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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 12, 2023
Applied DNA Sciences, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation) |
001-36745
(Commission File Number) |
59-2262718
(IRS Employer
Identification No.) |
50 Health Sciences Drive
Stony Brook, New York 11790
(Address of principal executive offices; zip code)
Registrant’s telephone number, including
area code:
631-240-8800
N/A
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the
registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or
Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, $0.001 par value |
|
APDN |
|
The Nasdaq Stock Market |
Item 1.01 |
Entry into a Material Definitive Agreement. |
On July 12, 2023 (the “Closing Date”), Spindle Acquisition
Corp., a corporation existing under the laws of the Province of Ontario (the “Purchaser”), and a wholly-owned subsidiary of
Applied DNA Sciences, Inc., a Delaware corporation (the “Company”), entered into a Share Purchase Agreement (the “Purchase
Agreement”) with Spindle Biotech Inc., a corporation existing under the federal laws of Canada (“Spindle”), the persons
listed on Schedule 1.1 of the Purchase Agreement (the “Sellers”) and Lai Him Chung, as Seller Representative. Spindle is an
early-stage, private biotech company developing next-generation RNA manufacturing technology.
Pursuant to the terms of the Purchase Agreement, the Purchaser, a wholly-owned
subsidiary of the Company, acquired all of the outstanding stock of Spindle (the “Spindle Shares”) from the Sellers (the “Transaction”)
with effect from the Closing Date. As a result, Spindle became a wholly-owned subsidiary of the Purchaser, and the financials of Spindle
will be consolidated with those of the Company.
As consideration for the transactions contemplated by the Purchase
Agreement, the Purchaser agreed to pay or issue to the Sellers, as applicable, on a pro rata basis: (i) a cash purchase price of
$625,000, as adjusted for debt of Spindle as of the closing date and expenses related to the transaction, which was paid to the Sellers
on the Closing Date; (ii) 750,000 restricted shares of the Company’s common stock, par value $0.001 per share (the “Common
Stock”), which shares were delivered to the Sellers on the Closing Date (the “Closing Stock Issuance”); (iii) a percentage
of the revenues expected from the Company’s sale or exploitation of products including or derived from a heterologous fusion protein
comprised of a DNA binding domain and an RNA polymerase enzyme developed by Spindle (the “Spindle RNAP”), payable to the Sellers
in accordance with the terms of the Purchase Agreement for a period of ten (10) years commencing on the Closing Date; and (iv) upon the
occurrence of certain events specified in the Purchase Agreement, including the issuance of a patent covering the Spindle RNAP and the
achievement of certain designated milestones in respect of the Company’s sales or exploitation of projects including or derived
from the Spindle RNAP, additional shares of Common Stock not to exceed 1,000,000 restricted shares, 250,000 of which will be issued upon
the issuance of a patent for the Spindle RNAP, and 750,000 shares of which will be issued in three equal tranches upon the achievement
of aggregate gross sales milestones at $5,000,000 per tranche (the “Earn-Out Shares” and, together with the Closing Stock
Issuance, the “Stock Consideration”).
The Purchase Agreement includes customary representations, warranties,covenants,
and indemnifcations. The representations, warranties, covenants and indemnification contained in
the Purchase Agreement were made only for purposes of that agreement and as of specific dates; were made solely for the benefit of the
parties to that agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures; may not have been intended to be statements of fact, but rather, as a method of allocating contractual risk and governing
the contractual rights and relationships between the parties to that agreement; and may be subject to standards of materiality applicable
to contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and
covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or Spindle or any
of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties
and covenants may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the
Company’s public disclosures.The foregoing description of the Purchase Agreement and the Transaction contemplated thereby
does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which
is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this report
and the exhibits hereto may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of
1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. Such statements are made based
on the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual
results or events may differ from those anticipated by forward-looking statements. Please refer to the last paragraph of the attached
press release and various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange
Commission for information concerning risks, uncertainties, and other factors that may affect future results.
Item 2.01 |
Completion of Acquisition or Disposition of Assets. |
The information regarding the Transaction and the Purchase Agreement
set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
Item 3.02 |
Unregistered Sales of Equity Securities. |
The information regarding the issuance of the Stock Consideration set
forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
The issuance of the Stock Consideration is exempt from registration
under the Securities Act in reliance on exemptions from the registration requirements of the Securities Act in transactions not involved
in a public offering pursuant to Section 4(a)(2) of the Securities Act.
On July 13, 2023, the Company issued a press release announcing the
Transaction. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
On July 13, 2023, the Company also made a presentation about the Transaction
available on the Company’s website at www.adnas.com. A copy of the Company’s presentation is attached hereto as Exhibit 99.2
and is incorporated herein by reference.
Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits
2.1*† |
Share Purchase Agreement, dated July 12, 2023, by and among Spindle Acquisition Corp., Spindle Biotech Inc., the persons listed on Schedule 1.1 therein, Lai Him Chung and Applied DNA Sciences, Inc. |
99.1 |
Press Release, dated July 13, 2023. |
99.2 |
Presentation, dated July 13, 2023. |
104 |
Cover Page Interactive Data File (formatted in Inline XBRL). |
* Certain exhibits and schedules to this Exhibit have been omitted
in accordance with Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of all omitted exhibits and schedules
to the Securities and Exchange Commission upon its request.
† Certain
confidential information contained in this agreement has been omitted because it is both not material and is the type that the registrant
treats as private or confidential.
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
July 13, 2023 |
APPLIED
DNA SCIENCES, INC. |
|
|
|
|
By: |
/s/
James A. Hayward |
|
Name: |
James
A. Hayward |
Exhibit 2.1
CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE
THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
Execution Version
SHARE PURCHASE AGREEMENT
by and among
SPINDLE ACQUISITION CORP.
SPINDLE BIOTECH INC.,
THE PERSONS LISTED ON Schedule 1.1,
Lai Him
Chung
and
solely for the purpose of Section 10.16,
APPLIED DNA SCIENCES, INC.
July 12, 2023
Table
of Contents
Page
Article I PURCHASE AND SALE OF COMPANY SHARES |
1 |
|
|
|
1.01 |
Purchase and Sale |
1 |
|
1.02 |
Consideration |
1 |
|
1.03 |
Payment of the Consideration |
2 |
|
1.04 |
Estimated Cash Payment |
3 |
|
1.05 |
Final Cash Payment Calculation |
4 |
|
1.06 |
Earn-Out |
6 |
|
1.07 |
Spindle RNAP Revenue Share |
9 |
|
1.08 |
Holdback Amount |
10 |
|
|
|
|
Article II THE CLOSING |
11 |
|
|
|
2.01 |
The Closing |
11 |
|
2.02 |
Closing Deliveries of Sellers and the Company |
11 |
|
2.03 |
Closing Deliveries of Purchaser and Purchaser Parent |
12 |
|
|
|
|
Article III REPRESENTATIONS AND WARRANTIES OF SELLERS |
13 |
|
|
|
3.01 |
Authorization of Transaction; Organization and Status of Sellers |
13 |
|
3.02 |
Non-contravention |
13 |
|
3.03 |
Brokerage |
14 |
|
3.04 |
Company Shares |
14 |
|
3.05 |
Litigation |
14 |
|
3.06 |
Bankruptcy and Insolvency |
14 |
|
3.07 |
Residency |
14 |
|
3.08 |
Stock Consideration |
14 |
|
3.09 |
Understandings or Arrangements |
15 |
|
3.10 |
Seller Status |
15 |
|
3.11 |
Experience of Such Seller |
16 |
|
3.12 |
General Solicitation |
16 |
|
3.13 |
Access to Information |
16 |
|
|
|
|
Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
16 |
|
|
|
4.01 |
Organization and Corporate Power of Company |
16 |
|
4.02 |
Subsidiaries |
16 |
|
4.03 |
Authorization; No Breach; Valid and Binding Agreement |
17 |
|
4.04 |
Capital Stock |
18 |
|
4.05 |
Financial Statements; Absence of Undisclosed Liabilities |
18 |
|
4.06 |
Absence of Certain Developments |
19 |
|
4.07 |
Title to Properties |
20 |
|
4.08 |
Tax Matters |
22 |
|
4.09 |
Contracts and Commitments |
26 |
|
4.10 |
Intellectual Property |
27 |
|
4.11 |
Litigation |
33 |
|
4.12 |
Employee Benefit Plans |
34 |
TABLE OF CONTENTS
(continued)
Page
|
4.13 |
Compliance with Laws; Improper Payments |
35 |
|
4.14 |
Environmental Compliance and Conditions |
36 |
|
4.15 |
Affiliated Transactions |
37 |
|
4.16 |
Labor and Employment |
37 |
|
4.17 |
Insurance |
38 |
|
4.18 |
Brokerage |
38 |
|
4.19 |
Banking Relationships |
38 |
|
4.20 |
Customers and Suppliers |
38 |
|
4.21 |
Accounts Receivable |
39 |
|
4.22 |
Territorial Restrictions |
39 |
|
4.23 |
Product or Service Warranties |
39 |
|
4.24 |
Health Care Regulatory Compliance |
40 |
|
4.25 |
HIPAA and Privacy Laws |
42 |
|
|
|
|
Article V REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PURCHASER PARENT |
42 |
|
|
|
5.01 |
Organization and Corporate Power |
42 |
|
5.02 |
Authorization; No Breach; Valid and Binding Agreement |
43 |
|
5.03 |
Litigation |
43 |
|
5.04 |
Brokerage |
43 |
|
5.05 |
Purchaser Parent Stock |
44 |
|
5.06 |
Purchaser Parent Capitalization |
44 |
|
|
|
|
Article VI COVENANTS |
44 |
|
|
|
6.01 |
Access to Books and Records |
44 |
|
6.02 |
Further Assurances |
44 |
|
6.03 |
Releases |
45 |
|
6.04 |
Publicity |
45 |
|
6.05 |
Confidentiality |
46 |
|
6.06 |
Restrictive Covenants |
46 |
|
|
|
|
Article VII TAX MATTERS |
47 |
|
|
|
7.01 |
Reserved |
47 |
|
7.02 |
Straddle Period Allocation |
47 |
|
7.03 |
Responsibility for Filing Tax Returns |
48 |
|
7.04 |
Books and Records; Cooperation |
48 |
|
7.05 |
Transfer Taxes |
48 |
|
7.06 |
Excessive Eligible Dividend Designation Election |
48 |
|
7.07 |
Excessive Capital Dividend Election |
48 |
|
7.08 |
Required Disclosure |
49 |
|
7.09 |
Tax Contests |
49 |
|
7.10 |
Post-Closing Amendments and Elections |
50 |
|
7.11 |
Tax Elections |
50 |
|
7.12 |
Tax Refunds |
51 |
TABLE OF CONTENTS
(continued)
Page
Article VIII INDEMNIFICATION |
51 |
|
|
|
8.01 |
Survival of Representations, Warranties, Covenants, Agreements and Other Provisions |
51 |
|
8.02 |
Indemnification from Sellers for the Benefit of Purchaser |
52 |
|
8.03 |
Indemnification by Purchaser for the Benefit of Sellers and Seller Representative |
54 |
|
8.04 |
Additional Provisions |
55 |
|
8.05 |
Defense of Third Party Claims |
56 |
|
8.06 |
Determination of Loss Amount |
56 |
|
|
|
|
Article IX DEFINITIONS |
57 |
|
|
|
9.01 |
Definitions |
57 |
|
9.02 |
Other Definitional Provisions |
67 |
|
9.03 |
Cross Reference of Other Definitions |
67 |
|
|
|
|
Article X MISCELLANEOUS |
70 |
|
|
|
10.01 |
Expenses |
70 |
|
10.02 |
Notices |
70 |
|
10.03 |
Assignment |
70 |
|
10.04 |
Severability |
71 |
|
10.05 |
References |
71 |
|
10.06 |
Construction |
71 |
|
10.07 |
Amendment and Waiver |
72 |
|
10.08 |
Complete Agreement |
72 |
|
10.09 |
Third Party Beneficiaries |
72 |
|
10.10 |
Governing Law |
72 |
|
10.11 |
Dispute Resolution |
72 |
|
10.12 |
Electronic Delivery |
73 |
|
10.13 |
Counterparts |
73 |
|
10.14 |
Specific Performance |
73 |
|
10.15 |
Appointment of the Seller Representative |
73 |
|
10.16 |
Purchaser Parent Guaranty |
76 |
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT
(this “Agreement”), dated as of July 12, 2023, is made by and among Spindle Acquisition Corp., a corporation existing
under the laws of the Province of Ontario (“Purchaser”), Spindle Biotech Inc., a corporation existing under the federal
laws of Canada (the “Company”), the Persons listed on Schedule 1.1 (“Sellers”), Lai Him Chung
(“Seller Representative”), and, solely for the purpose of Section 10.16 and the other provisions in which
Purchaser Parent is named, Applied DNA Sciences, Inc., a Delaware corporation (“Purchaser Parent”). Capitalized
terms used and not otherwise defined herein have the meanings set forth in Article X below.
RECITALS
A.
Sellers in the aggregate own 100% of the issued and outstanding shares in the
capital of the Company (the “Company Shares”);
B. Sellers
desire to sell the Company Shares to Purchaser, and Purchaser desires to acquire the Company Shares from Sellers on the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration
of the premises and the mutual promises herein made, and in consideration of the representations, warranties, covenants and other valuable
consideration herein contained, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Article I
PURCHASE AND SALE OF COMPANY SHARES
1.01 Purchase
and Sale. In accordance with the terms and subject to the conditions in this Agreement, at the Closing, each Seller shall sell, transfer,
assign, convey and deliver to Purchaser all right, title and interest in and to all of such Seller’s Company Shares, free and clear
of all Liens.
1.02 Consideration.
The consideration for the Company Shares pursuant to this Agreement (the “Consideration”) shall be as follows:
(a) The
cash consideration for the Company Shares (the “Cash Consideration”) shall consist of:
(i) the
Cash Payment; plus
(ii) the
aggregate amount of Spindle RNAP Revenue Share payable to Sellers pursuant to Section 1.07 below,
each of which will be allocated among Sellers
in accordance with each Seller’s Common Share Percentage.
(b) The
consideration for the Company Shares to be paid to Sellers in the form of shares of the Purchaser Parent’s common stock, par value
$0.001 per share (the “Purchaser Parent Stock” and such consideration, the “Stock Consideration”)
shall consist of:
(i) 750,000
shares of Purchaser Parent Stock (the “Closing Share Issuance”), which shares, for tax reporting purposes, shall have
a value per share utilizing the Volume Weighted Average Price for the Purchaser Parent Stock for the five trading days prior to the Closing
Date); plus
(ii) the
Earn-Out Shares, if any, issuable to Sellers pursuant to Section 1.06 below,
which will be allocated among the Sellers in accordance
with each Seller’s Person’s Common Share Percentage. The Purchaser Parent Stock that comprises the Stock Consideration has
not been registered pursuant to the Securities Act or any U.S. state securities laws, and unless so registered, may not be offered or
sold in the United States or, directly or indirectly, to U.S. Persons (as defined in Regulation S promulgated under the Securities Act)
except pursuant to an effective registration statement or pursuant to an exemption from, or in a transaction not subject to the Securities
Act, and in each case only in accordance with applicable state securities laws. Within 10 days after the date which is 180 days after
the Closing Date, Purchaser Parent shall promptly cause its counsel to issue a legal opinion to
American Stock Transfer & Trust Company, LLC, Purchaser Parent’s transfer agent,
or to the Sellers, if required by American Stock Transfer & Trust Company, LLC,
to effect the removal of any restrictive legend applicable to the shares of Purchaser Parent Stock issued to Sellers hereunder.
1.03 Payment
of the Consideration.
(a) Not
less than two Business Days prior to the anticipated Closing Date, Seller Representative shall deliver to Purchaser a spreadsheet (the
“Spreadsheet”) in a form reasonably acceptable to Purchaser, which shall include, as of the Closing, with respect to
each Seller: (i) such Seller’s address and bank accounts (with wire information), (ii) such Seller’s Tax ID, (iii) the
number of Company Shares held by such Seller, (iv) the respective certificate number(s) representing such shares (as applicable),
(v) the percentage of the shares in the capital of the Company held by such Seller, (vi) whether such Seller is an “accredited
investor” as defined as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12), or (a)(13) under the Securities
Act, (vii) the aggregate amount of the Estimated Cash Payment to be paid to such Person, (viii) the amount of the Closing Share
Issuance to be issued to such Person at the Closing, (ix) whether any amounts are required to be withheld and if so, the amount of
such withholdings, and (x) the name in which any shares of Stock Consideration issuable to such Seller is to be issued.
(b) At
the Closing, Purchaser shall pay:
(i) to
an account designated by Seller Representative at least two Business Days prior to the Closing Date, for further payment to Sellers based
on their Common Share Percentages, the Estimated Cash Payment, less the Holdback Amount;
(ii) to
the recipients thereof, as designated in the Estimated Closing Statement, the Closing Indebtedness Amount with respect to which Seller
Representative has delivered to Purchaser a Payoff Letter; and
(iii) to
the recipients thereof, designated in the Estimated Closing Statement, the Company Transaction Expenses;
(c) Contemporaneously
with the Closing, each Seller’s portion of the Closing Share Issuance (based on such Seller’s Common Share Percentage) shall
be issued by Purchaser Parent to such Seller in accordance with the Spreadsheet.
(d) All
payments of Cash Consideration (including any adjustment to the Cash Payment pursuant to Section 1.05) shall be made
by wire transfer of immediately available funds.
(e) Notwithstanding
any other provision of this Agreement, the Company and the Purchaser shall be entitled to deduct and withhold from any consideration payable
or otherwise deliverable pursuant to this Agreement such amounts as may be required to be deducted or withheld therefrom under any provision
of United States federal, state, local or non-United States Tax Law. Prior to making any deduction or withholding from any amount payable
pursuant to this Agreement that is not treated as compensation for applicable U.S. federal income tax purposes, the applicable payor shall
use commercially reasonable efforts to provide prior written notice as soon as reasonably practical to the applicable recipient of the
obligation to deduct and withholding. Purchaser shall use commercially reasonable efforts to cooperate, as reasonably requested by another
Party, to establish any applicable exemption or reduction to such deduction or withholding, including by providing any applicable withholding
forms or certificates. To the extent that any amounts are deducted or withheld pursuant to this Agreement and paid over to the appropriate
Governmental Authority by the payor, such amounts will be treated as having been paid to the Person in respect of which such deduction
or withholding was made.
1.04 Estimated
Cash Payment. Not less than two Business Days prior to the anticipated Closing Date, Seller Representative shall deliver to Purchaser
a certificate of the Chief Financial Officer of the Company (the “Estimated Closing Statement”) setting forth (a) its
good faith calculation of its estimate of (i) the Closing Indebtedness Amount (the “Estimated Closing Indebtedness Amount”),
and (ii) the Company Transaction Expenses (the “Estimated Company Transaction Expenses”), each as of the Closing
Date as reported by the Company using GAAP, which shall not include any changes in assets or liabilities as a result of purchase accounting
adjustments or other changes arising from or resulting as a consequence of the transactions contemplated hereby (the “Accounting
Methods”), (b) the Estimated Cash Payment; and (c) bank wire instructions for each Person entitled to receive any
portion of the Closing Indebtedness Amount or the Company Transaction Expenses.
1.05 Final
Cash Payment Calculation.
(a) As
promptly as possible, but in any event within ninety (90) days after the Closing Date, Purchaser or one of its Affiliates will prepare
and deliver to Seller Representative the balance sheet of the Company (the “Closing Balance Sheet”) as of the Closing
and a statement (together with the Closing Balance Sheet, the “Preliminary Closing Statement”) setting forth (i) its
good faith calculation of (A) the Closing Indebtedness Amount, and (B) the Company Transaction Expenses, each as of the Closing
as reported by the Company using the Accounting Methods, and (ii) the Cash Payment. The Parties agree that the purpose of preparing
the Closing Balance Sheet and determining the Closing Indebtedness Amount and the Company Transaction Expenses and the related Cash Payment
adjustment contemplated by this Section 1.05 is to measure changes in the Closing Indebtedness Amount and Company Transaction
Expenses, and such processes are not intended to permit the introduction of different judgments, accounting methods, policies, principles,
practices, procedures, classifications or estimation methodologies for the purpose of preparing the Closing Balance Sheet or determining
the Closing Indebtedness Amount and the Company Transaction Expenses. After delivery of the Preliminary Closing Statement, Seller Representative
and its accountants may make inquiries of Purchaser and the Company, and their respective accountants regarding questions concerning,
or disagreements with, the Preliminary Closing Statement arising in the course of their review thereof, and Purchaser shall use its, and
shall cause the Company to use its, commercially reasonable efforts to cause any such accountants to cooperate with and respond to such
inquiries. If Seller Representative has any objections to the Preliminary Closing Statement, Seller Representative shall deliver to Purchaser
a statement setting forth its objections thereto and a reasonably detailed description of the basis therefor (an “Objections
Statement”). If an Objections Statement is not delivered to the Purchaser within thirty (30) days after delivery of the Preliminary
Closing Statement, the Preliminary Closing Statement shall be final, binding and non-appealable by the Parties. Seller Representative
and Purchaser shall negotiate in good faith to resolve any objections in the Objections Statement, but if they do not reach a final resolution
within thirty (30) days after the delivery of the Objections Statement, Seller Representative or Purchaser may submit such dispute to
CohnReznick, or if CohnReznick is unavailable or conflicted for any reason at the time of engagement, a nationally recognized accounting
firm that is mutually agreeable to Purchaser and Seller Representative (the “Dispute Resolution Auditor”). Each of
Purchaser and the Seller Representative shall (i) enter into a customary engagement letter with the Dispute Resolution Auditor at
the time such dispute is submitted to the Dispute Resolution Auditor and otherwise cooperate with the Dispute Resolution Auditor, (ii) have
the opportunity to submit a written statement in support of their respective positions with respect to such disputed items, to provide
supporting material to the Dispute Resolution Auditor in defense of their respective positions with respect to such disputed items and
to submit a written statement responding to the other party’s position with respect to such disputed items and (iii) subject
to customary confidentiality and indemnity agreements, provide the Dispute Resolution Auditor with access to their respective books, records,
personnel and representatives and such other information as the Dispute Resolution Auditor may require in order to render its determination.
Any further submissions to the Dispute Resolution Auditor must be written and delivered to each party to the dispute. The Dispute Resolution
Auditor shall (i) consider only those items and amounts that are identified in the Objections Statement as being items that Seller
Representative, on the one hand, and Purchaser, on the other hand, are unable to resolve and (ii) select with respect to each item
in dispute an amount between or equal to the position of Seller Representative, on the one hand, and Purchaser, on the other hand. The
Dispute Resolution Auditor’s determination will be based solely on the definitions of Closing Indebtedness Amount and Company Transaction
Expenses contained herein. Seller Representative, on the one hand, and Purchaser, on the other hand, shall use their commercially reasonable
efforts to cause the Dispute Resolution Auditor to resolve all disagreements as soon as practicable. Further, the Dispute Resolution Auditor’s
determination, which shall be in writing, shall be based solely on the presentations by Purchaser, on the one hand, and Seller Representative,
on the other hand, which are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent
review). The resolution of the dispute by the Dispute Resolution Auditor shall be final, binding and non-appealable on the Parties. The
fees and expenses of the Dispute Resolution Auditor shall be allocated between the Purchaser, on the one hand, and the Seller Representative
(on behalf of the Sellers), on the other hand, based upon the percentage that the portion of the contested amount not awarded to each
party bears to the amount actually contested by such party. For example, if the Seller Representative claims Closing Indebtedness Amount
is $100,000 less than the amount determined by the Purchaser, and the Purchaser contests only $50,000 of the amount claimed by the Stockholder
Representative, and if the Dispute Resolution Auditor ultimately resolves the dispute by awarding the Seller Representative (for the benefit
of the Sellers) $30,000 of the $50,000 contested, then the costs and expenses of the Dispute Resolution Auditor shall be allocated sixty
percent (60%) (i.e., $30,000 ÷ $50,000) to the Purchaser and forty percent (40%) (i.e., $20,000 ÷ $50,000) to the Seller
Representative (on behalf of the Sellers). The statement setting forth (i) the final, binding and non-appealable calculation (as
determined pursuant to this Section 1.05(a) or otherwise agreed in writing by Purchaser and Seller Representative) of (A) the
Closing Indebtedness Amount, and (B) the Company Transaction Expenses, each as of the Closing as reported by the Company using the
Accounting Methods, and (ii) the Cash Payment shall be the “Final Closing Statement”.
(b) If
the Cash Payment as finally determined pursuant to Section 1.05(a) above is greater than the Estimated Cash Payment,
Purchaser shall promptly (but in any event within five Business Days of final determination of the Cash Payment as set forth in this Section 1.05)
pay such excess to the respective accounts/addresses of each Seller as set forth in the Spreadsheet, or such account/address as may subsequently
provided in writing by such Seller to Purchaser (in compliance with Section 10.02), based upon each Seller’s Common
Share Percentage. If the Cash Payment as finally determined pursuant to Section 1.05 above is less than the Estimated
Cash Payment, Sellers shall promptly (but in any event within five Business Days of final determination of the Cash Payment as set forth
in this Section 1.05), pay such deficit to Purchaser; provided that (a) each Seller shall only be obligated to pay such
Seller’s Common Percentage of such deficit and (b) only if the Cash Payment becomes due and payable within the first 180 days
following the Closing Date, and subject to compliance by such Seller with the applicable requirements set forth by American Stock Transfer &
Trust Company, LLC, Purchaser Parent’s transfer agent, in lieu of paying such Seller’s Common Percentage of such deficit entirely
in cash, each Seller shall have the right to pay any portion thereof via transfer to Purchaser Parent of such number of shares of Purchaser
Parent Stock held by such Seller which has an equivalent value (using the Volume Weighted Average Price for the Purchaser Parent Stock
for the five trading days prior to the date that the Cash Payment was finally determined pursuant to this Section 1.05, subject
to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization) equal to such
portion of Seller’s Common Percentage of such deficit.
1.06 Earn-Out.
(a) Subsequent
to the Closing and subject to this Section 1.06, Sellers shall be eligible to receive, based upon each Seller’s Common
Share Percentage, the following amounts of shares of Purchaser Parent Stock (the “Earn-Out Shares”):
(i) 250,000
(subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization) of
the Earn-Out Shares (the “Spindle RNAP Patent Earn-Out Shares”), in the event that the Company has received a non-provisional
patent from the U.S. Patent and Trademark Office or a patent from the European Patent Office containing patent claims that cover the Spindle
RNAP (the “Spindle RNAP Patent Issuance”) during the period from the Closing Date through and including the fifth anniversary
of the Closing Date (the “Earn-Out Period”). For the avoidance of doubt, and except as otherwise provided in Section 1.06(f),
if the Spindle RNAP Patent Issuance has not occurred prior to the end of the Earn-Out Period, the number of Spindle RNAP Earn-Out Shares
shall be zero.
(ii) 250,000
(subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization) of
the Earn-Out Shares (the “Spindle RNAP Net Sales Earn-Out Shares”), issuable at each point during the Earn-Out Period
that incremental Spindle RNAP Net Sales are in excess of $5,000,000 (each a “Spindle RNAP Net Sales Milestone”), up
to three times for a total of 750,000 Earn-Out Shares during the Earn-Out Period. For the avoidance of doubt, and except as otherwise
provided in Section 1.06(f), (A) if Spindle RNAP Net Sales during the Earn-Out Period are less than $5,000,000, the Spindle
RNAP Net Sales Earn-Out Shares issuable shall be zero; (B) if Spindle RNAP Net Sales during the Earn-Out Period are equal to or greater
than $5,000,000 but less than $10,000,000, the Spindle RNAP Net Sales Earn-Out Shares issuable shall be 250,000 (to be issued after the
Spindle RNAP Net Sales during the Earn-Out Period equals or exceeds $5,000,000); (C) if Spindle RNAP Net Sales during the Earn-Out
Period are equal to or greater than $10,000,000 but less than $15,000,000, the Spindle RNAP Net Sales Earn-Out Shares issuable shall be
500,000 (issued in increments of 250,000, with the first 250,000 to be issued after the Spindle RNAP Net Sales during the Earn-Out Period
equals or exceeds $5,000,000, and the second 250,000 to be issued after the Spindle RNAP Net Sales during the Earn-Out Period equals or
exceeds $10,000,000); and (D) if Spindle RNAP Net Sales during the Earn-Out Period are equal to or greater than $15,000,000, the
Spindle RNAP Net Sales Earn-Out Shares issuable shall be 750,000 (issued in increments of 250,000, with the first 250,000 to be issued
after the Spindle RNAP Net Sales during the Earn-Out Period equals or exceeds $5,000,000, the second 250,000 to be issued after the Spindle
RNAP Net Sales during the Earn-Out Period equals or exceeds $10,000,000, and the third 250,000 to be issued after the Spindle RNAP Net
Sales during the Earn-Out Period to equal or exceed $15,000,000).
