UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

	
Form 10‑Q	

	
		
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
 
For the quarterly period ended June 30, 2019

	
		
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
 
For the transition period from                        to                        
  Commission File No.  001-36847

Invitae Corp oration
(Exact name of the registrant as specified in its charter)

	
			
Delaware	 	27-1701898	
(State or other jurisdiction of
incorporation or organization)	 	(I.R.S. Employer
Identification No.)	
 
1400 16 th Street , San Francisco , California 94103
(Address of principal executive offices, Zip Code)
 
( 415 )  374-7782
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes    ☒     No   ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     ☒     No   ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b 2 of the Exchange Act.

					
Large accelerated filer	☐	 	Accelerated filer	☒	
Non-accelerated filer	☐	 	Smaller reporting company	☐	
 	 	 	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.       ☒
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ☐ No   ☒
Securities registered pursuant to Section 12(b) of the Act:

					
Title of each class	 	Trading Symbol	 	Name of exchange on which registered	
Common Stock, $0.0001 par value per share	 	NVTA	 	New York Stock Exchange	
The number of shares of the registrant’s common stock outstanding as of July 26, 2019 was 95,175,277 .

TABLE OF CONTENTS

	
			
 	 	Page No.	
PART I: Financial Information	 	
Item 1.	Consolidated Financial Statements	 	
 	Condensed Consolidated Balance Sheets	1	
 	Condensed Consolidated Statements of Operations	2	
 	Condensed Consolidated Statements of Comprehensive Loss	3	
 	Condensed Consolidated Statements of Stockholders' Equity	4	
 	Condensed Consolidated Statements of Cash Flows	5	
 	Notes to Condensed Consolidated Financial Statements	6	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38	
Item 4.	Controls and Procedures	39	
 	 	 	
PART II: Other Information	 	
Item 1.	Legal Proceedings	40	
Item 1A.	Risk Factors	40	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62	
Item 6.	Exhibits	62	
 	 	 	
SIGNATURES	64	

PART I — Financial Information
 
ITEM 1. Consolidated Financial Statements.
 
INVITAE CORPORATION

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

	
								
 	June 30,
2019	 	December 31,
2018	
Assets	 		 	 		
Current assets:	 		 	 		
Cash and cash equivalents	$	247,000		 	$	112,158		
Marketable securities	800		 	13,727		
Accounts receivable	23,143		 	26,296		
Prepaid expenses and other current assets	16,976		 	13,258		
Total current assets	287,919		 	165,439		
Property and equipment, net	29,021		 	27,886		
Operating lease assets	40,228		 	—		
Restricted cash	6,243		 	6,006		
Intangible assets, net	57,832		 	30,469		
Goodwill	76,556		 	50,095		
Other assets	5,103		 	3,064		
Total assets	$	502,902		 	$	282,959		
Liabilities and stockholders’ equity	 	 	 	
Current liabilities:	 	 	 	
Accounts payable	$	5,255		 	$	7,812		
Accrued liabilities	27,801		 	26,563		
Operating lease obligations	5,102		 	—		
Finance lease obligations	1,934		 	1,937		
Total current liabilities	40,092		 	36,312		
Operating lease obligations, net of current portion	45,694		 	—		
Finance lease obligations, net of current portion	429		 	1,375		
Debt	75,184		 	74,477		
Other long-term liabilities	—		 	8,956		
Total liabilities	161,399		 	121,120		
Commitments and contingencies (Note 8)			 			
Stockholders’ equity:	 	 	 	
Common stock	9		 	8		
Accumulated other comprehensive income (loss)	—		 	(5	)	
Additional paid-in capital	944,559		 	678,548		
Accumulated deficit	(603,065	)	 	(516,712	)	
Total stockholders’ equity	341,503		 	161,839		
Total liabilities and stockholders’ equity	$	502,902		 	$	282,959		

See accompanying notes to unaudited condensed consolidated financial statements.

 

1

INVITAE CORPORATION

Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

	
																
 	Three Months Ended
June 30,	 	Six Months Ended
June 30,	
 	2019	 	2018	 	2019	 	2018	
Revenue:	 	 	 	 	 	 	 	
Test revenue	$	52,302		 	$	36,350		 	$	91,921		 	$	63,403		
Other revenue	1,173		 	956		 	2,107		 	1,574		
Total revenue	53,475		 	37,306		 	94,028		 	64,977		
Cost of revenue	28,006		 	20,447		 	49,260		 	38,523		
Research and development	25,302		 	15,784		 	43,296		 	31,150		
Selling and marketing	30,779		 	18,707		 	54,972		 	37,631		
General and administrative	21,274		 	12,436		 	34,593		 	24,216		
Loss from operations	(51,886	)	 	(30,068	)	 	(88,093	)	 	(66,543	)	
Other income, net	1,381		 	188		 	2,019		 	1,835		
Interest expense	(2,121	)	 	(1,791	)	 	(4,229	)	 	(3,083	)	
Net loss before taxes	(52,626	)	 	(31,671	)	 	(90,303	)	 	(67,791	)	
Income tax benefit	(3,950	)	 	—		 	(3,950	)	 	—		
Net loss	$	(48,676	)	 	$	(31,671	)	 	$	(86,353	)	 	$	(67,791	)	
Net loss per share, basic and diluted	$	(0.54	)	 	$	(0.47	)	 	$	(1.01	)	 	$	(1.12	)	
Shares used in computing net loss per share, basic and diluted	90,863		 	67,807		 	85,148		 	60,775		
 
See accompanying notes to unaudited condensed consolidated financial statements.  

2

INVITAE CORPORATION

Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)

	
																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Net loss	$	(48,676	)	 	$	(31,671	)	 	$	(86,353	)	 	$	(67,791	)	
Other comprehensive income (loss):	 	 	 	 	 	 	 	
Unrealized income (loss) on available-for-sale marketable securities, net of tax	(8	)	 	51		 	5		 	62		
Comprehensive loss	$	(48,684	)	 	$	(31,620	)	 	$	(86,348	)	 	$	(67,729	)	
 
See accompanying notes to unaudited condensed consolidated financial statements.

3

INVITAE CORPORATION

Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
(unaudited)

	
																
 	Three Months Ended
June 30,	 	Six Months Ended
June 30,	
 	2019	 	2018	 	2019	 	2018	
Common stock:	 	 	 	 	 	 	 	
Balance, beginning of period	$	9		 	5		 	$	8		 	$	5		
Common stock issued	—		 	1		 	1		 	1		
Balance, end of period	9		 	6		 	9		 	6		
 	 	 	 	 	 	 	 	
Accumulated other comprehensive income (loss):	 	 	 	 	 	 	 	
Balance, beginning of period	8		 	(160	)	 	(5	)	 	(171	)	
Unrealized income on available-for-sale marketable securities, net of tax	(8	)	 	51		 	5		 	62		
Balance, end of period	—		 	(109	)	 	—		 	(109	)	
 	 	 	 	 	 	 	 	
Additional paid-in capital:	 	 	 	 	 	 	 	
Balance, beginning of period	870,784		 	525,592		 	678,548		 	520,558		
Common stock issued in connection with public offering, net	—		 	53,479		 	184,490		 	53,479		
Common stock issued on exercise of stock options, net	413		 	26		 	2,432		 	48		
Common stock issued pursuant to exercises of warrants	25		 	3,083		 	113		 	3,252		
Common stock issued pursuant to employee stock purchase plan	2,578		 	1,633		 	2,578		 	1,633		
Common stock issued pursuant to business combinations	59,026		 	3,973		 	59,442		 	3,973		
Warrants issued pursuant to loan agreement	—		 	—		 	—		 	383		
Stock-based compensation expense	11,733		 	6,112		 	16,956		 	10,505		
Other	—		 	—		 	—		 	67		
Balance, end of period	944,559		 	593,898		 	944,559		 	593,898		
 	 	 	 	 	 	 	 	
Accumulated deficit:	 	 	 	 	 	 	 	
Balance, beginning of period	(554,389	)	 	(423,477	)	 	(516,712	)	 	(398,598	)	
Cumulative effect of accounting change	—		 	—		 	—		 	11,241		
Net loss	(48,676	)	 	(31,671	)	 	(86,353	)	 	(67,791	)	
Balance, end of period	(603,065	)	 	(455,148	)	 	(603,065	)	 	(455,148	)	
Total stockholders' equity	$	341,503		 	$	138,647		 	$	341,503		 	$	138,647		

See accompanying notes to unaudited condensed consolidated financial statements.

4

INVITAE CORPORATION

Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	
								
 	Six Months Ended June 30,	
 	2019	 	2018	
Cash flows from operating activities:	 		 	 		
Net loss	$	(86,353	)	 	$	(67,791	)	
Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	
Depreciation and amortization	6,725		 	6,927		
Stock-based compensation	19,540		 	10,505		
Remeasurements of liabilities associated with business combinations	(286	)	 	709		
Benefit from income taxes	(3,950	)	 	—		
Other	1,182		 	462		
Changes in operating assets and liabilities, net of business acquired:	 	 	 	
Accounts receivable	3,153		 	(4,037	)	
Prepaid expenses and other current assets	(3,825	)	 	(512	)	
Other assets	2,410		 	(1,428	)	
Accounts payable	(3,954	)	 	(3,106	)	
Accrued expenses and other liabilities	4,267		 	(396	)	
Net cash used in operating activities	(61,091	)	 	(58,667	)	
 	 	 	 	
Cash flows from investing activities:	 	 	 	
Purchases of marketable securities	(20,781	)	 	(900	)	
Proceeds from sales of marketable securities	—		 	19,965		
Proceeds from maturities of marketable securities	34,000		 	2,078		
Acquisition of business, net of cash acquired	3,193		 	—		
Purchases of property and equipment	(8,824	)	 	(3,084	)	
Net cash provided by investing activities	7,588		 	18,059		
 	 	 	 	
Cash flows from financing activities:	 	 	 	
Proceeds from public offerings of common stock, net of issuance costs	184,490		 	53,480		
Proceeds from issuance of common stock	5,123		 	4,933		
Proceeds from debt financing	—		 	19,781		
Finance lease principal payments	(1,031	)	 	(1,170	)	
Net cash provided by financing activities	188,582		 	77,024		
 	 	 	 	
Net increase in cash, cash equivalents and restricted cash	135,079		 	36,416		
Cash, cash equivalents and restricted cash at beginning of period	118,164		 	17,459		
Cash, cash equivalents and restricted cash at end of period	$	253,243		 	$	53,875		
 	 	 	 	
Supplemental cash flow information of non-cash investing and financing activities:	 	 	
Purchases of property and equipment in accounts payable and accrued liabilities	$	1,059		 	$	238		
Investment in privately-held company in other assets and accrued liabilities	$	—		 	$	675		
Warrants issued pursuant to loan and security agreement	$	—		 	$	383		
Common stock issued for acquisition of businesses	$	59,442		 	$	3,973		
Lease assets obtained in exchange for lease obligations, net	$	5,615		 	$	—		

See accompanying notes to unaudited condensed consolidated financial statements.

5

INVITAE CORPORATION
Notes to Condensed Consolidated Financial Statements

1. Organization and description of business
Invitae Corporation ("Invitae," “the Company," "we," "us," and "our") was incorporated in the State of Delaware on January 13, 2010, as Locus Development, Inc. and changed its name to Invitae Corporation in 2012. We utilize an integrated portfolio of laboratory processes, software tools and informatics capabilities to process DNA-containing samples, analyze information about patient-specific genetic variation and generate test reports for clinicians and patients. Our headquarters and main production facility is located in San Francisco, California. We currently have more than 20,000 genes in production and provide a variety of diagnostic tests that can be used in multiple indications. Our tests include genes associated with hereditary cancer, neurological disorders, cardiovascular disorders, pediatric disorders, metabolic disorders and other hereditary conditions. In addition, and as a result of the acquisitions of Good Start Genetics (“Good Start”) in August 2017 and CombiMatrix Corporation (“CombiMatrix”) in November 2017, our services also include screening and testing in reproductive health, including preimplantation and carrier screening for inherited disorders, prenatal diagnosis, miscarriage analysis and pediatric developmental disorders. To complement these, in the first quarter of 2019, we introduced our Non-invasive Prenatal Screen ("NIPS") and to advance this offering, in June 2019 we acquired Singular Bio, Inc. ("Singular Bio") to lower costs associated with NIPS. In July 2019, we acquired Jungla Inc. ("Jungla") to further enhance our genetic variant interpretation. Invitae operates in one segment.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 . The results for the three and six months ended June 30, 2019 are not necessarily indicative of the results expected for the full fiscal year or any other periods.   
2. Summary of significant accounting policies
Principles of consolidation
Our unaudited condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base these estimates on historical and anticipated results, trends and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. Actual results could differ materially from those estimates and assumptions.
Significant estimates and assumptions made by management include the determination of:
		
•	revenue recognition (See Note 3, “Revenue, accounts receivable and deferred revenue” for further information);	
		
•	the fair value of assets acquired and liabilities assumed for business combinations;	
		
•	the fair value of goodwill and intangible assets;	
		
•	the recoverability of long-lived assets;	

6

		
•	our incremental borrowing rates used to calculate our lease obligations;	
		
•	stock-based compensation expense and the fair value of awards issued; and	
		
•	income tax uncertainties.	
Concentrations of credit risk and other risks and uncertainties
Financial instruments that potentially subject us to a concentration of credit risk consist of cash, cash equivalents, marketable securities and accounts receivable. Our cash and cash equivalents are held by financial institutions in the United States. Such deposits may exceed federally insured limits.
Significant customers are those that represent 10% or more of our total revenue presented on the statements of operations. We had one significant customer during the periods presented and revenue for this customer as a percentage of our total revenue were as follows:

													
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	 	2019	 	2018	 	2019	 	2018	
Medicare	 	23	%	 	18	%	 	22	%	 	17	%	
United Healthcare	 	10	%	 	*	 	10.0%	 	*		
*  Balance represents less than 10% of total revenue	 	 	 	 	 	 	
Our significant customer's accounts receivable balance as a percentage of total accounts receivable was as follows:

					
 	June 30, 2019	 	December 31, 2018	
Medicare	*	 	21	%	

____________________________
* Balance represents less than 10% of total accounts receivable
Cash, cash equivalents and restricted cash
We consider all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market funds.
Restricted cash consists primarily of money market funds held in irrevocable standby letters of credit that serve as collateral for security deposits for our facility leases.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the statements of cash flows (in thousands):

								
 	June 30,
2019	 	December 31,
2018	
Cash and cash equivalents	$	247,000		 	$	112,158		
Restricted cash	6,243		 	6,006		
Total cash, cash equivalents and restricted cash	$	253,243		 	$	118,164		

Accounts receivable
We receive payment for our tests from partners, patients, institutional customers and third-party payers. See Note 3, “Revenue, accounts receivable and deferred revenue” for further information.
Inventory
We maintain test reagents and other consumables primarily used in sample collection kits which are valued at the lower of cost or net realizable value. Cost is determined using actual costs on a first-in, first-out basis. Our inventory was $8.6 million and $8.3 million as of June 30, 2019 and December 31, 2018 , respectively, and was recorded in prepaid expenses and other current assets on our consolidated balance sheets.
Business combinations
The tangible and identifiable intangible assets acquired and liabilities assumed in a business combination are recorded based on their estimated fair values as of the business combination date, including identifiable

7

intangible assets which either arise from a contractual or legal right or are separable from goodwill. We base the estimated fair value of identifiable intangible assets acquired in a business combination on independent valuations that use information and assumptions provided by our management, which consider our estimates of inputs and assumptions that a market participant would use. Any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed is recorded to goodwill. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, cash flows, discount rates, estimated useful lives and probabilities surrounding the achievement of contingent milestones could result in different purchase price allocations and amortization expense in current and future periods.
In circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity , we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We remeasure this liability each reporting period and record changes in the fair value as a component of operating expenses.
Transaction costs associated with acquisitions are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in our operating results from the date of acquisition.
Goodwill
In accordance with ASC 350, Intangibles-Goodwill and Other (“ASC 350”), our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Under ASC 350, we perform annual impairment reviews of our goodwill balance during the fourth fiscal quarter. In testing for impairment, we compare the fair value of our consolidated single reporting unit to its carrying value including the goodwill of that unit. If the carrying value, including goodwill, exceeds the reporting unit’s fair value, we will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized cannot exceed the total amount of goodwill allocated to the reporting unit.
We have not incurred any goodwill impairment losses in any of the periods presented.
Indefinite-lived Intangible Assets
ASC 350 requires companies to test indefinite-lived intangible assets for impairment annually, and more frequently if indicators of impairment exist. ASC 350 includes an optional qualitative assessment for testing indefinite-lived intangible assets for impairment that permits companies to assess whether it is more likely than not (i.e., a likelihood of greater than 50%) that an indefinite-lived intangible asset is impaired. If a company concludes based on the qualitative assessment that it is not more likely than not that the fair value of an indefinite-lived intangible asset or, in the case of goodwill, that the fair value of the related reporting unit, is less than carrying value, it would not have to determine the asset’s or reporting unit’s fair value, as applicable.
In-Process Research and Development
Intangible assets related to in-process research and development costs (“IPR&D”), are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. If and when development is complete, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time. Prior to completion of the research and development efforts, the assets are considered indefinite-lived. During this period, the assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts.
During the fourth quarter and if business factors indicate more frequently, we perform an assessment of the qualitative factors affecting the fair value of our IPR&D. Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of an asset to its carrying value, without consideration of any recoverability test. We have not identified any such impairment losses to date.

8

Fair value of financial instruments
Our financial instruments consist principally of cash and cash equivalents, marketable securities, accounts payable, accrued liabilities, finance leases and debt. The carrying amounts of certain of these financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued and other current liabilities approximate their current fair value due to the relatively short-term nature of these accounts. Based on borrowing rates available to us, the carrying value of our finance leases and debt approximates their fair values.
Revenue recognition
We recognize revenue when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. All revenues are generated from contracts with customers.
Test revenue is generated primarily from the sale of tests that provide analysis and associated interpretation of the sequencing of parts of the genome.
Other revenue consists primarily of revenue from genome network subscription services which is recognized on a straight-line basis over the subscription term, and revenue from collaboration agreements.
Cost of revenue
Cost of revenue reflects the aggregate costs incurred in delivering the genetic testing results to clinicians and patients and includes expenses for personnel-related costs including stock-based compensation, materials and supplies, equipment and infrastructure expenses associated with testing and allocated overhead including rent, equipment depreciation, amortization of acquired intangibles and utilities.
Stock-based compensation
We measure stock-based payment awards made to employees and directors based on the estimated fair values of the awards and recognize the compensation expense over the requisite service period. We use the Black-Scholes option-pricing model to estimate the fair value of stock option awards and employee stock purchase plan (“ESPP”) purchases. The fair value of restricted stock unit (“RSU”) awards with time-based vesting terms is based on the grant date share price. We grant performance-based restricted stock unit (“PRSU”) awards to certain employees which vest upon the achievement of certain performance conditions, subject to the employees’ continued service relationship with us. The probability of vesting is assessed at each reporting period and compensation cost is adjusted based on this probability assessment. We recognize such compensation expense on an accelerated vesting method.
Stock-based compensation expense for awards without a performance condition is recognized using the straight-line method. Stock-based compensation expense is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. As such, our stock-based compensation is reduced for estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
We account for stock issued in connection with business combinations based on the fair value of our common stock on the date of issuance.
Net loss per share
Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. Potentially dilutive securities, consisting of convertible preferred stock, options to purchase common stock, common stock warrants, and RSUs, are considered to be common stock equivalents and were excluded from the calculation of diluted net loss per share because their effect would be antidilutive for all periods presented.
Recent accounting pronouncements
We evaluate all Accounting Standards Updates (“ASUs”) issued by the FASB for consideration of their applicability. ASUs not included in the disclosures in this report were assessed and determined to be either not applicable or are not expected to have a material impact on our consolidated financial statements.

9

Recently issued accounting pronouncements not yet adopted
In June 2016, FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) which requires measurement and recognition of expected credit losses for financial assets. This guidance will become effective for us beginning in the first quarter of 2020 and must be adopted using a modified retrospective approach, with certain exceptions. We are currently evaluating the effect that adoption of this ASU will have on our consolidated financial statements.
Recently adopted accounting pronouncements – Leases
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and in July 2018 issued ASU 2018-10 , Codification Improvements to Topic 842, Leases and ASU 2018-11 , Leases (Topic 842): Targeted Improvements (the foregoing ASUs collectively referred to as “Topic 842”). Under the new guidance, lessees are required to recognize a lease liability and a right-of-use asset for all leases at the commencement date and also make expanded disclosures about leasing arrangements.
On January 1, 2019, we adopted Topic 842 using the modified retrospective approach in accordance with Topic 842. Adoption of Topic 842 had a material impact on our consolidated balance sheets, but did not have an impact on our consolidated statements of operations. Prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under previous lease guidance, ASC 840: Leases. We elected the package of practical expedients permitted under the transition guidance which, among other things, allowed us to carry forward the historical classification of leases in place as of January 1, 2019.
The effect of the adoption of Topic 842 on our consolidated balance sheet as of January 1, 2019 was as follows (in thousands):

													
 	 	December 31, 2018	 	Adjustments Due to the Adoption of Topic 842	 	January 1, 2019	
Property and equipment, net	 	$	27,886		 	$	(5,159	)	 	$	22,727		
Operating lease assets	 	$	—		 	$	36,711		 	$	36,711		
Other assets	 	$	3,064		 	$	5,159		 	$	8,223		
Accrued liabilities	 	$	26,563		 	$	(490	)	 	$	26,073		
Operating lease obligations	 	$	—		 	$	4,697		 	$	4,697		
Operating lease obligations, net of current portion	 	$	—		 	$	41,279		 	$	41,279		
Other long-term liabilities	 	$	8,956		 	$	(8,775	)	 	$	181		

The adjustments due to the adoption of Topic 842 primarily relate to the recognition of operating and finance lease right-of-use assets and operating lease liabilities. Finance lease assets are recorded within other assets on our consolidated balance sheet and were $5.2 million as of implementation of Topic 842 on January 1, 2019 and $4.4 million as of June 30, 2019 .
Under Topic 842, we determine if an arrangement is a lease at inception primarily based on the determination of the party responsible for directing the use of an underlying asset within a contract. Operating leases are included in operating lease assets and operating lease obligations in our consolidated balance sheets. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date which includes significant assumptions made by us including our estimated credit rating. Operating lease right-of-use assets also include any lease payments made prior to the lease commencement date and exclude any lease incentives paid or payable at the lease commencement date. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise any such options. Lease expense is recognized on a straight-line basis over the expected lease term.
As allowed under Topic 842, we elected to not apply the recognition requirements of Topic 842 to short-term leases, that is, leases with terms of 12 months or less which do not include an option to purchase the underlying asset that we are reasonably certain to exercise. For short-term leases, we recognize lease payments as operating expenses on a straight-line basis over the lease term.

10

As a result of our election of the package of practical expedients permitted under the Topic 842 transition guidance, for assets related to facilities leases we elected to account for lease and non-lease components, such as common area maintenance charges, as a single lease component.
We did not identify any material embedded leases with the adoption of Topic 842 and therefore the implementation of Topic 842 primarily focused on the treatment of our previously identified leases.
3. Revenue, accounts receivable and deferred revenue
Test revenue is generated from sales of diagnostic tests to three groups of customers: institutions, such as hospitals, clinics and partners; patients who pay directly; and patients’ insurance carriers. Amounts billed and collected, and the timing of collections, vary based on whether the payer is an institution, an insurance carrier or a patient. Other revenue consists principally of revenue recognized under collaboration and genome network agreements.
The following table includes our revenues as disaggregated by payer category (in thousands):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Test revenue:	 	 	 	 	 	 	 	
Institutions	$	9,814		 	$	8,572		 	$	17,968		 	$	15,803		
Patient - direct	4,056		 	3,575		 	7,797		 	6,425		
Patient - insurance	38,432		 	24,203		 	66,156		 	41,175		
Total test revenue	52,302		 	36,350		 	91,921		 	63,403		
Other revenue	1,173		 	956		 	2,107		 	1,574		
Total revenue	$	53,475		 	$	37,306		 	$	94,028		 	$	64,977		

We recognize revenue related to billings based on estimates of the amount that will ultimately be realized. The estimate of the transaction price of test revenue is based on many factors such as length of payer relationship, historical payment patterns, and changes in contract provisions and insurance reimbursement policies. Cash collections for certain diagnostic tests delivered may differ from rates originally estimated. As a result of new information, we updated our estimate of the amounts to be recognized for previously delivered tests which resulted in the following increases to revenue and decreases to our loss from operations and basic and diluted net loss per share (in millions, except per share amounts):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
 	 	 	 	 	 	 	 	
Revenue	$	2.4		 	$	2.3		 	$	2.8		 	$	2.3		
Loss from operations	$	(2.4	)	 	$	(2.3	)	 	$	(2.8	)	 	$	(2.3	)	
Net loss per share, basic and diluted	$	(0.03	)	 	$	(0.03	)	 	$	(0.03	)	 	$	(0.04	)	

The changes in estimates in revenue recognized during the three and six months ended June 30, 2019 were primarily related to adjustments to revenue recognized in 2018 from businesses acquired in 2017. We recorded revenue of $2.3 million in the six months ended June 30, 2018 due to a change in estimate related to deletion/duplication analysis for hereditary breast and ovarian cancer using Current Procedure Terminology (CPT) code 81433 in conjunction with CPT code 81432, for tests completed during the second half of 2017.
Accounts receivable
The majority of our accounts receivable represents amounts billed to institutions (e.g., hospitals, clinics, partners) and estimated amounts to be collected from third-party insurance payers for diagnostic test revenue recognized. Also included are amounts due under the terms of collaboration and genome network agreements for diagnostic testing and data aggregation reporting services provided and proprietary platform access rights transferred.

11

Deferred revenue
We record deferred revenue when cash payments are received or due in advance of our performance related to one or more performance obligations. The amounts deferred to date primarily consist of consideration received pertaining to the estimated exercise of certain re-requisition rights. In order to comply with loss contract rules, our re-requisition rights revenue deferral is no less than the estimated cost of fulfilling related obligations. We recognize revenue related to re-requisition rights as the rights are exercised or expire unexercised, which is generally within 90 days of initial deferral.
4. Business combinations
Good Start Genetics
In August 2017, we acquired 100% of the fully diluted equity of Good Start, a privately held molecular diagnostics company focused on preimplantation and carrier screening for inherited disorders. As of December 31, 2018, we had a hold-back amount payable for remaining common stock to be issued upon the resolution of outstanding claims from Good Start customers of approximately $1.5 million , of which $0.7 million was settled during the six months ended June 30, 2019 , with the remainder settled in July 2019.
Singular Bio
In June 2019, we acquired 100% of the fully diluted equity of Singular Bio, a privately held company developing single molecule detection technology, for approximately $57.3 million , comprised of $53.9 million in the form of 2.5 million shares of our common stock and the remainder in cash. As of June 30, 2019, we have hold-back amounts payable within 12 months of the acquisition date of $1.8 million .
Prior to the acquisition, we entered into a co-development agreement with Singular Bio whereby we paid Singular Bio $3.0 million for a 12-month right of first refusal and an opportunity to conduct due diligence on its business. As of January 2019, we made all required payments under the terms of this agreement.
In connection with the acquisition, all of Singular Bio's equity awards that were outstanding and unvested prior to the acquisition became fully vested per the terms of the merger agreement. The acceleration of vesting required us to allocate the fair value of the equity attributable to pre-combination service to the purchase price and the remaining was considered our post-combination expense. We recognized post-combination expense related to the acceleration of unvested equity of $3.2 million and we also incurred transaction costs of $1.0 million related to the acquisition of Singular Bio; both of these charges were recorded as general and administrative expense during the three months ended June 30, 2019. We included the financial results of Singular Bio in our consolidated financial statements from the acquisition date, which were not material for the three or six months ended June 30, 2019 .
Assets acquired and liabilities assumed are recorded based on valuations derived from estimated fair value assessments and assumptions used by us. While we believe that our estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and liabilities assumed, and the resulting amount of goodwill. The following table summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands):

				
Cash	$	4,988		
Property and equipment	303		
In-process research and development	29,988		
Total identifiable assets acquired	35,279		
Current liabilities assumed	(479	)	
Deferred tax liability	(3,950	)	
Net identifiable assets acquired	30,850		
Goodwill	26,461		
Total purchase price	$	57,311		

Based on the guidance provided in ASC 805, we accounted for the acquisition of Singular Bio as a business combination in which we determined that 1) Singular Bio was a business which combines inputs and processes to create outputs, and 2) substantially all of the fair value of gross assets acquired was not concentrated in a single identifiable asset or group of similar identifiable assets.

12

Our purchase price allocation for our acquisition of Singular Bio is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but at the time was unknown to us may become known to us during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The acquisition of Singular Bio resulted in the recognition of $26.5 million of goodwill which we believe consists primarily of technological expertise and capabilities within nucleic acid analysis and the ability to utilize the technology outside NIPS. Goodwill created as a result of the acquisition of Singular Bio is not deductible for tax purposes.
We granted approximately $90.0 million of restricted stock units ("RSUs") under our 2015 Stock Incentive Plan as inducement awards to new employees who joined Invitae in connection with our acquisition of Singular Bio. $45.0 million of the RSUs are time-based and vest in three equal installments in December 2019, June 2020, and December 2020, subject to the employee's continued service with us ("Time-based RSUs") and $45.0 million of the RSUs are performance-based RSUs ("PRSUs") that vest upon the achievement of certain performance conditions over a period of approximately 12 months, subject to the employee's continued service with us. Since the number of awards granted is based on a 30-day volume weighted-average share price with a fixed dollar value, these Time-based RSUs and PRSUs are liability-classified and the fair value will be estimated at each reporting period based on the number of shares that are expected to be issued at each reporting date and our closing stock price, which combined are categorized as Level 3 inputs. Therefore, fair value of the RSUs and the number of shares to be issued will not be fixed until the RSUs vest.
During the three and six months ended June 30, 2019 , we recorded research and development stock-based compensation expense of $0.9 million related to the Time-based RSUs and $1.7 million related to the PRSUs based on our evaluations of the probability of achieving performance conditions. As of June 30, 2019 , the Time-based RSUs and PRSUs had a total fair value of $50.3 million and $44.7 million , respectively, based on a total estimated issuance of 4.0 million shares and expectation of the achievement of the performance conditions. As of June 30, 2019 , none of the Time-based RSUs or PRSUs granted to these new employees had vested.     
The unaudited pro forma financial information in the table below summarizes the combined results of operations for Invitae and Singular Bio as though the companies had been combined as of January 1, 2018. The pro forma amounts have been adjusted for transaction expenses incurred by Singular Bio and us, the impacts of the co-development agreement, the historical interest expense incurred by Singular Bio on its debt and debt-like items, compensation expense recognized in relation to the equity awards granted in connection with the acquisition of Singular Bio, post-combination expenses, income tax benefits resulting from the deferred tax liabilities acquired, and the 2.5 million shares of our common stock issued upon the closing of the Singular Bio transaction.
The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as of January 1, 2018 (in thousands, except per share data):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Revenue	$	53,475		 	$	37,306		 	$	94,028		 	$	64,977		
Net loss	(45,454	)	 	(32,122	)	 	(83,121	)	 	(68,723	)	
Basic and diluted net loss per share	$	(0.50	)	 	$	(0.46	)	 	$	(0.98	)	 	$	(1.09	)	

5. Goodwill and intangible assets
Goodwill
The changes in the carrying amounts of goodwill were as follows (in thousands):

				
Balance as of December 31, 2018	$	50,095		
Goodwill acquired	26,461		
Balance as of June 30, 2019	$	76,556		

13

Intangible Assets
The following table presents details of our intangible assets as of June 30, 2019 and December 31, 2018 (in thousands):

																												
 	June 30, 2019	 	December 31, 2018	
 	Cost	 	Accumulated
Amortization	 	Net	 	Weighted Average
Useful Life
(in Years)	 	Cost	 	Accumulated
Amortization	 	Net	 	Weighted Average
Useful Life
(in Years)	
Customer relationships	$	23,763		 	$	(3,961	)	 	$	19,802		 	10.0	 	$	23,763		 	$	(2,783	)	 	$	20,980		 	10.0	
Developed technology	11,963		 	(4,744	)	 	7,219		 	4.8	 	11,963		 	(3,482	)	 	8,481		 	4.8	
Non-compete agreement	286		 	(143	)	 	143		 	5.0	 	286		 	(114	)	 	172		 	5.0	
Trade name	576		 	(402	)	 	174		 	2.7	 	576		 	(329	)	 	247		 	2.7	
Patent licensing agreement	496		 	(54	)	 	442		 	15.0	 	496		 	(37	)	 	459		 	15.0	
Favorable leases	247		 	(183	)	 	64		 	2.2	 	247		 	(117	)	 	130		 	2.2	
In-process research and development	29,988		 	—		 	29,988		 	n/a	 	—		 	—		 	—		 	n/a	
 	$	67,319		 	$	(9,487	)	 	$	57,832		 	 	 	$	37,331		 	$	(6,862	)	 	$	30,469		 	 	

Acquisition-related intangibles included in the above table are finite-lived, other than in-process research and development which has an indefinite life, and are carried at cost less accumulated amortization. Customer relationships are being amortized on an accelerated basis, in proportion to estimated cash flows. All other finite-lived acquisition-related intangibles are being amortized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are realized. Amortization expense was $1.3 million for both three-month periods ended June 30, 2019 and 2018 , and $2.6 million and $2.5 million for the six months ended June 30, 2019 and 2018 , respectively. Amortization expense is recorded to cost of revenue, research and development, sales and marketing and general and administrative expense.
The following table summarizes our estimated future amortization expense of intangible assets with finite lives as of June 30, 2019 (in thousands):

				
2019 (remainder of year)	$	2,625		
2020	5,525		
2021	5,829		
2022	4,124		
2023	3,111		
Thereafter	6,630		
Total estimated future amortization expense	$	27,844		

14

6. Balance sheet components
Property and equipment, net
Property and equipment consisted of the following (in thousands):

								
 	June 30, 2019	 	December 31, 2018	
Leasehold improvements	$	14,049		 	$	13,034		
Laboratory equipment	25,341		 	22,149		
Equipment under capital lease	—		 	7,129		
Computer equipment	4,976		 	4,723		
Software	2,663		 	2,594		
Furniture and fixtures	901		 	784		
Automobiles	20		 	20		
Construction-in-progress	7,000		 	1,962		
Total property and equipment, gross	54,950		 	52,395		
Accumulated depreciation and amortization	(25,929	)	 	(24,509	)	
Total property and equipment, net	$	29,021		 	$	27,886		

Depreciation expense was $1.8 million and $2.3 million for the three months ended June 30, 2019 and 2018 , respectively, and $3.4 million and $4.4 million for the six months ended June 30, 2019 and 2018 , respectively.
Accrued liabilities
Accrued liabilities consisted of the following (in thousands):

								
 	June 30, 2019	 	December 31, 2018	
Accrued compensation and related expenses	$	11,187		 	$	7,917		
Liabilities associated with business combinations	5,090		 	6,460		
Liability associated with co-development agreement	—		 	2,000		
Deferred revenue	1,072		 	761		
Other	10,452		 	9,425		
Total accrued liabilities	$	27,801		 	$	26,563		

Other long-term liabilities
Other long-term liabilities consisted of the following (in thousands):

								
 	June 30, 2019	 	December 31, 2018	
Lease incentive obligation, non-current	$	—		 	$	3,280		
Deferred rent, non-current	—		 	5,495		
Other non-current liabilities	—		 	181		
Total other long-term liabilities	$	—		 	$	8,956		
 
7. Fair value measurements
 
Financial assets and liabilities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The authoritative guidance establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity.
The three-level hierarchy for the inputs to valuation techniques is summarized as follows:
Level 1—Observable inputs such as quoted prices (unadjusted) for identical instruments in active markets.

15

Level 2—Observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-derived valuations whose significant inputs are observable.
Level 3—Unobservable inputs that reflect the reporting entity’s own assumptions.
The following tables set forth the fair value of our consolidated financial instruments that were measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018 (in thousands):

																												
 	June 30, 2019	
 	Amortized
Cost	 	Unrealized	 	Estimated
Fair Value	 	 	 	 	 	 	
 		 	Gains	 	Losses	 		 	Level 1	 	Level 2	 	Level 3	
Financial assets:	 	 	 	 	 	 	 	 	 		 	 		 	 		
Money market funds	$	242,652		 	$	—		 	$	—		 	$	242,652		 	$	242,652		 	$	—		 	$	—		
Certificates of deposit	300		 	—		 	—		 	300		 	—		 	300		 	—		
Commercial paper	500		 	—		 	—		 	500		 	—		 	500		 	—		
Total financial assets	$	243,452		 	$	—		 	$	—		 	$	243,452		 	$	242,652		 	$	800		 	$	—		

				
 	June 30, 2019	
Reported as:	 		
Cash equivalents	$	236,409		
Restricted cash	6,243		
Marketable securities	800		
Total cash equivalents, restricted cash, and marketable securities	$	243,452		

	
																												
 	December 31, 2018	
 	Amortized
Cost	 	Unrealized	 	Estimated
Fair Value	 	 	 	 	 	 	
 		 	Gains	 	Losses	 		 	Level 1	 	Level 2	 	Level 3	
Financial assets:	 	 	 	 	 	 	 	 	 		 	 		 	 		
Money market funds	$	93,934		 	$	—		 	$	—		 	$	93,934		 	$	93,934		 	$	—		 	$	—		
Certificates of deposit	300		 	—		 	—		 	300		 	—		 	300		 	—		
Commercial paper	10,908		 	—		 	(1	)	 	10,907		 	—		 	10,907		 	—		
U.S. treasury notes	9,990		 	—		 	—		 	9,990		 	9,990		 	—		 	—		
U.S. government agency securities	6,001		 	—		 	(4	)	 	5,997		 	—		 	5,997		 	—		
Total financial assets	$	121,133		 	$	—		 	$	(5	)	 	$	121,128		 	$	103,924		 	$	17,204		 	$	—		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Financial liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Contingent consideration	 	 	 	 	 	 	$	4,998		 	—		 	—		 	$	4,998		
Total financial liabilities	 	 	 	 	 	 	$	4,998		 	—		 	—		 	$	4,998		

				
 	December 31, 2018	
Reported as:	 		
Cash equivalents	$	101,395		
Restricted cash	6,006		
Marketable securities	13,727		
Total cash equivalents, restricted cash, and marketable securities	$	121,128		
 	 	
Accrued liabilities	$	4,998		

There were no transfers between Level 1, Level 2 and Level 3 during the periods presented. The total fair value of investments with unrealized losses at June 30, 2019 was nil . None of the available-for-sale securities held

16

as of June 30, 2019 has been in a continuous unrealized loss position for more than one year. We have not identified any other-than-temporary declines in market value and thus have not recorded any impairment charges on our financial assets during the six months ended June 30, 2019 .  
At June 30, 2019 , the remaining contractual maturities of available-for-sale securities ranged from zero to one month .
 
 Our certificates of deposit, commercial paper, and debt securities of U.S. government agency entities are classified as Level 2 as they are valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs obtained from various third-party data providers, including but not limited to benchmark yields, interest rate curves, reported trades, broker/dealer quotes and reference data.
As of December 31, 2018, we had a contingent obligation of $5.0 million of our common stock calculated using a 30-day trailing average share price to the former owners of AltaVoice in conjunction with our acquisition of AltaVoice in January 2017. The amount of the contingent obligation was dependent upon 2017 and 2018 revenue attributable to AltaVoice. Since revenue attributable to AltaVoice for the combined period of 2017 and 2018 was greater than the $10 million contingent milestone, in April 2019 we issued 0.2 million shares of our common stock to the former owners of AltaVoice which had a fair value on the date of issuance of $5.2 million to settle this contingent obligation.
The fair value of our outstanding debt is estimated using the net present value of future debt payments, discounted at an interest rate that is consistent with market interest rates, which is a Level 2 input. The estimated fair value of our outstanding debt at June 30, 2019 and December 31, 2018 approximated the carrying values.
8 . Commitments and contingencies
Leases
Operating leases
In 2015, we entered into a lease agreement for our headquarters and main production facility in San Francisco, California which commenced in 2016. This lease expires in July 2026 and we may renew the lease for an additional ten years . This optional period was not considered reasonably certain to be exercised and therefore we determined the lease term to be a ten -year period expiring in 2026. In connection with the execution of the lease, we provided a security deposit of approximately $4.6 million which is included in restricted cash in our consolidated balance sheets. We also have other operating leases for office and laboratory space in California and Massachusetts. We expect to enter into new leases and modifying existing leases as we support continued growth of our operations.
As of June 30, 2019 , the weighted-average remaining lease term for our operating leases was 6.1 years and the weighted-average discount rate used to determine our operating lease liability was 11.5% . Cash payments included in the measurement of our operating lease liabilities were $2.5 million for the three months ended June 30, 2019 and $4.9 million for the six months ended June 30, 2019 .
The components of lease costs, which were included in cost of revenue, research and development, selling and marketing and general and administrative expenses on our consolidated statements of operations were as follows (in thousands):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Operating lease costs	$	2,564		 	$	2,392		 	$	5,081		 	$	4,832		
Sublease income	(43	)	 	(39	)	 	(86	)	 	(78	)	
Total operating lease costs	2,521		 	2,353		 	4,995		 	4,754		
Finance lease costs	391		 	446		 	811		 	955		
Total lease costs	$	2,912		 	$	2,799		 	$	5,806		 	$	5,709		

17

Future minimum payments under non-cancelable operating leases as of June 30, 2019 are as follows (in thousands):

				
2019 (remainder of year)	$	5,491		
2020	10,636		
2021	10,698		
2022	10,636		
2023	9,912		
Thereafter	28,249		
Future non-cancelable minimum operating lease payments	75,622		
Less: minimum payments to be received from non-cancelable subleases	(88	)	
Total future non-cancelable minimum operating lease payments, net	75,534		
Less: imputed interest	(24,738	)	
Total operating lease liabilities	50,796		
Less: current portion	(5,102	)	
Operating lease obligations, net of current portion	$	45,694		

Finance leases
We have entered into various finance lease agreements to obtain laboratory equipment. The terms of our finance leases are generally three years with a weighted-average remaining lease term of 1.2 years as of June 30, 2019 and are typically secured by the underlying equipment. The weighted-average discount rate used to determine our finance lease liability was 6.2% . The portion of the future payments designated as principal repayment was classified as a finance lease obligation on our consolidated balance sheets. Cash payments included in the measurement of our finance lease liabilities were $0.6 million for the three months ended June 30, 2019 and $1.1 million for the six months ended June 30, 2019 .
Future payments under finance leases at June 30, 2019 are as follows (in thousands):

				
2019 (remainder of year)	$	1,103		
2020	1,354		
Total finance lease obligations	2,457		
Less: interest	(94	)	
Present value of net minimum finance lease payments	2,363		
Less: current portion	(1,934	)	
Finance lease obligations, net of current portion	$	429		

Debt financing
In November 2018, we entered into a Note Purchase Agreement (the "2018 Note Purchase Agreement") pursuant to which we were eligible to borrow an aggregate principal amount up to $200.0 million over a seven year maturity term which included an initial borrowing of $75.0 million in November 2018. We received net proceeds of $10.3 million after terminating and repaying the balance of our obligations of approximately $64.7 million with our previous lender.
At June 30, 2019 , obligations under the 2018 Note Purchase Agreement were $75.0 million which are required to be repaid to the lender in a balloon payment no later than 2025. If we repay prior to the three year anniversary following the initial borrowing, in addition to other prepayment fees, the amount due will be: 117.5% of the principal amount if payment is made within 12 months after the borrowing; 132.5% of the principal amount if payment is made between 12 and 24 months after the borrowing; and 145.0% of the principal amount if payment is made between 24 and 36 months after the borrowing, all less the interest payments we've made since our initial borrowing.
The outstanding principal amount under the 2018 Note Purchase Agreement bears interest at a rate of 8.75% annually. In addition, beginning on January 1, 2020 and continuing until repayment or maturity of any outstanding principal, we will make quarterly payments of 0.5% of our annual net revenues subject to a maximum annual amount of such payments of $1.6 million which will be recognized as interest expense. Through the fixed interest charges and the quarterly revenue payments, we are required to pay total amounts to generate an 11%

18

internal rate of return to the lender on any outstanding principal balances due in a lump-sum upon the repayment or maturity of any outstanding principal. During the six months ended June 30, 2019 , the 2018 Note Purchase Agreement bore interest at an average interest rate of 10.6% .
The 2018 Note Purchase Agreement contains quarterly covenants to achieve certain revenue levels as well as additional covenants, including limits on our ability to dispose of assets, undergo a change of control, merge with or acquire other entities, incur debt, incur liens, pay dividends or other distributions to holders of our capital stock, repurchase stock and make investments, in each case subject to certain exceptions. Our obligations under the 2018 Note Purchase Agreement are secured by a security interest in substantially all of our and certain of our subsidiaries’ assets.
Debt discounts, including debt issuance costs, related to the 2018 Note Purchase Agreement of $0.7 million were recorded as a direct deduction from the debt liability and are being amortized to interest expense over the term of the 2018 Note Purchase Agreement. Future estimated payments under the 2018 Note Purchase Agreement as of June 30, 2019 are as follows (in thousands):

				
2019 (remainder of year)	$	3,354		
2020	8,297		
2021	8,279		
2022	8,279		
2023	8,279		
Thereafter	89,952		
Total remaining payments	126,440		
Less: debt discount	(668	)	
Less: interest	(50,588	)	
Total debt	$	75,184		

Interest expense related to our debt financings was $2.0 million and $1.7 million for the three months ended June 30, 2019 and 2018 , respectively, and $3.9 million and $2.9 million for the six months ended June 30, 2019 and 2018 , respectively.
Other commitments
In the normal course of business, we enter into various purchase commitments primarily related to service agreements and laboratory supplies. At June 30, 2019 , our total future payments under noncancelable unconditional purchase commitments having a remaining term of over one year were $3.1 million .
Guarantees and indemnifications
As permitted under Delaware law and in accordance with our bylaws, we indemnify our directors and officers for certain events or occurrences while the officer or director is or was serving in such capacity. The maximum amount of potential future indemnification is unlimited; however, we maintain director and officer liability insurance. This insurance allows the transfer of the risk associated with our exposure and may enable us to recover a portion of any future amounts paid. We believe the fair value of these indemnification agreements is minimal. Accordingly, we did not record any liabilities associated with these indemnification agreements at June 30, 2019 or December 31, 2018 .
Contingencies
We were not a party to any material legal proceedings at June 30, 2019 , or at the date of this report. We may from time to time become involved in various legal proceedings and claims arising in the ordinary course of business, and the resolution of any such claims could be material.

19

9. Stockholders’ equity
Shares Outstanding
Shares of convertible preferred and common stock were as follows (in thousands):

												
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Convertible preferred stock:	 	 	 	 	 	 	 	
Shares outstanding, beginning of period	125		 	3,459		 	3,459		 	3,459		
Conversion into common stock	—		 	—		 	(3,334	)	 	—		
Shares outstanding, end of period	125		 	3,459		 	125		 	3,459		
 	 	 	 	 	 	 	 	
Common stock:	 	 	 	 	 	 	 	
Shares outstanding, beginning of period	89,601		 	53,710		 	75,481		 	53,597		
Common stock issued in connection with public offering	—		 	12,778		 	10,350		 	12,778		
Common stock issued on exercise of stock options, net	80		 	9		 	340		 	20		
Common stock issued pursuant to vesting of RSUs	1,124		 	902		 	1,245		 	968		
Common stock issued pursuant to exercises of warrants	4		 	518		 	19		 	546		
Common stock issued pursuant to employee stock purchase plan	235		 	276		 	235		 	276		
Common stock issued pursuant to business combinations	2,719		 	783		 	2,759		 	783		
Common stock issued upon conversion of preferred stock	—		 	—		 	3,334		 	—		
Other	—		 	—		 	—		 	8		
Shares outstanding, end of period	93,763		 	68,976		 	93,763		 	68,976		

2018 Sales Agreement
In August 2018, we entered into a Common Stock Sales Agreement (the “2018 Sales Agreement”) with Cowen and Company, LLC (“Cowen”), under which we may offer and sell from time to time at our sole discretion shares of our common stock through Cowen as our sales agent, in an aggregate amount not to exceed $75.0 million . Cowen may sell the shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, including without limitation sales made directly on The New York Stock Exchange, and also may sell the shares in privately negotiated transactions, subject to our prior approval. Per the terms of the agreement, Cowen receives a commission equal to 3% of the gross proceeds of the sales price of all shares sold through it as sales agent under the 2018 Sales Agreement. In March 2019, we amended the 2018 Sales Agreement to increase the aggregate amount of our common stock to be sold under this agreement not to exceed $175.0 million . During 2018, we sold a total of 4.3 million shares of common stock under the 2018 Sales Agreement for aggregate gross proceeds of $61.1 million and net proceeds of $58.9 million . No shares of our common stock were sold under this agreement during 2019.
Public offerings
In March 2019, we sold, in an underwritten public offering, an aggregate of 10.4 million shares of our common stock at a price of $19.00 per share, for gross proceeds of $196.7 million and net proceeds of $184.5 million .
In April 2018, we sold, in an underwritten public offering, an aggregate of 12.8 million shares of our common stock at a price of $4.50 per share, for gross proceeds of $57.5 million and net proceeds of $53.5 million .
Private placement
In August 2017, in a private placement to certain accredited investors, we issued 5.2 million shares of common stock at a price of $8.50 per share, and 3.5 million shares of our Series A convertible preferred stock at a price of $8.50 per share, for gross proceeds of approximately $73.5 million and net proceeds of $68.9 million . The Series A preferred stock is convertible into common stock on a one-for-one basis, subject to adjustment for events such as stock splits, combinations and the like. During the six months ended June 30, 2019 , 3.3 million shares of Series A convertible preferred stock were converted to 3.3 million shares of common stock.

20

10. Stock incentive plans
Stock incentive plans
In 2010, we adopted the 2010 Incentive Plan (the “2010 Plan”). The 2010 Plan provides for the granting of stock-based awards to employees, directors and consultants under terms and provisions established by our Board of Directors. Under the terms of the 2010 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and nonstatutory stock options must be at least 110% of fair market of the common stock on the grant date, as determined by our Board of Directors. The terms of options granted under the 2010 Plan may not exceed ten years .
In January 2015, we adopted the 2015 Stock Incentive Plan (the “2015 Plan”), which became effective upon the closing of our initial public offering (“IPO”). Shares outstanding under the 2010 Plan were transferred to the 2015 Plan upon effectiveness of the 2015 Plan. The 2015 Plan provides for automatic annual increases in shares available for grant, beginning on January 1, 2016 through January 1, 2025. In addition, shares subject to awards under the 2010 Plan that are forfeited or terminated will be added to the 2015 Plan. The 2015 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, stock units, stock appreciation rights and other forms of equity compensation, all of which may be granted to employees, including officers, non-employee directors and consultants. Additionally, the 2015 Plan provides for the grant of cash-based awards. In June 2019, we amended and restated the 2015 Plan to create a pool of shares to be awarded solely as a material inducement to employees.
Options granted generally vest over a period of four years . Typically, the vesting schedule for options granted to newly hired employees provides that 1/4 of the award vests upon the first anniversary of the employee’s date of hire, with the remainder of the award vesting monthly thereafter at a rate of 1/48 of the total shares subject to the option. All other options typically vest in equal monthly installments over the four-year vesting schedule.
RSUs generally vest over a period of three years . Typically, the vesting schedule for RSUs provides that 1/3 of the award vests upon each anniversary of the grant date. We granted Time-based RSUs in connection with the acquisition of Singular Bio which vest in three equal installments over a period of 18 months and PRSUs that vest based on the achievement of performance conditions; see further details in Note 4, "Business Combinations."
Activity under the 2010 Plan and the 2015 Plan is set forth below (in thousands, except per share amounts and years):

																
 	Shares Available For Grant	 	Stock Options Outstanding	 	Weighted-Average Exercise Price Per Share	 	Weighted-Average Remaining Contractual Life (Years)	 	Aggregate Intrinsic Value	
Balances at December 31, 2018	118		 	3,855		 	$	8.54		 	6.8	 	$	9,927		
Additional shares reserved	13,019		 	—		 	 	 	 	 	 	
Options granted	(193	)	 	193		 	24.16		 	 	 	 	
Options cancelled	16		 	(16	)	 	9.23		 	 	 	 	
Options exercised	—		 	(340	)	 	7.15		 	 	 	 	
RSUs granted (1)	(5,546	)	 	—		 	 	 	 	 	 	
RSUs cancelled	106		 	—		 	 	 	 	 	 	
Balances at June 30, 2019	7,520		 	3,692		 	$	9.48		 	6.6	 	$	51,878		
Options exercisable at June 30, 2019	 	 	2,832		 	$	8.58		 	6.2	 	$	42,268		
Options vested and expected to vest at June 30, 2019	 	 	3,576		 	$	9.33		 	6.6	 	$	50,777		

(1)	Includes the Time-based RSUs and PRSUs granted as a part of the Singular Bio acquisition which are based on a fixed dollar value. The number of shares issued will be variable until the awards vest. See further details in Note 4, "Business Combinations."	