In no event shall the aggregate amount
of Earn-Out Shares exceed 1,000,000 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or
other similar recapitalization).
(b) Within
ten Business Days after it has been conclusively determined by Purchaser and the Seller Representative that the Company has achieved the
Spindle RNAP Patent Issuance pursuant to Section 1.06(a), Purchaser Parent shall issue to Sellers, based upon each Seller’s
Common Share Percentage, the Spindle RNAP Patent Earn-Out Shares.
(c) Within
ten Business Days after it has been conclusively determined by Purchaser and the Seller Representative in accordance with Section 1.06(d) that
any portion of the Spindle RNAP Net Sales Earn-Out Shares are owed to Sellers pursuant to Section 1.06(a)(ii), Purchaser Parent
shall, subject to Section 1.06(d) below, issue to Sellers, based upon each Seller’s Common Share Percentage, the
applicable amount of Spindle RNAP Net Sales Earn-Out Shares.
(d) Within
30 days following the end of each fiscal half year (i.e., March 31 and September 30 of each fiscal year) during the Earn-Out
Period and promptly following the end of the Earn-Out Period, if the Earn-Out Period ends prior to the end of a fiscal half year, Purchaser
will prepare and submit to the Seller Representative a statement (each a “Spindle RNAP Net Sales Statement”) setting
forth the Spindle RNAP Net Sales for such period, as well as the calculations relevant to the Spindle RNAP Revenue Share described in
Section 1.07. The Spindle RNAP Net Sales Statements shall be prepared in accordance
with GAAP. After delivery of a Spindle RNAP Net Sales Statement, the Seller Representative and its accountants may make inquiries of Purchaser,
Purchaser Parent, the Company, or their respective Affiliates, or from any third party described in Section 1.07(c), as applicable,
and their respective accountants, regarding questions concerning, or disagreements with, such Spindle RNAP Net Sales Statement arising
in the course of their review thereof, and Purchaser and Purchaser Parent shall use their, and shall cause the Company, Affiliates of
the Company, Purchaser and/or Purchaser Parent, and any third party described in Section 1.07(c) to use their, commercially
reasonable efforts to cause any such accountants to cooperate with and respond to such inquiries. If the Seller Representative has any
objections to such Spindle RNAP Net Sales Statement, the Seller Representative shall deliver to Purchaser a statement setting forth its
objections thereto and a reasonably detailed description of the basis therefor (an “Earn-Out Objections Statement”).
If an Earn-Out Objections Statement is not delivered to Purchaser within 30 days after delivery of a Spindle RNAP Net Sales Statement,
such Spindle RNAP Net Sales Statement shall be final, binding and non-appealable by the Parties. The Seller Representative and Purchaser
shall negotiate in good faith to resolve any objections in an Earn-Out Objections Statement, but if they do not reach a final resolution
within 30 days after the delivery of such Earn-Out Objections Statement, the Seller Representative or Purchaser may submit such dispute
to the Dispute Resolution Auditor. Each of Purchaser and the Seller Representative shall (i) enter into a customary engagement letter
with the Dispute Resolution Auditor at the time such dispute is submitted to the Dispute Resolution Auditor and otherwise cooperate with
the Dispute Resolution Auditor, (ii) have the opportunity to submit a written statement in support of their respective positions
with respect to such disputed items, to provide supporting material to the Dispute Resolution Auditor in defense of their respective positions
with respect to such disputed items and to submit a written statement responding to the other party’s position with respect to such
disputed items and (iii) subject to customary confidentiality and indemnity agreements, provide the Dispute Resolution Auditor with
access to their respective books, records, personnel and representatives and such other information as the Dispute Resolution Auditor
may require in order to render its determination. Any further submissions to the Dispute Resolution Auditor must be written and delivered
to each party to the dispute. The Dispute Resolution Auditor shall (i) consider only those items and amounts that are identified
in the Earn-Out Objections Statement as being items that the Seller Representative, on the one hand, and Purchaser, on the other hand,
are unable to resolve and (ii) select with respect to each item in dispute an amount between or equal to the position of the Seller
Representative, on the one hand, and Purchaser, on the other hand. The Dispute Resolution Auditor’s determination will be based
solely on the definitions contained herein. The Seller Representative, on the one hand, and Purchaser, on the other hand, shall use their
commercially reasonable efforts to cause the Dispute Resolution Auditor to resolve all disagreements as soon as practicable. Further,
the Dispute Resolution Auditor’s determination, which shall be in writing, shall be based solely on the presentations by Purchaser,
on the one hand, and the Seller Representative, on the other hand, which are in accordance with the terms and procedures set forth in
this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Auditor shall
be final, binding and non-appealable on the Parties. The fees and expenses of the Dispute Resolution Auditor shall be allocated between
the Purchaser, on the one hand, and the Seller Representative (on behalf of the Sellers), on the other hand, based upon the percentage
that the portion of the contested amount not awarded to each party bears to the amount actually contested by such party. For example,
if the Seller Representative claims Spindle RNAP Net Sales is $100,000 more than the amount determined by the Purchaser, and the Purchaser
contests only $50,000 of the amount claimed by the Stockholder Representative, and if the Dispute Resolution Auditor ultimately resolves
the dispute by awarding the Seller Representative (for the benefit of the Sellers) $30,000 of the $50,000 contested, then the costs and
expenses of the Dispute Resolution Auditor shall be allocated sixty percent (60%) (i.e., $30,000 ÷ $50,000) to the Purchaser and
forty percent (40%) (i.e., $20,000 ÷ $50,000) to the Seller Representative (on behalf of the Sellers).
(e) Seller
Representative and Sellers acknowledge and agree that (i) the issuance of the Earn-Out Shares is speculative and is subject to numerous
factors outside the control of Purchaser and the Company, and (ii) there is no assurance that Sellers will receive any of the Earn-Out
Shares and Purchaser has neither promised nor projected any Earn-Out Shares. Notwithstanding the foregoing, each of Purchaser and Purchaser
Parent undertakes (i) to take all steps reasonably necessary to achieve the Spindle RNAP Patent Issuance, (ii) to use commercially
reasonable efforts to achieve the Spindle RNAP Net Sales Milestones, and (iii) to cause it and the Company, and each Affiliate of
Purchaser, Purchaser Parent and the Company, to refrain from taking any action expressly intended to frustrate, hinder, delay, reduce
or circumvent the Earn-Out Shares potentially issuable to the Sellers and without any other reasonable business purpose. For purposes
of this Section 1.06(e), “commercially reasonable efforts” shall mean the devotion of efforts and resources that
are consistent with those utilized by a similarly situated biopharmaceutical company for its own internally discovered technology of similar
commercial potential at a similar stage of development, taking into consideration its safety and efficacy, the cost to develop, the competitiveness
of alternative technology, the nature and extent of their market exclusivity, the likelihood of regulatory approval, its profitability
and all other relevant factors.
(f)
In the event that Purchaser, Purchaser
Parent, the Company or any Affiliate of the foregoing shall assign, sell, transfer or convey, or cause the assignment, sale,
transfer or conveyance of, all right, title and interest in and to the Spindle RNAP (including any derivative products) to a third
party prior to the end of the Earn-Out Period, then upon the consummation of such assignment, sale, transfer or conveyance, all of
the Spindle RNAP Patent Earn-Out Shares and Spindle RNAP Net Sales Earn-Out Shares shall
be deemed to have been fully earned, and shall be issued by Purchaser Parent to Sellers (based upon each Seller’s Common Share
Percentage) within 45 days following the consummation of such assignment, sale, transfer or conveyance. In the event that all or
substantially all of the assets of the Company or fifty percent (50%) or more of the outstanding shares of capital stock of the
Company are directly or indirectly transferred to a third party (whether by sale, transfer, merger, operation of law or any other
means, and including without limitation, via the sale of all or substantially all of the assets, or at least fifty percent (50%) of
the outstanding shares of capital stock of, Purchaser Parent or any other direct or indirect parent of the Company) prior to the end
of the Earn-Out Period and/or the issuance of all Earn-Out Shares issuable with respect to the Earn-Out Period, then upon the
consummation of such assignment, sale, transfer or conveyance, all of the Spindle RNAP Patent Earn-Out Shares and Spindle
RNAP Net Sales Earn-Out Shares shall be deemed to have been fully earned, and shall be issued
by Purchaser Parent to Sellers (based upon each Seller’s Common Share Percentage) within 45 days following the consummation of
such assignment, sale, transfer or conveyance. Notwithstanding the foregoing and for clarity, Sellers acknowledge and agree that the
terms of this Section 1.06(f) shall not apply to, and references in this Section 1.06(f) to assignment,
sale, transfer and conveyance shall not include, (i) any issuances of stock by Purchaser Parent, or (ii) any licenses of,
in or to Intellectual Property covering the Spindle RNAP (and/or any derivative products) that may be granted by Purchaser,
Purchaser Parent, Company or any Affiliates of the foregoing to a third party, that in any case are necessary or useful for such
third party to research, develop, register, manufacture, have manufactured, use, distribute, offer for sale, sell and/or otherwise
commercialize the Spindle RNAP (including any derivative products) for or on behalf of Purchaser, Purchaser Parent, Company, or any
Affiliates of the foregoing, as applicable.
(g) Any
Earnout Shares issued pursuant to this Section 1.06 shall be treated as an addition
to the Consideration for Company Shares for income Tax purposes.
1.07 Spindle
RNAP Revenue Share.
(a) For
a period of ten years commencing upon the Closing (the “Revenue Share Period”), Sellers shall be entitled to receive
a share of the Spindle RNAP Net Sales (the “Spindle RNAP Revenue Share”) as follows:
(i) 14%
of Spindle RNAP Net Sales of (A) the Spindle RNAP that does not contain linearDNA, and (B) any Spindle RNAP Derivative Product
that does not contain linearDNA;
(ii) 10%
of Spindle RNAP Net Sales of any product that combines (A) linearDNA and the Spindle RNAP, or (B) linearDNA and a Spindle RNAP
Derivative Product; and
(iii) 10%
of Spindle RNAP Net Sales of any RNA product or derivative of any RNA product (such as protein synthesis using Spindle RNAP) produced
using the Spindle RNAP or any Spindle RNAP Derivative Product. For the avoidance of doubt, the Spindle RNAP Revenue Share set forth in
this Section 1.07(a)(iii) shall not apply to any RNA product or derivative of any RNA product (such as protein synthesis
using Spindle RNAP) produced by a party that is not an Affiliate of Purchaser Parent, Purchaser or Company.
(b) Within
ten Business Days after the Spindle RNAP Revenue Share has been conclusively determined by Purchaser and the Seller Representative for
each fiscal half year (i.e., the half-year periods ending March 31 and September 30 during the fiscal year) during the Revenue
Share Period, Purchaser shall pay the Spindle RNAP Revenue Share for such fiscal half year to the respective accounts/addresses of each
Seller as set forth in the Spreadsheet, or such account/address as may subsequently provided in writing by such Seller to Purchaser (in
compliance with Section 10.02), based upon each Seller’s Common Share Percentage. The Spindle RNAP Revenue Share shall
be conclusively determined in accordance with Section 1.06(d) with all provisions thereof applying to this Section 1.07
mutatis mutandis. For the avoidance of doubt, Purchaser shall continue to provide Spindle
RNAP Net Sales Statements for purposes of the Spindle RNAP Revenue Share through the end of the Revenue Share Period in accordance with
Section 1.06(d), even following the end of the Earn-Out Period. Further, to the extent the Seller Representative objects to
any calculation of the Spindle RNAP Revenue Share, but not the calculation of Spindle RNAP Net Sales for purposes of the Spindle RNAP
Net Sales Earn-Out Shares, in any given Spindle RNAP Net Sales Statement, such Spindle RNAP Net Sales Statement shall be final, binding
and non-appealable by the Parties solely for purposes of the Spindle RNAP Net Sales Earn-Out Shares, with the objection to the calculation
of the Spindle RNAP Revenue Share to be resolved in accordance with Section 1.06(d). For purposes of satisfying Purchaser’s
obligations under this Section 1.07(b), Purchaser shall only be obligated to send payment of each Seller’s portion of
the Spindle RNAP Revenue Share to the last account/address provided in the Spreadsheet or subsequently by such Seller to Purchaser in
writing (in compliance with Section 10.02).
(c) In
the event that Purchaser, Purchaser Parent, the Company, or any Affiliates of the foregoing, shall sell rights in and to, or cause the
sale of rights in and to, or license or sublicense, Intellectual Property Rights covering, or cause the license or sublicense of
Intellectual Property covering, the Spindle RNAP (and/or any derivative products), in any case to a third party during the Revenue Share
Period, Purchaser and Purchaser Parent shall require, and shall cause the Company and any applicable Affiliate to require, that the applicable
acquiror, licensee or sublicensee assume, without modification, all of Purchaser’s obligations under this Section 1.07
as a condition to the closing or the consummation of such transaction.
(d) Any
Spindle RNAP Revenue Share paid pursuant to this Section 1.07 shall be treated as an
addition to the Consideration for the Company Shares for all income Tax purposes.
1.08 Holdback
Amount. The Holdback Amount shall be reserved solely to satisfy any Turner Note Claim (as specified
in Section 8.02(a)). Any portion of the Holdback Amount unused to satisfy such claims shall be released to the respective
accounts/addresses of each Seller as set forth in the Spreadsheet, or such account/address as may subsequently provided in writing by
such Seller to Purchaser (in compliance with Section 10.02), based upon each Seller’s Common Share Percentage, on the
earlier of (a) the second anniversary of the Closing Date, and (b) receipt by Purchaser of evidence satisfactory to Purchaser
to reflect that the Turner Note has been terminated or cancelled, and that the holder of such note has waived and released any and all
rights under such securities.
Article II
THE CLOSING
2.01 The
Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place by the
electronic exchange of documents on the date hereof, or on such other date as may be mutually agreed by the Parties, and the Closing shall
be deemed to occur at 12:01 a.m., Eastern Time, on the Closing Date or at such other time as shall be mutually agreed upon in writing
by the Parties. By agreement of the Parties, the Closing may take place by conference call, telecopy or e-mail exchange of executed documents,
with exchange of original signatures by overnight mail. The date and time of the Closing are referred to herein as the “Closing
Date.”
2.02 Closing
Deliveries of Sellers and the Company. At or prior to the Closing, Seller Representative and the Company shall deliver to Purchaser
the following agreements, documents and other items, each of which shall be in form and substance satisfactory to Purchaser:
(a) appropriate
instruments of transfer to convey the Company Shares to Purchaser, with original certificates representing the Company Shares if they
are certificated, to be delivered promptly after the Closing;
(b) counterpart
signatures to the Employment Agreements, duly executed by Lai Him Chung;
(c) payoff
and release letters for all of the Closing Indebtedness Amount that (i) reflect the amounts required in order to pay in full such
Closing Indebtedness Amount, and (ii) provide that, upon payment in full of the amounts indicated, all Liens with respect to the
assets of the Companies shall be terminated and be of no further force and effect, together with UCC-3 termination statements and PPSA
discharges, as applicable, with respect to the financing statements filed against the assets or equity interests of the Company by the
holders of any such Liens (the “Payoff Letters”);
(d) the
written resignations, effective as of the Closing, of each of the directors and officers of the Company;
(e) a
Certificate of Compliance from Innovation, Science and Economic Development Canada dated within five calendar days of the Closing Date,
and certificates of good standing for the Company dated within five calendar days of the Closing Date, issued by the appropriate Governmental
Authorities in each jurisdiction in which the conduct of its business requires the Company to be qualified to do business as a foreign
entity;
(f) all
share transfer books, minute books, share certificates and other corporate records of the Company (to the extent not located at the Company’s
principal office or previously delivered to Purchaser);
(g) copies,
certified by the Secretary or other senior officer of the Company to be true, complete and correct as of the Closing Date, of the certificate
of incorporation of the Company and all amendments thereto, the Company’s bylaws and all amendments thereto, the resolutions of
the board of directors of the Company authorizing the execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and thereby, a certificate of incumbency for the signatories of
this Agreement and the other Transaction Documents, and a certificate of status of the Company;
(h) copies,
certified by a duly authorized officer of each of the Sellers that are corporations, of all resolutions adopted by the board of directors
and shareholders (as applicable) of each such Seller authorizing the execution, delivery and performance of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated hereby and thereby;
(i)
evidence of termination of the following (collectively, the
“Terminated Agreements”): (1) Unanimous Shareholders’ Agreement dated December 7, 2017 which was
amended by an Amendment to Unanimous Shareholders’ Agreement effective October 2, 2021; (2) Independent Contractor
Agreement with Nathaniel Brinn dated October 2, 2021; (3) Independent Contractor Agreement with Lai Him Chung dated
February 1, 2022; (4) Founders’ Agreement with Lai Him Chung, Mikhael Dubrovsky and Quynh Anh Ngo dated
December 1, 2017 which was amended by an Amendment to Founders’ Agreement dated February 28, 2019; and
(5) Independent Contractor Agreement with Chao Chen dated October 1, 2021; including evidence satisfactory to
Purchaser’s counsel that each of the foregoing Terminated Agreements shall be of no further force or effect and there shall be
no obligations or liabilities thereunder from and after the Closing Date, except as expressly set forth herein;
(j)
evidence that any convertible notes issued by the Company prior to
Closing, except for the Turner Note, and any other securities exchangeable for or convertible into Company Shares have been
terminated or cancelled, and, with respect to the convertible notes, except for the Turner Note, that the holders of such notes
and/or securities have waived and released any and all rights under such securities; and
(k) all
other instruments and documents required by this Agreement to be delivered by Sellers, the Company, or Seller Representative, and such
other instruments and documents which Purchaser or its counsel may reasonably request to effectuate the transactions contemplated hereby.
2.03 Closing
Deliveries of Purchaser and Purchaser Parent. At or prior to the Closing, Purchaser and Purchaser Parent shall deliver to Seller Representative
the following agreements, documents and other items, each of which shall be in form and substance satisfactory to Seller Representative:
(a) counterpart
signatures to the Employment Agreements, duly executed by the Purchaser Parent and BlueBack Global-Services (Canada) LTD.
(b) copies,
certified by the Secretary or other senior officer of the Purchaser to be true, complete and correct as of the Closing Date, of the certificate
of incorporation of the Purchaser and all amendments thereto, the Purchaser’s bylaws and all amendments thereto, the resolutions
of the board of directors of the Purchaser authorizing the execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and thereby, a certificate of incumbency for the signatories of
this Agreement and the other Transaction Documents, and a certificate of status of the Purchaser;
(c) copies,
certified by the Secretary or other senior officer of the Purchaser Parent to be true, complete and correct as of the Closing Date, of
the certificate of incorporation of the Purchaser Parent and all amendments thereto, the Purchaser Parent’s bylaws and all amendments
thereto and the resolutions of the board of directors of the Purchaser Parent authorizing the execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, a certificate
of incumbency for the signatories of this Agreement and the other Transaction Documents, and a certificate of good standing of the Company;
and
(d) all
other instruments and documents required by this Agreement to be delivered by Purchaser to the Company or Sellers, and such other instruments
and documents which Sellers, the Company or their counsel may reasonably request to effectuate the transactions contemplated hereby.
Article III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, severally and
not jointly and severally, and as to itself only, represents and warrants to Purchaser, as of the Closing, subject to the exceptions disclosed
in the schedules accompanying this Agreement (each, a “Schedule” and, collectively, the “Disclosure Schedule”),
as follows:
3.01 Authorization
of Transaction; Organization and Status of Sellers. Such Seller has full power, authority and legal capacity to execute and deliver
this Agreement and each other Transaction Document to which such Seller is a party and to perform such Seller’s obligations hereunder
and thereunder. Assuming the due authorization, execution and delivery of this Agreement and the other Transaction Documents by the other
parties thereto, this Agreement and each other Transaction Document to which such Seller is a party constitute the valid and legally binding
obligation of such Seller, enforceable against such Seller in accordance with their terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors generally and by the availability of equitable
remedies. In the case of a Seller that is not an individual, such Seller is a corporation, limited partnership or other legal entity,
as applicable, duly incorporated or formed, respectively, and validly existing under the laws of its jurisdiction of incorporation or
formation, respectively, has not been discontinued or dissolved under such laws, and has all requisite power and authority to enter into
and perform its obligations under this Agreement and the Transaction Documents to which it is a party.
3.02 Non-contravention.
Neither the execution and the delivery of this Agreement nor the other Transaction Documents to which such Seller is a party, nor the
consummation of the transactions contemplated hereby and thereby, will (i) violate or conflict with any Law or order to which such
Seller is subject, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any notice under any Contract to which such Seller is a party
or by which such Seller is bound or to which any of such Seller’s assets is subject; (iii) result in the imposition or creation
of a Lien upon or with respect to the Company Shares. Such Seller is not required to give any notice to, make any filing with, or obtain
any consent of any Governmental Authority or any other Person in order to consummate the transactions contemplated by this Agreement or
the other Transaction Documents to which such Seller is a party; or (iv) in the case of a Seller that is not an individual, not (or
would not with the giving of notice, the lapse of time, or both, or the happening of any other event or condition) constitute or result
in a breach or a violation of, or conflict with, or allow any other Person to exercise any rights under, any terms or provisions of its
constituent documents, by-laws or other similar documents.
3.03 Brokerage.
Such Seller has not incurred, nor will such Seller incur, directly or indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.04 Company
Shares. Such Seller holds of record and owns beneficially the number of Company Shares set forth next to such Seller’s name
in Schedule 1.1, free and clear of any Liens. Except as otherwise set forth on Schedule 3.04, such Seller is not a party
to, and such Seller’s Company Shares are not subject to, any option, warrant, purchase right or other Contract that could require
such Seller to sell, transfer, or otherwise dispose of any Company Shares (other than this Agreement). Such Seller is not a party to any
shareholder agreement, pooling agreement, voting trust, proxy or other Contract with respect to the ownership or voting of any Company
Shares. No Person has any written or oral agreement, option or warrant or any right or privilege (whether by Law, pre-emptive or contractual)
capable of becoming such for the purchase of any of the Company Shares owned by such Seller.
3.05 Litigation.
Such Seller is not engaged in or a party to or, to the Knowledge of such Seller, threatened with any complaint, charge, proceeding, order
or other process or procedure for settling disputes or disagreements with respect to the Company or the transactions contemplated by this
Agreement, and such Seller has not received written or, to the Knowledge of such Seller, oral notice of a claim or dispute that is reasonably
likely to result in any such complaint, charge, proceeding, order or other process or procedure for settling disputes or disagreements
with respect to the Company or the transactions contemplated by this Agreement.
3.06 Bankruptcy
and Insolvency. Such Seller is not an insolvent person within the meaning of the Bankruptcy and Insolvency Act (Canada), nor
is such Seller insolvent, unable to pay its debts, has stopped paying its debts as they fall due, or would become unable to pay its debts
as they fall due as a result of entering into this Agreement, performing its obligations under this Agreement, or the consummation of
the transactions contemplated by this Agreement. Such Seller has not made an assignment in favor of its creditors nor a proposal in bankruptcy
to its creditors or any class thereof nor had any petition for a receiving order presented in respect of it. Such Seller has not initiated
proceedings with respect to a compromise or arrangement with its creditors or for its winding up, liquidation or dissolution. No receiver
has been appointed in respect of such Seller, or any of its property or assets and no execution or distress has been levied upon any of
its property or assets.
3.07 Residency.
Except as set forth on Section 3.07 of the Disclosure Schedule, such Seller is not a non-resident for purposes of the Tax
Act.
3.08 Stock
Consideration. Each Seller acknowledges that:
(a) all
of the Purchaser Parent Stock issued as Stock Consideration or otherwise under this Agreement will be issued pursuant to an exemption
under securities Laws and have not been qualified by any prospectus or registration statement in any jurisdiction;
(b) no
securities regulatory authority has made any finding or determination as to the merit for investment in, or made any recommendation or
endorsement with respect to, any of the Purchaser Parent Stock;
(c) the
Purchaser Parent Stock issued as Stock Consideration or otherwise under this Agreement is “restricted stock” and is not listed
on any stock exchange or quotation system other than the NASDAQ Capital Market, and there is no guarantee that such Seller will be able
to sell its Purchaser Parent Stock received hereunder at a price and within a time period that are acceptable to such Seller, or at all;
(d) such
Seller did not ask for, and was not provided with, any offering memorandum or other document or information in respect of the Purchaser
Parent Stock, other than documents that are publicly available;
(e) each
of Purchaser Parent and Purchaser makes no representation or warranty, express or implied, of any nature whatsoever with respect to itself
or the Purchaser Parent Stock, except as expressly set forth in this Agreement; and
(f) such
Seller has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks
of its investment in the Purchaser Parent Stock
3.09 Understandings
or Arrangements. Such Seller is acquiring the Stock Consideration as principal for its own account and has no direct or indirect arrangement
or understandings with any other persons to distribute or regarding the distribution of such securities (this representation and warranty
not limiting such Seller’s right to sell such securities in compliance with applicable federal and state securities laws). Such
Purchaser understands that the Purchaser Parent Stock that comprises the Stock Consideration are “restricted securities” and
have not been registered under the Securities Act or any applicable state securities law and unless so registered, may not be offered
or sold in the United States or, directly or indirectly, to U.S. Persons (as defined in Regulation S promulgated under the Securities
Act) except pursuant to an effective registration statement or pursuant to an exemption from, or in a transaction not subject to the Securities
Act, and in each case only in accordance with applicable state securities laws. Seller is acquiring the Stock Consideration as principal
for his, her or its own account and not with a view to or for distributing or reselling such securities or any part thereof in violation
of the Securities Act or any applicable state securities law, has no present intention of distributing any of such securities in violation
of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Seller’s right to sell such securities in compliance with applicable federal
and state securities laws).
3.10 Seller
Status. Except as set forth on Section 3.10 of the Disclosure Schedule, the time such Seller was offered the Stock Consideration,
it was, and as of the date hereof it is, an “accredited investor” as defined pursuant to Rule 501 under the Securities
Act.
3.11 Experience
of Such Seller. Such Seller, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Stock Consideration,
and has so evaluated the merits and risks of such investment. Such Seller is able to bear the economic risk of an investment in such securities
and, at the present time, is able to afford a complete loss of such investment.
3.12 General
Solicitation. Such Seller is not, to such Seller’s Knowledge, purchasing the Stock Consideration as a result of any advertisement,
article, notice or other communication regarding such securities published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or, to the Knowledge of such Seller, any other general solicitation or general advertisement.
3.13 Access
to Information. Such Seller acknowledges that it has had the opportunity to review the Agreement and the other Transaction Documents
to which it is a party, and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of Purchaser concerning the terms and conditions of the offering of the Stock Consideration
and the merits and risks of investing in such securities; (ii) access to information about Purchaser and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that Purchaser possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the investment.
Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents
and warrants to Purchaser, as of the Closing, subject to the exceptions disclosed in the Disclosure Schedule, as set forth below. Notwithstanding
any contrary term of this Agreement, any of the following representations and warranties regarding any Laws of any jurisdiction other
than Canada are made by the Company to its Actual Knowledge.
4.01 Organization
and Corporate Power of Company. The Company is a corporation duly organized, validly existing and in good standing under the federal
Law of Canada and has not been dissolved or discontinued under such Laws. The Company has all requisite corporate power and authority
and all authorizations, licenses and permits necessary to own and operate its properties and to carry on its businesses as now conducted.
The Company is qualified to do business and is in good standing in every jurisdiction in which its ownership of property or the conduct
of business as now conducted requires it to qualify, except where the failure to be so qualified would not have a Material Adverse Effect.
4.02 Subsidiaries.
The Company does not own or hold the right to acquire any stock, partnership interest or joint venture interest or other equity ownership
interest in any other corporation, organization, entity or Person.
4.03 Authorization;
No Breach; Valid and Binding Agreement.
(a) The
Company has the requisite corporate and other power, capacity and authority to execute and deliver this Agreement and each other Transaction
Document to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and each Transaction Document to which it is a party, and the consummation of
the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite corporate or other action on the
part of the Company, and no other corporate proceedings on its part are necessary to authorize the execution, delivery or performance
of this Agreement.
(b) The
execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby do not
conflict with or result in any material breach of the provisions of the Company’s certificate of incorporation or bylaws.