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of our common stock for stock options that were in-the-money.
The weighted-average fair value of options to purchase common stock granted was $14.52 and $8.08 in the six months ended June 30, 2019 and 2018 , respectively.  The total grant-date fair value of options to purchase

21

common stock vested was $2.5 million and $1.8 million in the six months ended June 30, 2019 and 2018 , respectively. The intrinsic value of options to purchase common stock exercised was $4.5 million and $0.1 million in the six months ended June 30, 2019 and 2018 , respectively.
The following table summarizes RSU activity, which includes the Time-based RSUs and PRSUs granted in connection with our acquisition of Singular Bio (in thousands, except per share data):

							
 	Number of Shares	 	Weighted- Average Grant Date Fair Value Per Share	
Balance at December 31, 2018	4,031		 	$	8.35		
RSUs granted	1,268		 	$	21.01		
Time-based RSUs and PRSUs granted (1)	4,278		 	$	23.50		
RSUs vested	(1,246	)	 	$	11.16		
RSUs cancelled	(106	)	 	$	9.91		
Balance at June 30, 2019	8,225		 	$	17.74		

 (1)	The Time-based RSUs and PRSUs granted as a part of the Singular Bio acquisition in June 2019 are based on a fixed dollar value. The number of shares issued and weighted-average grant date fair value per share will be variable until the awards vest. See further details in Note 4, "Business Combinations."	

  2015 employee stock purchase plan
In January 2015, we adopted the 2015 Employee Stock Purchase Plan (the “ESPP”), which became effective upon the closing of the IPO. Employees participating in the ESPP may purchase common stock at 85% of the lesser of the fair market value of common stock on the purchase date or last trading day preceding the offering date. At June 30, 2019 , cash received from payroll deductions pursuant to the ESPP was $0.9 million . At June 30, 2019 , a total of 0.8 million shares of common stock were reserved for issuance under the ESPP.
 Stock-based compensation
We use the grant date fair value of our common stock to value options when granted. The fair value of share-based payments for options granted to employees and directors was estimated on the date of grant using the Black-Scholes option-pricing model which requires input of various assumptions. Changes in assumptions can materially affect the fair value and ultimately how much stock-based compensation is recognized. The assumptions used to estimate the fair value of stock options granted are as follows:

								
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Expected term (in years)	6.0	 	6.0	 	6.0	 	6.0	
Expected volatility	64.20%	 	59.58%	 	64.20%	 	59.58%	
Risk-free interest rate	2.58%	 	2.80%	 	2.58%	 	2.80%	

The following table summarizes stock-based compensation expense included in the consolidated statements of operations (in thousands): 

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Cost of revenue	$	2,205		 	$	1,082		 	$	2,856		 	$	1,573		
Research and development	6,767		 	2,032		 	8,572		 	3,515		
Selling and marketing	2,914		 	1,470		 	4,157		 	2,518		
General and administrative	2,431		 	1,528		 	3,955		 	2,899		
Total stock-based compensation expense	$	14,317		 	$	6,112		 	$	19,540		 	$	10,505		

At June 30, 2019 , unrecognized compensation expense related to unvested stock options, net of estimated forfeitures, was $5.2 million , which we expect to recognize on a straight-line basis over a weighted-average period of 1.9 years . Unrecognized compensation expense related to RSUs, including PRSUs, at June 30, 2019 , net of estimated forfeitures, was $124.1 million , which we expect to recognize on a straight-line basis over a weighted-average period of 1.3 years . Of this unrecognized compensation expense, $92.3 million is our estimate of what we

22

expect to recognize related to awards granted in connection with the Singular Bio acquisition which we expect to recognize over a weighted-average period of 1.2 years .
11. Net loss per share
The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share amounts):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Net loss	$	(48,676	)	 	$	(31,671	)	 	$	(86,353	)	 	$	(67,791	)	
Shares used in computing net loss per share, basic and diluted	90,863		 	67,807		 	85,148		 	60,775		
Net loss per share, basic and diluted	$	(0.54	)	 	$	(0.47	)	 	$	(1.01	)	 	$	(1.12	)	

The following common stock equivalents have been excluded from diluted net loss per share because their inclusion would be anti-dilutive (in thousands): 

												
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
Shares of common stock subject to outstanding options	3,669		 	4,060		 	3,714		 	4,079		
Shares of common stock subject to outstanding warrants	593		 	1,854		 	601		 	1,904		
Shares of common stock subject to outstanding RSUs	4,569		 	3,337		 	4,350		 	2,896		
Shares of common stock pursuant to ESPP	46		 	9		 	55		 	4		
Shares of common stock underlying Series A convertible preferred stock	125		 	3,459		 	1,288		 	3,459		
Total shares of common stock equivalents	9,002		 	12,719		 	10,008		 	12,342		

12. Geographic information
Revenue by country is determined based on the billing address of the customer. The following presents revenue by country for the three and six months ended June 30, 2019 and 2018 (in thousands):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2019	 	2018	 	2019	 	2018	
United States	$	50,368		 	$	34,899		 	$	88,013		 	$	60,806		
Canada	882		 	1,096		 	1,847		 	2,104		
Rest of world	2,225		 	1,311		 	4,168		 	2,067		
Total revenue	$	53,475		 	$	37,306		 	$	94,028		 	$	64,977		

All long-lived assets at June 30, 2019 and December 31, 2018 , were located in the United States.

23

13. Subsequent events
In July 2019, we entered into a Stock Purchase and Merger Agreement for 100% of the capital stock of Jungla, a privately held company that focuses on the development and commercialization of a cloud-based platform that combines clinical knowledge with advanced modeling technologies to help clinicians and patients understand the results of genetic and genomic tests. At the closing of the transaction, we issued an aggregate of 1.4 million shares of our common stock and approximately $14.9 million in cash to the former securityholders of Jungla. Up to approximately $0.5 million in cash and 0.2 million additional shares of our common stock are subject to a hold back to satisfy indemnification obligations that may arise following the closing. In addition, approximately $15.0 million , mostly in our common stock, may become payable in connection with the achievement of certain performance milestones within 24 months after the closing of the transaction. Given the timing of the closing of this transaction, we are currently in the process of valuing the assets acquired and liabilities assumed. As a result, we are not yet able to provide the amounts to be recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed and other related disclosures. We will disclose this and other related information in our Form 10-Q for the quarter ending September 30, 2019.
In July 2019, our Board of Directors approved an executive management incentive compensation plan for the 2019 fiscal year under which members of our management team may be eligible to receive incentive compensation in the form of cash and PRSUs based on the level of achievement of a specified revenue goal. Potential payouts range from 0% to 115% of aggregate target cash and PRSU amounts of $1.4 million and 1.0 million shares, respectively.

24

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included in Item 1 of Part I of this report, and together with our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018 . Historic results are not necessarily indicative of future results.
This report contains forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this report other than statements of historical fact, including statements identified by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions, are forward‑looking statements. Forward‑looking statements include, but are not limited to, statements about:
		
•	our views regarding the future of genetic testing and its role in mainstream medical practice;	
		
•	our mission and strategy for our business, products and technology, including our ability to expand our content and develop new content while maintaining attractive pricing, further enhance our genetic testing service and the related user experience, build interest in and demand for our tests and attract potential partners;	
		
•	the implementation of our business model;	
		
•	the expected benefits from our acquisitions;	
		
•	the rate and degree of market acceptance of our tests and genetic testing generally;	
		
•	our ability to scale our infrastructure and operations in a cost ‑ effective manner;	
		
•	the timing of and our ability to introduce improvements to our genetic testing platform and to expand our assays to include additional genes;	
		
•	our expectations with respect to future hiring;	
		
•	the timing and results of studies with respect to our tests;	
		
•	developments and projections relating to our competitors and our industry;	
		
•	our competitive strengths;	
		
•	the degree to which individuals will share genetic information generally, as well as share any related potential economic opportunities with us;	
		
•	our commercial plans, including our sales and marketing expectations;	
		
•	our ability to obtain and maintain adequate reimbursement for our tests;	
		
•	regulatory developments in the United States and foreign countries;	
		
•	our ability to attract and retain key scientific or management personnel;	
		
•	our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;	
		
•	our expectations regarding the time during which we will be an emerging growth company under the JOBS Act;	
		
•	our ability to obtain funding for our operations and the growth of our business, including potential acquisitions;	
		
•	our financial performance;	
		
•	the impact of accounting pronouncements and our critical accounting policies, judgments, estimates and assumptions on our financial results;	
		
•	our expectations regarding our future revenue, cost of revenue, operating expenses and capital expenditures, and our future capital requirements; and	
		
•	the impact of tax laws on our business.	
Forward‑looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expected. These risks and uncertainties include, but are not limited to, those risks discussed in Item 1A of Part II of this report. Although we believe that the expectations and assumptions reflected in the forward‑looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward‑looking statements. Any forward‑looking statements in this report speak

25

only as of the date of this report. We expressly disclaim any obligation or undertaking to update any forward‑looking statements.
This report contains statistical data and estimates that we obtained from industry publications and reports. These publications typically indicate that they have obtained their information from sources they believe to be reliable, but do not guarantee the accuracy and completeness of their information. Some data contained in this report is also based on our internal estimates. Although we have not independently verified the third‑party data, we believe it to be reasonable.
In this report, all references to “Invitae,” “we,” “us,” “our,” or “the Company” mean Invitae Corporation.
Invitae and the Invitae logo are trademarks of Invitae Corporation. We also refer to trademarks of other companies and organizations in this report.
Mission and strategy
Our mission is to bring comprehensive genetic information into mainstream medical practice, improving the quality of healthcare for billions of people. Our business model is to aggregate the world’s genetic tests into a single platform, consolidate and grow the genetic testing market, and on that foundation, build a new industry in which a network of customers and partners can work together to continue improving healthcare for every individual in the modernized healthcare system around the world.
Our strategy for long-term growth centers on five key drivers of our business, which we believe work in conjunction to create a flywheel effect extending our leadership position in the new market we are building:

•	Expanding our content offering.   We intend to continue steadily adding additional content to the Invitae platform, ultimately leading to affordable access to the personal molecular information relevant in enabling personalized medicine. The breadth and depth of our offering is a core and central contribution to an improved user experience. 	
		
•	Creating a unique user experience.   A state-of-the-art interactive platform will enhance our service offering, leverage the uniquely empowering characteristics of online sharing of genetic information and, we believe, enable a superior economic offering to clients. We intend to continue to expend substantial efforts developing, acquiring and implementing technology-driven improvements to our customers’ experience. We believe that an enhanced user experience and the resulting benefits to our brand and reputation will help draw customers to us over and above our direct efforts to do so.	
		
•	Driving volume.   We intend to increase our brand equity and visibility through excellent service and a variety of marketing and promotional techniques, including scientific publications and presentations, sales, marketing, public relations, social media and web technology vehicles. We believe that rapidly increasing the volume of customers using our platform helps us to attract partners. 	
		
•	Attracting partners.   As we add more customers to our platform, we believe our business becomes particularly attractive to potential partners that can help the patients in our network further benefit from their genetic information or that provide us access to new customers who may wish to join our	

26

network. We believe the cumulative effect of the increased volume brought by these strategic components will allow us to lower the cost of our service. 
		
•	Lowering the costs and price of genetic information.   Our goal is to provide customers with a broad menu of genetic content at a reasonable price and rapid turn-around time in order to grow volume and further achieve economies of scale. As we do so and experience further cost savings, we expect that those cost savings will allow us to deliver still more comprehensive information at decreasing prices and further improve the customer experience, allowing us to experience cumulative benefits from all of the efforts outlined above.	

We seek to differentiate our service in the market by establishing an exceptional customer experience. To that end, we believe that elevating the needs of the customer over those of our other stakeholders is essential to our success. Thus, in our decision-making processes, we will strive to prioritize, in order:
		
1)	the needs of our customers;	
		
2)	motivating our employees to serve the needs of our customers; and	
		
3)	our long-term stockholder value.	
We are certain that focusing on customers as our top priority rather than short-term financial goals is the best way to build and operate an organization for maximum long-term value creation.
Business overview
We offer high quality, comprehensive, affordable genetic testing across multiple clinical areas, including hereditary cancer, cardiology, neurology, pediatrics, metabolic conditions and rare diseases. To augment our offering and realize our mission, we have acquired multiple assets including four businesses in 2017, which expanded our suite of genome management offerings and completed our entry into prenatal and perinatal genetic testing. In the first quarter of 2019, we expanded our reproductive offering by introducing our Non-invasive Prenatal Screen ("NIPS") and in the second quarter of 2019, we acquired Singular Bio, Inc. ("Singular Bio") to assist in lowering the costs of this offering. Also in June 2019, we launched a direct channel to consumers to increase accessibility to our testing platform. In July 2019, we acquired Jungla Inc. ("Jungla") to further enhance our genetic variant interpretation and the quality of results we deliver.
We have experienced rapid growth. For the years ended December 31, 2018 , 2017 and 2016 , our revenue was $147.7 million, $68.2 million and $25.0 million, respectively, and we incurred net losses of $129.4 million, $123.4 million and $100.3 million, respectively. For the six months ended June 30, 2019 and 2018 , our revenue was $94.0 million and $65.0 million , respectively, and we incurred net losses of $86.4 million and $67.8 million , respectively. At June 30, 2019 , our accumulated deficit was $603.1 million . To meet the demands of scaling our business, we increased our number of employees to 992 at June 30, 2019 from 688 on June 30, 2018 . Our sales force grew to approximately 190 at June 30, 2019 from approximately 110 at June 30, 2018 . We expect headcount will continue to increase in 2019 as we add to the team to support anticipated growth.
Sales of our tests have grown significantly. In 2018 , 2017 and 2016 , we generated approximately 292,000, 145,000 and 57,000 billable tests, respectively. In the six months ended June 30, 2019 , we generated approximately 198,000 billable tests compared to approximately 131,000 billable tests in the same period in 2018 . Approximately 31% of the billable tests we performed in the first six months of 2019 were billable to institutions and patients, and the remainder were billable to third-party payers. Many of the gene tests on our assays are tests for which insurers reimburse. However, when we do not have reimbursement policies or contracts with private insurers, our claims for reimbursement may be denied upon submission, and we must appeal the claims. The appeals process is time consuming and expensive, and may not result in payment. Even if we are successful in achieving reimbursement, we may be paid at lower rates than if we were under contract with the third-party payer. When there is not a contracted rate for reimbursement, there is typically a greater coinsurance or copayment requirement from the patient which may result in further delay or decreased likelihood of collection.
We expect to incur operating losses for the near-term future and may need to raise additional capital in order to fund our operations. If we are unable to achieve our revenue growth objectives and successfully manage our costs, we may not be able to achieve profitability.
We believe that the keys to our future growth will be to increase billable test volumes, achieve broad reimbursement coverage for our tests from third-party payers, drive down the price for genetic analysis and interpretation, steadily increase the amount of genetic content we offer, consistently improve the client experience,

27

drive physician and patient utilization of our website for ordering and delivery of results and increase the number of strategic partners working with us to add value for our clients.
Factors affecting our performance
Number of billable tests
The growth in our test revenue is tied to the number of tests for which we bill third-party payers, institutions, partners or patients, which we refer to as billable tests. We typically bill for our services following delivery of the billable test report derived from testing samples and interpreting the results. We incur the expenses associated with a test in the period in which the test is processed regardless of when payment is received with respect to that test. We believe the number of billable tests in any period is the most important indicator of the growth in our test revenue, and with time, this will translate into the number of customers we add to the platform.
Success obtaining and maintaining reimbursement
Our ability to increase the number of billable tests and our revenue will depend in part on our success achieving broad reimbursement coverage and laboratory service contracts for our tests from third-party payers and agreements with institutions and partners. Reimbursement may depend on a number of factors, including a payer’s determination that a test is appropriate, medically necessary and cost-effective, as well as whether we are in contract, where we get paid more consistently and at higher rates. Because each payer makes its own decision as to whether to establish a policy or enter into a contract to reimburse for our testing services, seeking these approvals is a time-consuming and costly process. In addition, clinicians and patients may decide not to order our tests if the cost of the test is not covered by insurance. Because we require an ordering physician to requisition a test, our revenue growth also depends on our ability to successfully promote the adoption of our testing services and expand our base of ordering clinicians. We believe that establishing coverage and obtaining contracts from third-party payers is an important factor in gaining adoption by ordering clinicians. As of June 30, 2019 , we have entered into contracts for laboratory services with payers covering approximately 275 million lives, comprised of Medicare, most national health plans, and Medicaid in 47 states, including California (Medi-Cal), our home state.
In cases where we have established reimbursement rates with third-party payers, we face additional challenges in complying with their procedural requirements for reimbursement. These requirements may vary from payer to payer, and it may be time-consuming and require substantial resources to meet these requirements. We may also experience delays in or denials of coverage if we do not adequately comply with these requirements. In addition, we have experienced, and may continue to experience, delays in reimbursement when we transition to being an in-network provider with a payer.
We expect to continue to focus our resources on increasing adoption of, and expanding coverage and reimbursement for, our current tests, tests provided by companies we acquire and any future tests we may develop. However, if we are not able to continue to obtain and maintain adequate reimbursement from third-party payers and institutions and partners for our testing services and expand the base of clinicians and patients ordering our tests, we may not be able to effectively increase the number of billable tests or our revenue.
Ability to lower the costs associated with performing our tests
Reducing the costs associated with performing our genetic tests is both a focus and a strategic objective of ours. Over the long term, we will need to reduce the cost of raw materials by improving the output efficiency of our assays and laboratory processes, modifying our platform-agnostic assays and laboratory processes to use materials and technologies that provide equal or greater quality at lower cost, improving how we manage our materials, porting some tests onto a next generation sequencing platform and negotiating favorable terms for our materials purchases. Our acquisition of Singular Bio is a component of this objective and we expect the technology acquired in this transaction, once developed, to help decrease the costs associated with our NIPS offering. We also intend to continue to design and implement hardware and software tools that will reduce personnel-related costs for both laboratory and clinical operations/medical interpretation by increasing personnel efficiency and thus lowering labor costs per test.

28

Ability to expand our genetic content
Our focus on reducing the average cost per test will have a countervailing force — increasing the number of tests we offer and the content of each test. We intend to continue to expand our test menus by steadily releasing additional genetic content for the same or lower prices per test, ultimately leading to affordable whole genome services. The breadth and flexibility of our offering will be a critical factor in our ability to address new markets for genetic testing services. Both of these will be critical to our ability to continue to grow the volume of billable tests we deliver.
Investment in our business and timing of expenses
We plan to continue to invest in our genetic testing and information management business. We deploy state-of-the-art and costly technologies in our genetic testing services, and we intend to continue to scale our infrastructure, including our testing capacity and information systems. We also expect to incur software development costs as we seek to further automate our laboratory processes and our genetic interpretation and report sign-out procedures, scale our customer service capabilities and expand the functionality of our website. We plan to hire additional personnel as necessary to support anticipated growth, including software engineers, sales and marketing personnel, billing personnel, research and development personnel, medical specialists, biostatisticians and geneticists. We will also incur additional costs related to the expansion of our production facilities in San Francisco and Irvine to accommodate growth. In addition, we expect to incur ongoing expenses as a result of operating as a public company. The expenses we incur may vary significantly by quarter, as we focus on building out different aspects of our business.
How we recognize revenue
We generally recognize revenue on an accrual basis, which is when a customer obtains control of the promised goods or services, typically a test report. Accrual amounts recognized are based on estimates of the consideration that we expect to receive and such estimates are adjusted and subsequently recorded until fully settled. Changes to such estimates may increase or decrease revenue recognized in future periods. Revenue from our tests may not be equal to billed amounts due to a number of factors, including differences in reimbursement rates, the amounts of patient copayments, the existence of secondary payers and claims denials.
Financial overview
Revenue
We primarily generate revenue from the sale of our tests, which provide the analysis and associated interpretation of the sequencing of parts of the genome. Clients are billed upon delivery of test results. Our ability to increase our revenue will depend on our ability to increase our market penetration, obtain contracted reimbursement coverage from third-party payers, sign contracts with institutions and partners, and increase the rate at which we are paid for tests performed.
Cost of revenue
Cost of revenue reflects the aggregate costs incurred in delivering test results to clinicians and patients and includes expenses for materials and supplies, personnel-related costs, equipment and infrastructure expenses associated with testing and allocated overhead including rent, equipment depreciation, amortization of acquired intangibles and utilities. Costs associated with performing our tests are recorded as the patient’s sample is processed. We expect cost of revenue to generally increase in line with the increase in the number of tests we perform. However, we expect that the cost per test will decrease over time due to the efficiencies we expect to gain as test volume increases and from automation and other cost reductions, although the cost per test may fluctuate from quarter to quarter.
Operating expenses
Our operating expenses are classified into three categories: research and development, selling and marketing, and general and administrative. For each category, the largest component is personnel-related costs, which include salaries, employee benefit costs, bonuses, commissions, as applicable, and stock-based compensation expense.

29

Research and development
Research and development expenses represent costs incurred to develop our technology and future tests. These costs are principally for process development associated with our efforts to expand the number of genes we can evaluate in our tests and with our efforts to lower the cost of performing our tests. In addition, we incur process development costs to further develop the software we use to operate our laboratory, analyze the data it generates, process customer orders, enable ease of customer ordering, deliver reports and automate our business processes. These costs consist of personnel-related costs, laboratory supplies and equipment expenses, consulting costs and allocated overhead including rent, information technology, equipment depreciation and utilities.
We expense all research and development costs in the periods in which they are incurred. We expect our research and development expenses to increase as we continue our efforts to develop additional tests, make investments to reduce testing costs and streamline our technology to provide patients access to testing and work on scaling the business. Specifically, we expect stock-based compensation to significantly increase in future periods related to businesses acquired in 2019.
Selling and marketing
Selling and marketing expenses consist of personnel-related costs, client service expenses, advertising and marketing expenses, educational and promotional expenses, market research and analysis, and allocated overhead including rent, information technology, equipment depreciation and utilities. We expect our selling and marketing expenses to significantly increase as we expand our salesforce and increase our marketing and advertising.
General and administrative
General and administrative expenses include executive, finance and accounting, billing and collections, legal and human resources functions as well as other administrative costs. These expenses include personnel-related costs; audit, accounting and legal expenses; consulting costs; allocated overhead including rent, information technology, equipment depreciation, utilities; costs incurred in relation to our collaboration and co-development agreements; and post-combination expenses incurred in relation to companies we acquire. We expect our general and administrative expenses to increase as we support continued growth of operations.
Other income, net
Other income, net , primarily consists of income generated from our marketable securities and adjustments to fair value of acquisition liabilities.
Interest expense
Interest expense is attributable to debt financing and finance leases. See Note 8 , “Commitments and contingencies” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this report.
Income tax benefit
The income tax benefits is comprised of changes in our deferred income taxes and associated valuation allowances resulting from business combinations.
Critical accounting policies and estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

30

Revenue recognition
We generate test revenue primarily from delivery of test reports generated from our assays. Other revenue consists primarily of revenue from genome network subscription services which we recognize on a straight-line basis over the subscription term, and from revenue from collaboration agreements.
Under ASC 606, Revenue from Contracts with Customers, or ASC 606, we generally recognize revenue on an accrual basis, that is when a customer obtains control of the promised goods or services which for us is delivery of a test report. Accrual amounts are based on an estimate of the consideration that we expect to receive, and such estimates will be adjusted and subsequently recorded until fully settled. The estimate of the consideration that we expect to receive requires significant judgment by management and any adjustments may be material.
Business Combinations — Purchase Accounting
We apply ASC 805,  Business Combinations , or ASC 805, which is the accounting guidance related to business combinations. The standard requires recognition of assets acquired, liabilities assumed, and contingent consideration at their fair value on the acquisition date with subsequent changes recognized in earnings; requires acquisition-related expenses and restructuring costs to be recognized separately from the business combination and expensed as incurred; requires in-process research and development to be capitalized at fair value as an indefinite-lived intangible asset until completion or abandonment; and requires that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for taxes.
We account for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. The purchase prices of acquisitions are allocated to tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair values. The excess of purchase prices over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred. While we use our best estimates and assumptions as a part of the process to accurately value assets acquired and liabilities assumed at the business combination date, these estimates and assumptions are inherently uncertain and subject to refinement. Our key assumptions and estimates used have included projected revenue and achievement of certain performance milestones, cost of goods sold and operating expenses for our acquired entities, discount rates, as well as the tax impacts of the acquisitions. As a result, during the measurement period, which may be up to one year from the business combination date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. After the measurement period, we record adjustments to assets acquired or liabilities assumed subsequent to the measurement period in our operating results in the period in which the adjustments are determined.
Goodwill
In accordance with ASC 350,  Intangibles – Goodwill and Other , or ASC 350, we do not amortize goodwill or other intangible assets with indefinite lives but rather test them for impairment. ASC 350 requires us to perform an impairment review of our goodwill balance at least annually, which we do in the fourth fiscal quarter each year and whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.
Leases
We determine if an arrangement is a lease at inception primarily based on the determination of the party responsible for directing the use of an underlying asset within a contract. Operating leases are included in operating lease assets and operating lease obligations in our consolidated balance sheets. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date which includes significant assumptions made by us including our estimated credit rating. Operating lease right-of-use assets also include any lease payments made prior to the lease commencement date and exclude any lease incentives paid or payable at the lease commencement date. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise any such options. Lease expense is recognized on a straight-line basis over the expected lease term.

31

Stock-based compensation
Stock-based compensation expense is measured at the date of grant and is based on the estimated fair value of the award. Compensation cost is recognized as expense on a straight-line basis over the vesting period for options and restricted stock units, or RSUs, and on an accelerated basis for performance-based restricted stock units, or PRSUs. We recognize stock-based compensation expense associated with PRSU grants over the requisite service period when we determine the achievement of performance conditions is probable. In determining the fair value of stock options and Employee Stock Purchase Plan, or ESPP, purchases, we estimate the grant date fair value, and the resulting stock-based compensation expense. We estimate the grant date fair value of RSU and PRSU awards based on the grant date share price.
We account for stock-based compensation arrangements with non-employees using a fair value approach. The fair value of these options is measured using the Black-Scholes option-pricing model reflecting the same assumptions as applied to employee options in each of the reported periods, other than the expected life, which is assumed to be the remaining contractual life of the option. The compensation expenses of these arrangements are subject to remeasurement over the vesting terms as earned.
We estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue to evaluate the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior and other factors. The impact from any forfeiture rate adjustment would be recognized in full in the period of adjustment and if the actual number of future forfeitures differs from our estimates, we may be required to record adjustments to stock-based compensation in future periods.
Results of operations
Three Months Ended June 30, 2019 and 2018
The following sets forth our consolidated statements of operations data for each of the periods indicated (in thousands, except percentage changes). Our historical results are not necessarily indicative of our results of operations to be expected for any future period.