(c) Except
as set forth on Section 4.03(c) of the Disclosure Schedule, the execution, delivery and performance of this Agreement
and each other Transaction Document by the Company and the consummation of the transactions contemplated hereby and thereby, (i) do
not conflict with or result in any material breach of, constitute a material default under (with or without notice or lapse of time, or
both), result in a material violation of, give rise to a right of termination, cancellation or acceleration of any obligations or loss
or loss of a benefit under, result in the creation of any Lien (other than a Permitted Lien) upon any assets of the Company, (ii) do
not require any authorization, consent, approval, exemption or other action by or notice to any Person, court or other governmental body
under the provisions of any material lease, contract or other agreement, permit, franchise, license or other instrument or undertaking
to which the Company is a party or by which the Company or any of its assets is bound or affected, and (iii) do not result in a violation
or contravention of any Law, statute, rule or regulation or order, judgment, decree, determination or award applicable to the Company
or any of its properties or assets.
(d) Assuming
that this Agreement is a valid and binding obligation of the other Parties, this Agreement constitutes a valid and binding obligation
of the Company, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws
affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable
remedies.
4.04 Capital
Stock. The authorized capital of the Company consists of an unlimited number of common shares, of which 11,369,681 are issued and
outstanding and owned of record by Sellers in the amounts set forth in Section 1.01. The Company Shares were issued in accordance
with the Company’s certificate of incorporation and bylaws in effect at such time and are owned beneficially and of record by Sellers,
free and clear of all Liens (other than Liens set forth in the Company’s certificate of incorporation), and constitute the only
issued and outstanding shares in the capital of the Company. All of the Company Shares (A) have been duly issued and are outstanding
as fully paid and non-assessable shares in the capital of the Company, (B) have been issued in compliance with all applicable Laws
and (C) have not been issued in violation of any purchase option, call option, right of first refusal, pre-emptive right, subscription
right or any similar right of any Person. Immediately following the Closing, Purchaser will be the sole record and beneficial holder of
all issued and outstanding shares in the capital of the Company and all rights to acquire or receive any shares of the capital stock of
the Company, whether or not such shares of capital stock are outstanding. Except as set forth in Section 4.04 of the Disclosure
Schedule, the Company does not have any other shares, equity securities or securities containing any equity features authorized, issued
or outstanding, and there are no agreements, options, warrants or other rights or arrangements existing or outstanding which provide for
the sale or issuance of any of the foregoing by the Company. There are no declared or accrued but unpaid dividends with respect to any
shares of the Company. Except as set forth in Section 4.04 of the Disclosure Schedule, there are no rights, subscriptions,
warrants, options, conversion rights or agreements of any kind outstanding to purchase or otherwise acquire any shares or other equity
securities of the Company of any kind. Except as set forth in Section 4.04 of the Disclosure Schedule, the Company is not
a party to any shareholders agreement, stock purchase agreement, voting trust agreement, registration rights agreement, preemptive rights
agreement, phantom stock agreement, stock appreciation rights agreement, incentive plan, bonus plan, stock option plan, stock option agreement,
stock-based plan or any like agreement or plan relating to the equity securities of the Company, or any other contract relating to disposition,
voting or dividends with respect to any equity interests of the Company. Except as set forth in Section 4.04 of the Disclosure
Schedule or in the Company’s certificate of incorporation, there are no agreements or other obligations (contingent or otherwise)
which require the Company to repurchase, redeem or otherwise acquire any shares of the Company or other equity securities, to vote or
to dispose of any shares of the of the Company or to provide funds to or make any investment (in the form of a loan, capital contribution
or otherwise) in any other Person. All agreements, plans and obligations set forth in Section 4.04 of the Disclosure Schedule
shall terminate on or before the Closing Date, and be of no further force or effect and have no outstanding or continuing obligations,
from and after the Closing Date, except for the payment of the Consideration in accordance with this Agreement.
4.05 Financial
Statements; Absence of Undisclosed Liabilities.
(a) Financial
Statements. Section 4.05(a) of the Disclosure Schedule consists of: (a) the unaudited balance sheet of the Company
as of June 30, 2023 (the “Latest Balance Sheet”) and the related statement of income for the Company for the 11-month
period then ended June 30, 2023 and (b) the unaudited balance sheets and statements of earnings and deficit for the Company
for the fiscal years ended July 31, 2022 and July 31, 2021 (collectively, the “Financial Statements”). Except
as set forth in Section 4.05(a) of the Disclosure Schedule, the Financial Statements have been prepared in accordance
with GAAP, consistently applied throughout the periods indicated, and are true, complete and correct in all material respects and present
fairly, in all material respects, the financial condition and results of operations of the Company as of the times and for the periods
referred to therein, subject in the case of the unaudited financial statements to (i) the absence of footnote disclosures and other
presentation items and (ii) changes resulting from normal year-end adjustments.
(b) Absence
of Undisclosed Liabilities. The Company does not have any debts, claims, commitments, obligations or liabilities of any nature (whether
matured or unmatured, asserted or unasserted, fixed or contingent, accrued, absolute, liquidated or otherwise) other than (i) those
set forth or adequately provided for in the Financial Statements, (ii) those incurred in the ordinary course of business since the
date of the Latest Balance Sheet consistent (in amount and kind) with prior practice and not in excess of $25,000 in the aggregate, (iii) those
set forth on the Disclosure Schedule and (iv) those incurred in connection with the execution of this Agreement as provided in this
Agreement and the Transaction Documents.
4.06 Absence
of Certain Developments. Except as set forth in Section 4.06 of the Disclosure Schedule, or except as expressly contemplated
by this Agreement, since the date of the Latest Balance Sheet:
(a) the
Company has conducted its business in the ordinary course of business consistent with past practice;
(b) there
has not been any damage, destruction or loss, whether or not covered by insurance, with respect to the property and assets of the Company
having a replacement cost of more than $25,000 for any single loss;
(c) there
has not been any material change by the Company in accounting or Tax reporting principles, methods or policies;
(d) the
Company has not entered into any transaction or contract or incurred any obligation or liability involving the expenditure of more than
$25,000;
(e) the
Company has not acquired any assets or sold, assigned, transferred, conveyed, leased or otherwise disposed of any of its assets for which
the aggregate consideration paid or payable in any individual transaction was in excess of $25,000;
(f)
the Company has not cancelled or compromised any debt or claim with
a value, individually or in the aggregate, exceeding $25,000 or amended, cancelled, terminated, relinquished, waived or released any
contract or right involving the expenditure of more than $25,000;
(g) the
Company has not made or committed to make any capital expenditures or capital additions in excess of $25,000;
(h) the
Company has not instituted or settled any legal proceeding in which equitable relief was sought or in which claimed damages exceeded $25,000;
(i)
the Company has not amended any Plan or established any new
employee benefit plan;
(j)
there have been no labor strikes, work stoppages or lockouts against the
Company;
(k) the Company has not received any notice of termination of any Significant
Contract;
(l)
there has not been a Material Adverse Effect;
(m) the
Company has not hired any new employee whose salary is accounted for as an indirect expense;
(n) the
Company has not mortgaged, pledged or subjected to any Lien, any portion of its assets, except for Permitted Liens;
(o) the
Company has not sold, assigned or transferred any Company Intellectual Property;
(p) the
Company has not issued, sold or transferred any of its capital stock or other equity securities, securities convertible into its capital
stock or other equity securities or warrants, options or other rights to acquire its capital stock or other equity securities, or any
bonds or debt securities;
(q) the
Company has not made any loan to any other Person, except in the ordinary course of business;
(r)
the Company has not declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(s) the
Company has not made any loan to, or entered into any other transaction with, any of its directors, officers, and employees;
(t) the Company has not entered into any employment
contract or consulting or independent contractor agreement with payments exceeding $25,000 per year or any collective bargaining
agreement, or modified the terms of any such existing contract or agreement; or
(u) the
Company has not made any other material change in employment terms (including compensation) for any of its directors or officers or for
any employees having employment contracts with annual payments exceeding $25,000 per year (except for the grant and payment of any bonuses
in connection with the consummation of the transactions contemplated by this Agreement).
4.07 Title
to Properties.
(a) Except
as set forth in Section 4.07(a) of the Disclosure Schedule, the Company owns good, valid and marketable title to, or
holds pursuant to valid and enforceable leases, all of its tangible assets and tangible personal property, including those shown to be
owned or leased by the Company on the Latest Balance Sheet (except for tangible assets sold or otherwise disposed of since the Latest
Balance Sheet in the ordinary course of business), free and clear of all Liens, except for Permitted Liens.
(b) The
real property at the addresses listed in Section 4.07(b) of the Disclosure Schedule (the “Leased Real Property”)
constitutes all of the real property leased by the Company. The leases under which the Company leases each Leased Real Property (the “Real
Property Leases”) are in full force and effect, and, to its Knowledge, the Company holds a valid leasehold interest in the Leased
Real Property, to which each Real Property Lease relates, subject only to any limitation under applicable Laws relating to (A) bankruptcy,
winding-up, insolvency, arrangement and other Laws of general application affecting the enforcement of creditors’ rights, and (B) the
discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction. Section 4.07(b) of
the Disclosure Schedule sets forth a complete and accurate list of the Real Property Leases (including all amendments, modifications,
renewals, extensions and supplements). The Company has delivered to Purchaser complete and accurate copies of each Real Property Lease,
and no Real Property Lease has been modified in any material respect, except as disclosed in Section 4.07(b) of the Disclosure
Schedule. Except as set forth on Section 4.07(b) of the Disclosure Schedule, to its Knowledge, the Company is not in
default in any material respect under any of such Real Property Leases, and to Company’s Knowledge, no landlord or other party is
in default under any such Real Property Leases. Except as set forth on Section 4.07(b) of the Disclosure Schedule (i) to
Company’s Knowledge, there are no pending or threatened condemnation Actions relating to any Leased Real Property, (ii) the
Company has not entered into, and has no Knowledge of, any subleases, licenses or other agreements, oral or written, granting any other
person the right to use or occupy any portion of the Leased Real Property and (iii) to Company’s Knowledge, there are no outstanding
options or rights of first refusal to purchase any portion of the Leased Real Property or any interest therein. All improvements and alterations,
required to be made to the Leased Real Property pursuant to the terms of the Real Property Leases have been completed in all material
respects.
(c) The
Company does not own any real property. The Company is not subject to any agreement or option to own any real property or any interest
in any real property.
(d) All
tangible assets and properties used in the operations of the Company owned or leased by the Company on the Latest Balance Sheet constitute
all of the tangible assets and properties necessary to conduct Company’s operations and business as currently conducted by Company
in all material respects.
(e) All
tangible personal property (including computers, equipment, furniture and all other personal property) owned by the Company is in good
operating condition, regularly and properly maintained, subject to normal wear and tear.
(f)
True, correct and complete copies of the share
certificate books, minute books and other corporate records maintained by the Company have been made available to Purchaser, and
such books and records have been maintained in accordance with commercially reasonable business practices. The minute books of the
Company accurately reflect all meetings and material corporate actions taken by Sellers, Boards of Directors and committees of the
Board of Directors of the Company in all material respects. At the Closing, all of those books and records will be in the possession
of the Company, except to the extent they have been delivered to Purchaser on or prior to the Closing Date.
4.08 Tax
Matters. Except as set forth in Section 4.08 of the Disclosure Schedule:
(a) The
Company has duly filed on a timely basis (including applicable extensions) with the appropriate Governmental Authority all Tax Returns
(including instalments) required to be filed by Law on or before the Closing Date. All such Tax Returns were complete and accurate in
all respects. The Company has or will have paid on a timely basis all Taxes which are required to be paid or remitted by it on or before
the Closing Date (including all Taxes shown as due and owing on all Tax Returns, all Taxes assessed or reassessed by any Governmental
Authority, all installments on account of Taxes for the current year and prepayments of Tax as required by applicable Law). The Company
will not have any liability for Taxes for any period ending on or before the Closing Date, or that portion of any Straddle Period up to
and including the Closing Date, other than those liabilities for Taxes reflected as reserves on the most recent Financial Statements.
The liabilities reflected as reserves for Taxes on the Financial Statements or to be reflected on the Final Closing Statement are sufficient
for the payment or remittance of all Taxes which may become payable or remittable by the Company, whether or not disputed, in respect
of any period ending on or before the Closing Date. No jurisdiction or authority in or with which the Company does not file a Tax Return
has alleged that the Company is required to file such a Tax Return.
(b) The
Canadian federal and provincial income tax liability of the Company has been assessed by the appropriate Governmental Authorities for
all financial years up to and including the financial year ended July 31, 2022 and there are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any Tax Return or pay any Taxes or for any Governmental Authority to
examine any Tax Return or levy any assessment. The Company has not granted to any Person any power of attorney that is currently in force
with respect to any Tax matter.
(c) The
Company has collected, deducted or withheld from each payment made, or deemed to have been made, to any Person or partnership (including
payments to non-residents and present or former employees, directors or officers of the Company) the amount of all Taxes and other deductions
required to be collected, deducted or withheld therefrom and has paid the same to the proper Tax or other receiving authorities within
the time required under any applicable Law.
(d) The
Company has collected, deducted or withheld all amounts required to be collected, deducted or withheld by it on account of Taxes. The
Company has timely remitted to the appropriate Governmental Authorities when required by Law to do so all such amounts collected by it.
(e) There
are no claims, actions, suits, audits, administrative or judicial proceedings, investigations or other action pending or, to the Company’s
Knowledge, threatened against the Company in respect of Taxes and, to the Knowledge of the Company, there is no reason to expect that
any such claim, action, suit, audit, proceeding, investigation or other action may be asserted against the Company by a Governmental Authority
for any period ending on or prior to the Closing Date. The Company is not negotiating any final or draft assessment or reassessment in
respect of Taxes with any Governmental Authority and the Company has not received any indication from any Governmental Authority that
an assessment or reassessment is proposed or may be proposed in respect of any Taxes for any period ending on or prior to the Closing
Date. To the Knowledge of the Company, there are no facts which would constitute grounds for the assessment or reassessment of Taxes payable
by the Company for any period ending on or prior to the Closing Date, except in respect of Taxes that are provided for in the books and
records and the most recent Financial Statements. The Company has not received any written ruling from or entered into any written agreement
with a Governmental Authority relating to any Taxes.
(f)
No claim has been made by a Governmental Authority in a
jurisdiction where the Company does not file a Tax Return that the Company is or may be subject to taxation in such jurisdiction.
The Company does not have a permanent establishment (within the meaning of an applicable tax treaty) or a taxable presence and is
not treated as a resident for any Tax purposes, in any country other than its country of incorporation.
(g) There
are no Liens for Taxes on any of the assets of the Company.
(h) The
Company has provided to Purchaser a true copy of all Tax Returns filed by the Company in respect of its fiscal years ended July 31,
2019 to July 31, 2022 and all correspondence with any Governmental Authority relating to Taxes for any taxation periods that remain
open for assessment or reassessment as of the date hereof.
(i)
A summary of all income Tax years still open for assessment or reassessment in
respect of the Company under all applicable Laws imposing a requirement to file Tax Returns is listed in Section 4.08 of
the Disclosure Schedule. Except as otherwise set forth in Section 4.08 of the Disclosure Schedule, all income, sales (including
goods and services, harmonized sales and provincial or territorial sales) and other tax liabilities of the Company have been
assessed by the relevant Governmental Authorities and notices of assessment have been issued to each such entity by the relevant
Governmental Authorities for all taxation years or periods ending prior to and including the taxation year or period ended
July 31, 2022.
(j)
All amounts payable by the Company in respect of compensation, including but not limited
to salary, wages or other remuneration (other than reasonable vacation or holiday pay), have been paid in less than 180 days of the
end of the taxation year in which the expense was incurred.
(k) The
Company has not incurred any deductible outlay or expense owing to a Person not dealing at arm's length (for purposes of the Tax Act)
with it the amount of which would, in the absence of an agreement filed under paragraph 78(1)(b) of the Tax Act, be included in the
Company’s income for Canadian income tax purposes for any taxation year or fiscal period beginning on or after the Closing Date
under paragraph 78(1)(a) of the Tax Act or any analogous provision of any comparable law of any province or territory of Canada.
(l)
No facts, circumstances or events exist or have existed that have resulted
or may result in the application to the Company of any debt forgiveness, debt parking or property seizure provisions under any
applicable Tax Law, and specifically sections 79 to 80.04 of the Tax Act.
(m) The
Company has not, either directly or indirectly, transferred property or services, or the right to use property or services, to or acquired
property or services, or the right to use property or services, from a Person with whom the Company was not dealing at arm’s length
(as that term is defined for purposes of the Tax Act) for consideration other than consideration equal to the fair market value of the
property or services at the time of the disposition or acquisition thereof or which could result in the Company becoming liable to pay
Taxes of such Person under subsection 160(1) of the Tax Act or any analogous provision of any comparable Law of any province or territory
of Canada.
(n) The
Company has not received any requirement pursuant to section 224 of the Tax Act which remains unsatisfied in any respect.
(o) Except
pursuant to this Agreement, for purposes of the Tax Act or any other applicable provincial or territorial legislation, no Person or group
of Persons has ever acquired control of the Company.
(p) The
Company has not entered into, or been contractually obligated to enter into, (i) a “reportable transaction” within the
meaning of the Tax Act or a “notifiable transaction”, each as modified by or defined in the legislative proposals to amend
the Tax Act released by the Department of Finance (Canada) on February 4, 2022, (ii) any reportable transaction” as defined
in Section 6707A(c)(1) of the Code and Treasury Regulation Section 1.6011-4(b), or (iii) any transaction that is reportable
or notifiable under any applicable analogous provisions of provincial, territorial or foreign law.
(q) The
Company does not have outstanding loans to or indebtedness owing from directors, former directors, officers, shareholders and/or employees
or by any Person or corporation not dealing at arm’s length (as that term is defined for purposes of the Tax Act) with any of the
foregoing.
(r)
The Company has not claimed any reserve under any one or more of
subparagraph 40(1)(a)(iii), or paragraph 20(1)(m), 20(1)(m.1) or 20(1)(n) of the Tax Act or any similar provincial or
territorial provision, if any such amount could be included in the income of the Company for any period ending after the Closing
Date.
(s) The
Company has complied in all material respects with the intercompany transfer pricing provisions of each applicable Law relating to Taxes,
including the contemporaneous documentation and disclosure requirements thereunder. For all transactions between the Company and any non-resident
with whom the Company was not dealing at arm’s length (within the meaning of the Tax Act), the Company has abided by the requirements
of section 247 of the Tax Act and in particular the documentation required pursuant to subsection 247(4).
(t)
The Company is not a party to any Tax sharing, allocation, indemnity or similar
agreement or arrangement pursuant to which it will have any obligations to make any payment on or after the Closing Date.
(u) The
Company has not made an election to report its Canadian tax results in a currency other than the currency of Canada.
(v) There
are no transactions or events that have resulted and no circumstances existing that could result in the application of Parts III, III.1, IV.1
or VI.1 of the Tax Act to the Company.
(w) There are no circumstances existing which could result in the application
to the Company of sections 15, 17, 18(4), or subsections 90(6)-(12) of the Tax Act or any analogous provision of any comparable Law
of any province of Canada. The Company has not claimed nor will it claim any reserve under any provision of the Tax Act in respect
of its taxation year ending upon the Closing, except to the extent that it has recognized an equivalent deferred revenue or similar
reserve for accounting purposes that is reflected in the Final Closing Statement.
(x)
The Company is not obligated to make any payment that may result in an
amount not being deductible by virtue of section 67 of the Tax Act.
(y) The
Company has (i) duly and timely completed and filed any and all Tax Returns in respect of CEWS required to be filed by it, or that
it elected to file, and all such returns are complete, correct and accurate, (ii) not claimed CEWS to which it was not entitled and
(iii) not deferred any payroll Tax obligations as permitted under applicable COVID-19 related measures enacted, promulgated or offered
as an administrative relief by any Governmental Authority.
(z)
All Tax credits, input tax credits, refunds, rebates, overpayments and
similar adjustments of Taxes claimed by the Company have been validly claimed and correctly calculated as required by applicable
Laws, and the Company has retained all documentation prescribed by applicable Laws to support such claims. The Company has not
claimed, received, been credited or otherwise realized any COVID-19 subsidy amounts to which it was not, or is not, entitled and the
Company has satisfied at all times the relevant criteria and conditions entitling it to such amounts. For greater certainty, section
125.7(6) of the Tax Act did not and does not apply in respect of any such amounts.
(aa) All
research and development investment tax credits (“ITCs”) were claimed by the Company in accordance with the Tax
Act and the relevant provincial Tax Laws and the Company satisfied at all times the relevant criteria and conditions entitling it to
such ITCs. All refunds of ITCs received or receivable by the Company in any taxation year were claimed in accordance with the Tax
Act and the relevant provincial Tax Laws and the Company satisfied at all times the relevant criteria and conditions entitling it to
claim a refund of such ITCs.
(bb) All
unpaid Taxes of the Company arose in the ordinary course of business and consistent with past practice.
(cc) The
Company is a registrant for the purposes of the Excise Tax Act (Canada) and its registration number is set forth in Section 4.08
of the Disclosure Schedule.
(dd) The
Company has timely and accurately claimed any credits or refunds available pursuant to Part IX of the Excise Tax Act (Canada)
or an applicable provision in a provincial or territorial sales tax legislation and no such claim for any credit or refund has been denied
by any Governmental Authority.
(ee) The
Company has not been a controlled foreign corporation within the meaning of Section 957(a) of the Code.
(ff) The
Company is not a “surrogate foreign corporation” within the meaning of Section 7874(a)(2)(B) of the Code, is not
treated as a U.S. corporation under Section 7874(b) of the Code and has not elected under Section 897(i) of the Code
to be treated as a U.S. corporation.
(gg) The
Company has not been a “distributing corporation” or a “controlled corporation” in a distribution of stock that
was reported as satisfying, or was intended to satisfy the requirements of, Section 355 of the Code.
(hh) The
Company will not be required to include any item of income or gain in, or exclude any deduction or loss from, taxable income for any
taxable period (or portion thereof) ending on or after the Closing Date as a result of any (i) change in method of accounting for
a taxable period ending on or prior to the Closing Date, (ii) use of an improper method of accounting for a taxable period ending
on or prior to the Closing Date; (iii) “closing agreement” under Section 7121 of the Code (or any corresponding
or similar provision of state, local or foreign Tax law) executed on or prior to the Closing Date, (iv) intercompany transaction
or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision
of state, local or foreign Tax law), (v) installment sale or open transaction disposition consummated on or prior to the Closing
Date, (vi) prepaid amount received on or prior to the Closing Date, or (vii) any income earned or accumulated earnings and
profits that would result in an inclusion under Section 951(a) or Section 951A of the Code.
4.09 Contracts
and Commitments.
(a) Section 4.09
of the Disclosure Schedule sets forth the following agreements to which the Company is party (each a “Significant Contract”
and collectively the “Significant Contracts”): (i) each collective bargaining agreement or contract with any labor
union; (ii) each bonus, pension, profit sharing, retirement or other form of deferred compensation plan; (iii) each stock purchase,
stock option or similar plan; (iv) each management, consulting, independent contractor, employment, or severance agreement to which
the Company is a party, other than the standard offer letter between the Company and its employees entered into in connection with the
commencement of employment, a copy of which has been made available to Purchaser; (v) each agreement requiring the Company to indemnify
any Person other than in the ordinary course of business; (vi) each agreement granting any exclusive rights to any Person (including
any right of first refusal or right of first negotiation); (vii) each agreement or indenture relating to the borrowing of money,
indebtedness or to mortgaging, pledging or otherwise placing a material Lien on any portion of the assets of the Company including loan
agreements, credit facilities, letters of credit, mortgages, security agreements, financing statements, pledge agreements, deeds of trust,
swaps and other instruments relating to indebtedness or extension of credit; (viii) each guaranty of any obligation for borrowed
money or other material guaranty; (ix) each lease or agreement under which it is lessee of, or holds or operates any tangible personal
property owned by any other party, for which the annual rental exceeds $25,000; (x) each lease or agreement under which it is lessor
of or permits any third party to hold or operate any tangible property, real or personal, for which the annual rental exceeds $25,000;
(xi) each contract or group of related contracts with the same party for the purchase of products or services which provide for annual
payments in excess of $25,000 during the trailing twelve month period ending on the date of the Latest Balance Sheet; (xii) each
agreement relating to any pending or completed business acquisition by the Company; (xiii) each contract or group of related contracts
with a client or customer that provides annual revenues (based on the trailing twelve month period ending on the date of the Latest Balance
Sheet) to the Company in excess of $25,000; (xiv) each agreement relating to the license, use, sale, payment of royalties or development
of any third party Intellectual Property (other than commercial off the shelf licenses) to which the Company is a party; (xv) each
non-solicitation and non-competition agreement and each standalone confidentiality agreement to which the Company is a party; (xvi) each
partnership and joint venture agreement to which the Company is a party; (xvii) each agreement relating to the license, use, sale
or development of the Company’s Intellectual Property (it being understood that, for purposes of this Section 4.09,
all purchase orders or similar arrangements, as applicable, shall be deemed incorporated by reference with respect to any underlying master
agreement, multi-year agreement or similar agreement); (xviii) that terminate or materially and adversely modify any agreement described
in clauses (i) through (xvii) above, and (xix) that would reasonably be expected to have a Material Adverse Effect on Company
if breached by Company.
(b) Each
Significant Contract is valid, binding and enforceable against the Company, in accordance with its terms, except as limited by any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditors’ rights generally and
subject to general principles of equity. The Company is not in breach or default in any material respect under any Significant Contract,
and, to the Company’s Knowledge, no other party is in breach or default thereunder in any material respect. The Company does not
have any Significant Contracts that are Loss Contracts. All Significant Contracts are listed in Section 4.09 of the Disclosure
Schedule. With respect to each Significant Contract: (i) the Significant Contract is legal, valid, binding and enforceable and in
full force and effect with respect to Company, and to Company’s Knowledge, is legal, valid, binding, enforceable and in full force
and effect with respect to each other party thereto, in either case subject to the bankruptcy Laws, other similar Laws affecting creditors’
rights and general principles of equity effecting the availability of specific performance and other equitable remedies; (ii) the
Significant Contract will continue to be legal, valid, binding and enforceable and in full force and effect immediately following the
Closing in accordance with its terms as in effect prior to the Closing, subject to the bankruptcy Laws, other similar Laws affecting creditors’
rights and general principles of equity effecting the availability of specific performance and other equitable remedies; and (iii) neither
Company nor, to Company’s Knowledge, any other party is in breach or default, subject to such exceptions as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect. Company has paid in full all amounts due under the Significant
Contracts which are due and payable or accrued in accordance with GAAP, all amounts due to others by Company under the Significant Contract
(and has recognized revenues due from others thereunder in accordance with GAAP), and has satisfied in full or provided for all of its
liabilities and obligations under the Significant Contract which are due and payable, except amounts or liabilities disputed in good faith
by Company for which adequate reserves have been set aside. Except as set forth on Section 4.09 of the Disclosure Schedule,
Company is not a party to any oral Significant Contract. Company has delivered to Purchaser true, correct and complete copies of all Significant
Contracts.
4.10 Intellectual
Property.
(a) Section 4.10(a) of
the Disclosure Schedule sets forth a true, complete and accurate list of (i) all registered Patents, Copyrights and Trademarks, and
applications therefor, in the name of the Company or of which the Company is the owner, and (ii) all unregistered Trademarks and
material unregistered Copyrights owned by the Company, and specifies for each of (i) and (ii) the status (registered or pending)
and serial or registration number, if applicable, (iii) all licenses and sublicenses granted to the Company by a third party for
the use of Intellectual Property, including (A) a list of all Software not owned by the Company that is included within or necessary
for the use of the Company Software or the Company Solution (excluding (x) commercially available (on reasonable terms), off the
shelf, clickwrap or shrink wrap licenses for Software in which the Company is the licensee and the license fee is less than $10,000, and
(z) firmware that is included in any equipment purchased by the Company) (“Incorporated Third Party Software”),
and (B) any Key Data Assets that are not User Data and that were licensed or otherwise procured by the Company from a third party
((A) and (B) collectively, the “Company In-Licenses”), and (iv) all licenses and sublicenses granted
by the Company to any third party with respect to any Company Intellectual Property (the “Company Out-Licenses”). Section 4.10(a) of
the Disclosure Schedule also lists all domain names and Social Media Assets owned.
(b) The
Company owns, free and clear of all Liens, or has valid and enforceable rights to use, all Intellectual Property used by the Company in
its business as currently conducted or as proposed to be conducted within the twelve (12) months following the Closing, including the
Company Solution and Key Data Assets (collectively, “Company Intellectual Property”). Such Company Intellectual Property
constitutes all of the Intellectual Property necessary to the conduct of the businesses of the Company as currently conducted. With respect
to Company Intellectual Property owned by the Company (the “Company Owned IP”), including the Intellectual Property
described in clauses (i) and (ii) of Section 4.10(a), except as set forth on Section 4.10(b) of
the Disclosure Schedule, the Company is the sole owner of all right, title and interest therein and each item of such Company Owned IP
is valid and enforceable, and each of the Company In-Licenses and Company Out-Licenses is enforceable by the Company in accordance with
its terms and is in full force and effect.
(c) Except
as set forth on Section 4.10(c) of the Disclosure Schedule, (i) the Company is not in default (or with the giving
of notice or lapse of time or both, would not be in default) under any license to use any Intellectual Property, including the Company
In-Licenses, and, to Company’s Knowledge, the other party to any such license (including the Company In-Licenses) is not in default
under such license, (ii) to the Company’s Knowledge, no Company Owned IP or Intellectual Property exclusively licensed to the
Company under a Company In-License is being infringed, misappropriated, diluted or otherwise violated by any third party or has been infringed
by any third party in the past, (iii) to the Company’s Knowledge, the Company has never infringed, misappropriated, diluted
or otherwise violated, and the Company is not currently infringing, misappropriating, diluting or otherwise violating, any Intellectual
Property of any third party, (iv) to the Company’s Knowledge, the operation of the Company’s business as currently operated
and the use of the Company Owned IP, whether alone or in combination with other Intellectual Property licensed by the Company does not
and will not infringe, misappropriate, dilute or otherwise violate the Intellectual Property rights of any third party, (v) commercialization
in the United States of the Company’s core technology for performing in vitro RNA synthesis, as currently planned for commercialization
by the Company, would not infringe or misappropriate any Intellectual Property of any third party, (vi) the Company has not received
a written notice that the conduct of its business infringes, misappropriates, dilutes or otherwise violates the Intellectual Property
rights of any third party, nor any invitation to license Intellectual Property Rights of any third party, and there is no action pending
or, to the Company’s Knowledge, threatened that alleges the same, (vii) the Company Owned IP is validly filed, prosecuted and
maintained in compliance with all applicable Law, including timely disclosure before the applicable patent offices of all prior art known
to be material to the patentability of the Company Intellectual Property, and has not been adjudged invalid or unenforceable in whole
or in part; and (viii) no claim or action has been brought or, to the Company’s Knowledge, has been threatened against Company
that challenges the legality, validity, enforceability, use or ownership of Company Owned IP.
(d) Except
as set forth on Section 4.10(d) of the Disclosure Schedule, (i) no claim or dispute has been brought or, to the
Company’s Knowledge, threatened, regarding the ownership of, or use by, the Company of any Company Intellectual Property, or the
use by the Company of any other Intellectual Property, (ii) the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not result in the loss of use of any Company Intellectual Property, trigger any additional obligations
or liabilities of the Company, or otherwise detract from or adversely impact the full right and authority of the Company to commercialize
the Company Owned IP in the ordinary course of business consistent with past practice without violating the rights of any third party,
(iii) to the Company’s Knowledge, there is no fact or circumstance existing that would render the right to use any Company
Intellectual Property unenforceable or invalid, and (iv) to the Company’s Knowledge, no set of facts currently exists which
indicates a reasonable likelihood of any infringement, dilution, or misappropriation by Company, or conflict with, any third party with
respect to any Intellectual Property rights (including any demand or request that Company license any rights from a third party).
(e) The
Company has taken all reasonably necessary action to maintain and protect (i) the rights of the Company relating to the Company Owned
IP, Company Software, Company Solution, Company In-Licenses and Company Out-Licenses set forth on Section 4.10(a) of
the Disclosure Schedule and (ii) the secrecy, confidentiality, value and the rights in the trade secrets of the Company (including
source code for the Company Software and Company Solution). The Company has paid all fees and made all maintenance filings which have
heretofore become due to any Governmental Authority with respect to Company Intellectual Property, and under the Company In-Licenses to
the extent required by its terms. Except as set forth in Section 4.10(e) of the Disclosure Schedule, the Company has
and enforces a policy requiring all employees, consultants and contractors of the Company to execute confidentiality agreements and all
such employees, consultants and contractors have executed such agreements. Except as set forth in Section 4.10(e) of
the Disclosure Schedule, the Company’s current and former employees, officers, independent contractors and consultants that have
created or contributed to the development of any Intellectual Property within the scope of their employment or engagement by the Company
have entered into an intellectual property disclosure and assignment agreement with the Company and have assigned all right, title, interest
and ownership of such Intellectual Property, and have waived all moral rights such employees, officers, independent contractors and consultants
may have in and to such Intellectual Property to the Company, through a written agreement. Copies of the form of Company’s confidentiality
and intellectual property disclosure and assignment agreements have been made available to Purchaser. To the Company’s Knowledge,
there has been no violation or waiver of such intellectual property disclosure and assignment agreements or confidentiality agreements,
or unauthorized disclosure or use of any trade secret, confidential or proprietary information, or Intellectual Property of the Company.
To the Company’s Knowledge, none of the activities of any employee of the Company violates, or has violated, any contract, obligation
or other arrangement that any such employee has with a former employer. To Company’s Knowledge, there has been no security breach
relating to, no violation of any security policy regarding, and no unauthorized access to, the Company’s trade secrets, Company
Software, Company Solution, User Data, Company Data or any other confidential and proprietary information used in the business of the
Company.
(f)
Except for amounts due in the ordinary course, the Company
has no obligation to pay royalties, license fees, or other amounts or pay any other consideration to any Person by reason of
ownership, use, exploitation, practice, sale or disposition of any Intellectual Property relating to its business as presently
conducted, excluding any amounts payable for any Company In-Licenses.
(g) The
Company maintains policies and procedures regarding data security and privacy that are commercially reasonable and in compliance with
all obligations to their customers and under applicable Law.
(h) The
Company and processing of any Personal Data by or on behalf of the Company, is, and at all times has been, in material compliance with
all: (A) applicable Privacy Laws (including those relating to cross-border transfers), (B) contractual obligations concerning
data privacy and security relating to Personal Data in the possession or control of the Company or maintained by third parties having
access to such information under agreements (or portions thereof) to which the Company is a party, all applicable data transfer agreements
and data processing agreements, to which the Company is a party, and the requirements of any privacy or security-related self-regulatory
organizations or certifications to which the Company is subject (collectively, the “Privacy Agreements”), and (C) industry
standards, all internal and public-facing policies of the Company relating to privacy or security of Personal Data. The Company has established,
maintained, implemented and enforced reasonable policies, procedures and security measures to protect the confidentiality, integrity and
physical and electronic security of Personal Data against unauthorized access, use, modification, disclosure or other misuse, and the
Company is, and has been, in compliance in all material respects with all such policies, procedures and measures. To the Company’s
Knowledge, there has not been any breach, theft, misuse or unauthorized access, use or disclosure of any Personal Data processed by or
on behalf of the Company. The Company has not received any written notice or claim alleging a violation of any Privacy Law, contractual
or fiduciary obligations relating to privacy or security of Personal Data, and, to the Company’s Knowledge, no disclosure of any
data breach or systems or network security breach has been, or should have been made by the Company under any applicable Privacy or other
applicable Law or to any Governmental Authority. The Company is not subject to any obligation that would prevent the receipt or retention
at Closing (as applicable) or use after Closing, of the Personal Data collected by it in a manner consistent with any applicable Law regarding
the collection, retention, use, or disclosure of such data.
(i)
The Company is in material compliance with all applicable prior and current
internal and public-facing privacy policies and notices regarding their processing of Personal Information (collectively, the
“Privacy Policies”). There are no restrictions on the processing of Personal Information by Company including
under Privacy Laws, the Privacy Agreements and the Privacy Policies, that could materially prevent: (A) the Company from
continuing the business of the Company in the ordinary course immediately after Closing; (B) the Company from processing
Personal Data in connection with the business of the Company immediately after Closing, including by combining or otherwise using
such information in combination with its own data; or (C) the consummation by the Company of the transactions contemplated by
this Agreement.
(j)
The Company has not received any, nor
are there any pending, written or, to Company’s Knowledge, oral complaints, claims, demands, inquiries, proceedings, or other
notices, including any notices of any investigation or other legal proceedings, regarding the Company, initiated by: (A) any
Person; (B) any Governmental Authority, including the Office of the Privacy Commissioner of Canada or similar official, the
Canadian Radio-television and Telecommunications Commission or other similar supervisory authority; or (C) any self-regulatory
authority or entity, alleging that any activity of any Corporation: (1) is in violation of any applicable Privacy Laws or CASL;
(2) is in violation of any Privacy Agreements; (3) is in violation of any Privacy Policies; (4) is otherwise in
violation of any person’s privacy, personal or confidentiality rights (including, but not limited to consent withdrawals); or
(5) otherwise constitutes an unfair, deceptive, or misleading trade practice. The Company has not been the subject of any
internal or external audit which has identified any material deficiency or non-compliance with Privacy Laws, the Privacy Agreements,
or the Privacy Policies, including with respect to the collection, use, storage, encryption, retention, destruction and disclosure
of Personal Data which has not been fully addressed and remediated.
(k) The
Company has: (i) complied in all material respects at all times with CASL in connection with the sending of all commercial electronic
messages, and in connection with the installation of computer programs on the computer systems of third parties; (ii) maintained
and continue to maintain records that are sufficient to demonstrate their material compliance with CASL, including, as applicable, copies
of consent forms, commercial electronic message templates, and records of all consents given or withdrawn (including, but not limited
to unsubscribe requests); (iii) established appropriate procedures to facilitate material compliance with CASL and have trained all
employees on the requirements of CASL; and (iv) agreements with all third parties that, on the Company’s behalf, send commercial
electronic messages, collect electronic addresses or install computer programs on the computer systems of other third parties, which agreements
require such third parties to comply with CASL. The Company has not altered or caused to be altered any Transmission Data (as such term
is defined in CASL) in any message sent by any means of telecommunication, such that the message was delivered to a destination other
than or in addition to the destination specified by the sender, unless the sender or the recipient consented to such alteration in accordance
with CASL.
(l)
No Company Software or Company Solution, or Intellectual Property
therein, is subject to any transfer, assignment, change of control or other operational limitations. The Company has maintained and
protected the Company Software and Company Solution with appropriate proprietary notices, confidentiality and non-disclosure
agreements and such other measures as are reasonably necessary to protect the Intellectual Property contained therein or relating
thereto. No licenses or rights (including contingent rights) have been granted by the Company, or any of its Affiliates, to any
Person to access, use or distribute any source code of any Company Software or Company Solution. All Company Software and all
Software for the Company Solution (“Proprietary Software”) has been registered or is eligible for protection and
registration under applicable copyright law. Company is in actual possession of and has exclusive control over a complete and
correct copy of the source code for all proprietary components of the Proprietary Software. As of the date hereof, there has been no
unauthorized theft, reverse engineering, decompiling, disassembling, or other unauthorized disclosure of or access to any material
portion of the source code for any Proprietary Software. All Proprietary Software complies with all applicable Laws and industry
standards, including with respect to security and conform to all applicable contractual commitments, express and implied conditions
and warranties (to the extent not subject to legally effective express exclusions thereof). Except for the Incorporated Third Party
Software, all Proprietary Software was developed by employees of the Company or by consultants engaged by the Company, in each case
each of whom has validly assigned his/her entire rights, title and interests, and waived all moral rights, in and to the Proprietary
Software to the Company. The Company Software and Company Solution do not contain and has taken all reasonable steps to prevent the
introduction of any disabling device, virus, worm, back door, Trojan horse or other disruptive or malicious code that may or are
intended to impair or prevent their value, functionality, intended performance or otherwise permit unauthorized access to, hamper,
delete or damage any computer system, Software, network or data. The Proprietary Software operates, in all material respects, in
accordance with and conform in all material respects to any specifications, manuals, guides, descriptions and other similar
documentation, in written or electronic form.
(m) The
Company owns, leases or licenses sufficient hardware, computer and telecommunications equipment and other information technology and
related services as necessary to provide the Company Solution (collectively, “Information Systems”). The Information
Systems are reasonably sufficient for the immediate and anticipated needs of the Company, including as to capacity, scalability, and
ability to process current and anticipated peak volumes in a timely manner. The Information Systems are in sufficiently good working
condition to perform all information technology operations and include sufficient licensed capacity (whether in terms of authorized sites,
units, users, seats, or otherwise) for all Software, in each case as necessary for the conduct of the Company’s business as currently
conducted or as contemplated to be conducted. The Company has in-place data security and cybersecurity controls, including organizational,
technological and physical security measures which are reasonable in relation to the sensitivity of the data collected and held by the
Company. The Company has not been the subject of any internal or external audit which has identified any material deficiency with respect
to data security and cybersecurity controls, including organizational, technological and physical security measures which has not been
fully addressed and remediated. The Company: (i) is in material compliance with the Data Security Requirements; and (ii) confirms
that there has not been any unauthorized acquisition, destruction, damage, disclosure, loss, inability to account for, corruption, alteration,
or use of any Company Data and/or User Data contained in the Information Systems.
(n) In
the 12 months prior to the Closing, there have been no material failures, breakdowns, outages or unavailability of such Information Systems,
and the Company’s disaster recovery and business continuity plans (“DR/BCP Plans”) have not been activated other
than for testing purposes. Company has delivered to Purchaser a true and complete copy of the DR/BCP Plans. The DR Plans are consistent
with or exceed industry standards and applicable requirements of Law. The DR/BCP Plans are designed to ensure, at a minimum, the ability
of the Company’s business to resume operations and performance of Company Solution promptly, and ensure redundancy of all Key Data
Assets as required pursuant to any obligation under any contract or any requirement of Laws. Company has conducted testing of the DR/BCP
Plans not less frequently than annually (and in any event, upon a material change to the DR/BCP Plans) and corrected any material deficiencies
in the DR/BCP Plans or deficiencies in compliance with the DR/BCP Plans.
(o) Section 4.10(o) of
the Disclosure Schedule lists all Open Source Materials that the Company has used in any way in the products manufactured, distributed,
licensed or sold by the Company and describes: the Open Source Materials title, the title of the commonly published license to which such
Open Source Materials is subject, the applicable Company product, and an indication of whether such Company product contains, incorporates,
links or calls to or otherwise uses any Open Source Materials, and an indication of whether and how the Company modified the Open Source
Materials. Except as specifically disclosed in Section 4.10(h) of the Disclosure Schedule, the Company has not: (i) incorporated
Open Source Materials into, or combined Open Source Materials with, any product manufactured, distributed, licensed or sold by the Company;
(ii) distributed Open Source Materials in conjunction with any other Software developed or distributed by the Company; or (iii) used
Open Source Materials that create, or purport to create, obligations for the Company with respect to any product manufactured, distributed,
licensed or sold by the Company or grant, or purport to grant, to any third party, any rights or immunities under any Intellectual Property
(including using any Open Source Materials that require, as a condition of use or other exploitation of such Open Source Materials, that
other Software incorporated into, derived from or distributed with such Open Source Materials be disclosed or distributed in source code
form, licensed for the purpose of making derivative works or redistributable at no charge or minimal charge). The Company Solution does
not use, link to or incorporate, is not derived from, and is not distributed with, any Open Source Materials, or any modification or derivative
thereof, in a manner that: (x) would subject the Company Solution or any portion thereof to be made generally available in source
code form, (y) or that would require the Company to allow others to create and distribute derivative works of the Company Solution
(or any portion thereof), or (z) that would require the Company to distribute or license the Company Solution (or any portion thereof)
to others at no or minimal charge.
(p) Except
as set forth in Section 4.10(i) of the Disclosure Schedule, no Company Owned IP or Intellectual Property exclusively
licensed to the Company under a Company In-License was developed by, with or using any facilities or resources of, educational institutions
or under any contracts, funding, agreements, or other agreements or arrangement with any Governmental Authority.
(q) The
Company has not licensed, distributed or disclosed the source code version of any Software included in the Intellectual Property of the
Company to any person, except pursuant to the agreements listed in Section 4.10(a) of the Disclosure Schedule, and the
Company has taken all reasonable physical and electronic security measures to prevent disclosure of such source code.
(r)
The Key Data Assets are and have been collected, stored, maintained and used in
accordance with all applicable Laws (including Privacy Laws) and all obligations under any contract to which the Company is bound
relating to the Key Data Assets. Company owns or has valid right to use all Key Data Assets (i) in the manner in which such Key
Data Assets are used as of the Closing Date, (ii) in any manner in which the Key Data Assets were used to develop Company
Software or Company Solution, and (ii) for any use for the Key Data Assets that is contemplated as of the Closing.
4.11 Litigation.
(a) There
is no Action, subpoena, inquiry or investigation, civil, criminal, regulatory or otherwise, in law or in equity, pending or, to Company’s
Knowledge, threatened, by or against, or relating in any material respect to, the Company. The Company is not party to any Action, subpoena,
inquiry or investigation, civil, criminal, regulatory or otherwise, in law or in equity.
(b) There
are no outstanding judgments against the Company or consent decrees, orders or injunctions to which the Company is subject.
(c) There
is no Action pending, or to the Company’s Knowledge, threatened, by or against, or affecting in any material respect, the Company
or any shareholder or director of the Company, in connection with or relating to the transactions contemplated by this Agreement or of
any action taken or to be taken in connection herewith.
(d) Since
January 1, 2018, there have been no product liability Actions involving the Company or relating to products or services manufactured,
sold or provided by the Company.
4.12 Employee
Benefit Plans. The Company does not sponsor, provide, maintain or contribute to any Benefit Plan, and has never in the past sponsored,
provided, maintained or contributed a Benefit Plan. “Benefit Plans” means all plans, agreements, programs, policies,
practices, undertakings and arrangements (whether oral or written, formal or informal, funded or unfunded, registered or unregistered)
sponsored, provided, maintained or contributed to by the Company for the benefit of any employees, directors, officers, consultants or
contractors (or any former employees, directors, officers, consultants or contractors) or their respective spouses, beneficiaries or dependents,
or, in respect of which the Company is party to, is obligated to contribute to, participates in or has any actual or potential liability
for or obligations under, or pursuant to which payments are made or benefits are provided to, or an entitlement to benefits may arise
to, any such Persons, including:
(a) any
Pension Plan (including any multi-employer plan), supplemental pension or any other plan providing retirement income, any “retirement
compensation arrangement” as defined in the Tax Act, or any group registered retirement savings plan, tax-free savings account,
or other retirement or savings plan. “Pension Plan” means a “registered pension plan” as that term is defined
in the Tax Act or any pension plan within the meaning of federal or provincial pension benefits standards legislation;
(b) any
compensation or incentive compensation, bonus, deferred compensation, profit-sharing, commission, stock option, stock appreciation right,
phantom stock, share purchase or other equity or equity-based incentive, change of control, retention bonus, or severance or termination
pay plan or agreement;
(c) any
health and welfare, including dental, other medical, life, critical illness, accidental death and dismemberment, disability or other benefit
(whether insured or self-insured), supplementary unemployment benefit, salary continuation, vacation, sick leave, death or survivor benefit,
education assistance, mortgage assistance, employee loan or other taxable benefits; and
(d) any
other similar plans, programs, agreements or arrangements, except that the term “Benefit Plans” will not include any statutory
plans with which the Company is required to comply, including the Canada Pension Plan and plans administered under applicable provincial
health tax, workers’ compensation, workplace safety and insurance and federal employment insurance legislation.
4.13 Compliance
with Laws; Improper Payments.
(a) Since
January 1, 2018, the Company has conducted its business in compliance in all material respects with applicable Law and has received
no written notice of or been charged with the violation of any applicable Law during such period. The Company has all licenses, permits,
franchises, orders, approvals, written waivers and other authorizations of Governmental Authorities (collectively “Authorizations”)
as are required in order to enable it to own or lease its assets and conduct its business in all respects as currently conducted. No registration,
filing, notice, order, approval, consent, written waiver or other action of any Governmental Authority is required by virtue of the execution
and delivery of this Agreement or the consummation of the transactions contemplated hereby in order to maintain the rights pertaining
to the licenses, permits, franchises, orders, approvals, written waivers and other authorizations of Governmental Authorities referred
to in the preceding sentence. The Authorizations are valid, in good standing, and in full force or effect and there are no material outstanding
or, to the Knowledge of the Company, threatened, defaults, breaches, suspensions, revocations, cancellations or modifications thereof.
Section 4.13(a) of the Disclosure Schedule lists all current Authorizations issued to the each Acquired Company, including
the names of the Authorizations and their respective jurisdiction and dates of issuance and expiration. No Person has threatened to revoke,
withdraw, suspend, terminate, amend or impose any condition in respect of, or commenced Action to revoke, withdraw, suspend, terminate,
amend or impose conditions in respect of, any Authorizations.
(b) None
of the Company, or any of its directors, officers, employees, or, to the Knowledge of the Company, agents or consultants:
(i) has,
in the course of its actions for, or on behalf of, the Company (I) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity, (II) paid or received any bribe or otherwise unlawfully offered
or provided, directly or indirectly, anything of value to (or received anything of value from) any foreign or domestic government employee
or official or any other Person, (III) violated or taken any act that would violate any provision of the Corruption of Foreign
Public Officials Act (Canada) (“CFPOA”), the Foreign Corrupt Practices Act of 1977 (United States) (“FCPA”)
or other similar Laws of other jurisdictions, (IV) violated or taken any act that would violate the Special Economic Measures
Act (Canada) (“SEMA”) or other similar Laws of other jurisdictions, (V) violated or taken any act that would
violate the Freezing Assets of Corrupt Foreign Public Officials Act (Canada) (“FACFOA”) or other similar Laws
of other jurisdictions, in each case to which the Company is subject or (VI) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment;
(ii) has,
directly or indirectly, taken any action in violation of any export restrictions, anti-boycott regulations, embargo regulations or other
similar applicable Canadian, United States or other foreign Laws; or
(iii) is
a Person (i) identified under CFPOA, FCPA, SEMA, FACFOA or any United Nations resolution or regulation or otherwise a target of economic
sanctions under other similar applicable Canadian, United States or foreign Laws, (ii) located, organized or resident in a country
or territory which is itself the subject of or target of any sanctions under CFPOA, FCPA, SEMA, FACFOA, or any United Nations resolution
or regulation or otherwise a target of economic sanctions under other similar applicable Canadian, United States or foreign Laws, or (iii) 50
percent or greater owned by any Person or Persons described in clause (i) above.
(c) The
operations of the Company are conducted and have been conducted in compliance in all material respects with the applicable financial record
keeping and reporting requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and
the anti-money laundering Laws applicable to the Acquired Entities of all jurisdictions in which any Acquired Entity carries on business
(collectively, the “Anti-Money Laundering Laws”) and no Action by or before any Governmental Authority involving the
Company with respect to any of the Anti-Money Laundering Laws is pending or, to the Knowledge of the Company, threatened.
(d) The
Company has obtained all necessary Export Approvals in connection with its sale, delivery, transfer or provision of any products, services,
information, documents, technology or data, and no notice, approval or consent is required by virtue of the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby in order to maintain the rights pertaining to such Export Approvals.
4.14 Environmental
Compliance and Conditions.
(a) The
Company has obtained and possess all permits, licenses and other authorizations required under Environmental, Health and Safety Requirements
in connection with the conduct of its business, and the Company is in compliance with all terms and conditions of such permits, licenses
and authorizations.
(b) The
Company is in compliance, and has been in compliance, with all applicable Environmental, Health and Safety Requirements and any written
notice or demand letter issued, entered, promulgated or approved thereunder.
(c) The
Company has not received, since January 1, 2018, any written claim, demand or notice of violations or liabilities arising under Environmental,
Health and Safety Requirements, including any investigatory, remedial or corrective obligation from any foreign, federal, state or local
governments or any agency thereof, or any claim by any other Person, relating to the Company or its facilities and arising under Environmental,
Health and Safety Requirements, the subject of which is unresolved.
(d) The
Company has not commissioned and does not possess any environmental site assessments or environmental audit reports relating to the Company,
or any of its facilities.
(e) No
releases of any hazardous material have occurred at, on, from or under any Leased Real Property, for which releases the Company is liable
under any Environmental, Health and Safety Requirements.
(f) The
Company has not used or permitted to be used, except in compliance with all Environmental, Health and Safety Requirements in all material
respects, any of the Leased Real Property or facilities thereon to generate, manufacture, process, distribute, use, treat, store, dispose
of, transport or handle any hazardous substance.
4.15 Affiliated
Transactions. Except as set forth in Section 4.15 of the Disclosure Schedule, no officer, director, Seller or Affiliate
of the Company is a party to any agreement, contract, commitment or transaction with the Company or, to Company’s Knowledge, has
any interest in any property used by the Company. Except as set forth in Section 4.15 of the Disclosure Schedule, with respect
to any customer, supplier or competitor of the Company or any entity party to any Significant Contract, no officer, or to the Company’s
Knowledge, director of the Company (a) directly owns any interest in such entity, except for interest in publicly traded companies
comprising in each case less than 3% of the outstanding equity interest in such companies or (b) serves as an officer or director
of such entity.
4.16 Labor
and Employment.
(a) Except
as set forth in Section 4.16 of the Disclosure Schedule, the Company is not a party to any agreement pursuant to which either:
(A) change of control, retention, severance, termination or similar payments to any employee may be required to be paid, waived or
renounced as a result of the completion of the transactions contemplated by this Agreement (whether alone or in conjunction with any subsequent
event); or (B) any employee who is bound by confidentiality, non-competition or non-solicitation covenants with the Company is relieved
thereof as a result of the completion of the transactions contemplated by this Agreement, nor are there any employment agreements which
are not terminable on the giving of reasonable notice in accordance with applicable Law. The Company is not bound by, either directly
or by operation of applicable Law, any collective agreements, labor contract, letter of understanding, letter of intent, voluntary recognition
agreement or legally binding commitment to any labor union, trade union or employee organization or group which may qualify as a trade
union in respect of or affecting employees or independent contractors, nor is the Company currently engaged in any labor negotiation or
subject to any union organizing effort.
(b) The
Company is in material compliance with all applicable Laws relating to employment and labor matters, including provisions thereof relating
to employment standards, wages and hours, worker classification, classification as eligible or ineligible for overtime, immigration, language,
accessibility, human rights, workers’ compensation, occupational health and safety, pay equity, labor relations, unfair labor practices
and collective bargaining. There are no claims against the Company pursuant to any Laws relating to employees and contractors, including
employment standards, human rights, labor relations, worker classification, occupational health and safety Laws, worker’s compensation,
pay equity or accessibility. To the Knowledge of the Company, nothing has occurred which might lead to a claim against the Company under
any such Laws. There are no pending nor, to the Knowledge of the Company, threatened claims against the Company under any such Laws. There
are no outstanding decisions, orders or settlements or pending settlements which place any obligation upon the Company to do or refrain
from doing any act.
(c) During
the three year period ended on the date hereof, (A) the Company has not engaged in any unfair labor practice, nor to the Knowledge
of the Company is there any pending or threatened complaint regarding any alleged unfair labor practice; and (B) there has not been,
nor is there currently or, to the Knowledge of the Company, threatened any strike, slowdown, picketing or work stoppage with respect
to the employees of the Company.
(d) All
amounts due or accrued for all salary, wages, bonuses, incentive compensation, deferred compensation, commissions, vacation with pay,
sick days and benefits under any Benefit Plan and other similar accruals have either been paid or are accrued and accurately reflected
in the books and records of the Company.
(e) Section 4.16
of the Disclosure Schedule contains a list of (i) all the employees of the Company and each of their position, length of service,
employer entity, location of employment, compensation (including annual base salary, annual incentive targets, and other variable compensation),
annual vacation entitlements and accruals, material perquisites and active or in active status (including reason for leave of absence,
if known), and (ii) all independent contractors engaged by the Company and the general terms on which each such independent contractor
is engaged (including duration of engagement) and annual fees. Except as set forth on Section 4.16 of the Disclosure Schedule,
no employee or independent contractor of the Company is providing services pursuant to any work permit, visa or similar authorization.
Except as disclosed in Section 4.16 of the Disclosure Schedule, no employee is on short-term or long-term disability leave,
parental leave, extended absence or receiving benefits pursuant to the workers’ compensation Laws.
4.17 Insurance.
Section 4.17 of the Disclosure Schedule lists each material insurance policy maintained by the Company, complete and accurate
copies of which have been delivered to Purchaser. Each such insurance policy is in full force and effect, all premiums due thereon have
been paid and, the Company has not received any written or, to the Company’s Knowledge, oral notice of termination or reduction
of coverage, or intent to terminate or reduce coverage, of any such insurance policy. The Company is not in material default with respect
to its obligations under any such insurance policy. Except as set forth in Section 4.17 of the Disclosure Schedule, the Company
does not have any self-insurance or co-insurance programs.