														
 	Three Months Ended June 30,	 	Dollar
Change	 	%
Change	
 	2019	 	2018	 		 		
Revenue:	 		 	 		 	 		 	 	
Test revenue	$	52,302		 	$	36,350		 	$	15,952		 	44%	
Other revenue	1,173		 	956		 	217		 	23%	
Total revenue	53,475		 	37,306		 	16,169		 	43%	
Cost of revenue	28,006		 	20,447		 	7,559		 	37%	
Research and development	25,302		 	15,784		 	9,518		 	60%	
Selling and marketing	30,779		 	18,707		 	12,072		 	65%	
General and administrative	21,274		 	12,436		 	8,838		 	71%	
Loss from operations	(51,886	)	 	(30,068	)	 	(21,818	)	 	73%	
Other income, net	1,381		 	188		 	1,193		 	635%	
Interest expense	(2,121	)	 	(1,791	)	 	(330	)	 	18%	
Net loss before taxes	(52,626	)	 	(31,671	)	 	(20,955	)	 	66%	
Income tax benefit	(3,950	)	 	—		 	(3,950	)	 	(100)%	
Net loss	$	(48,676	)	 	$	(31,671	)	 	$	(17,005	)	 	54%	

32

Revenue
The increase in total revenue of $16.2 million for the three months ended June 30, 2019 compared to the same period in 2018 was due primarily to increased test volume. Billable test volumes increased to approximately 111,000 in the three months ended June 30, 2019 compared to 73,000 in the same period of 2018 . The increase in revenue recognized in the three months ended June 30, 2019 as compared to the prior year period is also due to changes in estimates during the period as during the three months ended June 30, 2019, we recognized revenue of $2.4 million primarily related to adjustments to estimated revenue recognized in 2018 for businesses acquired in 2017 and during the three months ended June 30, 2018, we recorded revenue of $2.3 million related to deletion/duplication analysis for hereditary breast and ovarian cancer using Current Procedure Terminology (CPT) code 81433 in conjunction with CPT code 81432, for tests completed during the second half of 2017. Average revenue per test decreased to $471 per test in the three months ended June 30, 2019 compared to $500 per test in the comparable prior period due to changes in payer mix as well as reductions in pricing for some payers as we focus on providing genetic content at a reasonable price.
Cost of revenue
The increase in the cost of revenue of $7.6 million for the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to costs associated with increased test volume, partially offset by the effect of cost efficiencies. For the three months ended June 30, 2019 , the number of samples accessioned increased to approximately 111,000 from approximately 73,000 for the same period in 2018 . Cost per sample accessioned was $252 in the three months ended June 30, 2019 compared to $279 for the same period in 2018 . The lower cost per sample accessioned in the current period was primarily attributable to increased volume, which together with automation efficiencies, resulted in lower per-sample costs for laboratory materials, labor and equipment depreciation.
Research and development
The increase in research and development expense of $9.5 million for the three months ended June 30, 2019 compared to the same period in 2018 was due to the growth of the business as well as for costs related to our acquisition of Singular Bio in June 2019. The increase primarily consisted of the following elements as we invest in research and development initiatives as we grow: personnel-related costs increased by $11.3 million, principally reflecting increased headcount as well as $2.6 million of stock-based compensation related to awards granted to new employees who joined Invitae in connection with our acquisition of Singular Bio, and an increase in technology costs by $0.6 million.
These cost increases were partially offset by increased allocations of resources from research and development to cost of revenue, resulting from increased test volumes, which reduced research and development expense by $1.4 million when compared to the prior year period, as well as decreases in depreciation and amortization of $0.9 million and laboratory expenses of $0.4 million.
Selling and marketing
The increase in selling and marketing expense of $12.1 million for the three months ended June 30, 2019 compared to the same period in 2018 was due primarily to the growth of the business and increased spending on marketing initiatives and principally consisted of the following elements: personnel-related costs increased by $8.3 million primarily reflecting increased headcount and includes an increase in sales commissions of $2.1 million; $1.5 million due to increases in marketing costs principally for branding initiatives and advertising; travel-related costs increased by $0.9 million and information technology costs increased by $0.6 million.
General and administrative
The increase in general and administrative expense of $8.8 million for the three months ended June 30, 2019 compared to the same period in 2018 was due primarily to the growth of the business and the effect of our acquisition of Singular Bio in June 2019 and principally consisted of the following elements: $3.2 million of post-combination expense relating to our acquisition of Singular Bio; legal and accounting services increased by $2.3 million which includes acquisition-related costs of $1.2 million related to Singular Bio and Jungla; personnel-related costs increased by $1.9 million; professional fees increased by $0.6 million due to increases in costs related to outside consultants; occupancy costs increased by $0.7 million; expense incurred related to collaboration and co-development agreements increased by $0.6 million; information technology costs increased by $0.6 million due to computer equipment and software purchases to support headcount growth; and travel-related costs increased by $0.5 million.

33

These cost increases were partially offset by a decrease of $1.6 million in allocations of technology and facilities-related expenses to other functional areas.
Other income, net
The increase in other income, net of $1.2 million for the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to increases in interest income generated on our cash equivalents and marketable securities.
Interest expense
The increase in interest expense of $0.3 million for the three months ended June 30, 2019 compared to the same period in 2018 was due principally to increased borrowings under our debt facilities outstanding during the three months ended June 30, 2019 as compared to the same period in 2018 .
Income tax benefit
The income tax benefit of $4.0 million recorded in the three months ended June 30, 2019 , was due to net deferred tax liabilities assumed in connection with our acquisition of Singular Bio which provided a future source of income to support the realization of our legacy deferred tax assets and resulted in a partial release of our valuation allowance.
Six Months Ended June 30, 2019 and 2018
The following sets forth our consolidated statements of operations data for each of the periods indicated (in thousands, except percentage changes). Our historical results are not necessarily indicative of our results of operations to be expected for any future period.

														
 	Six Months Ended June 30,	 	Dollar
Change	 	%
Change	
 	2019	 	2018	 		 		
Revenue:	 		 	 		 	 		 	 	
Test revenue	$	91,921		 	$	63,403		 	$	28,518		 	45%	
Other revenue	2,107		 	1,574		 	533		 	34%	
Total revenue	94,028		 	64,977		 	29,051		 	45%	
Cost of revenue	49,260		 	38,523		 	10,737		 	28%	
Research and development	43,296		 	31,150		 	12,146		 	39%	
Selling and marketing	54,972		 	37,631		 	17,341		 	46%	
General and administrative	34,593		 	24,216		 	10,377		 	43%	
Loss from operations	(88,093	)	 	(66,543	)	 	(21,550	)	 	32%	
Other income, net	2,019		 	1,835		 	184		 	10%	
Interest expense	(4,229	)	 	(3,083	)	 	(1,146	)	 	37%	
Net loss before taxes	(90,303	)	 	(67,791	)	 	(22,512	)	 	33%	
Income tax benefit	(3,950	)	 	—		 	(3,950	)	 	(100)%	
Net loss	$	(86,353	)	 	$	(67,791	)	 	$	(18,562	)	 	27%	
Revenue
The increase in total revenue of $29.1 million for the six months ended June 30, 2019 compared to the same period in 2018 was due primarily to increased test volume. Billable test volumes increased to approximately 198,000 in the six months ended June 30, 2019 compared to 131,000 in the same period of 2018 . The increase in revenue recognized in the three months ended June 30, 2019 as compared to the prior year period is also due to changes in estimates during the period as during the six months ended June 30, 2019, we recognized revenue of $2.8 million which primarily related to adjustments to revenue recognized in 2018 in relation to businesses acquired in 2017 and during the six months ended June 30, 2018, we recorded revenue of $2.3 million related to deletion/duplication analysis for hereditary breast and ovarian cancer using CPT code 81433 in conjunction with CPT code 81432, for tests completed during the second half of 2017. Average revenue per test decreased to $464 per test in the six months ended June 30, 2019 compared to $483 per test in the comparable prior period due to changes in payer mix as well as reductions in pricing for some payers as we focus on providing genetic content at a reasonable price.

34

Cost of revenue
The increase in the cost of revenue of $10.7 million for the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to costs associated with increased test volume, partially offset by the effect of cost efficiencies. For the six months ended June 30, 2019 , the number of samples accessioned increased to approximately 205,000 from approximately 138,000 for the same period in 2018 . Cost per sample accessioned was $240 in the six months ended June 30, 2019 compared to $280 for the same period in 2018 . The lower cost per sample accessioned in the six months ended June 30, 2019 was primarily attributable to increased volume, which together with automation efficiencies resulted in lower per-sample costs for laboratory materials, labor and equipment depreciation. In addition, per-sample shipping costs were lower in the six months ended June 30, 2019 compared to the same period in 2018 .    
Research and development
The increase in research and development expense of $12.1 million for the six months ended June 30, 2019 compared to the same period in 2018 was due to the growth of the business as well as for costs related to our acquisition of Singular Bio in June 2019. The increase principally consisted of the following elements as we invest in research and development initiatives as we grow: personnel-related costs increased by $16.0 million, primarily reflecting increased headcount as well as $2.6 million of stock-based compensation related to awards granted to new employees who joined Invitae in connection with our acquisition of Singular Bio; technology expense increased by $1.1 million primarily reflecting increased headcount; and travel-related costs increased by $0.3 million.
These cost increases were partially offset by increased allocations of resources from research and development to cost of revenue, resulting from increased test volumes, which reduced research and development expense by $2.8 million, as well as a decrease in depreciation and amortization costs by $1.6 million; a decrease in laboratory expenses by $0.5 million; and a decrease of professional fees by $0.4 million due to reduction in the use of outside consultants.
Selling and marketing
The increase in selling and marketing expense of $17.3 million for the six months ended June 30, 2019 compared to the same period in 2018 was due primarily to the growth of the business and our increased spend on marketing initiatives and principally consisted of the following elements: personnel-related costs increased by $12.0 million reflecting increased headcount and includes an increase in sales commissions of $3.9 million; a $1.6 million increase in marketing costs principally for branding initiatives and advertising; travel-related costs increased by $1.2 million; information technology costs, including software licenses and related expenses, increased by $1.1 million; and allocated technology and facilities-related expenses increased by $1.1 million.
General and administrative
The increase in general and administrative expense of $10.4 million for the six months ended June 30, 2019 compared to the same period in 2018 was due primarily to the growth of the business and the effect of our acquisition of Singular Bio in June 2019 and principally consisted of the following elements: $3.2 million of post-combination expense relating to our acquisition of Singular Bio; legal and accounting services increased by $2.4 million which includes acquisition-related costs of $1.2 million related to Singular Bio and Jungla; personnel-related costs increased by $2.4 million principally due to increased headcount; professional fees increased by $1.0 million; occupancy costs increased by $1.3 million; expenses relating to collaboration and co-development agreements increased by $1.1 million; information technology costs increased by $0.7 million due to computer equipment and software purchases to support headcount growth; and travel-related costs increased by $0.7 million.
These cost increases were partially offset by an increase of $2.7 million in allocations of technology and facilities-related expenses to other functional areas.
Other income, net
The increase in other income, net of $0.2 million for the six months ended June 30, 2019 compared to the same period in 2018 was principally due to increases in income generated on our cash equivalents and marketable securities of $1.9 million, partially offset by decreases in gains on remeasurement of acquisition-related liabilities of $1.6 million.

35

Interest expense
The increase in interest expense of $1.1 million for the six months ended June 30, 2019 compared to the same period in 2018 was to due principally to increased borrowings under our debt facilities.
Income tax benefit
The income tax benefit of $4.0 million recorded in the six months ended June 30, 2019 , was due to net deferred tax liabilities assumed in connection with our acquisition of Singular Bio which provided a future source of income to support the realization of our legacy deferred tax assets and resulted in a partial release of our valuation allowance.
Liquidity and capital resources
Liquidity and capital expenditures
We have incurred net losses since our inception. For the six months ended June 30, 2019 and 2018 , we had net losses of $86.4 million and $67.8 million , respectively, and we expect to incur additional losses in the near term. At June 30, 2019 , we had an accumulated deficit of $603.1 million . While our revenue has increased over time, we may never achieve revenue sufficient to offset our expenses.
Since inception, our operations have been financed primarily by net proceeds from sales of our capital stock, fees collected from our customers as well as borrowing from debt facilities.
In November 2018, we entered into a Note Purchase Agreement (the "2018 Note Purchase Agreement") pursuant to which we are eligible to borrow an aggregate principal amount up to $200.0 million over its maturity term of 7 years which included an initial borrowing of $75.0 million in November 2018 which we used to extinguish our previous debt. The outstanding principal amount under the 2018 Note Purchase Agreement bears interest at a rate of 8.75% annually. In addition, beginning on January 1, 2020 and continuing until the maturity date, we will make quarterly payments of 0.5% of our annual net revenues subject to a maximum annual amount of such payments of $1.6 million which will be recognized as interest expense. Through the fixed interest charges and the quarterly revenue payments, we are required to pay total amounts to generate an 11% internal rate of return to the lender on any outstanding principal balances due in a lump-sum upon the repayment or maturity of any outstanding principal.
The 2018 Note Purchase Agreement contains quarterly covenants to achieve certain revenue levels as well as additional covenants, including limits on our ability to dispose of assets, undergo a change of control, merge with or acquire other entities, incur debt, incur liens, pay dividends or other distributions to holders of our capital stock, repurchase stock and make investments, in each case subject to certain exceptions. See more details on the 2018 Note Purchase Agreement in Note 8 , “Commitments and contingencies” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this report.
At June 30, 2019 and December 31, 2018 , we had $254.0 million and $131.9 million , respectively, of cash, cash equivalents, restricted cash and marketable securities.
Our primary uses of cash are to fund our operations as we continue to grow our business, enter into partnerships and potentially to acquire businesses and technologies. Cash used to fund operating expenses is affected by the timing of when we pay expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
We have incurred substantial losses since our inception, and we expect to continue to incur losses in the near term. We believe our existing cash, cash equivalents and marketable securities as of June 30, 2019 , fees collected from the sale of our tests, and amounts available to us pursuant to the 2018 Note Purchase Agreement, will be sufficient to meet our anticipated cash requirements for the foreseeable future.
We may need additional funding to finance operations prior to achieving profitability or should we make additional acquisitions. We regularly consider fundraising opportunities and will determine the timing, nature and size of future financings based upon various factors, including market conditions and our operating plans. We may in the future elect to finance operations by selling equity or debt securities or borrowing money. We also may elect to finance future acquisitions. If we issue equity securities, dilution to stockholders may result. Any equity securities issued may also provide for rights, preferences or privileges senior to those of holders of our common stock. If we raise funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of our common stock. In addition, the terms of debt securities or borrowings could impose significant restrictions on our operations. If additional funding is required, there can be no assurance that additional

36

funds will be available to us on acceptable terms on a timely basis, if at all. If we are unable to obtain additional funding when needed, we will need to curtail planned activities to reduce costs. Doing so will likely have an unfavorable effect on our ability to execute on our business plan and have an adverse effect on our business, results of operations and future prospects.
The following table summarizes our cash flows (in thousands):

								
 	Six Months Ended June 30,	
 	2019	 	2018	
Cash used in operating activities	$	(61,091	)	 	$	(58,667	)	
Cash provided by investing activities	7,588		 	18,059		
Cash provided by financing activities	188,582		 	77,024		
Net increase in cash, cash equivalents and restricted cash	$	135,079		 	$	36,416		
Cash flows from operating activities
For the six months ended June 30, 2019 , cash used in operating activities of $61.1 million principally resulted from our net loss of $86.4 million , partially offset by non-cash charges of $19.5 million for stock-based compensation, $6.7 million for depreciation and amortization, and $4.0 million related to our income tax benefit. The net effect on cash of changes in net operating assets was an increase of cash of $2.1 million .
For the six months ended June 30, 2018, cash used in operating activities of $58.7 million principally resulted from our net loss of $67.8 million, partially offset by non-cash charges of $10.5 million for stock-based compensation, $6.9 million for depreciation and amortization, $0.7 million for non-cash remeasurements of liabilities associated with business combinations and $0.4 million for amortization of debt issuance costs. The net effect on cash of changes in net operating assets was a use of cash of $9.5 million.
Cash flows from investing activities
For the six months ended June 30, 2019 , cash provided by investing activities of $7.6 million was due to net maturities of marketable securities of $13.2 million and net cash acquired from the purchase of Singular Bio of $3.2 million , partially offset by cash used for purchases of property and equipment of $8.8 million .
For the six months ended June 30, 2018, cash provided by investing activities of $18.1 million was due to proceeds from maturities and sales of marketable securities of $22.0 million offset by cash used for purchases of property and equipment of $3.1 million, and purchases of convertible notes totaling $0.9 million.
Cash flows from financing activities
For the six months ended June 30, 2019 , cash provided by financing activities of $188.6 million consisted of net proceeds from the public offering of common stock of $184.5 million and cash received from issuances of common stock totaling $5.1 million , including cash received from employee stock plan purchases of $2.6 million and exercises of stock options of $2.4 million. These cash inflows were partially offset by finance lease payments of $1.0 million .
For the six months ended June 30, 2018, cash provided by financing activities of $77.0 million consisted of net proceeds from the underwritten public offering of common stock of $53.5 million, net proceeds of $19.8 million from the second term loan under the Amended 2017 Loan Agreement and cash received from issuances of common stock totaling $4.9 million, including cash received from employee stock purchases of $1.6 million and $3.1 million from exercises of warrants issued pursuant to the acquisition of CombiMatrix Corporation. These cash inflows were partially offset by capital lease obligations payments of $1.2 million.

37

Contractual obligations
The following table summarizes our contractual obligations, including interest, as of June 30, 2019 (in thousands):

																					
Contractual obligations:	 	Remainder of 2019	 	2020 and 2021	 	2022 and 2023	 	2024 and beyond	 	Total	
Operating leases	 	$	5,491		 	$	21,334		 	$	20,548		 	$	28,249		 	$	75,622		
Finance leases	 	1,103		 	1,354		 	—		 	—		 	2,457		
Debt	 	3,354		 	16,576		 	16,558		 	89,952		 	126,440		
Purchase commitments	 	753		 	2,292		 	51		 	—		 	3,096		
Total	 	$	10,701		 	$	41,556		 	$	37,157		 	$	118,201		 	$	207,615		
See Note 8 , "Commitments and contingencies" in the Notes to Condensed Consolidated Financial Statements for additional details regarding our leases, debt and purchase commitments.
Off-balance sheet arrangements
We have not entered into any off-balance sheet arrangements.
Recent accounting pronouncements
See “Recent accounting pronouncements” in Note 2, “Summary of significant accounting policies” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this report for a discussion of recently adopted accounting pronouncements and accounting pronouncements not yet adopted, and their expected effect on our financial position and results of operations.
ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rates. We had loan obligations under our 2018 Note Purchase Agreement of  $75.2 million  at  June 30, 2019 . This loan is subject to a fixed interest rate, plus beginning on January 1, 2020 and continuing until the maturity date, quarterly payments of 0.5% of our annual net revenues subject to a maximum annual amount of such payments of $1.6 million which will be recognized as interest expense. We had finance lease obligations of  $2.4 million  as of  June 30, 2019 , which primarily resulted from various finance lease agreements to obtain laboratory equipment. Our finance lease obligations carry fixed rates of interest. Our cash, cash equivalents, restricted cash and marketable securities totaled  $254.0 million  at  June 30, 2019 , and consisted of bank deposits, commercial paper, and money market funds. Such interest-bearing instruments carry a degree of risk; however, because our investments are primarily short-term in duration, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. At  June 30, 2019 , a hypothetical 1% (100 basis points) increase or decrease in interest rates would not have resulted in a material change in the fair value of our cash equivalents and portfolio of marketable securities. Fluctuations in the value of our cash equivalents and portfolio of marketable securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive gain (loss) and are realized only if we sell the underlying securities prior to maturity or declines in fair value are determined to be other-than-temporary.

38

ITEM 4.  Controls and Procedures.
(a) Evaluation of disclosure controls and procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, or Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial and accounting officer) have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
(b) Changes in internal control over financial reporting
During the quarterly period covered by this Quarterly Report on Form 10-Q, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

39

PART II — Other Information
 
ITEM 1.  Legal Proceedings.
We are not a party to any material legal proceedings on the date of this report. We may from time to time become involved in legal proceedings arising in the ordinary course of business, and the resolution of any such claims could be material.
ITEM 1A.  Risk Factors.
Risks related to our business and strategy
We expect to continue incurring significant losses, and we may not successfully execute our plan to achieve or sustain profitability.
We have incurred substantial losses since our inception. For the six months ended June 30, 2019 , our net loss was $86.4 million . For the years ended December 31, 2018 , 2017 and 2016 , our net losses were $129.4 million, $123.4 million and $100.3 million, respectively. At June 30, 2019 , our accumulated deficit was $603.1 million . While our revenue has increased over time, we expect to continue to incur significant losses. In addition, these losses may increase as we focus on scaling our business and operations and expanding our testing capabilities, which may increase our operating expenses. In addition, as a result of the integration of acquired businesses, we may be subject to unforeseen or additional expenditures, costs or liabilities. Our prior losses and expected future losses have had and may continue to have an adverse effect on our stockholders’ equity, working capital and stock price. Our failure to achieve and sustain profitability in the future would negatively affect our business, financial condition, results of operations and cash flows, and could cause the market price of our common stock to decline.
We began operations in January 2010 and commercially launched our initial assay in late November 2013; accordingly, we have a relatively limited operating history upon which you can evaluate our business and prospects. Our limited commercial history makes it difficult to evaluate our current business and makes predictions about our future results, prospects or viability subject to significant uncertainty. Our prospects must be considered in light of the risks and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets such as ours. These risks include an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, increase our customer base; implement and successfully execute our business and marketing strategy; identify, acquire and successfully integrate companies, assets or technologies in areas that are complementary to our business strategy; successfully enter into other strategic collaborations or relationships; obtain access to capital on acceptable terms and effectively utilize that capital; identify, attract, hire, retain, motivate and successfully integrate additional employees; continue to expand, automate and upgrade our laboratory, technology and data systems; obtain, maintain and expand coverage and reimbursement by healthcare payers; provide rapid test turnaround times with accurate results at low prices; provide superior customer service; and respond to competitive developments. We cannot assure you that we will be successful in addressing these risks, and the failure to do so could have a material adverse effect on our business, prospects, financial condition and results of operations. 
We have acquired and may continue to acquire businesses or assets, form joint ventures or make investments in other companies or technologies that could harm our operating results, dilute our stockholders’ ownership, or cause us to incur debt or significant expense.
As part of our business strategy, we have pursued and may continue to pursue acquisitions of complementary businesses or assets, as well as technology licensing arrangements. We also may pursue strategic alliances that leverage our core technology and industry experience to expand our offerings or distribution, or make investments in other companies. As an organization, we have limited experience with respect to acquisitions as well as the formation of strategic alliances and joint ventures.
In 2017, we established a leading position in family health genetic information services through the strategic acquisition of reproductive health testing capabilities, which included our acquisition of Good Start Genetics, Inc., or Good Start, a molecular diagnostics company focused on preimplantation and carrier screening for inherited disorders, and CombiMatrix Corporation, a company specializing in prenatal diagnosis, miscarriage analysis and pediatric developmental disorders. In 2017 we also acquired AltaVoice, formerly PatientCrossroads, a patient-centered data company with a global platform for collecting, curating, coordinating and delivering safeguarded data from patients and clinicians, and Ommdom, Inc. and its product, CancerGene Connect, an end-to-end platform for collecting and managing genetic family histories to deliver personalized genetic risk information.