4.18 Brokerage.
Except as set forth in Section 4.18 of the Disclosure Schedule, the Company has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any
similar charges in connection with this Agreement or any transaction contemplated hereby. Sellers shall be solely responsible for paying
any fee or compensation to any Person identified in Section 4.18 of the Disclosure Schedule to the extent not paid on or before
the Closing Date.
4.19 Banking
Relationships. Section 4.19 of the Disclosure Schedule sets forth (a) a list of each account, lock box or safe deposit
box of the Company (including any necessary identifying information) and (b) the name of each Person authorized to draw thereon or
to have access thereto and the name of each Person or entity, if any, holding powers of attorney with respect thereto.
4.20 Customers
and Suppliers.
(a) Section 4.20(a) of
the Disclosure Schedule sets forth a list of each customer that has accounted for revenues of the Company in (i) the fiscal year
ended July 31, 2022 and (ii) the 11-month period ended June 30, 2023. Except as set forth in Section 4.20(a) of
the Disclosure Schedule, the relationship between the Company and any customer set forth in Section 4.20(a) of
the Disclosure Schedule has not changed in any material adverse respect since January 1, 2023.
(b) Section 4.20(b) of
the Disclosure Schedule sets forth a list of each supplier or vendor (including any group of Persons that are Affiliates) to which the
Company has made payments in (i) the fiscal year ended July 31, 2022 and (ii) the 11-month period ended June 30, 2023..
Except as set forth in Section 4.20(b) of the Disclosure Schedule, the relationship between the Company and any supplier
or vendor set forth in Section 4.20(b) of the Disclosure Schedule has not changed in any material adverse respect since
January 1, 2023.
(c) None
of the customers, suppliers or vendors set forth in Sections 4.20(a) and (b) of the Disclosure Schedule have given
written or, to the Company’s Knowledge, oral notice of their intent of not continuing their relationship or not continuing to conduct
business with the Company after the Closing Date in substantially the same manner and on the same terms and conditions as prior to the
Closing Date, and to the Company’s Knowledge, except as set forth in Section 4.20(c) of the Disclosure Schedule,
there are no facts or circumstances that would reasonably be expected to result in any customer or supplier set forth in Sections 4.20(a) and
(b) of the Disclosure Schedule not continuing their relationship or not continuing to conduct business with the Company after
the Closing Date in substantially the same manner and on the same terms and conditions as prior to the Closing Date.
(d) To
the Company’s Knowledge, each customer identified on Schedule 4.20(a) of the Disclosure Schedule complied with
such customer’s conflict of interest policies, if applicable, when entering into any arrangement with the Company.
4.21 Accounts
Receivable. Except as set forth in Section 4.21 of the Disclosure Schedule, subject to any reserves, each Accounts Receivable
of the Company that has been billed is and, each unbilled Accounts Receivable will be when billed, (a) valid and existing and represents
monies due for goods sold and delivered and services performed in bona fide commercial transactions; (b) a legally binding obligation
of the account debtor enforceable in accordance with its terms, free and clear of all Liens and not subject to refunds, discounts (other
than trade discounts provided in the ordinary course of business), setoffs, adverse claims, counterclaims, assessments, defaults, prepayments,
defenses or conditions precedent; (c) to the Company’s Knowledge, fully collectible, net of any reserve for uncollectible accounts
shown on the Latest Balance Sheet; and (d) since the Latest Balance Sheet, no Account Receivable have been written off or sold by
the Company.
4.22 Territorial
Restrictions. The Company is not restricted by any agreement or understanding with any other Person from carrying on its business
in any geographical area in the world.
4.23 Product
or Service Warranties. Except as set forth in Section 4.23 of the Disclosure Schedule and for warranties under applicable
Law (if any), (a) there are no warranties, express or implied, written or oral, with respect to the products and services of the
Company, and (b) there are no pending or, to the Company’s Knowledge, threatened claims with respect to any such warranties.
The Company has no Knowledge of any facts that indicate that the reserves for product or service warranties reflected in the Latest Balance
Sheet are materially understated. Section 4.23 of the Disclosure Schedule includes a copy of the form of all written warranties
furnished by the Company to purchasers of any product or service sold by the Company since January 1, 2018. There have been no warranty
claims or complaints relating to the products of the Company during the previous and current calendar year, whether or not resolved.
4.24 Health
Care Regulatory Compliance.
(a) Except
as set forth in Section 4.24(a) of the Disclosure Schedule, to the Company’s Actual Knowledge, the Company is and
has, for the six year period ended on the date hereof, operated in compliance, in all material respects, with the Health Care Regulatory
Laws which are applicable to the Company (if any). Except as set forth in Section 4.24(a) of the Disclosure Schedule,
to the Company’s Actual Knowledge, the Company has not during such period received any written notice, nor any complaints from a
Person, that allege that the Company is not in compliance with any such Health Care Regulatory Laws which are applicable to the Company
(if any) and that have not been addressed to the satisfaction of such Governmental Authority or complainant.
(b) Except
as set forth in Section 4.24(b) of the Disclosure Schedule, during the six year period ended on the date hereof, the
Company and, to its Actual Knowledge, its equityholders (including Sellers), directors, managers, officers, personnel (whether employees,
independent contractors or workforce members), distributors, vendors and other agents or representatives, as applicable, have not: (i) been
heretofore excluded, debarred, suspended or been otherwise determined to be, or identified as, ineligible to participate in the Programs,
nor have Sellers or the Company received any written notice that the Company, its equityholders (including Sellers), directors, managers,
officers, personnel (whether employees, independent contractors or workforce members), distributors, vendors and other agents or representatives,
as applicable, have been proposed to be excluded, debarred, suspended or otherwise determined to be, or identified as, ineligible to participate
in any such Program; (ii) been convicted of any crime relating to any such Program; and (iii) been convicted of any crime or
engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a) or any similar Health Care Regulatory Law or authorized
by 21 U.S.C. § 335a(b) or any similar Health Care Regulatory Law, or actually been so debarred. During the six year period ended
on the date hereof, neither the Company nor, to its Actual Knowledge, any Seller has received any written notice, and the Company has
not become aware by any written notice, that the Company is the subject of any investigation or review regarding its participation in
any Program. The Company is not, as of the date hereof, listed on the System for Award Management or the Office of Inspector General’s
(OIG) lists of excluded individuals and entities, or any equivalent list maintained by any Canadian Governmental Authority.
(c) Except
as set forth in Section 4.24(c) of the Disclosure Schedule, the Company, and, to its Actual Knowledge, its equityholders
(including Sellers), directors, managers, officers, employees, and, as applicable, workforce members have not in the six year period ended
on the date hereof been the subject of or received, or have Knowledge of any pending or, to the Company’s Knowledge, threatened:
(i) compliance, disciplinary or enforcement action from any Governmental Authority; (ii) any notice of noncompliance with or
alleged violation of any Health Care Regulatory Laws or Regulatory Filings (as defined below); or (iii) material finding from an
inspection by a Governmental Authority. No Person has filed or, to the Company’s Knowledge, has threatened to file against the Company
any claim under any federal, provincial, territorial or state whistleblower statute, including without limitation, the Federal False Claims
Act (31 U.S.C. §§3729 et seq.), the Competition Act (Canada), the Criminal Code (Canada), Public Servants Disclosure
Protection Act (Canada) and any provincial securities Law. During the six year period ended on the date hereof, neither the Company
nor any record owner of the capital stock of the Company has entered into any agreements with any Governmental Authority in connection
with compliance with Health Care Regulatory Laws.
(d) Section 4.24(d) of
the Disclosure Schedule is a true, correct and complete list of all material licenses, franchises, permits, certifications, accreditations,
approvals, clearances, grants, consents, certificates, registrations, listings, orders and authorizations from Governmental Authorities
(“Regulatory Filings”) required under any Health Care Regulatory Law for the Company to conduct its business as it
is now being conducted, and as it will be conducted as of the Closing Date. The Company has delivered or made available to Purchaser true
and complete copies of all Regulatory Filings. Each Regulatory Filing is in full force and effect, without limitation or restriction,
except in accordance with its terms. Except as set forth in Section 4.24(d) of the Disclosure Schedule, the Company,
and, to its Knowledge, its equityholders (including Sellers), directors, managers, officers, personnel (whether employees, independent
contractors or workforce members), hold all required Regulatory Filings. All Regulatory Filings have been timely filed, maintained or
furnished. To the Company’s Knowledge, all Regulatory Filings and activities performed thereunder are in compliance, in all material
respects, with applicable Health Care Regulatory Laws. The Company has not received any written notice from a Governmental Authority that
such Governmental Authority intends to cancel or terminate any of such Regulatory Filings, nor to the Company’s Knowledge, is there
any reason to believe that any Governmental Authority intends to cancel or terminate any of such Regulatory Filings or that valid grounds
for such cancellation or termination currently exist.
(e) The
business of the Company has always operated in compliance in all material respects with all Laws applicable to data privacy, data security
and/or personal information. To its Knowledge, the Company has never experienced incidences in which personal information or other
sensitive data was or may have been stolen or improperly accessed.
4.25 HIPAA
and Privacy Laws. To the Company’s Knowledge, the Company: (a) is currently conducting its business in material compliance
with HIPAA; (b) has conducted its business in material compliance with the HIPAA since HIPAA first became applicable to it; (c) is
currently conducting its business in compliance in all material respects with all applicable Laws rules, regulations, directives (and
governmental obligations) worldwide and all binding guidance thereunder issued by a Governmental Authority, including all Laws governing
breach notification that relate to data protection, security, privacy, and the use of information relating to individuals and/or the
information rights of individuals, which may include, but may not be limited to the Personal Information Protection and Electronic
Documents Act (Canada), the Personal Information Protection Act (Alberta), the Personal Information Protection Act
(British Columbia), the Act Respecting The Protection Of Personal Information In The Private Sector (Quebec), the Personal
Health Information Protection Act (Ontario), the Personal Health Information Privacy and Access Act (New Brunswick),
the Personal Health Information Act (Newfoundland and Labrador), the Personal Health Information Act (Nova Scotia), the
EU General Data Protection Regulation 2016/679, the EU Data Protection Directive 95/46/EC, the EU Privacy and Electronic Communications
Directive 2002/58/EC, any successor legislation to any of the foregoing, and regulations not preempted by HIPAA governing the privacy,
security or confidentiality of “Personal Information” (or similar terms such as “Personally Identifiable Information,”,
as defined by applicable state, provincial and federal Laws), medical records and other records generated in the course of providing
or paying for health care services (collectively, the “Privacy Laws”); and (d) has conducted its business in
material compliance with the Privacy Laws since such laws first became applicable to them. The Company has executed current and
valid “Business Associate Agreements” (as described in 45 C.F.R. §§ 164.502(e) and 164.504(e)) with each (a) “covered
entity” (as defined at 45 C.F.R. § 160.103) for whom the Company provides functions or activities that render the Company
a “business associate” (as defined at 45 C.F.R. § 160.103)), and (b) “subcontractor” (as defined at
45 C.F.R. § 160.103) of the Company that is a business associate (pursuant to paragraph (3)(iii) of the definition of “business
associate” at 45 C.F.R. § 160.103). The Company has not breached any such Business Associate Agreement and, to the Company’s
Knowledge, no covered entity or subcontractor has materially breached any such Business Associate Agreement with the Company. The
Company has no Knowledge of any complaints to or investigations by the Office for Civil Rights with respect to HIPAA compliance by the
Company or any of its subcontractors. Neither the Company nor, to the Company’s Knowledge, any of its subcontractors has
experienced any (a) breach of security, as defined by the Privacy Laws, with respect to Personal Information, (b) Breach of
Unsecured Protected Health Information as “Breach,” “Unsecured Protected Health Information,” and “Protected
Health Information” are defined by HIPAA, or (c) any Security Incident as “Security Incident” is defined by HIPAA,
except, with respect to (c), for those Security Incidents which would not, individually or in the aggregate, reasonably be likely to
have a Material Adverse Effect. Neither (x) the execution, delivery or performance of this Agreement or any of the other Transaction
Documents, nor (y) any of the transactions contemplated by this Agreement or any such other agreement, document or instrument, will
result in any violation of any applicable Law or contractual obligations pertaining to the confidentiality or non-disclosure of Company
Data and/or User Data. The Company has obtained the right to use User Data, including Protected Health Information, to improve the Company
Software and/or the Company Solution. The Company has only exercised the aforementioned right in accordance with its contractual agreements.
Article V
REPRESENTATIONS
AND WARRANTIES OF PURCHASER AND PURCHASER PARENT
Each of Purchaser and Purchaser
Parent hereby represents and warrants to the Company, subject to the exceptions disclosed in the Disclosure Schedule, as follows:
5.01 Organization
and Corporate Power. Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the Province
of Ontario with full power and authority to enter into this Agreement and perform its obligations hereunder. Purchaser Parent is a corporation
duly organized, validly existing and in good standing under the Laws of the State of Delaware with full power and authority to enter into
this Agreement and perform its obligations hereunder.
5.02 Authorization;
No Breach; Valid and Binding Agreement.
(a) Each
of Purchaser and Purchaser Parent has the requisite corporate and other power, capacity and authority to execute and deliver this Agreement
and each other Transaction Document to which it is a party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of this Agreement and each other Transaction Document to which
Purchaser and Purchaser Parent is a party, and the consummation of the transactions contemplated hereby and thereby have been duly and
validly authorized by all requisite corporate or other action on the part of Purchaser and Purchaser Parent, as applicable, and no other
corporate proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement.
(b) The
execution, delivery and performance of this Agreement by Purchaser and Purchaser Parent and the consummation of the transactions contemplated
hereby do not conflict with or result in any material breach of the provisions of the certificate of incorporation or bylaws of Purchaser
or Purchaser Parent.
(c) The
execution, delivery and performance of this Agreement and each other Transaction Document by Purchaser and Purchaser Parent and the consummation
of the transactions contemplated hereby and thereby, (i) do not require any authorization, consent, approval, exemption or other
action by or notice to any Person, court or other governmental body under the provisions of any material lease, contract or other agreement,
permit, franchise, license or other instrument or undertaking to which the Purchaser or Purchaser Parent is a party or by which the Purchaser
or Purchaser Parent or any of its respective assets is bound or affected, except for Form 8-K reports, and any other applicable filings
or disclosure requirements with the SEC or pursuant to the Securities Act or NASDAQ rules and requirements required to be made by
an Affiliate of Purchaser or Purchaser Parent, and (ii) do not result in a violation or contravention of any Law, statute, rule or
regulation or order, judgment, decree, determination or award applicable to Purchaser or Purchaser Parent or any of its respective properties
or assets.
(d) Assuming
that this Agreement is a valid and binding obligation of the other Parties, this Agreement constitutes a valid and binding obligation
of Purchaser and Purchaser Parent, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy Laws,
other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance
and other equitable remedies.
5.03 Litigation.
There are no Actions pending or, to Purchaser’s knowledge, threatened against Purchaser or Purchaser Parent at law or in equity,
or before or by any Governmental Authority, which would adversely affect Purchaser’s or Purchaser Parent’s performance under
this Agreement or the consummation of the transactions contemplated hereby. Neither Purchaser nor Purchaser Parent is subject to any outstanding
judgment, order or decree of any court or governmental body.
5.04 Brokerage.
Neither Purchaser nor Purchaser Parent has incurred, nor will either such party incur, directly or indirectly, any liability for brokerage
or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
5.05 Purchaser
Parent Stock. The Purchaser Parent Stock is duly authorized and, when shares of Purchaser Parent Stock are issued to Sellers in accordance
with the terms of this Agreement, such shares of Purchaser Parent Stock will be duly and validly issued, fully paid and nonassessable,
fee and clear of all Liens. Assuming the accuracy of the representations of the Sellers in Section 3.10, the shares of Purchaser
Parent Stock, when issued to the Sellers under this Agreement, will be issued in compliance with all applicable securities Laws, including
the Securities Act. No Person has any preemptive rights or rights of first refusal by reason of or in connection with the issuance of
the shares of Purchaser Parent Stock to Sellers pursuant to this Agreement. Except for restrictions provided under applicable securities
Laws and the terms of this Agreement, there are, and will be, no restrictions on the sale or transferability of shares of Purchaser Parent
Stock issued to Sellers.
5.06 Purchaser
Parent Capitalization. Schedule 5.06 attached hereto sets forth the capitalization of the Purchaser Parent as of the Closing.
Article VI
COVENANTS
6.01 Access
to Books and Records. From and after the Closing, Purchaser shall, and shall cause the Company to, provide the Seller Representative
and its authorized representatives with reasonable access (for the purpose of examining and copying), during normal business hours, to
the books and records of the Company with respect to periods or occurrences prior to or on the Closing Date in connection with any matter
relating to or arising out of this Agreement or the transactions contemplated hereby. Any such access shall be given in such a manner
as to maintain the confidentiality of any confidential information, this Agreement and the transactions contemplated hereby and so as
not to interfere unreasonably with the operation of each Party or any of its Affiliates. Unless otherwise consented to in writing by the
Seller Representative, Purchaser shall not, and shall not permit the Company, until the expiration of the date on which Taxes may no longer
be assessed under the applicable statutes of limitation, including any waivers or extensions thereof, to destroy, alter or otherwise dispose
of any of the books and records of the Company for any period prior to the Closing Date without first giving reasonable prior notice to
the Seller Representative and offering to surrender to the Seller Representative such books and records or any portion thereof which Purchaser
or the Company may intend to destroy, alter or dispose of.
6.02 Further
Assurances. In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each
of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification
therefor under Article VIII below). Sellers acknowledge and agree that, from and after the Closing, Purchaser will be entitled
to possession of all documents, books, records (including Tax records), agreements and financial data of any sort relating to the Company.
6.03 Releases.
(a) Each
Seller, for itself, himself or herself, and its, his or her heirs, personal representatives, successors and assigns (collectively, the
“Seller Releasors”), hereby (i) forever fully and irrevocably releases and discharges Purchaser, the Company and
each of their respective predecessors, successors, direct or indirect subsidiaries and past and present stockholders, members, managers,
directors, officers, employees, agents, and other representatives (collectively, the “Purchaser/Company Released Parties”)
from any and all actions, suits, claims, demands, debts, agreements, obligations, promises, judgments, or liabilities of any kind whatsoever
in law or equity and causes of action of every kind and nature, or otherwise (including claims for damages, costs, expense, and attorneys’,
brokers’ and accountants fees and expenses) arising out of or related to events, facts, conditions or circumstances existing or
arising prior to the Closing, which the Seller Releasors can, shall or may have against the Purchaser/Company Released Parties, whether
known or unknown, suspected or unsuspected, unanticipated as well as anticipated, except only those specifically excluded below (collectively,
the “Seller Released Claims”), and (ii) irrevocably agree to refrain from directly or indirectly asserting any
claim or demand or commencing (or causing to be commenced) any Action against any Purchaser/Company Released Party based upon any Seller
Released Claim. Notwithstanding the preceding sentence of this Section 6.03(a), “Seller Released Claims”
does not include, and the provisions of this Section 6.03(a) shall not release or otherwise diminish, (i) the covenants,
liabilities, obligations of any Party set forth in or arising under any provisions of this Agreement or any Transaction Document, and
(ii) if such Seller is an employee of any Purchaser/Company Released Party, any claims for the current year’s accrued
but unpaid compensation.
(b) The
Company, for itself, and its successors and assigns (collectively, the “Company Releasors”), hereby (i) forever
fully and irrevocably releases and discharges each Seller and each of his/her/its respective predecessors, successors, direct or indirect
subsidiaries and past and present stockholders, members, managers, directors, officers, employees, agents, heirs and other representatives
(collectively, the “Seller Released Parties”) from any and all actions, suits, claims, demands, debts, agreements,
obligations, promises, judgments, or liabilities of any kind whatsoever in law or equity and causes of action of every kind and nature,
or otherwise (including claims for damages, costs, expense, and attorneys’, brokers’ and accountants fees and expenses) arising
out of or related to events, facts, conditions or circumstances existing or arising prior to the Closing, which the Company Releasors
can, shall or may have against the Seller Released Parties, whether known or unknown, suspected or unsuspected, unanticipated as well
as anticipated, except only those specifically excluded below (collectively, the “Company Released Claims”), and (ii) irrevocably
agree to refrain from directly or indirectly asserting any claim or demand or commencing (or causing to be commenced) any Action against
any Seller Released Party based upon any Company Released Claim. Notwithstanding the preceding sentence of this Section 6.03(b),
“Company Released Claims” does not include, and the provisions of this Section 6.03(b) shall not release
or otherwise diminish, the covenants, liabilities, obligations of any Seller set forth in or arising under any provisions of this Agreement
or any Transaction Document.
6.04 Publicity.
Except as required by applicable Law, no publicity, release, disclosure or announcement of or concerning this Agreement or the transactions
contemplated hereby shall be issued by Sellers, Seller Representative and/or the Company, on the one hand, or Purchaser or Purchaser Parent,
on the other hand, without the advance written consent of Purchaser (on behalf of itself and, post-Closing, the Company) and Seller Representative
(on behalf of itself, Sellers, and, pre-Closing, the Company), which consent shall not be unreasonably withheld, conditioned or delayed;
provided, however, that the Parties shall be permitted to make disclosures concerning this Agreement to their accountants, attorneys and
financial advisors, and Purchaser and its Affiliates shall be permitted to make disclosures concerning this Agreement and the transactions
contemplated hereby: (a) to prospective investors, lenders and target companies in connection with financings and acquisitions that
they are contemplating, provided, however, that such parties are subject to confidentiality restrictions materially equivalent to those
between the Parties; and (b) to the extent required by the SEC, NASDAQ, and the Securities Act. In the event that a Party is required
by applicable Law to make a release or announcement, such Party shall provide Purchaser or the Seller Representative, as the case may
be, with a reasonable opportunity to review such release or announcement before such release or announcement is made.
6.05 Confidentiality.
Each Seller agrees not to disclose or use any Confidential Information of Purchaser, Purchaser Parent, or the Company and the Company,
Purchaser and Purchaser Parent agree not to disclose or use any Confidential Information of any Seller, except (a) each Party may
disclose Confidential Information of another Party to its financial or legal advisors, provided that such advisors agree to keep such
Confidential Information confidential in compliance with the terms of this Section 6.05, and (b) if and as long as a
Seller is an employee of the Company after the Closing, then such Seller may use the Confidential Information of the Company in the ordinary
course of his or her employment on behalf of the Company so long as such use is in compliance with all policies and agreements applicable
to such Seller. If any Seller, the Company, Purchaser or Purchaser Parent are requested or required pursuant to written or oral question
or request for information or documents in any Action, interrogatory, subpoena, civil investigation demand or similar process to disclose
any Confidential Information of the other Party(ies), then such Party will notify the other Party(ies) promptly of the request or requirement
so that the other Party(ies) may seek an appropriate protective order or waive compliance with the provisions of this Section 6.05.
If, in the absence of a protective order or the receipt of a waiver hereunder, any Seller, the Company, Purchaser or Purchaser Parent
is, on the advice of counsel, compelled to disclose any Confidential Information of the other Party(ies) to any tribunal or else stand
liable for contempt, then such Party may disclose the Confidential Information to the tribunal; provided, however, that
the disclosing Party shall use its, his or her best efforts to obtain, at the request of the other Party(ies), an order or other assurance
that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the other Party(ies)
shall designate. The foregoing provisions shall not apply to any Confidential Information that is generally available to the public immediately
prior to the time of disclosure unless such Confidential Information is so available due to the actions of a Party in violation of this
Section 6.05.
6.06 Restrictive
Covenants.
(a) During
the Restricted Period, each Restricted Seller will not, and will not permit any of its Affiliates to, directly or indirectly, in any manner
(whether on its, his or her own account, or as an owner, operator, manager, consultant, officer, director, employee, investor, agent or
otherwise), anywhere in the Applicable Area, engage in the Business, a business that is substantially similar to the Business, or any
business that competes with the Business, or own any interest in, manage, control, provide financing to, participate in (whether as an
owner, operator, manager, consultant, officer, director, employee, investor, agent, representative or otherwise), render services for
or consult with any Person that is engaged in the Business, a business that is substantially similar to the Business, or in any activity
that competes with the Business; provided, however, that no owner of less than 1% of the outstanding stock of any publicly
traded corporation shall be deemed to engage solely by reason thereof in its business.
(b) During
the Restricted Period, each Restricted Seller will not, and will not permit any of its Affiliates to, directly or indirectly, in any manner
(whether on its, his or her own account, or as an owner, operator, manager, consultant, officer, director, employee, investor, agent or
otherwise), (a) call upon, solicit or provide services to any customer of the Company with the intent of selling or attempting to
sell any products or services similar to those offered by the Business, (b) hire or engage, or recruit, solicit or otherwise
attempt to employ or engage, or enter into any business relationship with, any Person employed by, or providing consulting services to,
the Company (or any successor thereto), or induce or attempt to induce any Person to leave such employment or consulting arrangement,
or (c) in any way interfere with the relationship between the Company (or any successor thereto) and any employee, consultant, customer,
supplier, licensee or other business relation (or any prospective employee, consultant, customer, supplier, licensee or other business
relation) of the Company (or any successor thereto).
(c) The
Restricted Sellers acknowledge that a breach or threatened breach of this Section 6.06 would give rise to irreparable
harm to Purchaser, for which monetary damages would not be an adequate remedy, and hereby agrees that, in the event of a breach or a threatened
breach by the Restricted Sellers of any such obligations, Purchaser shall, in addition to any and all other rights and remedies that may
be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an interim or
permanent injunction, specific performance and any other relief that may be available from a court of competent equitable jurisdiction
(without any requirement to post a bond or other security).
(d) The
Restricted Sellers acknowledge that the restrictions contained in this Section 6.06 are reasonable and necessary to protect
the legitimate interests of Purchaser and constitute a material inducement to Purchaser's entering into this Agreement and consummating
the transactions contemplated by this Agreement. The covenants contained in this Section 6.06 and each provision hereof
are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall
not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.
Article VII
TAX
MATTERS
7.01 Reserved.
7.02 Straddle
Period Allocation. In the case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Period”),
the amount of any Taxes based on or measured by income, receipts, transactions or payroll of the Company (including, for the avoidance
of doubt, any Taxes attributable to an income inclusion under Section 951(a) or Section 951A of the Code) for the Pre-Closing
Tax Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date (and for such
purpose, the taxable period of any partnership or other pass-through entity in which the Company holds a beneficial interest shall be
deemed to terminate at such time) and the amount of other Taxes of the Company for a Straddle Period that relates to the Pre-Closing Tax
Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the
number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.
7.03 Responsibility
for Filing Tax Returns. Purchaser shall prepare or cause to be prepared and timely file or cause to be timely filed all Tax Returns
for the Company that are due after the Closing Date. Purchaser shall permit the Seller Representative to review and comment on such Tax
Returns before filing and shall consider in good faith any comments or revisions reasonably requested by the Seller Representative.
7.04 Books
and Records; Cooperation. Purchaser and the Seller Representative shall, and shall cause their respective representatives to use commercially
reasonable efforts to, (i) provide the other party and its representatives with such assistance as may be reasonably requested in
connection with the preparation of any Tax Return, or any audit or other examination by any taxing authority or judicial or administrative
proceeding relating to Taxes with respect to the Company and (ii) retain and provide the other party and its representatives with
reasonable access to all records or information that may be relevant to such Tax Return, audit, examination or proceeding, provided, however,
that the foregoing shall be done at the expense of the party making such request and in a manner so as not to interfere unreasonably with
the conduct of the business of the Parties.
7.05 Transfer
Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges
and other fees and charges (including any penalties and interest) incurred in connection with the transactions contemplated by this Agreement
(collectively, “Transfer Taxes”), and any penalties, interest or additions to Tax with respect to the Transfer Taxes,
shall be paid by the Seller Representative (on behalf of Sellers) when due, and the Seller Representative (on behalf of Sellers) will,
at its own expense, file all necessary Tax Returns and other documentation with respect to the Transfer Taxes.
7.06 Excessive
Eligible Dividend Designation Election. If it is determined that the Company has made an “excessive eligible dividend
designation” (as defined in subsection 89(1) of the Tax Act), the Seller Representative, Sellers and the Company
hereby concurs in the making of an election under subsection 185.1(2) of the Tax Act in respect of such dividend, and such
election shall be made by the Company (or any successor thereto) in the manner and within the time prescribed by subsections
185.1(2) and 185.1(3) of the Tax Act.