40

In the second quarter of 2019, we acquired Singular Bio to assist in lowering the costs of our NIPS offering, and in July 2019, we acquired Jungla to further enhance our genetic variant interpretation and the quality of results we deliver.
With respect to our acquired businesses and any acquisitions we may make in the future, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. Any acquisitions by us also could result in significant write-offs or the incurrence of debt and contingent liabilities, any of which could harm our operating results. Furthermore, the loss of customers, payers, partners or suppliers following the completion of any acquisitions by us could harm our business. Changes in services, sources of revenue, and branding or rebranding initiatives may involve substantial costs and may not be favorably received by customers, resulting in an adverse impact on our financial results, financial condition and stock price. Integration of an acquired company or business also may require management’s time and resources that otherwise would be available for ongoing development of our existing business. We may also need to divert cash from other uses in order to fund these integration activities. Ultimately, we may not realize the anticipated benefits of any acquisition, technology license, strategic alliance, joint venture or investment, or these benefits may take longer to realize than we expected.
To finance any acquisitions or investments, we may raise additional funds. If we raise funds by issuing equity securities, dilution to our stockholders could result. Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. If we raise funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of our common stock. The terms of debt securities issued or borrowings could impose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our technologies or products, or grant licenses on terms that are not favorable to us. If the price of our common stock is low or volatile, we may not be able to acquire other companies for stock. In addition, our stockholders may experience substantial dilution as a result of additional securities we may issue for acquisitions. Open market sales of substantial amounts of our common stock issued to stockholders of companies we acquire could also depress our share price. Alternatively, we may raise additional funds for our acquisition activities through public or private financings. Additional funds may not be available on terms that are favorable to us, or at all. In addition, our 2018 Note Purchase Agreement limits our ability to merge with or acquire other entities, incur debt, incur liens, pay dividends or other distributions to holders of our capital stock and make investments, in each case subject to certain exceptions.
If third-party payers, including managed care organizations, private health insurers and government health plans do not provide adequate reimbursement for our tests or we are unable to comply with their requirements for reimbursement, our commercial success could be negatively affected.
Our ability to increase the number of billable tests and our revenue will depend on our success achieving reimbursement for our tests from third-party payers. Reimbursement by a payer may depend on a number of factors, including a payer’s determination that a test is appropriate, medically necessary, cost-effective and has received prior authorization.
Since each payer makes its own decision as to whether to establish a policy or enter into a contract to cover our tests, as well as the amount it will reimburse for a test, seeking these approvals is a time-consuming and costly process. In addition, the determination by a payer to cover and the amount it will reimburse for our tests will likely be made on an indication by indication basis. To date, we have obtained policy-level reimbursement approval or contractual reimbursement for some indications for our tests from most of the large commercial third-party payers in the United States, and the Centers for Medicare and Medicaid Services, or CMS, provides reimbursement for our multi-gene tests for hereditary breast cancer-related disorders as well as colon cancer. We believe that establishing adequate reimbursement from Medicare is an important factor in gaining adoption from healthcare providers. Our claims for reimbursement from third-party payers may be denied upon submission, and we must appeal the claims. The appeals process is time consuming and expensive, and may not result in payment. In cases where there is not a contracted rate for reimbursement, there is typically a greater coinsurance or copayment requirement from the patient, which may result in further delay or decreased likelihood of collection.
In cases where we have established reimbursement rates with third-party payers, we face additional challenges in complying with their procedural requirements for reimbursement. These requirements often vary from payer to payer, and we have needed additional time and resources to comply with them. We have also experienced, and may continue to experience, delays in or denials of coverage if we do not adequately comply with these requirements. Our third-party payers have also requested, and in the future may request, audits of the amounts paid to us. We have been required to repay certain amounts to payers as a result of such audits, and we could be adversely affected if we are required to repay other payers for alleged overpayments due to lack of

41

compliance with their reimbursement policies. In addition, we have experienced, and may continue to experience, delays in reimbursement when we transition to being an in-network provider with a payer.
We expect to continue to focus our resources on increasing adoption of, and expanding coverage and reimbursement for, our current tests and any future tests we may develop. If we fail to expand and maintain broad adoption of, and coverage and reimbursement for, our tests, our ability to generate revenue could be harmed and our future prospects and our business could suffer.
Our inability to raise additional capital on acceptable terms in the future may limit our ability to develop and commercialize new tests and expand our operations.
We expect capital expenditures and operating expenses to increase over the next several years as we expand our infrastructure, commercial operations, research and development activities and pursue and integrate acquisitions. We believe our existing cash and cash equivalents as of June 30, 2019, revenue from sales of our tests and available debt under our 2018 Note Purchase Agreement will be sufficient to meet our anticipated cash requirements for our currently-planned operations for the 12-month period following the filing date of this report. We may raise additional capital to finance operations prior to achieving profitability, or should we make additional acquisitions. We may seek to raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements. Additional funding may not be available to us on acceptable terms, or at all. If we raise funds by issuing equity securities, dilution to our stockholders would result. Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. The terms of debt securities issued or borrowings, if available, could impose significant restrictions on our operations. Our obligations under our 2018 Note Purchase Agreement are subject to covenants, including quarterly covenants to achieve certain revenue levels as well as additional covenants, including limits on our ability to dispose of assets, undergo a change in control, merge with or acquire other entities, incur debt, incur liens, pay dividends or other distributions to holders of our capital stock, repurchase stock and make investments, in each case subject to certain exceptions. Our obligations under our 2018 Note Purchase Agreement are secured by a security interest on substantially all of our and certain of our subsidiaries' assets.
The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could adversely affect our ability to conduct our business. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline. In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required to accept unfavorable terms. These agreements may require that we relinquish or license to a third party on unfavorable terms our rights to tests we otherwise would seek to develop or commercialize ourselves, or reserve certain opportunities for future potential arrangements when we might be able to achieve more favorable terms. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and development programs, selling and marketing initiatives, or potential acquisitions. In addition, we may have to work with a partner on one or more aspects of our tests or market development programs, which could lower the economic value of those tests or programs to our company.
We face intense competition, which is likely to intensify further as existing competitors devote additional resources to, and new participants enter, the market. If we cannot compete successfully, we may be unable to increase our revenue or achieve and sustain profitability.
With the development of next generation sequencing, the clinical genetics market is becoming increasingly competitive, and we expect this competition to intensify in the future. We face competition from a variety of sources, including:

•	dozens of relatively specialized competitors focused on inherited clinical genetics and gene sequencing, such as Ambry Genetics, Inc., a subsidiary of Konica Minolta Inc., Athena Diagnostics, a subsidiary of Quest Diagnostics Incorporated, Baylor Genetics, Blueprint Genetics, Inc., Centogene AG, Color Genomics, Inc., Connective Tissue Gene Test LLC, a subsidiary of Health Network Laboratories, L.P., Cooper Surgical, Inc., Eurofins Scientific, GeneDx, a subsidiary of OPKO Health, Inc., MNG Laboratories, LLC, Myriad Genetics, Inc., Natera, Inc., Perkin Elmer, Inc., PreventionGenetics, LLC, Progenity, Inc. and Sema4 Genomics;	
		
•	a few large, established general testing companies with large market share and significant channel power, such as Laboratory Corporation of America Holdings and Quest Diagnostics Incorporated;	

42

		
•	a large number of clinical laboratories in an academic or healthcare provider setting that perform clinical genetic testing on behalf of their affiliated institutions and often sell and market more broadly; and	
		
•	a large number of new entrants into the market for genetic information ranging from informatics and analysis pipeline developers to focused, integrated providers of genetic tools and services for health and wellness including Illumina, Inc., which is also one of our suppliers.	
Hospitals, academic medical centers and eventually physician practice groups and individual clinicians may also seek to perform at their own facilities the type of genetic testing we would otherwise perform for them. In this regard, continued development of equipment, reagents, and other materials as well as databases and interpretation services may enable broader direct participation in genetic testing and analysis.
Participants in closely related markets such as clinical trial or companion diagnostic testing could converge on offerings that are competitive with the type of tests we perform. Instances where potential competitors are aligned with key suppliers or are themselves suppliers could provide such potential competitors with significant advantages.
In addition, the biotechnology and genetic testing fields are intensely competitive both in terms of service and price, and continue to undergo significant consolidation, permitting larger clinical laboratory service providers to increase cost efficiencies and service levels, resulting in more intense competition.
We believe the principal competitive factors in our market are:
		
•	breadth and depth of content;	
		
•	quality;	
		
•	reliability;	
		
•	accessibility of results;	
		
•	turnaround time of testing results;	
		
•	price and quality of tests;	
		
•	coverage and reimbursement arrangements with third-party payers;	
		
•	convenience of testing;	
		
•	brand recognition of test provider;	
		
•	additional value-added services and informatics tools;	
		
•	client service; and	
		
•	quality of website content.	
Many of our competitors and potential competitors have longer operating histories, larger customer bases, greater brand recognition and market penetration, higher margins on their tests, substantially greater financial, technological and research and development resources, selling and marketing capabilities, lobbying efforts, and more experience dealing with third-party payers. As a result, they may be able to respond more quickly to changes in customer requirements, devote greater resources to the development, promotion and sale of their tests than we do, sell their tests at prices designed to win significant levels of market share, or obtain reimbursement from more third-party payers and at higher prices than we do. We may not be able to compete effectively against these organizations. Increased competition and cost-saving initiatives on the part of governmental entities and other third-party payers are likely to result in pricing pressures, which could harm our sales, profitability or ability to gain market share. In addition, competitors may be acquired by, receive investments from or enter into other commercial relationships with larger, well-established and well-financed companies as use of next generation sequencing for clinical diagnosis and preventative care increases. Certain of our competitors may be able to secure key inputs from vendors on more favorable terms, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to website and systems development than we can. In addition, companies or governments that control access to genetic testing through umbrella contracts or regional preferences could promote our competitors or prevent us from performing certain services. In addition, some of our competitors have obtained approval or clearance for certain of their tests from the U.S. Food and Drug Administration, or FDA. If payers decide to reimburse only for tests that are FDA-approved or FDA-cleared, or if they are more likely to reimburse for such tests, we may not be able to compete effectively unless we obtain similar approval or clearance for our tests. If we are unable to compete successfully against current and future competitors,

43

we may be unable to increase market acceptance and sales of our tests, which could prevent us from increasing our revenue or achieving profitability and could cause our stock price to decline.
We may not be able to manage our future growth effectively, which could make it difficult to execute our business strategy.
Our expected future growth could create a strain on our organizational, administrative and operational infrastructure, including laboratory operations, quality control, customer service, marketing and sales, and management. We may not be able to maintain the quality of or expected turnaround times for our tests, or satisfy customer demand as it grows. We will likely need to continue expanding our sales force to facilitate our growth, and we may have difficulties locating, recruiting, training and retaining sales personnel. Our ability to manage our growth properly will require us to continue to improve our operational, financial and management controls, as well as our reporting systems and procedures. As we grow, any failure of our controls or interruption of our production facilities or systems could have a negative impact on our business and financial operations. We plan to implement new enterprise software systems in a number of areas affecting a broad range of business processes and functional areas. The time and resources required to implement these new systems is uncertain, and failure to complete these activities in a timely and efficient manner could adversely affect our operations. Future growth in our business could also make it difficult for us to maintain our corporate culture. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our business could be harmed.
Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.
In the ordinary course of our business, we collect and store sensitive data, including protected health information, or PHI, personally identifiable information, credit card information, intellectual property and proprietary business information owned or controlled by ourselves or our customers, payers and other parties. We manage and maintain our applications and data utilizing a combination of on-site systems, managed data center systems and cloud-based data center systems. We also communicate sensitive patient data through our Invitae Family History Tool, Patient Insights Network, or PIN, and CancerGene Connect platform. In addition to storing and transmitting sensitive personal information that is subject to myriad legal protections, these applications and data encompass a wide variety of business-critical information including research and development information, commercial information, and business and financial information. We face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate disclosure, inappropriate modification, and the risk of our being unable to adequately monitor and modify our controls over our critical information. Any technical problems that may arise in connection with our data and systems, including those that are hosted by third-party providers, could result in interruptions in our business and operations. These types of problems may be caused by a variety of factors, including infrastructure changes, human or software errors, viruses, security attacks, fraud, spikes in customer usage and denial of service issues. From time to time, large third-party web hosting providers have experienced outages or other problems that have resulted in their systems being offline and inaccessible. Such outages could materially impact our business and operations.
The secure processing, storage, maintenance and transmission of this critical information are vital to our operations and business strategy, and we devote significant resources to protecting such information. Although we take what we believe to be reasonable and appropriate measures to protect sensitive information from unauthorized access or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance or other disruptions. Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, altered, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under federal or state laws that protect the privacy of personal information, such as but not limited to the Health Insurance Portability and Accountability Act of 1996, or HIPAA, the Health Information Technology for Economic and Clinical Heath Act, or HITECH, state data security and data breach notification laws, and related regulatory penalties. Although we have implemented security measures and a formal, dedicated enterprise security program to prevent unauthorized access to patient data, our Invitae Family History Tool, PIN and CancerGene Connect platform are currently accessible through our online portal and/or through our mobile applications, and there is no guarantee we can protect our online portal or our mobile applications from breach. Unauthorized access, loss or dissemination could also disrupt our operations (including our ability to conduct our analyses, provide test results, bill payers or patients, process claims and appeals, provide customer assistance, conduct research and development activities, collect, process and prepare company financial information, provide information about our tests and other patient and physician education and outreach efforts through our website, and

44

manage the administrative aspects of our business) and damage our reputation, any of which could adversely affect our business.
In addition to security risks, we also face privacy risks. While we have policies that govern our privacy practices and procedures that aim to keep our practices consistent with such policies, such procedures are not invulnerable to human error. Should we inadvertently break the privacy promises we make to patients or consumers, we could receive a complaint from an affected individual or interested privacy regulator, such as the Federal Trade Commission (FTC) or a state Attorney General. This risk is heightened given the sensitivity of the data we collect.
Penalties for failure to comply with a requirement of HIPAA and HITECH vary significantly, and include civil monetary penalties of up to $1.5 million per calendar year for each provision of HIPAA that is violated. A person who knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face a criminal penalty of up to $50,000 and up to one-year imprisonment. The criminal penalties increase if the wrongful conduct involves false pretenses or the intent to sell, transfer or use identifiable health information for commercial advantage, personal gain or malicious harm. Penalties for unfair or deceptive acts or practices under the FTC Act or state Unfair and Deceptive Acts and Practices, or UDAP, statutes may also vary significantly.
There has been unprecedented activity in the development of data protection regulation around the world. As a result, the interpretation and application of consumer, health-related and data protection laws in the United States, Europe and elsewhere are often uncertain, contradictory and in flux. The European Union’s General Data Protection Regulation, or GDPR, took effect in May 2018. The GDPR applies to any business, regardless of its location, that provides goods or services to residents in the European Union. The GDPR imposes strict requirements on controllers and processors of personal data, including special protections for “sensitive information” which includes health and genetic information of data subjects residing in the European Union. The GDPR also grants individuals various rights in relation to their personal data including the right to access, rectification, objection to processing and deletion, and provides an individual with an express right to seek legal remedies if the individual believes his or her rights have been violated. Failure to comply with the requirements of the GDPR and the related national data protection laws of the member states of the European Union, which may deviate slightly from the GDPR, may result in significant fines.
Additionally, the implementation of GDPR has led other jurisdictions to either amend or propose legislation to amend their existing data privacy and cybersecurity laws to resemble the requirements of GDPR. For example, on June 28, 2018, California adopted the California Consumer Privacy Act of 2018, or CCPA, and amended the law in September 2018 to exempt all PHI collected by certain parties subject to HIPAA. The effective date of the CCPA is January 1, 2020; however, legislators have stated that they intend to propose amendments to the CCPA before it goes into effect. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
It is possible the GDPR, CCPA and other data protection laws may be interpreted and applied in a manner that is inconsistent with our practices. If so, this could result in government-imposed fines or orders requiring that we change our practices, which could adversely affect our business. In addition, these privacy regulations may differ from country to country and state to state, and may vary based on whether testing is performed in the United States or in the local country. Complying with these various laws and regulations could cause us to incur substantial costs or require us to change our business practices and compliance procedures in a manner adverse to our business. We can provide no assurance that we are or will remain in compliance with diverse privacy and security requirements in all of the jurisdictions in which we do business. Failure to comply with privacy and security requirements could result in civil or criminal penalties, which could have a material adverse effect on our business.
We rely on highly skilled personnel in a broad array of disciplines and, if we are unable to hire, retain or motivate these individuals, or maintain our corporate culture, we may not be able to maintain the quality of our services or grow effectively.
Our performance, including our research and development programs and laboratory operations, largely depend on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization, including software developers, geneticists, biostatisticians, certified laboratory scientists and other scientific and technical personnel to process and interpret our genetic tests. In addition, we expect the need to continue to expand our sales force with qualified and experienced personnel. Competition in our industry for qualified employees is intense, and we may not be able to attract or retain qualified personnel in the future due to the competition for qualified personnel among life science and technology businesses as well as universities and

45

public and private research institutions, particularly in the San Francisco Bay Area. In addition, our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that could adversely affect our ability to scale our business, support our research and development efforts and our clinical laboratory. We believe that our corporate culture fosters innovation, creativity and teamwork. However, as our organization grows, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture. This could negatively impact our ability to retain and attract employees and our future success.
We need to scale our infrastructure in advance of demand for our tests, and our failure to generate sufficient demand for our tests would have a negative impact on our business and our ability to attain profitability.
Our success depends in large part on our ability to extend our market position, to provide customers with high-quality test reports quickly and at a lower price than our competitors, and to achieve sufficient test volume to realize economies of scale. In order to execute our business model, we intend to continue to invest heavily in order to significantly scale our infrastructure, including our testing capacity and information systems, expand our commercial operations, customer service, billing and systems processes and enhance our internal quality assurance program. We expect that much of this growth will be in advance of demand for our tests. Our current and future expense levels are to a large extent fixed and are largely based on our investment plans and our estimates of future revenue. Because the timing and amount of revenue from our tests is difficult to forecast, when revenue does not meet our expectations, we may not be able to adjust our spending promptly or reduce our spending to levels commensurate with our revenue. Even if we are able to successfully scale our infrastructure and operations, we cannot assure you that demand for our tests will increase at levels consistent with the growth of our infrastructure. If we fail to generate demand commensurate with this growth or if we fail to scale our infrastructure sufficiently in advance of demand to successfully meet such demand, our business, prospects, financial condition and results of operations could be adversely affected.
If we are not able to continue to generate substantial demand of our tests, our commercial success will be negatively affected.
Our business model assumes that we will be able to generate significant test volume, and we may not succeed in continuing to drive clinical adoption of our test to achieve sufficient volumes. Inasmuch as detailed genetic data from broad-based testing panels such as our tests have only recently become available at relatively affordable prices, the continued pace and degree of clinical acceptance of the utility of such testing is uncertain. Specifically, it is uncertain how much genetic data will be accepted as necessary or useful, as well as how detailed that data should be, particularly since medical practitioners may have become accustomed to genetic testing that is specific to one or a few genes. Given the substantial amount of additional information available from a broad-based testing panel such as ours, there may be distrust as to the reliability of such information when compared with more limited and focused genetic tests. To generate further demand for our tests, we will need to continue to make clinicians aware of the benefits of our tests, including the price, the breadth of our testing options, and the benefits of having additional genetic data available from which to make treatment decisions. Because broad-based testing panels are relatively new, it may be more difficult or take more time for us to expand clinical adoption of our assay beyond our current customer base. In addition, clinicians in other areas of medicine may not adopt genetic testing for hereditary disease as readily as it has been adopted in hereditary cancer and our efforts to sell our tests to clinicians outside of oncology may not be successful. A lack of or delay in clinical acceptance of broad-based panels such as our tests would negatively impact sales and market acceptance of our tests and limit our revenue growth and potential profitability. Genetic testing is expensive and many potential customers may be sensitive to pricing. In addition, potential customers may not adopt our tests if adequate reimbursement is not available, or if we are not able to maintain low prices relative to our competitors. Also, we have recently introduced our direct channel, in which we facilitate the ordering of our genetic tests by consumers through an online network of physicians. Since we have limited experience directly marketing to patients, we may not be successful in increasing demand for our tests through this new channel. Patient-initiated testing may also be perceived negatively by our existing customer base of clinicians and genetic counselors, in which case our core business could be harmed.
If we are not able to generate demand for our tests at sufficient volume, or if it takes significantly more time to generate this demand than we anticipate, our business, prospects, financial condition and results of operations could be materially harmed.

46

Our success will depend on our ability to use rapidly changing genetic data to interpret test results accurately and consistently, and our failure to do so would have an adverse effect on our operating results and business, harm our reputation and could result in substantial liabilities that exceed our resources.
Our success depends on our ability to provide reliable, high-quality tests that incorporate rapidly evolving information about the role of genes and gene variants in disease and clinically relevant outcomes associated with those variants. Errors, such as failure to detect genomic variants with high accuracy, or mistakes, such as failure to identify, or incompletely or incorrectly identifying, gene variants or their significance, could have a significant adverse impact on our business.
Hundreds of genes can be implicated in some disorders, and overlapping networks of genes and symptoms can be implicated in multiple conditions. As a result, a substantial amount of judgment is required in order to interpret testing results for an individual patient and to develop an appropriate patient report. We classify variants in accordance with published guidelines as benign, likely benign, variants of uncertain significance, likely pathogenic or pathogenic, and these guidelines are subject to change. In addition, it is our practice to offer support to clinicians and geneticists ordering our tests regarding which genes or panels to order as well as interpretation of genetic variants. We also rely on clinicians to interpret what we report and to incorporate specific information about an individual patient into the physician’s treatment decision.
The marketing, sale and use of our genetic tests could subject us to liability for errors in, misunderstandings of, or inappropriate reliance on, information we provide to clinicians, geneticists or patients, and lead to claims against us if someone were to allege that a test failed to perform as it was designed, if we failed to correctly interpret the test results, if we failed to update the test results due to a reclassification of the variants according to new published guidelines, or if the ordering physician were to misinterpret test results or improperly rely on them when making a clinical decision. In addition, our entry into the reproductive health testing market exposes us to increased liability. A product liability or professional liability claim could result in substantial damages and be costly and time-consuming for us to defend. Although we maintain liability insurance, including for errors and omissions, we cannot assure you that such insurance would fully protect us from the financial impact of defending against these types of claims or any judgments, fines or settlement costs arising out of any such claims. Any liability claim, including an errors and omissions liability claim, brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in the future. Additionally, any liability lawsuit could cause injury to our reputation or cause us to suspend sales of our tests. The occurrence of any of these events could have an adverse effect on our reputation and results of operations.
Our industry is subject to rapidly changing technology and new and increasing amounts of scientific data related to genes and genetic variants and their role in disease. Our failure to develop tests to keep pace with these changes could make us obsolete.
In recent years, there have been numerous advances in methods used to analyze very large amounts of genomic information and the role of genetics and gene variants in disease and treatment therapies. Our industry has and will continue to be characterized by rapid technological change, increasingly larger amounts of data, frequent new testing service introductions and evolving industry standards, all of which could make our tests obsolete. Our future success will also depend on our ability to keep pace with the evolving needs of our customers on a timely and cost-effective basis and to pursue new market opportunities that develop as a result of technological and scientific advances. Our tests could become obsolete and our business adversely affected unless we continually update our offerings to reflect new scientific knowledge about genes and genetic variations and their role in diseases and treatment therapies.
Our success will depend in part on our ability to generate sales using our internal sales team and through alternative marketing strategies.
We may not be able to market or sell our current tests and any future tests we may develop effectively enough to drive demand sufficient to support our planned growth. We currently sell our tests primarily through our internal sales force. Historically, our sales efforts have been focused primarily on hereditary cancer and more recently on reproductive health. Our efforts to sell our tests to clinicians and patients outside of oncology may not be successful, or may be difficult to do successfully without significant additional selling and marketing efforts and expense. We significantly increased the size of our sales force in 2017, 2018, and early 2019. Our future sales will also depend in large part on our ability to develop and substantially expand awareness of our company and our tests through alternative strategies including through education of key opinion leaders, through social media-related and online outreach, education and marketing efforts, and through focused channel partner strategies designed to drive demand for our tests. We also plan to increase our consumer advertising in connection with our introduction of our direct channel to consumers, which could be costly. We have limited experience implementing these types of

47

marketing efforts. We may not be able to drive sufficient levels of revenue using these sales and marketing methods and strategies necessary to support our planned growth, and our failure to do so could limit our revenue and potential profitability.
Outside the United States we use a limited number of distributors to assist with sales, logistics, education and customer support. Sales practices utilized by our distributors that are locally acceptable may not comply with sales practices standards required under U.S. laws that apply to us, which could create additional compliance risk. If our sales and marketing efforts are not successful outside the United States, we may not achieve significant market acceptance for our tests outside the United States, which could adversely impact our business.
Impairment in the value of our goodwill or other intangible assets could have a material adverse effect on our operating results and financial condition.
We record goodwill and intangible assets at fair value upon the acquisition of a business. Goodwill represents the excess of amounts paid for acquiring businesses over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets are evaluated for impairment annually, or more frequently if conditions warrant, by comparing the carrying value of a reporting unit to its estimated fair value. Intangible assets with definite lives are reviewed for impairment when events or circumstances indicate that their carrying value may not be recoverable. Declines in operating results, divestitures, sustained market declines and other factors that impact the fair value of a reporting unit could result in an impairment of goodwill or intangible assets and, in turn, a charge to net income. Any such charges could have a material adverse effect on our results of operations or financial condition.
We rely on a limited number of suppliers or, in some cases, sole suppliers, for some of our laboratory instruments, materials and services, and we may not be able to find replacements or immediately transition to alternative suppliers.
We rely on a limited number of suppliers, or, in some cases, sole suppliers, including Illumina, Inc., Integrated DNA Technologies Incorporated, Qiagen N.V., Roche Holdings Ltd. and Twist Bioscience Corporation for certain laboratory substances used in the chemical reactions incorporated into our processes, which we refer to as reagents, as well as sequencers and other equipment and materials which we use in our laboratory operations. We do not have short- or long-term agreements with most of our suppliers, and our suppliers could cease supplying these materials and equipment at any time, or fail to provide us with sufficient quantities of materials or materials that meet our specifications. Our laboratory operations could be interrupted if we encounter delays or difficulties in securing these reagents, sequencers or other equipment or materials, and if we cannot obtain an acceptable substitute. Any such interruption could significantly affect our business, financial condition, results of operations and reputation. We rely on Illumina as the sole supplier of next generation sequencers and associated reagents and as the sole provider of maintenance and repair services for these sequencers. Any disruption in Illumina’s operations could impact our supply chain and laboratory operations as well as our ability to conduct our tests, and it could take a substantial amount of time to integrate replacement equipment into our laboratory operations. We also currently rely on a third party to perform non-invasive prenatal screening, or NIPS, testing on our behalf. In the event of any disruption or termination of these services, it may be difficult to find a replacement NIPS offering, which could harm our business, financial condition, results of operation and reputation.
We believe that there are only a few other manufacturers that are currently capable of supplying and servicing the equipment necessary for our laboratory operations, including sequencers and various associated reagents. The use of equipment or materials provided by these replacement suppliers would require us to alter our laboratory operations. Transitioning to a new supplier would be time consuming and expensive, may result in interruptions in our laboratory operations, could affect the performance specifications of our laboratory operations or could require that we revalidate our tests. We cannot assure you that we will be able to secure alternative equipment, reagents and other materials, and bring such equipment, reagents and materials on line and revalidate them without experiencing interruptions in our workflow. In the case of an alternative supplier for Illumina, we cannot assure you that replacement sequencers and associated reagents will be available or will meet our quality control and performance requirements for our laboratory operations. If we encounter delays or difficulties in securing, reconfiguring or revalidating the equipment and reagents we require for our tests, our business, financial condition, results of operations and reputation could be adversely affected.
If our laboratories in California become inoperable due to disasters or for any other reason, we will be unable to perform our tests and our business will be harmed.
We perform all of our tests at our production facilities in San Francisco and Irvine, California. Our laboratories and the equipment we use to perform our tests would be costly to replace and could require substantial lead time to replace and qualify for use. Our laboratories may be harmed or rendered inoperable by natural or man-

48

made disasters, including earthquakes, flooding, fire and power outages, which may render it difficult or impossible for us to perform our tests for some period of time. This risk is especially high for us since we perform the substantial majority of our tests at our San Francisco laboratory, which is located in an active seismic region, and we do not have a redundant facility to perform the same tests in the event our San Francisco laboratory is inoperable. The inability to perform our tests or the backlog that could develop if our laboratories are inoperable for even a short period of time may result in the loss of customers or harm our reputation. Although we maintain insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all.
The loss of any member or change in structure of our senior management team could adversely affect our business.
Our success depends in large part upon the skills, experience and performance of members of our executive management team and others in key leadership positions. The efforts of these persons will be critical to us as we continue to develop our technologies and test processes and focus on scaling our business. If we were to lose one or more key executives, we may experience difficulties in competing effectively, developing our technologies and implementing our business strategy. All of our executives and employees are at-will, which means that either we or the executive or employee may terminate their employment at any time. We do not carry key man insurance for any of our executives or employees. In addition, we do not have a long-term retention agreement in place with our president and chief executive officer.
Development of new tests is a complex process, and we may be unable to commercialize new tests on a timely basis, or at all.
We cannot assure you that we will be able to develop and commercialize new tests on a timely basis. Before we can commercialize any new tests, we will need to expend significant funds in order to:
		
•	conduct research and development;	
		
•	further develop and scale our laboratory processes; and	
		
•	further develop and scale our infrastructure to be able to analyze increasingly larger and more diverse amounts of data.	
Our testing service development process involves risk, and development efforts may fail for many reasons, including:
		
•	failure of any test to perform as expected;	
		
•	lack of validation or reference data; or	
		
•	failure to demonstrate utility of a test.	
As we develop tests, we will have to make significant investments in development, marketing and selling resources. In addition, competitors may develop and commercialize competing tests faster than we are able to do so.
We depend on our information technology systems, and any failure of these systems could harm our business.
We depend on information technology and telecommunications systems for significant elements of our operations, including our laboratory information management system, our bioinformatics analytical software systems, our database of information relating to genetic variations and their role in disease process and drug metabolism, our clinical report optimization systems, our customer-facing web-based software, our customer reporting, and our Invitae Family History Tool, PIN, and CancerGene Connect platform. We have installed, and expect to expand, a number of enterprise software systems that affect a broad range of business processes and functional areas, including for example, systems handling human resources, financial controls and reporting, customer relationship management, regulatory compliance and other infrastructure operations. In addition, we intend to extend the capabilities of both our preventative and detective security controls by augmenting the monitoring and alerting functions, the network design, and the automatic countermeasure operations of our technical systems. These information technology and telecommunications systems support a variety of functions, including laboratory operations, test validation, sample tracking, quality control, customer service support, billing and reimbursement, research and development activities, scientific and medical curation, and general administrative activities, including financial reporting.

49

Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our information technology and telecommunications systems, failures or significant downtime of our information technology or telecommunications systems or those used by our third-party service providers could prevent us from conducting tests, preparing and providing reports to clinicians, billing payers, processing reimbursement appeals, handling physician or patient inquiries, conducting research and development activities, and managing the administrative and financial aspects of our business. Any disruption or loss of information technology or telecommunications systems on which critical aspects of our operations depend could have an adverse effect on our business and results of operations.
Any technical problems that may arise in connection with our data and systems, including those that are hosted by third-party providers, could result in interruptions in our business and operations. These types of problems may be caused by a variety of factors, including infrastructure changes, human or software errors, viruses, security attacks, fraud, spikes in customer usage and denial of service issues. From time to time, large third-party web hosting providers have experienced outages or other problems that have resulted in their systems being offline and inaccessible. Such outages could materially impact our business and operations.
Ethical, legal and social concerns related to the use of genetic information could reduce demand for our tests.
Genetic testing has raised ethical, legal and social issues regarding privacy and the appropriate uses of the resulting information. Governmental authorities could, for social or other purposes, limit or regulate the use of genetic information or genetic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure. Similarly, these concerns may lead patients to refuse to use, or clinicians to be reluctant to order, genomic tests even if permissible. These and other ethical, legal and social concerns may limit market acceptance of our tests or reduce the potential markets for our tests, either of which could have an adverse effect on our business, financial condition or results of operations.
Our international business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States.
Doing business internationally involves a number of risks, including:
		
•	multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits and licenses;	
		
•	failure by us or our distributors to obtain regulatory approvals for the use of our tests in various countries;	
		
•	complexities and difficulties in obtaining protection and enforcing our intellectual property;	
		
•	difficulties in staffing and managing foreign operations;	
		
•	complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems;	
		
•	logistics and regulations associated with shipping samples, including infrastructure conditions and transportation delays;	
		
•	limits on our ability to penetrate international markets if we do not to conduct our tests locally;	
		
•	natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; and	
		
•	regulatory and compliance risks that relate to maintaining accurate information and control over activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, or FCPA, its books and records provisions, or its anti-bribery provisions.	
Any of these factors could significantly harm our international operations and, consequently, our revenue and results of operations.
In addition, applicable export or import laws and regulations such as prohibitions on the export of samples imposed by countries outside of the United States, or international privacy or data restrictions that are different or more stringent than those of the United States, may require that we build additional laboratories or engage in joint ventures or other business partnerships in order to offer our tests internationally in the future. Any such restrictions

50

would impair our ability to offer our tests in such countries and could have an adverse effect on our business, financial condition and results of operations.
Risks related to government regulation
If the FDA regulates our tests as medical devices, we could incur substantial costs and our business, financial condition and results of operations could be adversely affected.
We provide our tests as laboratory-developed tests, or LDTs. CMS and certain state agencies regulate the performance of LDTs (as authorized by the Clinical Laboratory Improvement Amendments of 1988, or CLIA, and state law, respectively).
Historically, the FDA has exercised enforcement discretion with respect to most LDTs and has not required laboratories that furnish LDTs to comply with the agency’s requirements for medical devices (e.g., establishment registration, device listing, quality systems regulations, premarket clearance or premarket approval, and post-market controls). In recent years, however, the FDA has stated it intends to end its policy of general enforcement discretion and regulate certain LDTs as medical devices. To this end, on October 3, 2014, the FDA issued two draft guidance documents, entitled “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)” and “FDA Notification and Medical Device Reporting for Laboratory Developed Tests (LDTs),” respectively, that set forth a proposed risk-based regulatory framework that would apply varying levels of FDA oversight to LDTs. Subsequently, on January 13, 2017, the FDA published a “discussion paper” in which it outlined a substantially revised “possible approach” to the oversight of LDTs. In December 2018, a draft bill titled the “Verifying Accurate Leading-edge IVCT Development Act of 2018,” or VALID Act, was released for discussion. The draft bill proposes a risk-based approach to regulate LDTs and creates a new in vitro clinical test, or IVCT, category of regulated products, which includes LDTs, and a regulatory structure under the FDA. As proposed, the draft bill grandfathers many existing tests from the proposed premarket approval, quality systems, and labeling requirements, respectively, but would require such tests to comply with other regulatory requirements (e.g., registration and notification, adverse event reporting). We cannot predict if this draft bill will be enacted in its current (or any other) form and cannot quantify the effect of this draft bill on our business.
Legislative proposals addressing the FDA’s oversight of LDTs have been introduced in previous Congresses, and we expect that new legislative proposals will be introduced from time-to-time. The likelihood that Congress will pass such legislation and the extent to which such legislation may affect the FDA’s plans to regulate certain LDTs as medical devices is difficult to predict at this time.
If the FDA ultimately regulates certain LDTs (either as medical devices or as part of a new stand-alone regulatory category for IVCTs), whether via individualized enforcement action, or more generally, as outlined in final guidance or final regulation, or as instructed by Congress, our tests may be subject to certain additional regulatory requirements. Complying with the FDA’s requirements can be expensive, time-consuming and subject us to significant or unanticipated delays. Insofar as we may be required to obtain premarket clearance or approval to perform or continue performing an LDT, we cannot assure you that we will be able to obtain such authorization. Even if we obtain regulatory clearance or approval where required, such authorization may not be for the intended uses that we believe are commercially attractive or are critical to the commercial success of our tests. As a result, the application of the FDA’s requirements to our tests could materially and adversely affect our business, financial condition and results of operations.
Failure to comply with applicable FDA regulatory requirements may trigger a range of enforcement actions by the FDA including warning letters, civil monetary penalties, injunctions, criminal prosecution, recall or seizure, operating restrictions, partial suspension or total shutdown of operations, and denial of or challenges to applications for clearance or approval, as well as significant adverse publicity.
In addition, in November 2013, the FDA issued final guidance regarding the distribution of products labeled for research use only. Certain of the reagents and other products we use in our tests are labeled as research use only products. Certain of our suppliers may cease selling research use only products to us and any failure to obtain an acceptable substitute could significantly and adversely affect our business, financial condition and results of operations.
If we fail to comply with federal, state and foreign laboratory licensing requirements, we could lose the ability to perform our tests or experience disruptions to our business.
We are subject to CLIA, a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease. CLIA regulations establish specific standards with respect to personnel qualifications, facility administration, proficiency testing, quality control, quality assurance and inspections. CLIA certification is also required in order for

51

us to be eligible to bill state and federal healthcare programs, as well as many private third-party payers, for our tests. We have current CLIA certifications to conduct our tests at our laboratories in San Francisco and Irvine, California. To renew these certifications, we are subject to survey and inspection every two years. Moreover, CLIA inspectors may make random inspections of our clinical reference laboratories.
We are also required to maintain licenses to conduct testing in California. California laws establish standards for day-to-day operation of our clinical reference laboratories in San Francisco and Irvine, including the training and skills required of personnel and quality control. We also maintain out-of-state laboratory licenses to conduct testing on specimens from Maryland, New York, Pennsylvania and Rhode Island.
In addition to having laboratory licenses in New York, our clinical reference laboratories are approved on test-specific bases by the New York State Department of Health, or NYDOH. Other states may adopt similar licensure requirements in the future, which may require us to modify, delay or stop our operations in such jurisdictions. We may also be subject to regulation in foreign jurisdictions as we seek to expand international utilization of our tests or such jurisdictions adopt new licensure requirements, which may require review of our tests in order to offer them or may have other limitations such as restrictions on the transport of samples necessary for us to perform our tests that may limit our ability to make our tests available outside of the United States. Complying with licensure requirements in new jurisdictions may be expensive, time-consuming, and subject us to significant and unanticipated delays.
Failure to comply with applicable clinical laboratory licensure requirements may result in a range of enforcement actions, including license suspension, limitation, or revocation, directed plan of action, onsite monitoring, civil monetary penalties, criminal sanctions, and cancellation of the laboratory’s approval to receive Medicare and Medicaid payment for its services, as well as significant adverse publicity. Any sanction imposed under CLIA, its implementing regulations, or state or foreign laws or regulations governing clinical laboratory licensure, or our failure to renew our CLIA certificate, a state or foreign license, or accreditation, could have a material adverse effect on our business, financial condition and results of operations. Even if we were able to bring our laboratory back into compliance, we could incur significant expenses and potentially lose revenue in doing so.
The College of American Pathologists, or CAP, maintains a clinical laboratory accreditation program. CAP asserts that its program is “designed to go well beyond regulatory compliance” and helps laboratories achieve the highest standards of excellence to positively impact patient care. While not required to operate a CLIA-certified laboratory, many private insurers require CAP accreditation as a condition to contracting with clinical laboratories to cover their tests. In addition, some countries outside the United States require CAP accreditation as a condition to permitting clinical laboratories to test samples taken from their citizens. We have CAP accreditations for our laboratories. Failure to maintain CAP accreditation could have a material adverse effect on the sales of our tests and the results of our operations.
Complying with numerous statutes and regulations pertaining to our business is an expensive and time-consuming process, and any failure to comply could result in substantial penalties.
Our operations are subject to other extensive federal, state, local and foreign laws and regulations, all of which are subject to change. These laws and regulations currently include, among others:
		
•	HIPAA, which establish comprehensive federal standards with respect to the privacy and security of protected health information and requirements for the use of certain standardized electronic transactions;	
		
•	amendments to HIPAA under HITECH, which strengthen and expand HIPAA privacy and security compliance requirements, increase penalties for violators and expand vicarious liability, extend enforcement authority to state attorneys general, and impose requirements for breach notification;	
		
•	the federal Anti-Kickback Statute, which prohibits knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for the referral of an individual, for the furnishing of or arrangement for the furnishing of any item or service for which payment may be made in whole or in part by a federal healthcare program, or the purchasing, leasing, ordering, arranging for, or recommend purchasing, leasing or ordering, any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program;	
		
•	the Eliminating Kickbacks in Recovery Act of 2018, known as EKRA, which prohibits payments for referrals to recovery homes, clinical treatment facilities, and laboratories and reaches beyond federal health care programs, to include private insurance;	
		
•	the federal physician self-referral law, known as the Stark Law, which prohibits a physician from making a referral to an entity for certain designated health services covered by the Medicare program, including	

52

laboratory and pathology services, if the physician or an immediate family member has a financial relationship with the entity unless an exception applies, and prohibits an entity from billing for designated health services furnished pursuant to a prohibited referral;
		
•	the federal false claims law, which impose liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the federal government;	
		
•	the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies;	
		
•	the HIPAA fraud and abuse provisions, which create new federal criminal statutes that prohibit, among other things, defrauding health care benefit programs, willfully obstructing a criminal investigation of a healthcare offense and falsifying or concealing a material fact or making any materially false statements in connection with the payment for healthcare benefits, items or services;	
		
•	other federal and state fraud and abuse laws, such as anti-kickback laws, prohibitions on self-referral, fee-splitting restrictions, insurance fraud laws, anti-markup laws, prohibitions on the provision of tests at no or discounted cost to induce physician or patient adoption, and false claims acts, which may extend to services reimbursable by any third-party payer, including private insurers;	
		
•	the prohibition on reassignment of Medicare claims, which, subject to certain exceptions, precludes the reassignment of Medicare claims to any other party;	
		
•	state laws that prohibit other specified practices, such as billing clinicians for testing that they order; waiving coinsurance, copayments, deductibles and other amounts owed by patients; billing a state Medicaid program at a price that is higher than what is charged to one or more other payers; and	
		
•	similar foreign laws and regulations that apply to us in the countries in which we operate or may operate in the future.	
We have adopted policies and procedures designed to comply with these laws and regulations. In the ordinary course of our business, we conduct internal reviews of our compliance with these laws. Our compliance may also be subject to governmental review. The growth of our business and our expansion outside of the United States may increase the potential of violating these laws or our internal policies and procedures. The risk of our being found in violation of these or other laws and regulations is further increased by the fact that many have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action brought against us for violation of these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of these laws and regulations, we may be subject to any applicable penalty associated with the violation, including administrative, civil and criminal penalties, damages, fines, individual imprisonment, exclusion from participation in Federal healthcare programs, refunding of payments received by us, and curtailment or cessation of our operations. Any of the foregoing consequences could seriously harm our business and our financial results.
Healthcare policy changes, including legislation reforming the U.S. healthcare system, may have a material adverse effect on our financial condition, results of operations and cash flows.
In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively referred to as the Affordable Care Act, was enacted in the United States, which made a number of substantial changes in the way healthcare is financed by both governmental and private insurers. Among other things, the Affordable Care Act requires each medical device manufacturer to pay a sales tax equal to 2.3% of the price for which such manufacturer sells its medical devices, and applied to sales of taxable medical devices from January 1, 2013 through December 31, 2015. The medical device tax has been suspended for 2016 through 2019, but is scheduled to return beginning in 2020. It is unclear at this time when, or if, the provision of our LDTs will trigger the medical device tax if the FDA ends its policy of general enforcement discretion and regulates certain LDTs as medical devices. It is possible, however, that this tax will apply to some or all of our tests or tests that are in development.
Many of the Current Procedure Terminology, or CPT, procedure codes that we use to bill our tests were revised by the American Medical Association, effective January 1, 2013. Moreover, effective January 1, 2015, the AMA released several new codes to report genomic sequencing procedures. In a final determination under the

53

Medicare Clinical Laboratory Fee Schedule, or CLFS, published in November 2014, CMS set the 2015 payment rate for these codes by the gap-fill process. Under the gap-fill process, local Medicare Administrative Contractors, or MACs, establish rates for those codes that each MAC believes meet the criteria for Medicare coverage and considering laboratory charges and discounts to charges, resources, amounts paid by other payers for the tests, and amounts paid by the MAC for similar tests. In 2015, gap-filled payment rates were established for some, but not all, of the above-described codes. For those codes for which local gap-filled rate(s) were established in 2015, a national limitation amount for Medicare was established for 2016. Codes for which local gap-filled rates were not established in 2015 were priced by the local MACs in 2016 insofar as an individual MAC determines that such codes should be covered. Where available, the national limitation amount serves as a cap on the Medicare and Medicaid payment rates for a test procedure.
The AMA also released several CPT codes effective January 1, 2016 that may be appropriate to report certain of our tests. In a November 2015 final determination, CMS set the calendar year 2016 CLFS payment rate for these new codes by the gap-fill process. CMS and the local MACs went through the gap-fill process in 2016 and announced final gap-filled rates for 2017 on September 30, 2016. The calendar year 2017 national limitation amounts for certain codes were significantly less than the rates at which we have historically offered our tests.
In April 2014, Congress passed the Protecting Access to Medicare Act of 2014, or PAMA, which included substantial changes to the way in which clinical laboratory services are paid under Medicare. Under the final rule that implements PAMA, which was promulgated by CMS in June 2016, clinical laboratories must report to CMS private payer rates beginning in 2017 and every three years thereafter for clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests and every year for advanced diagnostic laboratory tests.
We do not believe that our tests meet the definition of advanced diagnostic laboratory tests, but in the event that we seek designation for one or more of our tests as an advanced diagnostic laboratory test and the tests are determined by CMS to meet these criteria or new criteria developed by CMS, we would be required to report private payer data for those tests annually. Otherwise, we will be required to report private payer rates for our tests on an every three years basis. Laboratories that fail to timely report the required payment information may be subject to substantial civil money penalties.
As set forth in the PAMA final rule, for tests furnished on or after January 1, 2018, Medicare payments for clinical diagnostic laboratory tests are paid based upon these reported private payer rates. For clinical diagnostic laboratory tests that are assigned a new or substantially revised code, initial payment rates for clinical diagnostic laboratory tests that are not advanced diagnostic laboratory tests will be assigned by the cross-walk or gap-fill methodology, similar to prior law. Initial payment rates for new advanced diagnostic laboratory tests will be based on the actual list charge for the laboratory test. The payment rates calculated under PAMA went into effect starting January 1, 2018. Where applicable, reductions to payment rates resulting from the new methodology are limited to 10% per test per year in each of the years 2018 through 2020 and to 15% per test per year in each of 2021 through 2023 (following a second round of private payer rate reporting in 2020 to establish rates for 2021 through 2023).
PAMA also authorized the adoption of new, temporary billing codes and/or unique test identifiers for FDA-cleared or approved tests as well as advanced diagnostic laboratory tests. The CPT® Editorial Panel approved a proposal to create a new section of billing codes to facilitate implementation of this section of PAMA, but it is unclear how these codes would apply to our tests.
In March 2018, CMS published a final national coverage determination, or NCD, for next generation sequencing, or NGS, tests for patients with advanced cancer. The final NCD establishes full coverage for FDA-approved or FDA-cleared NGS-based companion diagnostic assays when offered for their FDA-approved or FDA-cleared use(s), ordered by the patient’s treating physician for Medicare beneficiaries with advanced cancer (recurrent, relapsed, refractory, metastatic, or advanced stage III or IV cancer) who have not have previously been tested with the same test for the same primary diagnosis of cancer or are seeking repeat testing for a new primary cancer diagnosis, and have decided to seek further cancer treatment. The final NCD also gives MACs the authority to establish local coverage for NGS-based assays that are not FDA-approved or FDA-cleared companion diagnostics when offered to patients meeting the above-referenced criteria. It is unclear, however, whether MACs retain the authority to establish local coverage for NGS-based tests provided for patients with cancer that do not meet the above-referenced criteria - e.g., patients with earlier stage cancers or patients with a personal history of cancer - or if such tests are nationally non-covered under the NCD. If CMS interprets the final NCD to exclude coverage for patients with earlier stage cancers or personal history of cancer, MACs will no longer have discretion to cover our current tests when offered to such patients, notwithstanding historical Medicare coverage for such tests. An interpretation of the NCD that results in Medicare non-coverage for our current and future assays would have significant negative impact on our business, financial condition and results of operations. In April 2019, in an effort to clarify the impact of the NCD, CMS announced that it would be re-opening the NCD. CMS requested

54

comments on tests for germline mutations to identify those with hereditary cancer who may benefit from targeted treatments based on results of the test, and explicitly stated that all other tests are beyond the scope of the re-opening. However, the extent to which CMS may eventually reconsider its position with respect to NGS-based germline testing more generally - or the position that CMS may take with respect to such testing -  remains unclear at this time. 
We cannot predict whether future healthcare initiatives will be implemented at the federal or state level, or how any future legislation or regulation may affect us. For instance, the payment reductions imposed by the Affordable Care Act and the expansion of the federal and state governments’ role in the U.S. healthcare industry as well as changes to the reimbursement amounts paid by payers for our tests and future tests or our medical procedure volumes may reduce our profits and have a materially adverse effect on our business, financial condition, results of operations and cash flows. Notably, Congress enacted legislation in 2017 that eliminates the Affordable Care Act’s “individual mandate” beginning in 2019, which may significantly impact the number of covered lives participating in exchange plans. Moreover, Congress has proposed on several occasions to impose a 20% coinsurance on patients for clinical laboratory tests reimbursed under the clinical laboratory fee schedule, which would increase our billing and collecting costs and decrease our revenue.
If we use hazardous materials in a manner that causes injury, we could be liable for resulting damages.
Our activities currently require the use of hazardous chemicals and biological material. We cannot eliminate the risk of accidental contamination or injury to employees or third parties from the use, storage, handling or disposal of these materials. In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our resources or any applicable insurance coverage we may have. In 2018, we decommissioned our laboratory in Cambridge, Massachusetts; however, we could be held liable for any damages resulting from our prior use of hazardous chemicals and biological materials at this facility. Additionally, we are subject on an ongoing basis to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. The cost of compliance with these laws and regulations may become significant, and our failure to comply may result in substantial fines or other consequences, and either could negatively affect our operating results.
We could be adversely affected by violations of the FCPA and other worldwide anti-bribery laws.
We are subject to the FCPA, which prohibits companies and their intermediaries from making payments in violation of law to non-U.S. government officials for the purpose of obtaining or retaining business or securing any other improper advantage. We use a limited number of independent distributors to sell our tests internationally, which requires a high degree of vigilance in maintaining our policy against participation in corrupt activity, because these distributors could be deemed to be our agents, and we could be held responsible for their actions. Other U.S. companies in the medical device and pharmaceutical fields have faced criminal penalties under the FCPA for allowing their agents to deviate from appropriate practices in doing business with these individuals. We are also subject to similar anti-bribery laws in the jurisdictions in which we operate, including the United Kingdom’s Bribery Act of 2010, which also prohibits commercial bribery and makes it a crime for companies to fail to prevent bribery. These laws are complex and far-reaching in nature, and, as a result, we cannot assure you that we would not be required in the future to alter one or more of our practices to be in compliance with these laws or any changes in these laws or the interpretation thereof. Any violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and could result in a material adverse effect on our business, prospects, financial condition or results of operations. We could also incur severe penalties, including criminal and civil penalties, disgorgement and other remedial measures.
Risks related to our intellectual property
Litigation or other proceedings or third-party claims of intellectual property infringement or misappropriation may require us to spend significant time and money, and could in the future prevent us from selling our tests or impact our stock price.
Our commercial success will depend in part on our avoiding infringement of patents and proprietary rights of third parties, including for example the intellectual property rights of competitors. As we continue to commercialize our tests in their current or an updated form, launch different and expanded tests, and enter new markets, competitors might claim that our tests infringe or misappropriate their intellectual property rights as part of business strategies designed to impede our successful commercialization and entry into new markets. Our activities may be subject to claims that we infringe or otherwise violate patents or other intellectual property rights owned or controlled by third parties. We cannot assure you that our operations do not, or will not in the future, infringe existing or future patents. We may be unaware of patents that a third party, including for example a competitor in the genetic

55

testing market, might assert are infringed by our business. There may also be patent applications that, if issued as patents, could be asserted against us. Third parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to perform our tests. Further, if a patent infringement suit were brought against us, we could be forced to stop or delay our development or sales of any tests or other activities that are the subject of such suit. Defense of these claims, regardless of merit, could cause us to incur substantial expenses and be a substantial diversion of our employee resources. Any adverse ruling or perception of an adverse ruling in defending ourselves could have a material adverse impact on our business and stock price. In the event of a successful claim of infringement against us by a third party, we may have to (1) pay substantial damages, possibly including treble damages and attorneys’ fees if we are found to have willfully infringed patents; (2) obtain one or more licenses, which may not be available on commercially reasonable terms (if at all); (3) pay royalties; and/or (4) redesign any infringing tests or other activities, which may be impossible or require substantial time and monetary expenditure, all of which could have a material adverse impact on our cash position and business and financial condition.
If licenses to third-party intellectual property rights are or become required for us to engage in our business, we may be unable to obtain them at a reasonable cost, if at all. Even if such licenses are available, we could incur substantial costs related to royalty payments for licenses obtained from third parties, which could negatively affect our gross margins. Moreover, we could encounter delays in the introduction of tests while we attempt to develop alternatives. Defense of any lawsuit or failure to obtain any of these licenses on favorable terms could prevent us from commercializing tests, which could materially affect our ability to grow and thus adversely affect our business and financial condition.
Developments in patent law could have a negative impact on our business.
Although we view current U.S. Supreme Court precedent to be aligned with our belief that naturally occurring DNA sequences and detection of natural correlations between observed facts (such as patient genetic data) and an understanding of that fact’s implications (such as a patient’s risk of disease associated with certain genetic variations) should not be patentable, it is possible that subsequent determinations by the U.S. Supreme Court or other federal courts could limit, alter or potentially overrule current law. Moreover, from time to time the U.S. Supreme Court, other federal courts, the United States Congress or the U.S. Patent and Trademark Office, or USPTO, may change the standards of patentability, and any such changes could run contrary to, or otherwise be inconsistent with, our belief that naturally occurring DNA sequences and detection of natural correlations between observed facts and an understanding of that fact’s implications should not be patentable, which could result in third parties newly claiming that our business practices infringe patents drawn from categories of patents which we currently view to be invalid as directed to unpatentable subject matter. For example, the U.S. Senate Judiciary Committee, Subcommittee on Intellectual Property has held hearings in 2019 regarding a legislative proposal that would overrule current U.S. Supreme Court precedent concerning the scope of patentable subject matter. If such proposal were to be formulated as a bill and enacted into law, there could be an increase in third party claims to patent rights over correlations between patient genetic data and its interpretation and such third parties may assert that our business practices infringe some of those resulting patent rights.
Our inability to effectively protect our proprietary technologies, including the confidentiality of our trade secrets, could harm our competitive position.
We currently rely upon trade secret protection and copyright, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants and third-parties, and to a limited extent patent protection, to protect our confidential and proprietary information. Although our competitors have utilized and are expected to continue utilizing similar methods and have aggregated and are expected to continue to aggregate similar databases of genetic testing information, our success will depend upon our ability to develop proprietary methods and databases and to defend any advantages afforded to us by such methods and databases relative to our competitors. If we do not protect our intellectual property adequately, competitors may be able to use our methods and databases and thereby erode any competitive advantages we may have.
We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies are covered by valid and enforceable patents or are effectively maintained as trade secrets. In this regard, we have applied, and we intend to continue applying, for patents covering such aspects of our technologies as we deem appropriate. However, we expect that potential patent coverage we may obtain will not be sufficient to prevent substantial competition. In this regard, we believe it is probable that others will independently develop similar or alternative technologies or design around those technologies for which we may obtain patent protection. In addition, any patent applications we file may be challenged and may not result in issued patents or may be invalidated or narrowed in scope after they are issued. Questions as to inventorship or ownership may also arise. Any finding that our patents or applications are unenforceable could harm our ability to prevent