7.07 Excessive
Capital Dividend Election. If it is determined that the Company has made an election under subsection 83(2) of the Tax Act in
respect of the full amount of any dividend payable by it on shares of any class of its capital stock, and the full amount of such dividend
exceeded the amount of the “capital dividend account” (as defined in the Tax Act) of the Company immediately before the dividend
became payable, the Sellers hereby concur in the making of an election under subsection 184(3) of the Tax Act in respect of such
dividend.
7.08 Required
Disclosure. In the event that (a) any applicable Law in respect of Taxes promulgated by any Canadian Governmental Authority comes
into effect following the Closing that may require disclosures to be made with the Canada Revenue Agency with respect to the transactions
set out in this Agreement (“New Tax Legislation”) and (b) any party to this Agreement determines that it or its
Affiliates is required to make a disclosure filing in respect of any transaction set out in this Agreement pursuant to the New Tax Legislation,
the applicable party (the “Notifying Party”) agrees to promptly, and in any event within 20 days prior to any applicable
filing deadline under the New Tax Legislation, (i) notify all other parties of such determination and (ii) provide the other
parties with supporting analysis or information, including a draft of the applicable disclosure filing, so that the other parties may
assess and determine the applicability of such New Tax Legislation to the transactions set out in this Agreement. In the event any other
party determines that it or any of its Affiliates is required to make a disclosure filing in respect of the transactions set out in this
Agreement pursuant to New Tax Legislation, such other party shall fully cooperate with the Notifying Party in connection with the preparation
of a draft of the applicable disclosure filing and the Notifying Party shall be given the opportunity to review, comment upon and suggest
changes or corrections to the draft of the applicable disclosure filing, it being understood that such other party shall consider in good
faith all reasonable changes or corrections to the draft of the applicable disclosure with a view to ensuring that the other party’s
applicable disclosure filing is consistent with the Notifying Party’s applicable disclosure filing. Neither party shall make any
filings under any New Tax Legislation without first complying with the provisions of this Section.
7.09 Tax
Contests.
(a) Purchaser
or the Seller Representative, as the case may be, shall notify the other Party within twenty (20) Business Days after receipt by such
Party or any of its Affiliates of written notice of any pending federal, state, local or foreign Tax audit or examination or notice of
deficiency or other adjustment, assessment, redetermination or proceedings relating to Taxes (“Tax Contest”) for which
such other Party or its Affiliates may reasonably be expected to be responsible under this Agreement, provided, that the failure
to deliver any such notice promptly will not relieve the other Party of their obligations under this Agreement, except to the extent such
Party is materially prejudiced as a result thereof.
(b) At
its election, the Seller Representative shall control any Tax Contests related to Taxes with respect to a Pre-Closing Tax Period (other
than Straddle Periods). The Seller Representative shall keep Purchaser fully and timely informed with respect to the commencement, status
and nature of any such Tax Contest. The Seller Representative shall, in good faith, allow Purchaser to make comments to the Seller Representative
regarding the conduct of or positions taken in any such proceeding. Purchaser shall be entitled to fully participate in any such Tax Contest.
Purchaser shall have the right to consent to any settlement with respect to (or abandonment of) any such Tax Contest (provided such consent
shall not be unreasonably withheld, conditioned or delayed). In the case that Purchaser controls such Tax Contest because the Seller Representative
conceded right to control such Tax Contest, Purchaser shall keep the Seller Representative fully and timely informed with respect to the
commencement, status and nature of any such Tax Contest. Purchaser shall, in good faith, allow the Seller Representative to make comments
to Purchaser regarding the conduct of or positions taken in any such proceeding. The Seller Representative shall be entitled to fully
participate in any such Tax Contest. Purchaser (or an Affiliate thereof) shall control in good faith any other Tax Contest solely related
to Taxes of the Company. In the case of a Tax Contest in respect of a Straddle Period, the Purchaser shall keep the Seller Representative
fully and timely informed with respect to the commencement, status and nature of any such Tax Contest. Purchaser shall, in good faith,
allow the Seller Representative to make comments to Purchaser regarding the conduct of or positions taken in any such proceeding. The
Seller Representative shall be entitled to participate fully in any such Tax Contest. Purchaser shall not settle such Tax Contest without
the Seller Representative ’s prior written consent (not to be unreasonably withheld, conditioned or delayed).
(c) To
the extent of any inconsistencies between any provision of this Section 7.09 and Article VIII in a matter principally
involving Taxes, the provisions of this Section 7.09 shall control.
7.10 Post-Closing
Amendments and Elections. Except as required by Law or a “determination” within the meaning of Section 1313(a) of
the Code (or any analogous provision of state, local or foreign Tax Law), without the prior written consent of the Seller Representative
(not to be unreasonably withheld, delayed or conditioned), Purchaser shall not, and shall not permit or cause the Company, or any Affiliate
of Purchaser or the Company, to (i) amend (or cause to be amended) or otherwise modify (or cause to be otherwise modified) any Tax
Returns of the Company with respect to any Pre-Closing Tax Period; (ii) file any Tax Return of the Company for any Pre-Closing Tax
Period in a jurisdiction in which the Company did not previously file a Tax Return (to the extent such filing(s) could increase the
Sellers’ and/or the Company’s Tax liability for any Pre-Closing Tax Period); (iii) make or change any Tax election with
respect to the Company that has retroactive effect to any Pre-Closing Tax Period; (iv) agree to the waiver or any extension of the
statute of limitations relating to any Taxes of the Company for any Pre-Closing Tax Period (to the extent such extension or waiver could
increase the Sellers’ and/or the Company’s Tax liability for any Pre-Closing Tax Period); or (v) enter into or file any
voluntary Tax disclosure, amnesty or similar filing or agreement with respect to any Taxes attributable to any Pre-Closing Tax Period.
7.11 Tax
Elections. Notwithstanding anything to the contrary in Section 7.10 or any other provisions in this Agreement, Purchaser
or Purchaser Parent, whichever is applicable, shall be entitled to make, or cause to be made, at Purchaser’s sole discretion, an
election under Section 338(g) of the Code (or any comparable election under state, local or foreign Law) with respect to the
Merger. In the event Purchaser or Purchaser Parent makes an election under Section 338(g) of the Code, the Seller Representative
shall, and shall cause its respective representatives to use commercially reasonable efforts to (i) provide Purchaser and Purchaser
Parent with such assistance as may be reasonably requested in connection with the preparation of all filing and other requirements necessary
to effectuate the election under Section 338(g) of the Code pursuant to this Section 7.11; and (ii) cooperate
with Purchaser and Purchaser Parent in the preparation and timely filing of any Tax Returns required to be filed in connection with the
making of the election, including the exchange of information and preparation of an allocation of the Consideration plus any additional
amounts treated as consideration for Sellers’ Company Shares for U.S. federal income tax purposes among assets of the Company pursuant
to Sections 1060 and 338 of the Code and the regulations thereunder.
7.12 Tax
Refunds. Any cash refunds or credits in lieu of a cash refund to Taxes paid by the Company for any taxable period ending on or before
the Closing Date that are received by Purchaser or any of its Affiliates (including, following the Closing, for the avoidance of doubt,
the Company or Affiliates thereof) shall be for the account of Seller as finally determined (excluding any refund or credit attributable
to any taxable period beginning after the Closing Date applied to the relevant taxable period ending on or before the Closing Date (e.g.,
as a carryback). Purchaser shall pay over to Seller, as additional purchase price for the Company Shares, any such refund received in
cash or the amount of any such credit within 15 days after entitlement thereto, in each case, net of any Taxes and reasonable out-of-pocket
expenses incurred in connection with such refund or credit. Notwithstanding anything in this Agreement to the contrary, in the event that
any such refund or credit is subsequently determined by any Governmental Authority to be less than the amount paid by Purchaser to Sellers,
Sellers shall promptly return any such disallowed amounts (plus any interest in respect of such disallowed refund or credit owed to a
Governmental Authority) to Purchaser.
Article VIII
INDEMNIFICATION
8.01 Survival
of Representations, Warranties, Covenants, Agreements and Other Provisions. The representations and warranties contained in Article III,
Article IV and Article V of this Agreement shall terminate on the date that is 18 months after the Closing Date
(the “Survival Period Termination Date”); provided, however, that the representations and warranties
contained in Section 3.01 (Authorization of Transaction; Organization and Status of Sellers), Section 3.02 (Non-Contravention),
Section 3.03 (Brokerage), Section 3.04 (Company Shares), Section 4.01 (Organization and Corporate Power
of Company), Section 4.02 (Subsidiaries), Section 4.03 (Authorization; No Breach; Valid and Binding Agreement),
Section 4.04 (Capital Stock), Section 4.18 (Brokerage), Section 5.01 (Organization and Corporate Power),
Section 5.02 (Authorization; No Breach; Valid and Binding Agreement), Section 5.04 (Brokerage) and Section 5.05
(Purchaser Parent Stock) shall survive indefinitely (collectively, the “Fundamental Representations”); provided
further, that the representations and warranties contained in Section 3.07 (Residency), Section 4.08 (Tax Matters)
and Section 4.12 (Employee Benefit Plans) shall survive until the date that is 60 days after the expiration of the respective
applicable statute of limitations for such item (collectively, the “Tax Representations”); provided further that the
representations and warranties contained in Section 4.24 (Health Care Regulatory Compliance) and Section 4.25 (HIPAA
and Privacy Laws) shall survive until the date that is 24 months after the Closing Date (collectively, the “Additional Representations”);
provided further that the representations and warranties contained in Section 4.10 (Intellectual Property) shall survive until
the date that is 36 months after the Closing Date (the “IP Representations”). The agreements and covenants set forth
in this Agreement shall survive in accordance with their respective terms, and if no specific term is specified, shall survive the expiration
of the respective applicable statute of limitations for such item. For the avoidance of doubt, claims related to Spreadsheet Losses, Pre-Closing
Stock Transactions, Convertible Securities Matters, and Pre-Closing Tax Matters (each as described in Section 8.02 below)
shall survive indefinitely. No claim for indemnification hereunder for breach of any such representations, warranties, covenants or agreements
may be made after the expiration of the applicable survival period. In the event, however, that notice of any claim for indemnification
for breach of a representation, warranty, covenant or agreement is given to the other party in accordance with Section 8.05
within the applicable survival period, the cause of action that is the subject of such indemnification claim shall survive until such
time as such claim is finally resolved.
8.02 Indemnification
from Sellers for the Benefit of Purchaser.
(a) From
and after the Closing, Sellers shall jointly and severally, subject to the limitations set forth in Sections 8.02(c) and (d),
indemnify Purchaser and its Affiliates, and their respective officers, directors, partners, members, employees, agents, representatives,
successors and permitted assigns (collectively, the “Purchaser Indemnified Parties”) and save and hold each of them
harmless from and against and pay on behalf of or reimburse Purchaser Indemnified Parties as and when incurred for any and all claims,
obligations, losses, fines, penalties, damages, liabilities, judgments, Taxes, settlements, costs, expenses, interests or awards (whether
or not arising out of third party claims) (including reasonable attorneys’ fees, expert witness fees, disbursements and the cost
of investigation, defense, settlement and litigation) (collectively “Losses”) incurred or suffered by any such Purchaser
Indemnified Party relating to or arising out of (i) the breach or inaccuracy of any representation or warranty made by the Company
in this Agreement (including all schedules hereto), any Transaction Document or in any certificate or other instrument delivered by the
Company or Seller Representative hereunder; (ii) the breach or violation of, or failure to perform, any covenant or agreement of
the Company or Seller Representative contained in this Agreement, any Transaction Document or in any certificate or other instruments
delivered by the Company or Seller Representative pursuant to this Agreement; (iii) any inaccuracy or omission in the Spreadsheet,
including any amounts set forth therein that are paid to a Person in excess of the amounts such Person is entitled to receive pursuant
to the terms of this Agreement or any amounts a Person was entitled to receive pursuant to the terms of this Agreement that was omitted
from the Spreadsheet (other than due to the error of Purchaser) (collectively, “Spreadsheet Losses”); (iv) the
sale, issuance, grant, award, purchase, transfer or cancellation of any of the Company Shares prior to the Closing Date (collectively,
“Pre-Closing Stock Transactions”); (v) any claims made against the Company, Purchaser, Purchaser Parent, or any
of their Affiliates by a holder of a convertible note, or any other securities exchangeable for or convertible into Company Shares, issued
by the Company prior to Closing (“Convertible Securities Matters”); and (vi) (A) all Taxes (or the non-payment
thereof) of the Company for all taxable periods ending on or before the Closing Date (“Pre-Closing Tax Period”), (B) all
Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company (or any predecessor of any of the foregoing)
is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or
similar state, local or foreign law or regulation, (C) any and all Taxes of any person (other than the Company) imposed on the Company
as a transferee or successor, by contract or pursuant to any law, rule, or regulation, which Taxes relate to an event or transaction occurring
before the Closing Date and (D) any and all Taxes of Purchaser as a result of any current or accumulated earnings and profits of
the Company under Section 951(a) or Section 951A of the Code to the extent such earnings and profits are attributable to
any Pre-Closing Tax Period (collectively, “Pre-Closing Tax Matters”). Except as otherwise expressly set forth herein,
any indemnification, reimbursement or other payment to be made by Sellers pursuant to this Section 8.02(a) shall be paid
first, in whole or in part, at Purchaser’s sole election, from the Spindle RNAP Revenue Share, then by withholding Earn-Out Shares
as earned pursuant to Section 1.06 (using the Volume Weighted Average Price for the Purchaser Parent Stock for the five trading
days prior to the date that the Losses were finally determined pursuant to this Article VIII), and then directly by Sellers,
in accordance with Section 9.02(d), in cash; provided, however, that, if any Spindle RNAP Revenue Share or Earn-Out Shares
have been earned, but not yet paid or issued, at the time of any indemnification reimbursement, then Purchaser shall be obligated to be
first paid from such earned, but not yet paid or issued, Spindle RNAP Revenue Share or Earn-Out Shares pursuant to the foregoing. Notwithstanding
any contrary provision of this Agreement, any indemnification obligation of a Seller pursuant to this Section 8.02(a) with
respect to Convertible Securities Matters related to the $20,000 Convertible Loan Note, dated January 23, 2020, issued to Joseph
Turner (the “Turner Note,” and such indemnification obligation, a “Turner Note Claim”), shall be
paid solely and exclusively (x) first, from the Holdback Amount, (y) second, from such Seller’s Common Share Percentage
of the Spindle RNAP Revenue Share, and (z) third, by withholding such Seller’s Common Share Percentage of Earn-Out Shares as
earned pursuant to Section 1.06 (using the Volume Weighted Average Price for the Purchaser Parent Stock for the five trading days
prior to the date that the Losses were finally determined pursuant to this Article VIII)
(b) From
and after the Closing, each Seller shall severally, subject to the limitations set forth in Sections 8.02(c) and (d),
indemnify Purchaser Indemnified Parties and save and hold each of them harmless from and against and pay on behalf of or reimburse Purchaser
Indemnified Parties as and when incurred for any and all Losses incurred or suffered by any such Purchaser Indemnified Party relating
to or arising out of (i) the breach or inaccuracy of any representation or warranty made by such Seller in this Agreement (including
all schedules hereto), any Transaction Document or in any certificate or other instrument delivered by such Seller hereunder; or (ii) the
breach or violation of, or failure to perform, any covenant or agreement of such Seller contained in this Agreement, any Transaction Document
or in any certificate or other instruments delivered by such Seller pursuant to this Agreement. Except as otherwise expressly set forth
herein, any indemnification, reimbursement or other payment to be made by a Seller pursuant to this Section 8.02(b) shall
be paid first, in whole or in part, at Purchaser’s sole election, from such Seller’s Common Share Percentage of the Spindle
RNAP Revenue Share, then by withholding such Seller’s Common Share Percentage of Earn-Out Shares as earned pursuant to Section 1.06
(using the Volume Weighted Average Price for the Purchaser Parent Stock for the five trading days prior to the date that the Losses were
finally determined pursuant to this Article VIII), and then directly by such Seller, in accordance with Section 8.02(d),
in cash; provided, however, that, if any Spindle RNAP Revenue Share or Earn-Out Shares have been earned, but not yet paid or issued, at
the time of any indemnification reimbursement, then Purchaser shall be obligated to be first paid from such Seller’s Common Share
Percentage of such earned, but not yet paid or issued, Spindle RNAP Revenue Share or Earn-Out Shares pursuant to the foregoing.
(c) Except
as provided below, Purchaser Indemnified Parties shall not be entitled to receive any indemnification payments with respect to any breach
of a representation or warranty under Section 8.02(a)(i) or Section 8.02(b)(i) (i) for any individual
item or series of related items based on a similar set of operative facts, where the Loss relating thereto is less than $10,000 (the “De
Minimis Claim Threshold”) or (ii) in respect of any individual item where the Loss relating thereto is equal to or greater
than the De Minimis Claim Threshold, unless and until the aggregate amount of Losses that would otherwise be payable hereunder exceeds
on a cumulative basis an amount equal to $25,000 (the “Threshold”); provided, that (x) in the event the De Minimis
Claim Threshold is met, the full amount of Losses relating to such item or series of related items (including the De Minimis Claim Threshold),
including and from the first dollar thereof, shall be included in the calculation of the Threshold, and (y) in the event the Threshold
is met, Purchaser Indemnified Parties shall be entitled to indemnification for the amount of all claims in excess of the Threshold. Notwithstanding
the foregoing, neither the De Minimis Claim Threshold nor the Threshold shall apply to Losses arising as a result of (A) any fraud
or intentional misrepresentation by any Seller, the Company, or Seller Representative, (B) any breach or inaccuracy of any Fundamental
Representation, Tax Representation, Additional Representation, or IP Representation by any Seller or the Company, (C) any nonfulfillment
or breach of any covenant or agreement by any Seller, the Company or Seller Representative in this Agreement, (D) Spreadsheet Losses,
(E) Pre-Closing Stock Transactions, (F) Convertible Securities Matters, or (G) Pre-Closing Tax Matters.
(d) The
aggregate amount of payments to which Purchaser Indemnified Parties shall be entitled in satisfaction of claims for Losses under Sections
8.02(a) and 8.02(b) shall in no event exceed, in the aggregate, $1,500,000 (the “Cap”); provided,
however, that (i) the Cap shall not apply to Losses arising as a result of (i) any fraud or intentional misrepresentation by
any Seller, the Company, or Seller Representative, (ii) any breach or inaccuracy of any Fundamental Representation, Tax Representation,
Additional Representation, or IP Representation by any Seller or the Company, (iii) any nonfulfillment or breach of any covenant
or agreement by any Seller, the Company or Seller Representative in this Agreement, (iv) Spreadsheet Losses, (v) Pre-Closing
Stock Transactions, (vi) Convertible Securities Matters, or (vii) Pre-Closing Tax Matters, and (ii) each Seller’s
liability for Losses under Sections 8.02(a) and 8.02(b) that are subject to the Cap shall not exceed, in the aggregate,
such Seller’s Common Share Percentage of the Cap.
(e) All
payments made pursuant to this Article VIII shall be treated by the Parties as an adjustment to the proceeds received by Sellers
pursuant to 1.08 hereof for all U.S. federal, state and local income and non-U.S. Tax purposes. Each of the Parties shall
file all Tax Returns in a manner consistent with the foregoing.
8.03 Indemnification
by Purchaser for the Benefit of Sellers and Seller Representative.
(a) Purchaser
and Purchaser Parent shall jointly and severally indemnify Sellers and Seller Representative and their Affiliates, and their respective
officers, directors, partners, members, employees, agents, representatives, successors and permitted assigns (collectively, the “Seller
Indemnified Parties”) and save and hold each of them harmless from and against and pay on behalf of or reimburse the Seller
Indemnified Parties as and when incurred for any and all Losses incurred or suffered by any such Seller Indemnified Party relating to
or arising out of: (i) any breach or inaccuracy of any representation or warranty made by Purchaser or Purchaser Parent in this Agreement
(including all schedules hereto), any Transaction Document or in any certificate or other instrument delivered by Purchaser or Purchaser
Parent hereunder; and (ii) the breach or violation of, or failure to perform, any covenant or agreement of Purchaser or Purchaser
Parent contained in this Agreement, any Transaction Document or in any certificate or other instruments delivered by Purchaser or Purchaser
Parent pursuant to this Agreement. Any indemnification of Sellers pursuant to this Section 8.03 shall be effected by wire
transfer of immediately available funds to an account designated by Seller Representative for the benefit of Sellers, to be subsequently
distributed to Sellers according to their Common Share Percentage, within five Business Days after the final determination thereof.
(b) No
claims by the Seller Indemnified Parties shall be so asserted (i) for any individual item or series of related items based on a similar
set of operative facts, where the Loss relating thereto is less than the De Minimis Claim Threshold or (ii) in respect of any individual
item where the Loss relating thereto is equal to or greater than the De Minimis Claim Threshold, unless and until the aggregate amount
of Losses that would otherwise be payable hereunder exceeds on a cumulative basis an amount equal to the Threshold; provided, that (x) in
the event De Minimis Claim Threshold is met, the full amount of Losses relating to such item or series of related items (including the
De Minimis Claim Threshold), including and from the first dollar thereof, shall be included in the calculation of Threshold, and (y) in
the event Threshold is met, the Seller Indemnified Parties shall be entitled to indemnification for the full amount of all claims in excess
of the Threshold. Notwithstanding the foregoing, neither De Minimis Claim Threshold nor Threshold shall apply to Losses arising as a result
of (A) any fraud or intentional misrepresentation by Purchaser or Purchaser Parent, (B) any breach or inaccuracy of any Fundamental
Representation by Purchaser or Purchaser Parent or (C) any nonfulfillment or breach of any covenant or agreement by Purchaser or
Purchaser Parent.
(c) The
aggregate amount of payments to which the Seller Indemnified Parties shall be entitled in satisfaction of claims for Losses under Sections
8.03(a) shall in no event exceed the Cap; provided, however, that the Cap shall not apply to Losses arising as a result of (i) any
fraud or intentional misrepresentation by Purchaser or Purchaser Parent, (ii) any breach or inaccuracy of any Fundamental Representation
or (iii) any nonfulfillment or breach of any covenant or agreement by Purchaser or Purchaser Parent contained in this Agreement,
any Transaction Document or any certificate or other instrument delivered pursuant to this Agreement.
8.04 Additional
Provisions.
(a) Each
Person entitled to indemnification hereunder shall take all reasonable steps to mitigate all losses, costs, expenses and damages after
becoming aware of any event which could reasonably be expected to give rise to any losses, costs, expenses and damages that are indemnifiable
or recoverable hereunder or in connection herewith.
(b) For
the purposes of this Article VIII only, for purposes of determining whether there has been any breach, inaccuracy or failure
of any representation, warranty, covenant or agreement made by Sellers, the Company or Seller Representative in this Agreement and when
calculating the amount of Losses suffered by a Purchaser Indemnified Party as a result of any such breach, inaccuracy or failure of any
representation, warranty, covenant or agreement made by Sellers, the Company or Seller Representative in this Agreement that is qualified
or limited in scope as to materiality or Material Adverse Effect, such representation, warranty, covenant or agreement shall be deemed
to be made or given without such qualification or limitation.
8.05 Defense
of Third Party Claims. Any Person making a claim for indemnification under Section 8.02or Section 8.03(an
“Indemnitee”) shall notify the indemnifying party (an “Indemnitor”) of the claim in writing promptly
after receiving written notice of any such Action against it (if by a third party) or becoming aware of the facts giving rise to such
claim, describing the claim, the amount thereof (if known and quantifiable, or if not known and quantifiable, a good faith and reasonable
estimate thereof) and the basis thereof. The Parties agree that any notice of a claim for indemnification to Sellers as the indemnifying
party shall be directed solely to the Seller Representative on behalf of Sellers. Any Indemnitor shall be entitled to assume the defense
of any Action by appointing a reputable counsel reasonably acceptable to the Indemnitee to be the lead counsel in connection with such
defense; provided, however, that any Indemnitor shall continue to be entitled to assert any limitation on any claims contained herein;
provided further the Indemnitee shall be entitled to participate in the defense of such claim and to employ counsel of its choice for
such purpose (it being understood that the fees and expenses of such separate counsel shall be borne by the Indemnitee). In the event
that the Indemnitor elects not to undertake such defense, or within a reasonable time after notice of any such claim from the other Party
shall fail to defend, the Indemnitee (upon notice to the Indemnitor) shall have the right to undertake the defense by counsel or other
representatives of its own choosing, on behalf of and for the account and risk of the Indemnitor (who shall be solely responsible for
paying the cost of such counsel and defense). The Indemnitor and Indemnitee shall obtain the other’s prior written consent (which
consent shall not be unreasonably withheld, conditioned or delayed) before entering into any settlement of a claim or ceasing to defend
such claim if, pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief will be imposed against
the Indemnitee or if such settlement does not expressly and unconditionally release the Indemnitee from all liabilities and obligations
with respect to such claim. Whether or not the Seller Representative shall have assumed the defense of a claim hereunder, neither Purchaser
nor any of its Affiliates shall settle, compromise or discharge, any claim hereunder without the prior written consent of the Seller Representative
(which consent shall not be unreasonably withheld, conditioned or delayed) if, pursuant to or as a result of such settlement, compromise
or discharge, injunctive or other equitable relief will be imposed against any of Sellers or the Seller Representative, or other equitable
relief will be imposed against any such parties or if the settlement does not expressly and unconditionally release such parties from
all liabilities and obligations with respect to such claim. The Seller Representative, on behalf of Sellers, shall act on behalf of all
Indemnitors in the case of all third party claims with respect to which Purchaser is seeking indemnification from Sellers under Section 8.02.
8.06 Determination
of Loss Amount.
(a) Except
in the case of (i) fraud, intentional or willful breach of this Agreement, (ii) any breach or inaccuracy of any Fundamental
Representation by Sellers, the Company, Purchaser or Purchaser Parent, or (iii) any breach by Purchaser, Purchaser Parent, or the
Company, or any Affiliates of the foregoing, of Section 1.07(c), an indemnifying person shall not be responsible or liable for Losses
or other amounts under this Article VIII that are consequential, incidental, indirect (including loss of future revenue, income
or profits or loss of business reputation or opportunity), special, exemplary or punitive (except for fines and penalties and indemnification
claims to be paid to a third party (whether or not involving third party claims)).
(b) The
Parties agree and acknowledge that, except in the case of fraud or intentional or willful breach of this Agreement, the rights to indemnification
provided for in this Article VIII shall be the sole and exclusive remedy (regardless of the theory or cause of action pled)
for monetary damages of Sellers on the one hand, or Purchaser or Purchaser Parent, on the other hand, as the case may be, after the Closing
for and with respect to any breach of or inaccuracy in any representation or warranty of a Party and for any failure by the other party
to perform and comply with any covenants and agreements contained in this Agreement, and each Party to this Agreement hereby waives to
the fullest extent permitted by law, any other rights or remedies that may arise under any applicable law in connection therewith; provided,
however, that nothing herein will limit in any way any Party’s rights hereunder or otherwise, to specific performance, injunctive
relief or other non-monetary equitable relief.
(c) Sellers
shall not have any claim for contribution from or against the Company as a result of any indemnification or other payments made by Sellers
to any of Purchaser Indemnified Parties pursuant to this Agreement.
(d) Upon
making an indemnity payment pursuant to this Agreement, the Indemnitor will, to the extent of such payment, be subrogated to all rights
of the Indemnitee against any third party in respect of the damages to which the payment related. Without limiting the generality of any
other provision hereof, each such Indemnitor and Indemnitee will duly execute upon request all instruments reasonably necessary to evidence
and perfect the above described subrogation rights.
(e) Each
Indemnitor’s liability pursuant to this Article VIII in respect of any Losses shall be reduced by an amount equal to any insurance
proceeds actually recovered by the applicable Indemnitee for such Losses less the amounts paid or to be paid by the applicable Indemnitee
for (i) the cost and expense of pursuing such insurance recovery, (ii) any deductible associated therewith, and (iii) the
amount of any and all retro-premium obligations and any and all actual premium increases resulting from such recovery. Each Indemnitee
shall use commercially reasonable efforts to obtain, receive, or realize such insurance proceeds.
Article IX
DEFINITIONS
9.01 Definitions.
For purposes hereof, the following terms when used herein shall have the respective meanings set forth below:
“Accounts Receivable”
means the accounts receivable, and any other accounts, notes and other receivables of the Company, determined in accordance with GAAP.
“Action”
means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation,
summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Affiliate”
of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where
“control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether
through the ownership of voting securities, contract or otherwise.
“Affiliated Group”
means an affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined
under state, local or foreign income Tax Law).
“Applicable Area”
means (a) North America, but if such area is determined by judicial action to be too broad, then it means (c) any country in
which the Company was engaged in the Business prior to the Closing Date.