56

others from practicing the related technology, and a finding that others have inventorship or ownership rights to our patents and applications could require us to obtain certain rights to practice related technologies, which may not be available on favorable terms, if at all. If we initiate lawsuits to protect or enforce our patents, or litigate against third party claims, which would be expensive, and, if we lose, we may lose some of our intellectual property rights. Furthermore, these lawsuits may divert the attention of our management and technical personnel.
We expect to rely primarily upon trade secrets and proprietary know-how protection for our confidential and proprietary information, and we have taken security measures to protect this information. These measures, however, may not provide adequate protection for our trade secrets, know-how or other confidential information. Among other things, we seek to protect our trade secrets and confidential information by entering into confidentiality agreements with employees and consultants. There can be no assurance that any confidentiality agreements that we have with our employees and consultants will provide meaningful protection for our trade secrets and confidential information or will provide adequate remedies in the event of unauthorized use or disclosure of such information. Accordingly, there also can be no assurance that our trade secrets will not otherwise become known or be independently developed by competitors. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed. 
We may not be able to enforce our intellectual property rights throughout the world.
The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and many companies have encountered significant challenges in establishing and enforcing their proprietary rights outside of the United States. These challenges can be caused by the absence of rules and methods for the establishment and enforcement of intellectual property rights outside of the United States. In addition, the legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to healthcare. This could make it difficult for us to stop the infringement of our patents, if obtained, or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property.
Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
We employ individuals who were previously employed at universities or genetic testing, diagnostic or other healthcare companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees or consultants have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our intellectual property. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Risks related to being a public company
We incur increased costs and demands on management as a result of compliance with laws and regulations applicable to public companies, which could harm our operating results.
As a public company, we incur significant legal, accounting and other expenses , including costs associated with public company reporting requirements. In addition, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, as well as rules implemented by the SEC and the New York Stock Exchange, or NYSE, impose a number of

57

requirements on public companies, including with respect to corporate governance practices. The SEC and other regulators have continued to adopt new rules and regulations and make additional changes to existing regulations that require our compliance. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, enacted in 2010, includes significant corporate governance and executive-compensation-related provisions. Our management and other personnel need to devote a substantial amount of time to these compliance and disclosure obligations. If these requirements divert the attention of our management and personnel from other aspects of our business concerns, they could have a material adverse effect on our business, financial condition and results of operations. Moreover, these rules and regulations applicable to public companies substantially increase our legal, accounting and financial compliance costs, require that we hire additional personnel and make some activities more time-consuming and costly. It may also be more expensive for us to obtain director and officer liability insurance.
If we are unable to maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information and the market price of our common stock may be negatively affected.
We are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on our internal control over financial reporting. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We have compiled the system and process documentation necessary to perform the evaluation needed to comply with Section 404 of the Sarbanes-Oxley Act. We need to maintain and enhance these processes and controls as we grow and we have required, and may continue to require, additional personnel and resources to do so.
During the evaluation and testing process, if we identify one or more material weaknesses in our internal controls, our management will be unable to conclude that our internal control over financial reporting is effective. Moreover, when we are no longer an emerging growth company, as described below, our independent registered public accounting firm will be required to issue an attestation report on the effectiveness of our internal control over financial reporting. Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed.
If we are unable to conclude that our internal control over financial reporting is effective, or when we are no longer an emerging growth company, if our auditors were to express an adverse opinion on the effectiveness of our internal control over financial reporting because we had one or more material weaknesses, investors could lose confidence in the accuracy and completeness of our financial disclosures, which could cause the price of our common stock to decline. Internal control deficiencies could also result in the restatement of our financial results in the future.
We are an emerging growth company and have elected to comply with reduced public company reporting requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.
We are an emerging growth company, as defined under the Securities Act. We may remain an emerging growth company until December 31, 2020, although if our revenue exceeds $1.07 billion in any fiscal year before that time, we would cease to be an emerging growth company as of the end of that fiscal year. In addition, if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our second fiscal quarter of any fiscal year before the end of that five-year period, we would cease to be an emerging growth company as of December 31 of that year, and we currently expect that we will cease to be an emerging growth company on December 31, 2019. As an emerging growth company, we have chosen to take advantage of exemptions from various reporting requirements applicable to certain other public companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced financial statement and financial-related disclosures, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirement of holding a nonbinding advisory vote on executive compensation and obtaining stockholder approval of any golden parachute payments not previously approved by our stockholders. We cannot predict whether investors will find our common stock less attractive because we have chosen to rely on any of these exemptions. If investors find our common stock less attractive as a result of any choices to reduce future disclosure we may make, there may be a less active trading market for our common stock and our stock price may be more volatile.

58

Risks related to our common stock
Our stock price is volatile, and you may not be able to sell shares of our common stock at or above the price you paid.
The trading price of our common stock is volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. These factors include:
		
•	actual or anticipated fluctuations in our operating results;	
		
•	competition from existing tests or new tests that may emerge;	
		
•	announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;	
		
•	failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;	
		
•	issuance of new or updated research or reports by securities analysts or changed recommendations for our stock;	
		
•	our focus on long-term goals over short-term results;	
		
•	the timing of our investments in the growth of our business;	
		
•	actual or anticipated changes in regulatory oversight of our business;	
		
•	additions or departures of key management or other personnel;	
		
•	disputes or other developments related to our intellectual property or other proprietary rights, including litigation;	
		
•	changes in reimbursement by current or potential payers;	
		
•	general economic and market conditions; and	
		
•	issuances of significant amounts of our common stock.	
In addition, the stock market in general, and the market for stock of life sciences companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.
Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our common stock. In addition, the sale of substantial amounts of our common stock could adversely impact its price. As of June 30, 2019 , we had outstanding approximately 93.8 million shares of our common stock, options to purchase approximately 3.7 million shares of our common stock (of which approximately 2.8 million were exercisable as of that date), outstanding restricted stock units representing approximately 8.2 million shares of our common stock (which includes an estimated number of Time-based RSUs and PRSUs granted in connection with our acquisition of Singular Bio), outstanding Series A convertible preferred stock convertible into approximately 0.1 million shares of our common stock and warrants to purchase 0.6 million shares of our common stock. The foregoing does not include additional shares that may be issuable in 2019 upon the achievement of certain milestones in connection with our acquisition of Jungla. Up to $114.0 million of our common stock was available for sale as of June 30, 2019 pursuant to the 2018 Sales Agreement, as amended. In addition, have agreed to register for resale on Form S-3 an aggregate of approximately 3.9 million shares of our common issued in connection with our acquisition of Singular Bio and Jungla. Once registered, such stockholders may decide to sell their shares pursuant to such registration statements at any time. The sale or the availability for sale of a large number of shares of our common stock in the public market could cause the price of our common stock to decline.

59

If securities or industry analysts issue an adverse opinion regarding our stock or do not publish research or reports about our company, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that equity research analysts publish about us and our business. We do not control these analysts or the content and opinions included in their reports. Securities analysts may elect not to provide research coverage of our company and such lack of research coverage may adversely affect the market price of our common stock. The price of our common stock could also decline if one or more equity research analysts downgrade our common stock, change their price targets, issue other unfavorable commentary or cease publishing reports about us or our business. If one or more equity research analysts cease coverage of our company, we could lose visibility in the market, which in turn could cause our stock price to decline.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
At June 30, 2019, our total gross deferred tax assets were $131.9 million. Due to our lack of earnings history and uncertainties surrounding our ability to generate future taxable income, the net deferred tax assets have been fully offset by a valuation allowance. The deferred tax assets were primarily comprised of federal and state tax net operating losses and tax credit carryforwards. Furthermore, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards, or NOLs, and other pre-change tax attributes (such as research tax credits) to offset its future taxable income may be limited. In general, an “ownership change” occurs if there is a cumulative change in our ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period. Our existing NOLs and tax credit carryovers may be subject to limitations arising from previous ownership changes, and if we undergo one or more ownership changes in connection with completed acquisitions, or other future transactions in our stock, our ability to utilize NOLs and tax credit carryovers could be further limited by Section 382 of the Internal Revenue Code. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss and tax credit carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. The annual limitation may result in the expiration of certain net operating loss and tax credit carryforwards before their utilization. In addition, the Tax Cuts and Jobs Act limits the deduction for NOLs to 80% of current year taxable income and eliminates NOL carrybacks. Also, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
We have never paid dividends on our capital stock, and we do not anticipate paying dividends in the foreseeable future.
We have never paid dividends on any of our capital stock and currently intend to retain any future earnings to fund the growth of our business. In addition, our 2018 Note Purchase Agreement limits our ability to pay dividends on our common stock. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for the foreseeable future.
Anti-takeover provisions in our charter documents and under Delaware law could discourage, delay or prevent a change in control and may affect the trading price of our common stock.
Provisions in our restated certificate of incorporation and our amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our restated certificate of incorporation and amended and restated bylaws include provisions that:
		
•	authorize our board of directors to issue, without further action by the stockholders, up to 20,000,000 shares of undesignated preferred stock;	
		
•	require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;	
		
•	specify that special meetings of our stockholders can be called only by our board of directors, our chairman of the board or our chief executive officer;	
		
•	establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;	
		
•	establish that our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms;	

60

		
•	provide that our directors may be removed only for cause;	
		
•	provide that vacancies on our board of directors may, except as otherwise required by law, be filled only by a majority of directors then in office, even if less than a quorum; and	
		
•	require a super-majority of votes to amend certain of the above-mentioned provisions as well as to amend our bylaws generally.	
In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. Section 203 generally prohibits us from engaging in a business combination with an interested stockholder subject to certain exceptions.
Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for:
		
•	any derivative action or proceeding brought on our behalf;	
		
•	any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders;	
		
•	any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law; or	
		
•	any action asserting a claim against us governed by the internal affairs doctrine.	
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the provisions of our certificate of incorporation described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

61

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended June 30, 2019, we issued an aggregate of 2,498,705 shares of our common stock upon the closing of the Singular Bio transaction and in July 2019, we issued an aggregate of 1,365,567 shares of our common stock upon the closing of the Jungla transaction. These issuances were in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.
ITEM 6.  Exhibits.

			
Exhibit Number	 	Description	
 	 	 	
2.1+	 	Agreement and Plan of Merger and Reorganization, dated as of June 14, 2019, by and among Invitae Corporation, Santa Barbara Merger Sub, Singular Bio, Inc. and Fortis Advisors LLC.	
 	 	 	
2.2+	 	Stock Purchase and Merger Agreement, dated as of July 11, 2019, by and among Invitae Corporation, Jumanji, LLC, Jungla Inc., and Fortis Advisors LLC.	
 	 	 	
10.1	 	Invitae Corporation 2015 Stock Incentive Plan (as amended and restated as of June 11, 2019).	
 	 	 	
10.2	 	Form of Notice of Time-Based Restricted Stock Unit Award and Time-Based Restricted Stock Unit Agreement for Awards Granted under the Invitae Corporation 2015 Stock Incentive Plan (Inducement).	
 	 	 	
10.3^	 	Form of Notice of Performance-Based Restricted Stock Unit Award and Performance-Based Restricted Stock Unit Agreement for Awards under the Invitae Corporation 2015 Stock Inventive Plan (Inducement).	
 	 	 	
10.4	 	Form of Registration Rights Agreement by and among Invitae Corporation and certain stockholders of Singular Bio, Inc.  	
 	 	 	
10.5	 	Form of Registration Rights Agreement by and among Invitae Corporation and certain stockholders of Jungla Inc.  	
 	 	 	
31.1	 	Principal Executive Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 	 	 	
31.2	 	Principal Financial and Accounting Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
 	 	 	
32.1*   	 	Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002).	
 	 	 	
32.2*   	 	Certification Pursuant to 18 U.S.C. § 1350 (Section 906 of Sarbanes-Oxley Act of 2002).	
 	 	 	
101.INS	 	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	
 	 	 	
101.SCH	 	Inline XBRL Taxonomy Extension Schema	
 	 	 	
101.CAL	 	Inline XBRL Taxonomy Extension Calculation Linkbase	
 	 	 	
101.DEF	 	Inline XBRL Taxonomy Extension Definition Linkbase	
 	 	 	
101.LAB	 	Inline XBRL Taxonomy Extension Label Linkbase	
 	 	 	
101.PRE	 	Inline XBRL Taxonomy Extension Presentation Linkbase	

		

		
+	The schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.	

^	Portions of this Exhibit have been redacted in accordance with Item 601 of Regulation S-K.	

62

		
*	In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933 except to the extent that the registrant specifically incorporates it by reference.	

63

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	
			
 	INVITAE CORPORATION	
 	 	 	
 	By:	/s/ Sean E. George, Ph.D.	
 	 	Sean E. George, Ph.D.	
 	 	President and Chief Executive Officer	
 	 	Principal Executive Officer	
 	 	 	
 	By:	/s/ Shelly D. Guyer	
 	 	Shelly D. Guyer	
 	 	Chief Financial Officer	
 	 	Principal Financial and Accounting Officer	
 	 	 	
Date: August 6, 2019	 	 	

64

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
INVITAE CORPORATION,
SANTA BARBARA MERGER SUB, INC.,
SINGULAR BIO, INC.,
and
FORTIS ADVISORS LLC,
as Holders’ Representative
June 14, 2019

	
				
TABLE OF CONTENTS	
ARTICLE I: DEFINITIONS	 	2	
Section 1.1	Defined Terms	 	2	
ARTICLE II: THE MERGER AND EFFECT OF THE MERGER	 	19	
Section 2.1	The Merger	 	19	
Section 2.2	Closing	 	19	
Section 2.3	Effective Time	 	19	
Section 2.4	Effects of the Merger	 	19	
Section 2.5	Charter Documents of Surviving Corporation	 	20	
Section 2.6	Management of the Surviving Corporation	 	20	
Section 2.7	Effect of the Merger on Capital Stock	 	20	
Section 2.8	Delivery of Calculations	 	23	
Section 2.9	Payments At Closing	 	24	
Section 2.10	Issuances of Shares Following Closing	 	25	
Section 2.11	Non-Conversion	 	25	
Section 2.12	Exchange Agent; Exchange of Certificates	 	26	
Section 2.13	No Liability	 	27	
Section 2.14	Withholding Taxes	 	27	
Section 2.15	Adjustments	 	28	
Section 2.16	Post-Closing Adjustment Amount	 	28	
Section 2.17	Indemnification Hold-Back Amount and Payment	 	30	
Section 2.18	Tax Consequences.	 	31	
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	31	
Section 3.1	Organizational Matters	 	31	
Section 3.2	Authority; Noncontravention; Voting Requirements	 	32	
Section 3.3	Capitalization	 	33	
Section 3.4	No Consents or Approvals	 	35	
Section 3.5	Financial Matters	 	36	
Section 3.6	Absence of Certain Changes or Events	 	38	
Section 3.7	Legal Proceedings	 	38	
Section 3.8	Compliance with Laws; Permits	 	38	
Section 3.9	Taxes	 	40	
Section 3.10	Employee Benefits and Labor Matters	 	42	
Section 3.11	Environmental Matters	 	47	
Section 3.12	Contracts	 	47	
Section 3.13	Assets: Title, Sufficiency, Condition	 	50	
Section 3.14	Real Property	 	50	

i

	
				
Section 3.15	Intellectual Property; Technology; Privacy and Security; Information Systems; Disaster Recovery	 	52	
Section 3.16	Insurance	 	57	
Section 3.17	Related Party/Affiliate Transactions	 	57	
Section 3.18	Suppliers	 	58	
Section 3.19	Disclaimer of Warranties	 	58	
Section 3.20	Certain Business Practices	 	58	
Section 3.21	Brokers and Other Advisors	 	58	
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB	 	58	
Section 4.1	Organization, Standing and Corporate Power	 	59	
Section 4.2	Authority; Noncontravention	 	59	
Section 4.3	Governmental Approvals	 	60	
Section 4.4	Ownership and Operations of Merger Sub	 	60	
Section 4.5	SEC Documents	 	60	
Section 4.6	Shares of Common Stock	 	60	
Section 4.7	Non-Reliance	 	61	
ARTICLE V: ADDITIONAL COVENANTS AND AGREEMENTS	 	61	
Section 5.1	Conduct of Business	 	61	
Section 5.2	Stockholder and other Holder Approvals	 	64	
Section 5.3	Commercially Reasonable Efforts	 	65	
Section 5.4	Public Announcements	 	65	
Section 5.5	Access to Information	 	65	
Section 5.6	Confidentiality	 	66	
Section 5.7	Notification of Certain Matters	 	66	
Section 5.8	Tax Matters	 	67	
Section 5.9	Employment Related Agreements	 	70	
Section 5.10	Officers and Directors Insurance and Indemnification	 	70	
Section 5.11	Employee Matters and Company Plans	 	71	
Section 5.12	No Negotiations, Etc	 	72	
Section 5.13	Termination of the Company Option Plan and Investor Rights Arrangements	 	72	
Section 5.14	Registration of Stock Consideration Shares	 	73	
Section 5.15	Amendment or Termination of AKESOgen Agreement	 	73	
ARTICLE VI: CONDITIONS TO CLOSING	 	73	
Section 6.1	Conditions to Obligations of Parent and Merger Sub	 	73	
Section 6.2	Conditions to Obligation of the Company	 	77	
ARTICLE VII: TERMINATION	 	77	

ii

	
				
Section 7.1	Termination	 	77	
Section 7.2	Effect of Termination	 	78	
ARTICLE VIII: SURVIVAL AND INDEMNIFICATION	 	79	
Section 8.1	Survival	 	79	
Section 8.2	Indemnification	 	79	
Section 8.3	Offset Right	 	83	
Section 8.4	Claims for Indemnification; Resolution of Conflicts	 	84	
Section 8.5	Holders’ Representative	 	89	
ARTICLE IX: GENERAL PROVISIONS	 	92	
Section 9.1	Interpretation	 	92	
Section 9.2	Notices	 	93	
Section 9.3	Assignment and Succession	 	94	
Section 9.4	Amendment or Supplement	 	94	
Section 9.5	Waivers	 	94	
Section 9.6	Entire Agreement	 	95	
Section 9.7	No Third-Party Beneficiaries	 	95	
Section 9.8	Remedies Cumulative	 	95	
Section 9.9	Specific Performance	 	95	
Section 9.10	Severability	 	96	
Section 9.11	Costs and Expenses	 	96	
Section 9.12	Time of Essence	 	96	
Section 9.13	Counterparts	 	96	
Section 9.14	Governing Law	 	96	
Section 9.15	Exclusive Jurisdiction; Venue; Service of Process	 	96	
Section 9.16	Consent to Representation; Privileged Communications	 	97	

EXHIBITS

Exhibit A – Form of Written Consent and Joinder Agreement
Exhibit B – Form of Parent RSU Award Agreement
Exhibit C – R&W Insurance Policy
Exhibit D – Form of Certificate of Merger
Exhibit E – List of Continuing Employees
Exhibit F – Form of Employment and Non-Competition Agreements

iii

Exhibit G – Form of Registration Rights Agreement

iv

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “ Agreement ”), is dated as of June 14 , 2019 (the “ Agreement Date ”), by and among Invitae Corporation, a Delaware corporation (“ Parent ”), Santa Barbara Merger Sub, Inc., a Delaware corporation (“ Merger Sub ”), Singular Bio, Inc., a Delaware corporation (the “ Company ”), and Fortis Advisors LLC, a Delaware limited liability company , as representative of the Holders (as more thoroughly defined in Section 8.5 , “ Holders’ Representative ”). Each of Parent, Merger Sub, the Company and Holders’ Representative may be individually referred to herein as a “ Party ” and collectively referred to herein as the “ Parties .” Capitalized terms used herein have the meanings ascribed thereto in ARTICLE I or elsewhere in this Agreement as identified in ARTICLE I .
RECITALS
WHEREAS , the Company, Parent and Merger Sub intend to effect a merger of Merger Sub with and into the Company (the “ Merger ”) in accordance with this Agreement and the General Corporation Law of the State of Delaware (the “ DGCL ”), whereupon, following consummation of the Merger, Merger Sub shall cease to exist and the Company shall become a wholly-owned Subsidiary of Parent;
WHEREAS , the board of directors of the Company has approved, adopted and declared advisable this Agreement and the transactions contemplated hereby, including the Merger, and recommended the adoption of this Agreement and the transactions contemplated by this Agreement to its stockholders, in accordance with the DGCL and upon the terms and subject to the conditions set forth herein;
WHEREAS , the respective boards of directors of Parent and Merger Sub have each approved, adopted and declared advisable this Agreement and the transactions contemplated hereby, including the Merger, in accordance with the DGCL and upon the terms and subject to the conditions set forth herein;
WHEREAS , promptly following the execution and delivery of this Agreement, and as an inducement to Parent’s willingness to enter into this Agreement, in accordance with Sections 228(a) and 228(c) of the DGCL, the Company has agreed to deliver a written consent and joinder agreement in the form attached as Exhibit A hereto (a “ Written Consent and Joinder Agreement ”), executed by Holders holding no less than 97.5% of the outstanding shares of Company Capital Stock and Company Options to acquire no less than 73.9% of the Company Capital Stock issuable upon exercise of all outstanding Company Options (assuming full vesting), pursuant to which such Holders will, (a) to the extent they are Stockholders, Optionholders holding in-the-money Options, or Warrantholders holding in-the-money Warrants, (i) approve this Agreement, the Merger, the Preferred Stock Conversion (as applicable), the arrangements contemplated by the Parent RSU

Award Agreements and the other transactions and arrangements contemplated hereby and (ii) agree to the indemnification provisions set forth herein, (b) to the extent they are Stockholders, make customary representations and warranties relating to an investment in shares of Parent Common Stock (including, as applicable, with the assistance of a “purchaser representative” for such purpose) and (c) release the Company against certain claims;
WHEREAS , for U.S. federal income Tax purposes, the Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code; and
WHEREAS , following consummation of the Merger, Parent intends to grant certain restricted stock units to the Continuing Employees pursuant to a restricted stock unit award agreement with each such Continuing Employee in the form attached as Exhibit B hereto (a “ Parent RSU Award Agreement ”), pursuant to which Parent shall agree to issue shares of Parent Common Stock to the Continuing Employees at such times, and upon such conditions (including with respect to the vesting of such shares upon the occurrence of certain time-based and milestone-based contingencies), as are set forth therein.
NOW, THEREFORE , in consideration of the foregoing and the mutual covenants, representations, warranties and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and intending to be legally bound hereby, the Parties agree as follows:

2

ARTICLE I: DEFINITIONS
Section 1.1      Defined Terms .
The following terms shall have the following meanings in this Agreement:
“ Accounting Methodology ” means the accounting methods, practices and procedures used to prepare the Audited Financial Statements.
“ Action ” means any claim, controversy, suit, action or cause of action, litigation, arbitration, investigation, opposition, interference, audit, hearing, demand, assessment, complaint, citation, proceeding, order or other legal proceeding (whether sounding in contract or tort or otherwise, whether civil, criminal, administrative or otherwise and whether brought at law or in equity or under arbitration or administrative regulation) and any written notice of violation, notice of potential responsibility or any notice alleging liability, in each case by or before a Governmental Authority.
“ Actual Outstanding Shares of Company Capital Stock ” means the aggregate number of shares of Company Common Stock (on a post-Preferred Stock Conversion basis) that are issued and outstanding immediately prior to the Effective Time (other than shares to be cancelled in accordance with Section 2.7.2 ) – i.e., all shares of Company Capital Stock other than shares underlying any Company Options or Company Warrants that remain unexercised as of immediately prior to the Effective Time.
“ Adjustment Hold-Back Amount ” means $250,000.
“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.
“ Aggregate Exercise Amount ” means the aggregate exercise price of all in-the-money Company Options and in-the-money Company Warrants outstanding as of immediately prior to the Effective Time.
“ Aggregate Gross Option and Warrant Payment ” means the product of (i) the Stock Factor multiplied by (ii) the product of (A) the quotient of (x) the aggregate number of shares of Company Capital Stock (on an as converted to Company Common Stock basis) issuable upon exercise of all in-the-money Company Options and in-the-money Company Warrants immediately prior to the Effective Time (assuming acceleration of all vesting periods applicable to such Company Options

3

and Company Warrants) divided by (y) the Fully Diluted Shares of Company Capital Stock, multiplied by (B) the Base Upfront Consideration Amount.
“ Aggregate Non-Consenting Stockholder Payment ” means the product of (i) the Stock Factor multiplied by (ii) the product of (A) the quotient of (x) the aggregate number of shares of Company Capital Stock (on an as converted to Company Common Stock basis) held by Non-Consenting Stockholders divided by (y) the Fully Diluted Shares of Company Capital Stock, multiplied by (B) the Base Upfront Consideration Amount.
“ Aggregate Stock Consideration Amount ” means (i) the product of (x) the Stock Factor multiplied by (y) the Base Upfront Consideration Amount minus (ii) the sum of (A) the Aggregate Gross Option and Warrant Payment plus (B) the Aggregate Non-Consenting Stockholder Payment.
“ Agreement Date NVTA Stock Value ” means $19.69 (i.e., the closing price for shares of Parent Common Stock on The New York Stock Exchange on the trading day most immediately preceding the Agreement Date).
“ Base Upfront Consideration Amount ” means the sum of (i) the Closing Date Merger Consideration, minus (iii) the Indemnification Hold-Back Amount, minus (v) the Adjustment Hold-Back Amount, minus (v) the Expense Fund Amount
“ Anti-Kickback Statute ” means the Federal Health Care Program Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), and all regulations promulgated thereunder.
“ Business Day ” means any day other than a Saturday, Sunday or any other day on which banking institutions in San Francisco, California are authorized or required by Law or order to remain closed.
“ CERCLA ” is defined within the definition of “Environmental Laws” below.
“ Certificate ” means a certificate representing shares of the Company Capital Stock.
“ Change of Control Payment ” means (a) any “single-trigger” bonus, severance or other payment that is created, accelerated, accrues or becomes payable by the Company to any present or former director, stockholder, Employee or Consultant, including pursuant to an employment agreement, Plan or any other Contract (according to the express terms thereof), (b) any “double-trigger” bonus, severance or other payment that is created, accelerated, accrues or becomes payable by the Company to any present or former director, stockholder, Employee or Consultant, including pursuant to an employment agreement, Plan or any other Contract (according to the express terms thereof), but only if the second trigger (in addition to the first trigger change of control represented by the Merger) would occur notwithstanding post-Closing employment with Parent on substantially

4

similar terms as pre-Closing employment with the Company, and (c) without duplication of any other amounts included within the definition of Company Transaction and Bonus Expenses, any other payment, expense or fee that accrues or becomes payable by the Company to any Governmental Authority or other Person under any Law or Contract (according to the express terms thereof), including in connection with the making of any filings, the giving of any notices or the obtaining of any consents, authorizations or approvals (for clarity, excluding any such payment, expense or fee that is “double trigger” in nature), in each case of each of (a), (b) and (c) as a result of or in connection with the execution and delivery of the Agreement or any other Transaction Agreement or the consummation of the Transactions (including the Merger).
“ Charter Documents ” means, with respect to any entity, the articles of incorporation and bylaws or similar organizational documents of such entity.
“ Closing Cash ” means the fair market value of all cash and cash equivalents held by the Company as of the Closing (before taking into account the consummation of the Merger), determined in accordance with the Accounting Methodology, including, to the extent applicable, outstanding (uncleared) checks, drafts, wire transfers or deposits in transit, and other and credits in-process in favor of the Company, and excluding, to the extent applicable, (a) outstanding (uncleared) checks, drafts, wire transfers or deposits in transit, and other debits in-process against the Company, (b) restricted cash balances, (c) amounts held in escrow, (d) amounts held in banks outside of the United States in accounts that cannot be readily expatriated due to foreign exchange controls or other applicable Laws, and (e) the proceeds of any casualty loss with respect to any asset held or owned by the Company (to the extent that any such asset has not been repaired or replaced or the liability for the repair or replacement of such asset has not been paid or accrued as a current liability).
“ Closing Date Merger Consideration ” means an amount equal to the Purchase Price plus (a) the estimated Closing Cash, plus (b) the Aggregate Exercise Amount, less (c) the estimated Company Debt, less (d) the estimated Company Transaction and Bonus Expenses, less (e) the amount, if any, by which the Net Working Capital Threshold exceeds the estimated Closing Net Working Capital, plus (f) the amount, if any, by which the estimated Closing Net Working Capital exceeds the Net Working Capital Threshold, less (g) the Co-Development Amount, in each case, as determined in accordance with the Accounting Methodology (if applicable) and as of immediately prior to the Closing.
“ Closing Net Working Capital ” means, as of the Closing, an amount equal to (a) the current assets of the Company (excluding Closing Cash and any Tax assets) reduced by (b) the liabilities of the Company (excluding Company Debt, Company Transaction and Bonus Expenses and any Tax liabilities), in each case as determined in accordance with the Accounting Methodology.
“ Code ” means the United States Internal Revenue Code of 1986, as amended.