“Business” means
the business of (a) developing and/or commercializing technologies and/or methods for the production of RNA, and (b) providing
any other products or services that the Company provided, or actively considered providing, at any time during the 12 months prior to
the Closing Date.
“Business Day”
means any day other than a Saturday, Sunday or a day on which the banks in Toronto, Ontario or New York, New York are authorized or obligated
by Law or executive order to close.
“Cash Payment”
means $625,000 less the Closing Indebtedness Amount, less the Company Transaction Expenses.
“CASL” means
an Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance
on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Act, the
Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act (Canada).
“CEWS” means
the Canada Emergency Wage Subsidy, promulgated under Bill C-14 and assented to on April 11, 2020, as amended, and any other COVID-19
related direct or indirect wage subsidy offered by a Canadian federal, provincial, or local Governmental Authority.
“Closing Indebtedness
Amount” means the aggregate amount of all unpaid Indebtedness of the Company as of Closing as reported by the Company using
the Accounting Methods.
“Code” means
the Internal Revenue Code of 1986, as amended and in effect from time to time.
“Commercially reasonable
efforts” means, except as otherwise provided in Section 1.06(e), the efforts that a commercially reasonable Person
desirous of achieving a result would use in similar circumstances to achieve that result as expeditiously as reasonably practicable; provided,
however, that a Person required to use commercially reasonable efforts under this Agreement will not be thereby required to take any action
that would result in a material adverse change in the benefits to such Person of this Agreement or the transactions contemplated hereby,
to make any change to its business, to incur any unreasonable fees or expenses (other than normal and usual filing fees, processing fees
and incidental expenses), to commence any litigation or to incur any other material burden.
“Common Share Percentage”
means, with respect to each Seller, a fraction, the numerator of which is the number of Company Shares owned by such Seller, and the denominator
of which is the sum of the number of Company Shares issued and outstanding immediately prior to the Closing. The Common Share Percentage
of each Seller is reflected on Schedule 1.1.
“Company’s Knowledge”
or words of similar effect means, unless otherwise expressly provided in this Agreement, (a) the actual knowledge of Lai Him Chung
and Nathaniel Brinn (“Actual Knowledge”), and (b) the knowledge that said persons would reasonably be expected
to obtain after reasonable inquiry by such persons. For avoidance of doubt, none of such persons would reasonably be expected to obtain
any legal opinion, counsel or advice regarding the applicability of any laws of any jurisdictions other than Canada, or the Company’s
compliance with the same.
“Company Data”
means all data or information owned or purported to be owned by a Company Party.
“Company Software”
means all Software owned or purported to be owned by, or licensed exclusively or purported to be licensed exclusively to, the Company.
“Company Solution”
means all Software, products and services from which the Company is currently deriving or planning to derive revenue, including from the
sale, distribution, license, maintenance, subscription, software as a service, support or provision thereof.
“Company Transaction
Expenses” shall mean any fee, cost, expense, payment, expenditure, liability (contingent or otherwise) or obligation incurred
by Company that remains outstanding immediately prior to the Closing and that (i) relates directly or indirectly to (A) the
proposed disposition of all or a portion of the business of Company, or the process of identifying, evaluating and negotiating with prospective
purchasers of all or a portion of the business of Company, (B) the investigation and review conducted by Purchaser and its representatives,
and any investigation or review conducted by other prospective purchasers of all of a portion of the business of the Company, with respect
to the business of Company (and the furnishing of information to Purchaser and its representatives and such other prospective purchasers
and their representatives in connection with such investigation and review), (C) the negotiation, preparation, review, execution,
delivery or performance of this Agreement (including the Disclosure Schedules), or any exhibit, certificate, opinion, agreement or other
instrument or document delivered or to be delivered in connection with this Agreement or the transactions contemplated hereby, (D) the
obtaining of any consent required to be obtained in connection with any of the transactions contemplated hereby, or (E) the consummation
of the transactions contemplated by this Agreement; or (ii) arises or is expected to arise, is triggered or becomes due or payable,
in whole or in part, as a direct or indirect result of the consummation (whether alone or in combination with any other event or circumstance)
of the transactions contemplated by this Agreement.
“Confidential Information”
means any information concerning the business or personal affairs of a Seller, the Company, Purchaser, or Purchaser Parent which is of
a personal or proprietary nature and which is not already generally available to the public.
“Contract”
means any contract, lease, deed, mortgage, license, instrument, note, commitment, undertaking, indenture, joint venture and any other
agreement, commitment or legally binding arrangement, whether written or oral.
“Control”
or “Controlled” means, with respect to any (a) material or item of Information or (b) intellectual property
right, the possession (whether by ownership or license, other than pursuant to this Agreement) by a Party or its Affiliates of the ability
to grant to the other Party the right, access or a license as provided herein under such item or right without giving rise to any violation
of the terms of any agreement or other binding arrangement with any third party existing at the time such right, license, or access first
comes into effect or use hereunder.
“COVID-19”
means SARS-CoV-2 or COVID-19, and any variants or evolutions thereof or related or associated epidemics, pandemic or disease outbreaks.
“Data Security Requirements”
means, collectively, to the extent relating to the Company Data and User Data, each of the Company’s own rules, policies, and procedures,
all Privacy Laws, and the confidentiality requirements contained in the agreements to which the Company is a party.
“Employment Agreements”
means (a) that certain employment agreement to be entered into as of the date hereof by and between Lai Him Chung and the Purchaser
Parent, and (b) that certain employment agreement to be entered into as of the date hereof by and between Lai Him Chung and BlueBack
Global-Services (Canada) LTD.
“Environmental, Health
and Safety Requirements” means all applicable Laws concerning occupational health and safety, pollution or protection of the
environment as enacted and in effect on or prior to the Closing Date, including all such Laws and regulations relating to the emission,
discharge, release or threatened release of any chemicals, petroleum, pollutants, contaminants or hazardous or toxic materials, substances
or wastes into ambient air, surface water, groundwater or lands or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any chemicals, petroleum, pollutants, contaminants or hazardous
or toxic materials, substances or waste.
“Estimated Cash Payment”
means $625,000 less the Estimated Closing Indebtedness Amount, less the Estimated Company Transaction Expenses.
“Export Approvals”
shall mean export and import licenses, license exceptions and other consents, notices, waivers, approvals, orders, authorizations, registrations,
declarations and filings with any Governmental Authority required for (i) the export, import and re-export of products, services,
Software and technologies and (ii) releases of technologies and Software to foreign nationals located in the United States and abroad.
“Final Cash Payment
Amount” means $625,000, minus the Final Closing Indebtedness Amount, minus the Final Company Transaction Expenses
Amount.
“Final Closing Indebtedness
Amount” shall mean the Closing Indebtedness Amount set forth in the Final Closing Statement, provided, however, that if the
Closing Indebtedness Amount is disputed, it shall mean the Closing Indebtedness Amount as finally determined pursuant to the procedures
in Section 1.05(a).
“Final Company Transaction
Expenses” shall mean the Company Transaction Expenses set forth in the Final Closing Statement, provided, however, that if the
Company Transaction Expenses is disputed, it shall mean the Company Transaction Expenses as finally determined pursuant to the procedures
in Section 1.05(a).
“GAAP” means
Canadian Accounting Standards for Private Enterprises as set out in the CPA Canada Handbook (Part II) published by the Chartered
Professional Accountants of Canada, and in the absence of a specific recommendation for private enterprises contained in the Handbook
of CPA Canada, such accounting principles for private enterprises as are generally accepted in practice in Canada, and applicable as at
the date on which a calculation is made or an action is taken.
“Governmental Authority”
means any government or political subdivision, whether federal, state, provincial, territorial, local, foreign or supranational, or any
agency, authority, official or instrumentality, or supranational court, tribunal or arbitrator.
“Health Care Regulatory
Laws” shall mean any Law relating to healthcare or pharmaceutical product or ingredient manufacturing, importation, exportation,
sales, advertising, and formulation, including, without limitation the following, (i) those relating to Medicare, Medicaid or provincial
and territorial health care insurance plans and programs, including all information and formal guidance and codes of conduct issued by
Governmental Authorities related thereto, (ii), the Federal Food, Drug and Cosmetic Act of 1938, as amended, and all informal and formal
guidance issued by the U.S. Food and Drug Administration (“FDA”) pursuant thereto (the “FDCA”),
(iii) the Food and Drugs Act (Canada), the regulations promulgated thereunder, and all information and formal guidance issued
by Health Canada related thereto, (iv) HIPAA, and all federal and state Laws concerning privacy, security or confidentiality of “Personal
Information” (or similar terms such as “Personally Identifiable Information”, as defined by applicable state and federal
Laws), medical records and/or other records generated in the course of providing or paying for health care services, patient confidentiality
and informed consent, and the regulations promulgated thereunder, including all applicable Privacy Laws, (v) the Anti-Kickback Law
(42 U.S.C. § 1320a-7b, 42 C.F.R. § 1001.952) and any equivalent or similar Canadian provincial and territorial Laws applicable
to health professionals, (vi) the Civil Monetary Penalties Act (including those aspects pertaining to beneficiary inducements) (42
U.S.C. § 1320a-7a, and the regulations promulgated pursuant to such statutes), (vii) the Program Fraud Civil Remedies Act (31
U.S.C. §§ 3801-3812), (viii) the federal physician self-referral prohibition (42 U.S.C. § 1395nn, 42 C.F.R. §
411.351 et seq.), (ix) the False Claims Act (31 U.S.C. § 3729 et seq.) and the Public Servants Disclosure Protection Act
(Canada), (x) the Federal Health Care Fraud Law (18 U.S.C. § 1347), (xi) applicable state, provincial and territorial
Laws relating to health care fraud and abuse and financial relationships between referral sources and referral recipients; (xii) other
federal, provincial, territorial or state Laws relating to billing or claims for reimbursement submitted to any third-party payor, (xiii) the
Controlled Substances Act and the Controlled Drugs and Substances Act (Canada), each as amended, (ix) the Public Health Service
Act and the Quarantine Act (Canada), (xv) the federal Controlled Substances Act (21 U.S.C. §801), as well as federal,
provincial, territorial, and state Laws related to the wholesale distribution of products, including without limitation the Prescription
Drug Marketing Act (21 U.S.C. §353 and the regulations promulgated thereunder), (xvi) the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (Pub. L. No. 108-173) and the regulations promulgated thereunder, (xvii) the Patient Protection
and Affordable Care Act (Pub. L. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), (xviii) requirements
of all applicable state, federal, provincial and territorial Laws, regulatory bodies, or quasi-governmental accrediting bodies, (xix) federal,
state, provincial, territorial and local Laws regulating the ownership, operation or licensure of a health care business, or assets used
in connection therewith, (xx) federal, state, provincial, territorial and local Laws relating to the provision of management or administrative
services in connection with health care professions, employment of professionals by non-professionals, professional fee splitting, patient
brokering, patient or program charges, claims submission, record retention, certificates of operations and authority, (xxi) the Criminal
Code (Canada), (xxii) the Canada Health Act (Canada), and (xxiii) the Competition Act (Canada) as it relates
to marketing and advertising of Products.
“HIPAA” shall
mean the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and
Clinical Health Act, and the regulations promulgated pursuant thereto, including the Transaction Cost Set Standards, the Privacy Rules and
the Security Rules set forth at 45 C.F.R. Parts 160 and 164.
“Holdback Amount”
means $40,000.
“Indebtedness”
means, without duplication, all indebtedness of a Person for borrowed money, whether secured or unsecured, including, without limitation,
(a) all indebtedness of the Company for money borrowed from a lender; (b) indebtedness of such a Person for the deferred purchase
price of property or services represented by a note, earnout or contingent purchase payment; (c) all indebtedness of such Person
created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person; (d) all
indebtedness of such Person secured by a mortgage or other Lien to secure all or part of the purchase price of the property subject to
such Lien or mortgage; (e) that portion of obligations with respect to capital leases that is properly classified as a liability
on a balance sheet in conformity with GAAP; (f) any liability of such Person in respect of banker’s acceptances or letters
of credit; (g) notes payable and agreements representing extensions of credit whether or not representing obligations for borrowed
money; (h) guarantees securing indebtedness for borrowed money; (i) all deferred compensation obligations, including (1) all
payment obligations under any non-qualified deferred compensation plan of the Company and (2) any underfunded pension or post-retirement
liabilities of the Company; (j) any obligations under any interest rate swap agreements; (k) accrued bonus pool liabilities;
(l) all obligations with respect to the net current Tax liabilities of the Company that are allocable to any Pre-Closing Tax Period,
including any deferred Tax obligations as permitted under applicable COVID-19 related measures enacted, promulgated or offered as an administrative
relief by any Governmental Authority, and (m) all interest, any premiums payable or any other costs, fees or charges (including any
prepayment penalties) on any instruments or obligations described in clauses (a) through (l) hereof, all as the same may be
payable upon the complete and final payoff thereof, regardless of whether such payoff occurs prior to, simultaneous with or following
the Closing.
“Intellectual Property”
means all intellectual property and industrial property rights and assets, and all rights, interests and protections of any type that
are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, under the Laws of any jurisdiction
throughout the world, whether owned or held for use under license, whether registered or unregistered, including such right in and to
any and all : (a) patents, patent applications and statutory invention registrations, including continuations, continuations-in-part,
divisionals, provisionals, non-provisionals, reexaminations, reissues renewals, substitutions, any counterparts claiming priority therefrom,
patents of importation/confirmation, certificates of invention, certificates of registration, design registrations or patents and like
rights and extensions thereof or analogous rights, other patent rights and any other Governmental Authority issued indicia of invention
ownership (“Patents”); (b) trademarks, service marks, trade names, certification marks, brand names, trade dress,
logos and corporate names, slogans and other indicia of source of origin, whether or not registered, including all common law rights thereto
and all goodwill associated therewith, and registrations and applications for registration thereof (“Trademarks”);
(c) copyrights, whether registered or unregistered, writings or other works of authorship, database rights, and registrations and
applications for registration thereof (“Copyrights”); (d) trade secrets, information, business, technical and
know-how information, business processes, non-public information, proprietary information, including confidential information and proprietary
know-how, and rights to limit the use or disclosure thereof by any Person; (e) domain names, uniform resource locators, and internet
addresses, web pages, websites and related content; (f) moral rights; (g) shop rights; (h) inventions (whether patentable
or unpatentable), invention disclosures, industrial design rights, industrial models and utility models; (i) proprietary discoveries,
ideas, developments, data, technical, business and other information, including methodology, processes, techniques, methods, formulae,
designs, algorithms, prospect lists, customer lists, projections, analyses, market studies, manufacturing or marketing information, advertising
and promotional materials (whether or not copyrightable), blueprints, drawings, chemical compositions, market research, specifications
and methods of manufacture; (j) mask works and other semiconductor chip rights and registrations thereof; (k) computer programs
and Software including source code, object code, data and databases, application programming interfaces, and other software-related specifications,
software documentation, and any user documentation, libraries, data and other information related to such computer programs and Software;
(l) the right and power to assert, defend and recover title to any of the foregoing; (m) all rights to assert, defend and recover
for any past, present and future infringement, misuse, misappropriation, impairment, unauthorized use of other violation of any of the
foregoing; and (n) all rights to obtain renewals, continuations, divisions and extensions of legal protection pertaining to any of
the foregoing; in each case, including any registrations of, and applications to register, any of the foregoing with or by any Governmental
Authority in any jurisdiction.
“Key Data Assets”
means (a) User Data, and (c) all other data and information (including Personal Data, Protected Health Information (as defined
in HIPAA), de-identified or anonymized information, and aggregate information) that (i) is collected, generated and/or stored by
the Company, (ii) was or is used in development, deployment or operation of any Company Software or Company Solution (including aggregate
data sets upon which algorithms within any Company Software or Company Solution rely or are based), or (iii) are otherwise material
to the provision of any Company Software, Company Solution or operation of the Company’s business.
“Knowledge”
means, in the case of a Seller, the actual knowledge of such individual, without inquiry.
“Law” means
any law, rule, statute, code, ordinance, regulation, judgment, injunction, order, decree, sub-regulatory guidance or other restriction
or requirement of any court or Governmental Authority.
“Liens” means
any mortgage, lien, hypothec, option, encumbrance, assignment, restriction, pledge, claim, security interest, hypothecation, adverse claim,
easement, encroachment, right of way, burden, title defect, title retention agreement, voting trust agreement, right of first refusal,
preemptive right, put, call, restriction on transfer, charge or other encumbrance, restriction or limitation.
“Loss Contracts”
means any contract for the sale of goods and/or services which, after allocation of costs including overhead and general and administrative
expenses, would result in negative profit, defined as revenue being less than direct and allocable costs on the contract.
“Material Adverse Effect”
means any change, circumstance, event or effect that, individually or in the aggregate, is materially adverse to the business, assets,
liabilities, properties, prospects, financial condition or results of operations of the Company; provided, however, that none of the following
shall be deemed in themselves, either alone or in combination, to constitute, and none of the following shall be taken into account in
determining whether there has been or would reasonably be expected to be, a Material Adverse Effect: any adverse change or effect attributable
to (i) the announcement or pendency of the transactions contemplated by this Agreement; (ii) conditions affecting the industry
in which the Company participates, the Canadian economy as a whole or the capital markets in general or the markets in which the Company
operates (so long as the foregoing do not disproportionally affect the Company); (iii) compliance with the terms of, or the taking
of any action required by, this Agreement or any related action; (iv) any change in applicable Laws or the interpretation thereof;
(v) actions required to be taken under applicable Laws; (vi) any change in GAAP or other accounting requirements or principles
or any change in related Laws, rules or regulations or the interpretation thereof; (vii) any matter set forth in the Disclosure
Schedules to this Agreement; (viii) natural disasters, epidemics or pandemics or (ix) the commencement, continuation or escalation
of a war, material armed hostilities or other material international or national calamity or act of terrorism.
“Open Source Materials”
means all Software, documentation or other material that is distributed as “free software,” “open source software”
or under any licensing or distribution model that includes as a term thereof any requirement for distribution of source code to licensees
or third-parties, patent license requirements on distribution, restrictions on future patent licensing terms, or other abridgement or
restriction of the exercise or enforcement of any Intellectual Property through any means, including, but not limited to, the GNU General
Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), or any other license described by the Open
Source Initiative as set forth on www.opensource.org.
“Parties”
means the Company, Purchaser, Purchaser Parent, Sellers and the Seller Representative.
“Patents”
means: (a) pending patent applications, issued patents, utility models and designs; (b) reissues, substitutions, confirmations,
registrations, validations, re-examinations, additions, continuations, continued prosecution applications, continuations-in-part, or divisions
of or to any of the foregoing; (c) any other patent application claiming priority to any of the foregoing anywhere in the world;
and (d) extension, renewal or restoration of any of the foregoing by existing or future extension, renewal or restoration mechanisms,
including supplementary protection certificates or the equivalent thereof.
“Permitted Liens”
means (i) statutory Liens for current Taxes or other governmental charges not yet due and payable or the amount or validity of which
is being contested in good faith by appropriate proceedings by the Company and for which adequate reserves have been taken in accordance
with GAAP; (ii) mechanics’, carriers’, workers’, repairers’ and similar statutory Liens arising or incurred
in the ordinary course of business for amounts which are not delinquent; (iii) zoning, entitlement, building and other land use regulations
imposed by Governmental Authorities having jurisdiction over the Leased Real Property which are not violated by the current use and operation
of the Leased Real Property; (iv) covenants, conditions, restrictions, easements and other similar matters of record affecting title
to the Leased Real Property which do not materially impair the occupancy or use of the Leased Real Property for the purposes for which
it is currently used in connection with the Company’s businesses; and (v) public roads and highways.
“Person”
means any individual, corporation, partnership, firm, joint venture, association, limited liability company, limited liability partnership,
joint-stock company, trust, joint venture, unincorporated organization, governmental, judicial or regulatory body, business unit, division
or any other business entity, organization or Governmental Authority.
“Personal Data”
means a natural Person’s name, street address, telephone number, e-mail address, photograph, social security number, social insurance
number, driver’s license number, heath card information, passport number, or customer or account number, or any other piece of information
that alone or together with other information allows the identification of a natural Person.
“Product”
means: (a) the Spindle RNAP; (b) any Spindle RNAP Derivative Product; (c) any product that combines linearDNA and the Spindle
RNAP; (d) any product that combines linearDNA and a Spindle RNAP Derivative Product; or (e) any RNA product or derivative of
any RNA product (such as protein synthesis using Spindle RNAP) produced by Purchaser Parent, the Purchaser, the Company, or any Affiliates
of the foregoing, using Spindle RNAP or any Spindle RNAP Derivative Product.
“Programs”
shall mean each government sponsored health care program (including any program or plan providing health care benefits that is funded
directly, in whole or part, by a Governmental Authority), insurer, health benefit plan, health maintenance organization, preferred provider
organization, employer-sponsored health plan, multi-employer welfare trust, or any other managed care program or third party payor, including
any fiscal intermediary or contractor of any of the foregoing, under which it directly or indirectly is presently receiving payments.
“Regulatory Authority”
means, in a particular country or jurisdiction, any applicable governmental authority or non-governmental authority involved in granting
regulatory approval of or for a biopharmaceutical product or medical device in such country or jurisdiction.
“Restricted Period”
means the period beginning on the Closing Date and ending on the fifth anniversary of the Closing Date.
“Restricted Seller”
means each of Lai Him Chung and Nathaniel Brinn. “Restricted Sellers” means each Restricted Seller, collectively.
“SEC Reports”
means all reports, schedules, forms, statements, prospectuses, registration statements and other documents filed or furnished by
the Company to the U.S. Securities and Exchange Commission.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Social Media Assets”
means any accounts, profiles, pages, feeds, registrations and other online presences controlled by Company and used in connection with
the Company’s business, including (i) all access credentials therefor and (ii) all information, data, audio materials,
video materials, other visual materials, marketing materials, promotional materials, and other content contained in or used in connection
with the foregoing.
“Software”
means all (a) software, computer programs, applications, systems and code, including algorithms, models, methodologies, program interfaces,
source code, object code and executable code, (b) Internet and intranet websites, databases and compilations, including data and
collections of data, whether machine-readable or otherwise, (c) development and design tools, utilities, libraries and compilers,
(d) technology supporting websites, user interfaces, and the contents and audiovisual displays of websites, and (e) media, documentation
and other works of authorship, including forms, user manuals, support, maintenance and training materials, relating to or embodying any
of the foregoing or on which any of the foregoing is recorded.
“Spindle RNAP”
means any heterologous fusion protein comprised of a DNA binding domain and an RNA polymerase (RNAP) enzyme developed by the Company as
detailed in the PCT patent application PCT/IB2021/000727 and all genetic sequences able to produce same or processes or instructions for
producing any of the foregoing.
“Spindle RNAP Derivative
Product” means a heterologous fusion protein comprising a DNA binding domain and an RNA polymerase based substantially on the
design, functionality, and mechanism of action as the Spindle RNAP.
“Spindle RNAP Net Sales”
means the gross revenue actually received by the Purchaser, Purchaser Parent, Company, their respective Affiliates, or any third party
described in Section 1.07(c), from the sale or exploitation of Products.
“Tax Act”
means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1.
“Tax” or
“Taxes” means any federal, state, provincial, local or foreign income, gross receipts, franchise, profits, estimated,
alternative minimum, add on minimum, sales, use, transfer, real property gains, registration, value added, escheat, unclaimed property,
employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs, duties, real property, personal property,
capital stock, social security, unemployment, disability, payroll, license, harmonized sales, use, value-added, excise, special assessment,
stamp, withholding, business, franchising, health, employee health, payroll, workers’ compensation, employment or unemployment,
termination pay, severance pay, social services, social security, education, utility, surtaxes, health insurance and government pension
plan premiums or contributions employee or other withholding, or other tax, of any kind, including any interest, penalties or additions
to tax or additional amounts in respect of the foregoing and including any obligations to indemnify or otherwise assume or succeed to
the Tax liability of any other Person.
“Tax Returns”
means any return, report, claim for refund, information return or other document (including schedules or any related or supporting information)
filed or required to be filed with any governmental entity or other authority in connection with the determination, assessment or collection
of any Tax or the administration of any Laws, regulations or administrative requirements relating to any Tax.
“Transaction Documents”
means this Agreement and any agreement, certificate or instrument delivered hereunder.
“User Data”
means any Personal Data or other data or information collected by or on behalf of the Company from users of any Company Software or Company
Solution.
“Volume Weighted Average
Price” of the shares of Purchaser Parent Stock means, on any date, the volume weighted average sale price per share of Purchaser
Parent Stock on such date on the principal U.S. national or non-U.S. securities exchange on which the Purchaser Parent Stock is then listed
or, if the Purchaser Parent Stock is not listed on a U.S. national or non-U.S. securities exchange, an automated quotation system on which
the Purchaser Parent Stock is then listed or authorized for quotation.
9.02 Other
Definitional Provisions.
(a) Accounting
Terms. Accounting terms which are not otherwise defined in this Agreement have the meanings given to them under GAAP. To the extent
that the definition of an accounting term defined in this Agreement is inconsistent with the meaning of such term under GAAP, the definition
set forth in this Agreement will control.
(b) Successor
Laws. Any reference to any particular Code section or any other Law or regulation will be interpreted to include any revision of or
successor to that Code section regardless of how it is numbered or classified.
9.03 Cross
Reference of Other Definitions. Each capitalized term listed below is defined in the corresponding Section of this Agreement:
Term |
Section No. |
Action |
8.05 |
Additional Representations |
8.01 |
Agreement |
Preface |
Anti-Money Laundering Laws |
4.13(c) |
Authorizations |
4.13(a) |
Benefit Plan |
4.12 |
Cap |
8.02(e) |
Cash Consideration |
1.02(a) |
CFPOA |
4.13(b) |
Closing |
2.01 |
Term |
Section No. |
Closing
Date |
2.01 |
Closing
Share Issuance |
1.02(b)(i) |
Company |
Preface |
Company
In-Licenses |
4.10(a) |
Company
Intellectual Property |
4.10(b) |
Company
Out-Licenses |
4.10(a) |
Company
Owned IP |
4.10(b) |
Company
Representatives |
7.04 |
Company
Shares |
Recitals |
Competing
Transaction |
7.04 |
Confidentiality
Agreement |
6.02 |
Convertible
Securities Matters |
8.02(a) |
Copyrights |
Article IX |
De
Minimis Claim Threshold |
8.02(c) |
Disclosure
Schedule |
Article III |
Dispute
Resolution Auditor |
1.06(d) |
Dollars
or $ |
10.05(a) |
DR/BCP
Plans |
4.10(n) |
Earn-Out
Objections Statement |
1.06(d) |
Earn-Out
Period |
1.06(a)(i) |
Earn-Out
Shares |
1.06(a) |
Electronic
Delivery |
10.12 |
Estimated
Closing Statement |
1.04 |
FACFOA |
4.13(b) |
FCPA |
4.13(b) |
FDA |
Article IX |
FDCA |
Article IX |
Financial
Statements |
4.05(a) |
Fundamental
Representations |
8.01 |
Incorporated
Third Party Software |
4.10(a) |
Indemnitee |
8.05 |
Indemnitor |
8.05 |
Information
Systems |
4.10(m) |
IP
Representations |
8.01 |
Latest
Balance Sheet |
4.05(a) |
Leased
Real Property |
4.07(b) |
Losses |
8.02(a) |
Patents |
Article IX |
Payoff
Letters |
2.02(c) |
Pension
Plans |
4.12 |
Pre-Closing
Stock Transactions |
8.02(a) |
Pre-Closing
Tax Matters |
8.02(a) |
Pre-Closing
Tax Period |
7.01 |
Privacy
Agreements |
4.10(h) |
Term |
Section No. |
Privacy
Laws |
4.25 |
Privacy
Policies |
4.10(i) |
Proprietary
Software |
4.10(l) |
Purchaser |
Preface |
Purchaser
Indemnified Parties |
8.02(a) |
Purchaser
Parent Stock |
1.02(b) |
Purchaser's
Representatives |
7.02 |
Real
Property Leases |
4.07(b) |
Regulatory
Filings |
4.24(d) |
Released
Claims |
6.03 |
Released
Parties |
6.03 |
Releasors |
6.03 |
Revenue
Share Period |
1.07(a) |
Schedule |
Article III |
Seller
Indemnified Parties |
8.03(a) |
SEMA |
4.13(b) |
Significant
Contract |
4.09(a) |
Spindle
RNAP Net Sales Earn-Out Shares |
1.06(a)(ii) |
Spindle
RNAP Net Sales Milestone |
1.06(a)(ii) |
Spindle
RNAP Net Sales Statement |
1.06(d) |
Spindle
RNAP Patent Earn-Out Shares |
1.06(a)(i) |
Spindle
RNAP Patent Issuance |
1.06(a)(i) |
Spindle
RNAP Revenue Share |
1.07(a) |
Spreadsheet |
1.03(a) |
Spreadsheet
Losses |
8.02(a) |
Stock
Certificates |
1.03 |
Stock
Consideration |
1.02(b) |
Seller
Representative |
Preface |
Straddle
Period |
7.02 |
Survival
Period Termination Date |
8.01 |
Tax
Contest |
7.09(a) |
Tax
Representations |
8.01 |
Terminated
Agreements |
2.02(h) |
Threshold |
8.02(c) |
Trademarks |
Article IX |
Transfer
Taxes |
7.05 |
Turner
Note |
8.02(a) |
Turner
Note Claim |
8.02(a) |
Article X
MISCELLANEOUS
10.01 Expenses.
Except as otherwise expressly provided herein, each Party shall pay all of its own expenses (including attorneys’, broker’s,
financial advisory and accountants’ fees and expenses) in connection with the negotiation of this Agreement, the performance of
their obligations hereunder and the consummation of the transactions contemplated by this Agreement.
10.02 Notices.
All notices and other communications hereunder shall be in writing and shall be deemed duly delivered (a) upon receipt if delivered
personally, (b) three Business Days after being mailed by registered or certified mail, postage prepaid, return receipt requested,
(c) one Business Day after it is sent by commercial overnight courier service, or (d) upon transmission if sent via email to
the parties at the following address (or at such other address for a party as shall be specified upon like notice):
Notices to Purchaser, and, following the Closing, Company,
to:
c/o Applied DNA Sciences, Inc.
50 Health Sciences Drive
Stony Brook, New York 11790
Attention: Clay Shorrock, Chief Legal Officer
Email: clay.shorrock@adnas.com
with a copy (which shall not constitute notice) to:
McDermott Will & Emery LLP
One Vanderbilt Avenue
New York, NY 10017-3852
Attention: Merrill Kraines
Email: Mkraines@mwe.com
McDermott Will & Emery LLP
One Vanderbilt Avenue
New York, NY 10017-3852
Attention: Todd Kornfeld
Email: tkornfeld@mwe.com
Notices to the Seller Representative:
Lai Him Chung
Unit 903, 92 King Street East
Toronto, Ontario, Canada, ON M5C 2V8
Email: aaronchunglaihim@hotmail.com
10.03 Assignment.
This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors
and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or
delegated by any Seller without the prior written consent of the other Parties. For the avoidance of doubt, nothing in this Section 10.03
shall prohibit Purchaser from amalgamating with the Company at any time following the Closing without the consent of Sellers.
10.04 Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
Law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable Law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions
of this Agreement, and the Parties shall amend or otherwise modify this Agreement to replace any prohibited or invalid provision with
an effective and valid provision that gives effect to the intent of the Parties to the maximum extent permitted by applicable Law.
10.05 References.
(a) When
a reference is made in this Agreement to a section, subsection, Exhibit or Schedule, such reference shall be to a section, subsection,
Exhibit or Schedule of this Agreement unless otherwise indicated. The headings contained in this Agreement, in any Schedules and
in the table of contents to this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made part of this Agreement
as if set forth in full herein. Any capitalized term used in any Exhibit or Schedule, including the Disclosure Schedules, and not
otherwise defined shall have the meaning given to such term in this Agreement. Unless the context clearly requires otherwise, whenever
the words “include”, “includes”, “including”, “such as” or terms of similar meaning are
used in this agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof”,
“herein”, “hereby” and “hereunder” and terms of similar meaning when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “or” is not exclusive.
The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and
such phrase shall not mean simply “if”. The definitions contained in this Agreement are applicable to the singular as well
as to the plural forms of such terms. Any agreement or instrument defined or referred to herein means such agreement or instrument as
from time to time amended, modified or supplemented. References to a Person are also to its permitted successors and assigns. Pronouns
of one gender shall include all genders. All accounting conventions shall be consistent with GAAP unless otherwise specified. The headings
in this Agreement are for reference only, and shall not affect the interpretation of this Agreement. All references to “Dollars”
or “$” shall be to United States Dollars unless otherwise specified.
(b) The
Exhibits and Schedules to this Agreement are a material part of this Agreement. The Disclosure Schedule attached hereto is incorporated
herein and expressly made a part of this Agreement as though completely set forth herein. All references to this Agreement herein or in
the Disclosure Schedule shall be deemed to refer to this entire Agreement, including Disclosure Schedules. Capitalized terms used in the
Disclosure Schedule and not otherwise defined therein have the meanings given to them in this Agreement.
10.06 Construction.
The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Person. The information contained in this Agreement and in the Disclosure Schedules and
Exhibits hereto is disclosed solely for purposes of this Agreement, and no information contained herein or therein shall be deemed to
be an admission by any party hereto to any third party of any matter whatsoever (including, without limitation, any violation of Law or
breach of contract).
10.07 Amendment
and Waiver. Any provision of this Agreement or the Disclosure Schedules or Exhibits hereto may be amended or waived only in a writing
signed by Purchaser, the Company and the Seller Representative, and any such modification, amendment or waiver shall be binding on each
of the Parties and each party bound by this Agreement. No waiver of any provision hereunder or any breach or default thereof shall extend
to or affect in any way any other provision or prior or subsequent breach or default.
10.08 Complete
Agreement. This Agreement (including the Recitals which are incorporated in and made a part hereof) and the documents referred to
herein (including the Confidentiality Agreement) contain the complete agreement between the Parties and supersede any prior understandings,
agreements or representations by or between the Parties, written or oral, which may have related to the subject matter hereof in any way.
10.09 Third
Party Beneficiaries. Except as otherwise expressly provided herein, nothing expressed or referred to in this Agreement will be construed
to give any Person other than the Parties any legal or equitable right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement.
10.10 Governing
Law. All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and the exhibits
and schedules hereto shall be governed by, and construed in accordance with, the Laws of the State of New York, without giving effect
to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of New York.
10.11 Dispute
Resolution. Any legal suit, action, proceeding or dispute arising out of or relating to this Agreement or the transactions
contemplated hereby or thereby may be instituted in the federal courts of the United States of America or the courts of the State of New York in
each case located in the city of New York and county of New York, and each party irrevocably submits to the exclusive jurisdiction of
such courts in any such suit, action, proceeding or dispute. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL ACTION, PROCEEDING, CAUSE OF ACTION OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, INCLUDING
ANY EXHIBITS AND SCHEDULES ATTACHED TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION; (II) EACH PARTY HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER; (III) EACH PARTY MAKES THIS WAIVER KNOWINGLY AND VOLUNTARILY; AND (IV) EACH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.12 Electronic
Delivery. This Agreement and any signed agreement or instrument entered into in connection with this Agreement (excluding the Stock
Certificates), and any amendments hereto or thereto, to the extent delivered by means of a facsimile machine or electronic mail (any such
delivery, an “Electronic Delivery”), shall be treated in all manner and respects as an original agreement or instrument
and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At
the request of any Party or to any such agreement or instrument, each other party hereto or thereto shall re execute original forms thereof
and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of Electronic Delivery
to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic
Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense
related to lack of authenticity.
10.13 Counterparts.
This Agreement may be executed in multiple counterparts, any one of which need not contain the signature of more than one party, but all
such counterparts taken together shall constitute one and the same instrument.
10.14 Specific
Performance. The Parties acknowledge and agree that any party hereto would be irreparably damaged if any of the provisions of this
Agreement are not performed in accordance with their specific terms and that any breach of this Agreement by any party could not be adequately
compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which any party may be entitled,
at law or in equity, such party (as well as Seller Representative) shall also be entitled to enforce any provision of this Agreement by
a decree of specific performance and to temporary, preliminary, and permanent injunctive relief to prevent breaches or threatened breaches
of any of the provisions of this Agreement, without posting any bond or other undertaking.
10.15 Appointment
of the Seller Representative.
(a) Sellers
irrevocably appoint Seller Representative as their true and lawful agent, attorney-in-fact and representative (with full power of substitution
in the premises), and grant unto said agent, attorney-in-fact and representative full power and authority to do and perform each and every
act and thing necessary or desirable to be done in connection with the transactions contemplated by this Agreement, as fully to all intents
and purposes as Sellers could do in person, hereby ratifying and confirming all that Seller Representative may lawfully do or cause to
be done by virtue hereof. Each Seller agrees that such agency, proxy and power of attorney are coupled with an interest, and are therefore
irrevocable without the consent of the Seller Representative and Purchaser and shall survive the death, incapacity, bankruptcy or dissolution
of each such Seller. By its execution hereof, Seller Representative hereby accepts such appointment.
(b) Seller
Representative is hereby authorized (i) to take all actions necessary or desirable, in connection with the defense and/or settlement
of any claims for Losses (including the power to compromise any indemnity claim on behalf of Sellers and to transact matters of litigation)
for which Sellers may be required to indemnify Purchaser and its Affiliates pursuant to Article VIII and Section 7.01
hereof, (ii) to take all actions necessary or desirable in connection with the determination and payment of the Consideration, (iii) to
give and receive all notices required to be given under this Agreement and the other agreements contemplated hereby to which all of Sellers
are subject, and (iv) to do or refrain from doing all such further acts and things, and to execute all such documents as Seller Representative
shall deem necessary or appropriate in connection with the transactions contemplated by this Agreement, including, without limitation,
the power:
(i) to
execute and deliver all amendments, waivers, ancillary agreements, stock powers, certificates and documents that Seller Representative
deems necessary or appropriate in connection with the consummation of the transactions contemplated by this Agreement;
(ii) to
receive funds, make (or cause to be made) payments of funds, and give receipts for funds to appoint a paying agent for the disbursement
of funds to Sellers pursuant to this Agreement;
(iii) to
receive funds for the payment of expenses of Sellers, to deposit such funds in such accounts as Seller Representative deems appropriate
and apply such funds in payment for such expenses;
(iv) to
do or refrain from doing any further act or deed on behalf of Sellers that the Seller Representative deems necessary or appropriate in
its sole discretion relating to the subject matter of this Agreement as fully and completely as Sellers could do if personally present;
(v) to
receive service of process in connection with any claims under this Agreement; and
(vi) to
engage attorneys, accountants and other professionals and experts (the Seller Representative may in good faith rely conclusively upon
information, reports, statements and opinions prepared or presented by such professionals, and any action taken by the Seller Representative
based on such reliance shall be deemed conclusively to have been taken in good faith).
(c) In
the event that the Seller Representative dies, becomes unable to perform its responsibilities hereunder or resigns from such position,
Sellers (or, if applicable, their respective heirs, legal representatives, successors and assigns) who held a majority of the voting power
represented by the Company Shares issued and outstanding immediately prior to the Closing, shall select another representative to fill
such vacancy and such substituted representative shall be deemed to be a Seller Representative for all purposes of this Agreement.
(d) All
decisions and actions by the Seller Representative, including the defense or settlement of any claims for Losses for which Sellers and
may be required to indemnify Purchaser and its Affiliates pursuant to Article VIII and Section 7.01 hereof, shall
be binding upon all of Sellers, and no Seller shall have the right to object, dissent, protest or otherwise contest the same.
(e) Purchaser
shall be able to rely conclusively on the instructions and decisions of Seller Representative as to the determination and payment of the
Consideration and the settlement of any claims for Losses for which Sellers may be required to indemnify Purchaser and its Affiliates
pursuant to Article VIII and Section 7.01 hereof and any other actions required to be taken by Seller Representative
hereunder, and no party hereunder or Seller shall have any cause of action against Purchaser for any action taken by Purchaser in reliance
upon the instructions or decisions of Seller Representative.
(f) All
actions, decisions and instructions of the Seller Representative shall be conclusive and binding upon all of Sellers, and Seller Representative
shall have no liability, and no Seller shall have any cause of action against Seller Representative under any legal or equitable theory
whatsoever, for any action taken or not taken, decision made or instruction given by Seller Representative under this Agreement, except
to the extent involving gross negligence, bad faith or willful misconduct on its part.
(g) Seller
Representative shall not have by reason of this Agreement a fiduciary relationship with any Seller, except in respect of amounts received
by the Seller Representative on behalf of such Seller.
(h) Seller
Representative shall not be liable to any of Sellers for any apportionment or distribution of payments made by her, except to the extent
involving gross negligence, bad faith or willful misconduct on its part, and if any such apportionment or distribution is subsequently
determined to have been made in error, the sole recourse of any Seller to whom payment was due, but not made, shall be to recover from
other Sellers any payment in excess of the amount to which they are determined to have been entitled. The Sellers shall indemnify the
Seller Representative against any reasonable, documented, and out-of-pocket losses, liabilities and expenses (“Representative
Losses”) arising out of or in connection with this Agreement and any related agreements, in each case as such Representative
Loss is suffered or incurred other than to the extent any such Representative Losses are attributable to gross negligence, bad faith or
willful misconduct of Seller Representative.
(i) The
provisions of this Section 10.15 are independent and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that any Seller may have in connection with the transactions contemplated by this Agreement;
and
(j) The
provisions of this Section 10.15 shall be binding upon the heirs, legal representatives; successors and assigns of each
Seller, and any references in this Agreement to a Seller shall mean and include the successors to the rights of such Seller hereunder,
whether pursuant to testamentary disposition, the Laws of descent and distribution or otherwise.
10.16 Purchaser
Parent Guaranty. By joining in this Agreement, Purchaser Parent guarantees to Sellers the full and prompt payment by Purchaser of
all of the Purchaser’s covenants and obligations under this Agreement. If Purchaser does not perform a covenant or obligation under
this Agreement, the Purchaser Parent shall promptly perform or cause Purchaser to perform the covenant or obligation. This guaranty of
Purchaser Parent is one of payment, not of collection. This guaranty shall remain in force and effect (and shall remain in effect notwithstanding
any amendments to this Agreement) for Purchaser Parent until all of the obligations of Purchaser have been paid, observed, performed,
or discharged in full.
[Remainder of page intentionally
left blank]
IN WITNESS WHEREOF, the Parties
have executed this Share Purchase Agreement on the day and year first above written.
COMPANY: |
SPINDLE BIOTECH INC.
|
|
By: |
/s/ Lai Him Chung |
|
|
Name: Lai Him Chung |
|
|
Title: Chief Executive Officer |
PURCHASER: |
SPINDLE ACQUISITION CORP.
|
|
By: |
/s/ James
A. Hayward |
|
|
Name: James A. Hayward |
|
|
Title: President and CEO |
Solely for the purposes of acknowledging and
agreeing to Section 10.16 and the other provisions in which the Purchaser Parent is named:
PURCHASER PARENT: |
APPLIED DNA SCIENCES INC.
|
|
By: |
/s/ Clay
Shorrock |
|
|
Name: Clay Shorrock |
|
|
Title: Chief Legal Officer |
[Signature Page to Share Purchase Agreement]
SELLER REPRESENTATIVE: |
/s/ Lai Him Chung |
|
Lai Him Chung |
[Signature Page to Share Purchase Agreement]
SELLER: |
SOSV IV LLC by SOSV IV GP LLC, its
Manager
|
|
/s/ Sean
O’Sullivan |
|
Name:
Sean O’Sullivan |
|
Title:
Managing Partner |
[Signature Page to Share Purchase Agreement]
Schedule 1.1
Sellers
Expected Cap Table (post note conversion: anticipated closing date
July 12th 2023)
|
Share # |
Share % |
Lai Him Chung |
[***] |
[***] |
Nathaniel Brinn |
[***] |
[***] |
Chao Chen |
[***] |
[***] |
Brendan Hussey |
[***] |
[***] |
Mikhael Dubrovsky |
[***] |
[***] |
Quynh Anh Ngo |
[***] |
[***] |
SOSV IV LLC |
[***] |
[***] |
Cyrus M Brinn |
[***] |
[***] |
Sunil Dadlani |
[***] |
[***] |
Kent Spafford |
[***] |
[***] |
Kunal Bhasin |
[***] |
[***] |
Pierre Vella-Zarb |
[***] |
[***] |
Marc Gregory Taylor, Ph.D. |
[***] |
[***] |
Keith Ian Pardee |
[***] |
[***] |
Trevor David McKee |
[***] |
[***] |
Kwan Tsaan Lai |
[***] |
[***] |
Allied Waves Inc. |
[***] |
[***] |
Sohrab Ghaffari-haghi |
[***] |
[***] |
|
|
|
Total |
[***] |
[***] |
Exhibit
99.1
Applied
DNA Acquires RNA Polymerase Developer Spindle Biotech, Launches LineaIVTTM Platform to Substantially Improve mRNA Manufacturing
and Broaden Market Reach
-
Platform Enables Customers to Manufacture mRNA with Substantial Reduction in dsRNA and Manufacturing Complexities; Integrable into Current
mRNA Workflows -
-
Platform Currently Available Under Early Access Program -
STONY BROOK,
N.Y. – July 13, 2023 – Applied
DNA Sciences, Inc. (NASDAQ: APDN) (“Applied DNA”
or the “Company”), a leader in PCR-based DNA technologies, today announced that it has acquired Spindle
Biotech Inc. (“Spindle”), an early-stage, private biotech company developing next-generation
RNA manufacturing technologies. The acquisition uniquely leverages the Company’s LinearDNA™ platform that enables the efficient
chemical modification of DNA templates and the high binding affinity of Spindle’s proprietary, high-performance RNA polymerase
(RNAP) for chemically modified DNA templates to deliver multiple advantages over conventional plasmid DNA-based mRNA production, including
1) the prevention or reduction of double-stranded RNA (dsRNA) contamination resulting in higher target mRNA yields; 2) delivery of IVT
templates in as little as 14 days for milligram scale and 30 days for gram scale; and 3) reduced mRNA manufacturing complexities.
The
acquisition combines the Company’s linearDNA™ IVT templates and Spindle’s RNA polymerase into an integrated offering
branded as the LineaIVT™ platform. With this integrated offering, Applied DNA expands its access to the mRNA value chain severalfold
to what it estimates is over 20%1 of mRNA manufacturing costs of goods.
Terms of the Stock Purchase
Agreement
Under
the terms of the stock purchase agreement entered into among Applied DNA, Spindle, and the former shareholders of Spindle, Applied DNA
acquired all outstanding shares in Toronto-based Spindle for an upfront purchase consideration of $625,000 cash, as adjusted for debt
and transaction expenses, and 750,000 restricted shares of Company common stock, in addition to future contingent consideration of up
to 1.0 million shares of Company common stock upon the satisfaction of certain commercialization and revenue milestones. The SPA also
provides for a 10-year revenue share based on the net sales generated by the LineaIVT platform. Aaron Chung, co-founder and CEO of Spindle,
joins the Company as Director of Nucleic Acid Platforms.
Dr.
James A. Hayward, president and CEO of Applied DNA, stated, “The acquisition of Spindle aligns us with the growing demand for mRNA
therapeutics across an expanding range of diseases. mRNA supply, however, is challenged by the industry’s use of plasmid DNA and
inherent limitations associated with conventional production methods for mRNA. Chief among these limitations is the generation of potentially
hazardous dsRNA contaminants that is a significant challenge to quality control for CDMOs and therapy developers that can potentially
delay development timelines and program costs and complicate regulatory approval processes. The issue of dsRNA is currently addressed
through additional purification, specialized instrumentation, and cost, however, with the launch of our LineaIVT platform, we seek to
solve these manufacturing issues and enable our customers to produce better mRNA faster.
“Having
first partnered with Spindle in 2022, we deeply appreciate the complementary nature of its RNAP to our linearDNA IVT templates and the
combined technologies’ ability to substantially reduce or eliminate dsRNA contamination without sacrificing production yields,”
concluded Dr. Hayward. “With this acquisition, we have moved into a unique leadership position based on our combined offering, which
we believe is the only platform to leverage the unique attributes of enzymatically produced IVT templates to empower a proprietary RNA
polymerase. With the simultaneous launch of our LineaIVT platform early access program, we plan to engage mRNA stakeholders across the
entirety of the value chain.”
Additional Transaction Details
The
transaction is being accounted for as an asset acquisition. Applied DNA will record the assets acquired and the consideration paid in
its fiscal fourth quarter and full-year 2023 results ending September 30, 2023. A copy of the stock purchase agreement will be filed with
the Securities and Exchange Commission (“SEC”) and will be publicly available.
Click to review
an overview of the Spindle transaction
About Applied DNA Sciences
Applied DNA Sciences is a
biotechnology company developing technologies to produce and detect deoxyribonucleic acid (“DNA”). Using PCR to enable both
the production and detection of DNA, we operate in three primary business markets: (i) the manufacture of DNA for use in nucleic acid-based
therapeutics; (ii) the detection of DNA in molecular diagnostics testing services; and (iii) the manufacture and detection of DNA for
industrial supply chain security services.
Visit adnas.com for
more information. Follow us on Twitter and LinkedIn.
Join our mailing list.
The Company’s common
stock is listed on NASDAQ under the ticker symbol ‘APDN,’ and its publicly traded warrants are listed on OTC under the ticker
symbol ‘APPDW.’
About Spindle Biotech Inc.
Founded
in 2017, Spindle has developed a proprietary RNA Polymerase that, when used in conjunction with specialized chemically modified IVT templates,
produces high-quality and high-yield mRNA with significant reductions in dsRNA impurities. In March
2022, Spindle and Applied DNA entered into a collaborative research agreement to pursue a simplified and
efficient method to produce mRNA with advantages over conventional plasmid DNA methods.
Forward-Looking Statements
The statements made by Applied
DNA in this press release may be “forward-looking” in nature within the meaning of Section 27A of the Securities Act of 1933,
Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements
describe Applied DNA’s future plans, projections, strategies, and expectations, are based on assumptions and involve a number of
risks and uncertainties, many of which are beyond the control of Applied DNA, and include Applied DNA’s beliefs and expectations
and statements about the benefits sought to be achieved in the acquisition of Spindle and the potential effects of the acquisition on
Applied DNA. Actual results could differ materially from those projected due to its history of net losses, limited financial resources,
unknown future demand for its biotherapeutics products and services, the unknown amount of revenues and profits that will result from
the LineaIVT platform, the fact that there has never been a commercial drug product utilizing PCR-produced DNA technology and/or the Spindle
RNAP enzyme approved for therapeutic use, and various other factors detailed from time to time in Applied DNA’s SEC reports and
filings, including its Annual Report on Form 10-K filed on December 14, 2022, as amended, its 10-Q filed on February 9, 2023,
and May 11, 2023, and other reports it files with the SEC, which are available at www.sec.gov. Applied DNA undertakes no obligation
to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date hereof or to reflect
the occurrence of unanticipated events, unless otherwise required by law.
Corporate Contacts:
Investor Relations Contact: Sanjay
M. Hurry, 917-733-5573, sanjay.hurry@adnas.com
Program Contact: Clay Shorrock,
631-912-6454, clay.shorrock@adnas.com
Web: www.adnas.com
Twitter: @APDN
###
Exhibit 99.2
©2023 Applied DNA Sciences, Inc. Applied DNA Acquires Spindle Biotech Better RNA…Faster July 13, 2023 ©2023 Applied DNA Sciences, Inc. Nasdaq: APDN
©2023 Applied DNA Sciences, Inc. The statements made by Applied DNA in this presentation may be “forward - looking” in nature within the meaning of Section 27 A of the Securities Act of 1933 , Section 21 E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995 . Forward - looking statements describe Applied DNA’s future plans, projections, strategies, and expectations, are based on assumptions and involve a number of risks and uncertainties, many of which are beyond the control of Applied DNA, and include Applied DNA’s beliefs and expectations and statements about the benefits sought to be achieved in the acquisition of Spindle and the potential effects of the acquisition on Applied DNA . Actual results could differ materially from those projected due to its history of net losses, limited financial resources, unknown future demand for its biotherapeutics products and services, the unknown amount of revenues and profits that will result from the LineaIVT ̿ platform, the fact that there has never been a commercial drug product utilizing PCR - produced DNA technology and/or the Spindle RNAP enzyme approved for therapeutic use, and various other factors detailed from time to time in Applied DNA’s SEC reports and filings, including its Annual Report on Form 10 - K filed on December 14 , 2022 , as amended, its 10 - Q filed on February 9 , 2023 , and May 11 , 2023 , and other reports it files with the SEC, which are available at www . sec . gov . Applied DNA undertakes no obligation to update publicly any forward - looking statements to reflect new information, events, or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless otherwise required by law . 2 Safe Harbor Statement
©2023 Applied DNA Sciences, Inc. Non - Contingent Considerations Cash of $625,000, and 750,000 shares of restricted common stock subject to a 6 - month lockup period 3 Acquisition Highlights V2 Platform Contingent Stock Considerations 1.0M shares, 250,000 shares of which will be issued upon the issuance of a patent for the Spindle RNA polymerase, and 750,000 shares of which will be issued in three equal tranches upon the achievement of aggregate gross sales milestones at $5.0M per tranche Structure The acquisition of Spindle Biotech is being accounted for as an asset acquisition, and Applied DNA will record the assets acquired and the consideration paid in its fiscal fourth quarter and full - year 2023 results ending September 30, 2023. Management Spindle Biotech CEO Aaron Chung joins Applied DNA as Director, Nucleic Acid Platforms Revenue Share (10 Years) 10% of Linea ̿ IVT platform net sales 14% of enzyme net sales if sold outside of the Linea ̿ IVT platform
©2023 Applied DNA Sciences, Inc. Acquisition Rationale • Unique combination of LinearDNA ̿ platform and Spindle complementary technologies allow Applied DNA to address two significant issues facing mRNA manufacturing. • The Company’s LinearDNA platform is well suited to produce chemically modified IVT templates, which are required for the Spindle RNA polymerase (RNAP). • Addition of Spindle RNAP increases the Company’s total addressable market several fold to an estimated 20+% 1 of mRNA manufacturing costs of goods. • Combined technology allows Applied DNA customers to produce better mRNA, faster and cheaper. 4 1 - Based on Company’s internal modeling and estimates
©2023 Applied DNA Sciences, Inc. Conventional mRNA Manufacturing Problems Long lead times increase mRNA production timeline Struggles with complex DNA sequences such as Poly(a) tails Requires expensive enzymatic linearization and additional filtration Steps Problematic inflammatory byproduct of conventional IVT dsRNA removal is essential for safe and effective mRNA products Increased regulatory scrutiny Currently removed via expensive and complex purification methods Can cause quality control issues Increased regulatory scrutiny Plasmid DNA ( pDNA ) Double Stranded RNA (dsRNA) Bacterially derived pDNA is currently the starting material for mRNA 5
©2023 Applied DNA Sciences, Inc. linearDNA TM IVT Templates • Cell free enzymatic production platform • Rapid production timelines • Reduces mRNA production steps • Primer induced modifications enable simple 3’ and 5’ IVT template customization • Stable homopolymer amplification Spindle RNA Polymerase (RNAP) • Proprietary and patent pending RNAP • Includes DNA binding domain and high - fidelity T7 • High binding affinity for chemically modified linearDNA IVT templates • Reduces or eliminates dsRNA contamination • mRNA yields that meet or exceed conventional IVT Substantially Improved mRNA Production • Significantly simplified mRNA production • Reduced or eliminated dsRNA contamination • Delivery of commercial scale IVT templates in as little as 14 days • Integrable into current mRNA workflows 6
©2023 Applied DNA Sciences, Inc. Conventional IVT mRNA Production Linea IVT mRNA Production Simplifying mRNA Production Removal of IVT template linearization and purification steps results in simplified workflow 7
©2023 Applied DNA Sciences, Inc. Equivalent mRNA Yields to Conventional IVT 0.2uM RNAP 82.825 98.5 86.6 64.775 91.025 93.8 91.9 82.575 0 30 60 90 120 Biotin-temp Biotin-temp No-biotin No-biotin NEB wild type Spindle sp1 NEB wild type Spindle sp1 RNA Yield (µg) +KCl -KCl Standard Template Standard Template + LineaIVT Additives - LineaIVT Additives Platform’s chemically modified linearDNA templates and proprietary enzyme and IVT conditions have no negative impact on mRNA yields Chem. Mod. Template Chem. Mod. Template 8
©2023 Applied DNA Sciences, Inc. Elimination or Significant Reduction of dsRNA Impurities 9 + LineaIVT Additives - LineaIVT Additives + LineaIVT Additives - LineaIVT Additives Chem. Mod. Template Standard Template • Dot blot detection of dsRNA impurities in mRNA. The darker the dot, the more dsRNA is present. • Combination of chemically modified linearDNA templates +Spindle RNAP significantly reduces or eliminates dsRNA impurities as compared to conventional IVT
©2023 Applied DNA Sciences, Inc. Thank you! ir@adnas.com Nasdaq: APDN
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