5

“ Co-Development Amount ” means $3,000,000.
“ Collection and Use ” (and its variants) means the collection, use, interception, storage, receipt, purchase, sale, maintenance, transmission, transfer, disclosure, processing and/or use of Personal Data.
“ Company Capital Stock ” means the outstanding shares of the Company Common Stock and the outstanding shares of Company Preferred Stock.
“ Company Common Stock ” means the common stock of the Company, par value $0.0001 per share.
“ Company Debt ” means, as at any time with respect to the Company, without duplication, all liabilities, including all obligations with respect to principal, accrued and unpaid interest, penalties, premiums and any other fees, expenses and breakage costs on and other payment obligations arising under any (a) indebtedness for borrowed money (including amounts outstanding under overdraft facilities), (b) indebtedness issued in exchange for or in substitution for borrowed money, (c) obligations for the deferred purchase price of property, goods or services other than trade payables arising in the Ordinary Course of Business, (d) obligations evidenced by any note, bond, debenture, guarantee or other debt security or similar instrument or Contract, (e) all liabilities under capitalized leases, (f) all obligations, contingent or otherwise, in respect of letters of credit and banker’s acceptance or similar credit transactions (solely to the extent drawn upon), (g) obligations under Contracts relating to interest rate protection or other hedging arrangements, to the extent payable if such Contract is terminated at Closing and (h) guarantees of the types of obligations described in sub clauses (a) though (g) above.
“ Company Fundamental Representations ” means the representations and warranties contained in Section 3.1 (Organizational Matters) (first sentence of Section 3.1.1 only), Section 3.2 (Authority; Noncontravention; Voting Requirements) (excluding clause (c) of Section 3.2.4 ), Section 3.3 (Capitalization), Section 3.9 (Taxes), and Section 3.21 (Brokers and Other Advisors).
“ Company Intellectual Property Rights ” means all Intellectual Property Rights owned by the Company or used by the Company in connection with the business of the Company as currently conducted, including all Intellectual Property Rights in and to Company Technology.
“ Company Material Adverse Effect ” means, with respect to the Company, any fact, condition, event, occurrence, change, circumstance or effect that, individually or in the aggregate with all other facts, conditions, changes, circumstances and effects with respect to which such defined term is used in this Agreement, is, or would reasonably be expected to become, materially adverse to (a) the business, assets, operations, results of operations or condition (financial or otherwise) of the Company, or (b) the Company’s ability to, in a timely manner, perform its

6

obligations under the Transaction Agreements to which it is a party, or to consummate the Transactions (including the Merger) under such Transaction Agreements; provided , however , that any determination of whether there has been a Material Adverse Effect pursuant to clause (a) above shall not include any effect, change, event, occurrence or state of facts: (i) that generally affects the industry in which the Company operates so long as the Company is not disproportionately affected thereby relative to other participants in such industry; (ii) that results from general economic or political conditions in any country where the Company’s business is conducted so long as the Company is not disproportionately affected relative to the other companies therein; (iii) arising out of or attributable to any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv) arising out of or attributable to any acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any changes in applicable Laws or accounting rules (including GAAP) or the enforcement, implementation or interpretation thereof; (vi) any natural or man-made disaster or acts of God; (vii) any failure by the Company to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded); or (viii) that results from the taking or announcement of any action or inaction specifically contemplated or required to be taken by this Agreement.
“ Company Option ” means an outstanding option granted pursuant to, or outside of, the Company Option Plan and any other option or other right (including any commitment to grant options or other rights, but excluding any Company Warrants) to purchase or otherwise acquire Company Capital Stock, whether or not vested or exercisable.
“ Company Option Plan ” means the Company’s 2014 Stock Incentive Plan.
“ Company Plans ” means (a) “employee benefit plans” (as defined in Section 3(3) of ERISA, as amended), (b) individual employment, consulting, change in control, severance or other agreements or arrangements and (c) other benefit plans, policies, agreements or arrangements, including bonus or other incentive compensation, stock purchase, equity or equity-based compensation, deferred compensation, profit sharing, change in control, severance, pension, retirement, welfare, sick leave, vacation, loans, salary continuation, health, dental, disability, flexible spending account, service award, fringe benefit, life insurance and educational assistance plan, policies, agreements or arrangements, whether written or oral, under which any Employee, Consultant or director of the Company participates and which is maintained, contributed to or participated in by the Company, or with respect to which the Company has or may have any obligation or liability, contingent or otherwise.
“ Company Preferred Stock ” means the Series A Preferred Stock, the Series A-1 Preferred Stock and the Series B Preferred Stock.

7

“ Company Technology ” means any and all Technology that is owned by the Company or used in connection with, or necessary to the conduct of, the business of the Company as currently conducted, including Proprietary Software.
“ Company Transaction and Bonus Expenses ” means an amount equal to (a) the aggregate fees and expenses payable or reimbursable by the Company to third parties in connection with negotiation, entering into and consummation of this Agreement and the Transactions including the Merger, including the fees and expenses of investment bankers, finders, consultants, attorneys, accountants and other advisors engaged by the Company in connection with the Merger (for clarity, this clause (a) is not intended to address allegations from a counter-party to any Contract with the Company that such counter-party’s consent was required under the assignment or termination provisions of such Contract), plus (b) all Change of Control Payments, plus (c) fifty percent (50%) of all fees and costs (including any premiums, brokerage fees and underwriting fees) associated with the R&W Insurance Policy, plus (d) all (100%) of the fees and costs (including any premiums, brokerage fees and underwriting fees) associated with the D&O Tail Insurance, plus (e) all Transaction Payroll Taxes.
“ Company Warrants ” means all warrants to acquire shares of the Company Capital Stock, whether or not vested or exercisable.
“ Confidentiality Agreement ” means the Confidential Disclosure Agreement, effective as of May 8, 2019, between Parent and the Company as it may be amended from time to time.
“ Consenting Holders ” means those Stockholders, Optionholders holding in-the-money Company Options, and Warrantholders holding in-the-money Company Warrants, in each case that have delivered a duly executed Written Consent and Joinder Agreement prior to the Closing.
“ Contract ” means any contract, loan or credit agreement, debenture, note, guaranty, bond, mortgage, indenture, deed of trust, license, lease or other agreement, arrangement or instrument (in each case, as applicable, whether written or oral) that is legally binding.
“ Dissenting Shares ” means shares of Company Capital Stock held by a holder who has properly demanded and not effectively withdrawn or lost such holder’s appraisal, dissenters’ or similar rights for such shares under the DGCL.
“ DOL ” means the United States Department of Labor.
“ DR Plans ” means the Company’s disaster recovery and business continuity plans.
“ Effective Date ” means the date on which the Effective Time occurs.

8

“ Environmental Laws ” means all Laws relating in any way to the environment, preservation or reclamation of natural resources, the presence, management or Release of, or exposure to, Hazardous Materials, or to human health and safety, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.) (“ CERCLA ”), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.) and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), each of their state and local counterparts or equivalents, each of their foreign and international equivalents and any transfer of ownership notification or approval statute, as each has been amended and the regulations promulgated pursuant thereto.
“ Environmental Liabilities ” means, with respect to any Person, all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, liens, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any Action, claim or demand by any other Person or in response to any violation of Environmental Law, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or administrative regulation, to the extent based upon, related to, or arising under or pursuant to any Environmental Law, environmental Permit, order or agreement with any Governmental Authority or other Person, which relates to any environmental, health or safety condition, violation of Environmental Law or Release or threatened Release of Hazardous Materials.
“ ERISA ” means the Employee Retirement Income Security Act of 1974.
“ European Economic Area ” means the member countries of the European Union, Norway, Iceland and Lichtenstein.
“ False Claims Act ” means the Federal False Claims Act, 31 U.S.C. § 3729 et seq., and all regulations promulgated thereunder.
“ FDA ” means the United States Food and Drug Administration.
“ Final Merger Consideration ” means an amount equal to the Purchase Price plus (a) the Closing Cash, plus (b) the Aggregate Exercise Amount, less (c) the Company Debt, less (d) the Company Transaction and Bonus Expenses, less (e) the amount, if any, by which the Net Working Capital Threshold exceeds the Closing Net Working Capital, plus (f) the amount, if any, by which the Closing Net Working Capital exceeds the Net Working Capital Threshold, less (g) the Co-

9

Development Amount, in each case, as determined in accordance with the Accounting Methodology (if applicable) and as of immediately prior to the Closing.
“ FTC ” means the United States Federal Trade Commission.
“ Fully Diluted Shares of Company Capital Stock ” means the sum, without duplication, of (a) the aggregate number of shares of Company Capital Stock (on an as converted to Company Common Stock basis) that are issued and outstanding immediately prior to the Effective Time (other than shares to be cancelled in accordance with Section 2.7.2 ), plus (b) the aggregate number of shares of Company Capital Stock (on an as converted to Company Common Stock basis) issuable upon exercise of all in-the-money Company Options and in-the-money Company Warrants immediately prior to the Effective Time (assuming, for this purpose, acceleration of all vesting periods applicable to such Company Options and Company Warrants).
“ Fundamental Representations ” means, collectively, the Company Fundamental Representations and the Parent Fundamental Representations.
“ GAAP ” means the generally accepted accounting principles in the United States.
“ Governmental Authority ” means any (a) nation, region, state, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) department, agency or instrumentality of a foreign or other government, including any state-owned or state-controlled instrumentality of a foreign or other government, (d) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department or other entity and any court or other tribunal), (e) international or multinational organization formed by states or governments, (f) organization that is designated by executive order pursuant to Section 1 of the United States International Organizations Immunities Act (22 U.S.C. 288 of 1945), as amended and the rules and regulations promulgated thereunder, (g) other body entitled to exercise any administrative, executive, judicial, legislative, police or regulatory authority or (h) any arbitrator.
“ Hazardous Materials ” means any material, substance or waste that is regulated, classified, or otherwise characterized under or pursuant to any Environmental Law as “hazardous”, “toxic”, a “pollutant”, a “contaminant”, “radioactive” or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold, urea formaldehyde insulation, chlorofluorocarbons and all other ozone-depleting substances (for clarity, excluding office and cleaning supplies that are safely stored).
“ Health Care Laws ” means any Laws relating to health care regulatory and reimbursement matters, including (a) the Federal Ethics in Patient Referrals Act, 42 U.S.C. § 1395nn, and all regulations promulgated thereunder, (b) the Anti-Kickback Statute, (c) the False Claims Act, (d) the Occupational Safety and Health Act, and all regulations, agency guidance or similar legal

10

requirements promulgated thereunder that apply to the Company or its business, (e) the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 321 et seq., and all regulations promulgated thereunder, (f) the Public Health Service Act, 42 U.S.C. § 201 et seq., and all regulations, agency guidance or similar legal requirements promulgated thereunder, (g) the Clinical Laboratory Improvement Amendments, 42 U.S.C. § 263a, and all regulations, agency guidance or similar legal requirements promulgated thereunder, (h) applicable Laws of the United States Drug Enforcement Administration, (i) the Medicare Act, 42 U.S.C. § 1395 et seq., and all regulations, agency guidance, or similar legal requirements promulgated thereunder, (j) state self-referral, anti-kickback, fee-splitting and patient brokering Laws, (k) Information Privacy and Security Laws, including those related to genetic testing and the privacy of genetic testing results, and (l) state Laws governing the licensure and operation of clinical laboratories and billing for clinical laboratory services.
“ HIPAA ” means, collectively, the Health Insurance Portability and Accountability Act of 1996 as amended by the Health Information Technology for Economic and Clinical Health Act (“ HITECH ”), implementing regulations promulgated thereunder and related guidance issued from time to time.
“ Holder ” means any Stockholder, Optionholder or Warrantholder.
“ Holder Indemnified Persons ” means the Holders and their Affiliates and each of their respective equity holders, directors, officers, employees, agents, successors and assigns.
“ Holders’ Representative Expenses ” means any loss, claim, damages, fee, cost, liability or expense (including costs incurred in connection with seeking recovery from insurers), judgment, fine or amounts paid in settlement of any nature incurred by Holders’ Representative arising out of or in connection with the administration of its duties as Holders’ Representative, including reasonable legal fees and costs of other skilled professionals and other costs and expenses of defending or preparing to defend against any claim or liability in the premises, unless such loss, liability or expense is caused by such Holders’ Representative’s willful misconduct or gross negligence.
“ Indemnification Hold-Back Amount ” means $1,500,000.
“ Indemnified Person ” means a Parent Indemnified Person or a Holder Indemnified Person, as applicable.
“ Indemnifying Party ” means Parent or the Consenting Holders (including, where applicable, Holders’ Representative on behalf of the Consenting Holders), as applicable; provided , however , that with respect to the Offset Right as it applies to the Indemnification Hold-Back Amount and the obligation to contribute to the Indemnification Hold-Back Amount, Adjustment Hold-Back Amount and Expense Fund Amount, all Holders will be treated as Indemnifying Parties.

11

“ Information Privacy and Security Laws ” means all applicable Laws concerning the privacy and/or security of Personal Data (including any Laws of jurisdictions where the Personal Data was collected), and all regulations promulgated thereunder, including, where applicable, HIPAA, state data privacy and breach notification Laws, state social security number protection Laws, any applicable Laws concerning requirements for website and mobile application privacy policies and practices, data or web scraping, call or electronic monitoring or recording or any outbound communications (including, outbound calling and text messaging, telemarketing, and e-mail marketing), the European Union Directive 95/46/EC, the European Union General Data Protection Regulation (GDPR), the Federal Trade Commission Act, the Gramm Leach Bliley Act, the Fair Credit Reporting Act, the Fair and Accurate Credit Transaction Act, the CAN-SPAM Act, the Telephone Consumer Protection Act, Children’s Online Privacy Protection Act, and state consumer protection Laws.
“ Information Statement ” shall mean an information statement prepared by the Company for the purpose of soliciting the vote of the Stockholders to approve and adopt this Agreement and the transactions contemplated hereby.
“ Information System ” means software, hardware, computer and telecommunications equipment and other information technology and related services.
“ Intellectual Property Rights ” means all proprietary rights of every kind and nature however denominated, throughout the world, including: (a) patents, industrial designs, copyrights, mask work rights, trade secrets, database rights and all other proprietary rights in Technology; (b) trademarks, trade names, service marks, service names, brands, trade dress, logos and other indicia of origin and the goodwill and activities associated therewith; (c) domain names, rights of privacy and publicity and moral rights; (d) any and all registrations, applications, recordings, licenses, common-law rights and contractual rights relating to any of the foregoing; and (e) all Actions and rights to sue at law or in equity for any past or future infringement or other impairment of any of the foregoing, including the right to receive all proceeds and damages therefrom and all rights to obtain renewals, continuations, divisions, or other extensions of legal protections pertaining thereto.
“ IRS ” means the United States Internal Revenue Service.
“ Knowledge ” means, with respect to the Company, the actual knowledge of Hywel Jones and Jim Collins, and, in each case, the knowledge such individuals would reasonably be expected to have after due inquiry with respect to the subject matter so qualified with Knowledge.
“ Law ” means any United States federal, state or local or any foreign law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, agency guidance or similar legal requirement or any Order or any Permit granted under any of the foregoing or any similar provision having the force or effect of law and includes Health Care Laws.

12

“ Liability ” means, with respect to any Person, any liability or obligation of such Person whether known or unknown, whether asserted or not asserted, whether determined, determinable or otherwise, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether directly incurred or consequential, whether due or to become due and whether or not required under GAAP to be accrued on the financial statements of such Person.
“ Lien ” means any charge, encumbrance, claim, community or other marital property interest, equitable ownership interest, collateral assignment, lien (statutory or otherwise), option, pledge, security interest, mortgage, deed of trust, attachment, right of way, easement, restriction, encroachment, servitude, right of first offer or first refusal, buy/sell agreement and any other restriction or covenant with respect to, or condition governing the use, construction, voting (in the case of any equity interest), transfer, receipt of income or exercise of any other attribute of ownership of any kind or nature whatsoever affecting or attached to any asset.
“ Loss ” means, with respect to any Person, any cost, damage, expense, liability, loss, deficiency and Tax, including interest, penalties, fees, fines, reasonable legal, accounting and other professional fees and reasonable expenses incurred in the investigation, collection, prosecution, determination and defense of such Losses (including, in each case, in connection with the enforcement of any claim for indemnification hereunder), that is incurred or suffered by such Person. For clarity, Losses will exclude any punitive damages except to the extent awarded by a Governmental Authority in connection with a Third Party Claim.
“ Net Working Capital Threshold ” means $ 0.00 .
“ Non-Consenting Stockholders ” means those Stockholders that have not delivered a duly executed Written Consent and Joinder Agreement prior to the Closing.
“ Nonqualified Deferred Compensation Plan ” has the meaning given such term in Section 409A(d)(1) of the Code.
“ Optionholder ” means a holder of one or more Company Options.
“ Order ” means any Law, order, injunction (whether temporary, preliminary or permanent), judgment, decree, assessment, award or ruling enacted, promulgated, issued, entered, amended or enforced by any Governmental Authority.
“ Ordinary Course of Business ” means the ordinary course of business of the Company consistent with past practice in nature and amount.

13

“ Parent Common Stock ” means shares of Parent’s common stock, par value $0.0001 per share, or any other shares of capital stock into which such common stock may be reclassified, converted or exchanged.
“ Parent Fundamental Representations ” means the representations and warranties contained in Section 4.1 (Organization, Standing and Corporate Power), Section 4.2 (Authority; Noncontravention), Section 4.6 (Shares of Common Stock) and Section 4.7 (Non-Reliance).
“ Parent Indemnified Persons ” means each of the Surviving Corporation, Parent and Merger Sub and their respective Affiliates and each of the respective equity holders, directors, officers, employees, agents, successors and assigns of each of the foregoing Persons.
“ Permit ” means any permit, license, franchise, certificate, accreditation approval, registration, notification or authorization from any Governmental Authority, or required by any Governmental Authority to be obtained, maintained or filed.
“ Permitted Liens ” means: (a) statutory liens with respect to the payment of Taxes, in all cases which are not yet due or payable or that are being contested in good faith by appropriate actions and for which appropriate reserves with respect thereto have been specifically established on the books and records of the Company to the extent required in accordance with GAAP; (b) statutory liens of landlords, suppliers, mechanics, carriers, materialmen, warehousemen, service providers or workmen and other similar Liens imposed by Law created in the Ordinary Course of Business the existence of which would not constitute a default or breach under any of the Company’s Contracts for amounts that are not yet delinquent and are not, individually or in the aggregate significant; (c) building, zoning, entitlement and other land use regulations imposed by any Governmental Authority with jurisdiction over the Leased Real Property which are not violated by the current use or occupancy of such Leased Real Property; (d) easements, conditions, covenants and restrictions that are of record with respect to the Leased Real Property which are not violated by the current use or occupancy of such Leased Real Property or the operation of the Company’s business or that do not and shall not adversely affect the value, or impair the use or current occupancy of the Leased Real Property; (e) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance, or similar programs mandated by applicable Law; (f) such imperfections of title and encumbrances, if any, that are not material in character, amount or extent, and that do not materially detract from the value, or materially interfere with the present use, of the property subject thereto or affected thereby; and (g) non-exclusive licenses and contractual restrictions contained in Contracts identified in the Disclosure Schedule or Shrink Wrap Licenses to which the Company is a party.
“ Person ” means any natural person, corporation, limited liability company, partnership, association, trust or other entity, including a Governmental Authority.

14

“ Personal Data ” means, as applicable, (a) any and all information about an individual that either contains data elements that identify the individual or with respect to which there is a reasonable basis to believe the information can be used to identify the individual, (b) any information that enables a Person to contact the individual (i.e., information about an individual such as an IP address contained in a cookie or an electronic device fingerprint) and (c) any and all other information, the collection, use, sharing, transfer or other processing of which is regulated by any applicable Law in relation to data protection, data privacy or personal privacy, including personal healthcare information. Personal Data includes (i) personal identifiers such as name, address, Social Security Number, date of birth, driver’s license number or state identification number, Taxpayer Identification Number and passport number, (ii) personal financial information, including credit or debit card numbers, account numbers, access codes, consumer report information and insurance policy number, (iii) demographic information, (iv) unique biometric data, such as fingerprint, retina or iris image, voice print or other unique physical representation and (v) individual medical or health information (including information of patients, customers, employees, workers, contractors, and third parties who have provided information to the Company, and including information relating to services provided by or to third parties).
“ Personal Data Obligations ” means the Company’s privacy policies (or applicable terms of use) as published on any Company websites or mobile applications or any other privacy policies (or applicable terms of use), Contracts, documents or promises or representations agreed to with employees, consumers or customers, or other Persons, and any applicable Laws, or applicable industry standards, regarding Collection and Use of Personal Data, including but not limited to Laws regarding the use of Personal Data for marketing communications such as the CAN SPAM Act of 2003.
“ Pre-Closing Tax Period ” means (a) any taxable period ending on or before the Closing Date and (b) with respect to a Straddle Period, any portion thereof ending on and including the Closing Date.
“ Pre-Closing Taxes ” means, without duplication, all Taxes of, or imposed on, the Company with respect to any Pre-Closing Tax Period. Notwithstanding any provision to the contrary in this definition, Pre-Closing Taxes shall not include (a) any Taxes attributable to any action of Parent or its Affiliates (including the Company and the Surviving Corporation) on the Closing Date after the Closing other than any actions contemplated by this Agreement or that are otherwise within the Ordinary Course of Business, (b) any Taxes resulting from an election under Section 338 of the Code (or other comparable election under any other Tax Law) with respect to the Transactions, or (c) Taxes resulting from an amendment of Tax Returns for the Pre-Closing Tax Period unless such amendment is the result of a breach or inaccuracy of the representations contained in Section 3.9 or the Holder’s Representative consents thereto (such consent not to be unreasonably withheld).

15

“ Premises ” means any building, plant, improvement or structure located on the Leased Real Property.
“ Pro Rata Portion ” means, with respect to a particular Consenting Holder, (a) the number of Fully Diluted Shares of Company Capital Stock beneficially owned by such Consenting Holder as of immediately prior to the Effective Time relative to (b) the aggregate number of Fully Diluted Shares of Company Capital Stock beneficially owned by all Consenting Holders as of immediately prior to the Effective Time; provided , however , that with respect to the Offset Right as it applies to the Indemnification Hold-Back Amount and with respect to the Adjustment Hold-Back Amount and Expense Fund Amount, “Pro Rata Portion” will be calculated with reference to all Holders rather than Consenting Holders.
“ Products and Services ” means any product or service that the Company currently offers or sells or has offered or sold at any time in the past, or intends to offer or sell in the business as currently conducted by the Company.
“ Proprietary Software ” means any Software that is owned by the Company and is related to the Company’s business as conducted.
“ Public Software ” means any software that is (a) distributed as free software or as open source software (e.g., Linux), (b) subject to 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 Company Intellectual Property Rights through any means, (c) licensed or distributed under any Public Software License or under less restrictive free or open source licensing and distribution models such as those obtained under the BSD, MIT, Boost Software License and the Beer-Ware Public Software Licenses or any similar licenses, (d) a public domain dedication or (e) derived from in any manner (in whole or in part), links to, relies on, is distributed with, incorporates or contains any software described in (a) through (d) above.
“ Public Software License ” means any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: (a) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (b) the Artistic License (e.g., PERL); (c) the Mozilla Public License; (d) the Netscape Public License; (e) the Sun Community Source License (SCSL); (f) the Sun Industry Standards License (SISL); (g) the Apache License; and (h) any licenses that are defined as OSI (Open Source Initiative) licenses as listed on the Opensource.org website.
“ Purchase Price ” means an amount equal to $45,000,000.

16

“ R&W Insurance Policy ” means that certain buyer-side representations and warranties insurance policy issued to Parent pursuant to that certain Binder Agreement, dated as of the Agreement Date, between Ambridge Partners LLC and Parent, substantially in the form attached to this Agreement as Exhibit C .
“ Reference Date ” means January 1, 2014.
“ Related Party ” means (a) any current or former director (or nominee), or officer of the Company, (b) any five percent (5%) or greater Stockholder of the Company on a fully-diluted basis and (c) any relative, spouse, officer, director or Affiliate of any of the foregoing Persons (for clarity, excluding any portfolio company of any venture capital, private equity or angel investor in the Company).
“ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing of or migrating into or through the environment or any natural or man-made structure.
“ Representatives ” means, with respect to any Person, the officers, employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives of such Person.
“ SEC ” means the United States Securities and Exchange Commission.
“ Securities Act ” means The Securities Act of 1933, as amended.
“ Series A Preferred Stock ” means the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share.
“ Series A-1 Preferred Stock ” means the Company’s Series A-1 Convertible Preferred Stock, par value $0.0001 per share.
“ Series B Preferred Stock ” means the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share.
“ Software ” means computer software programs and software systems, including all databases, compilations, tool sets, compilers, higher level or “proprietary” languages, related documentation and materials (including all Source Code Materials), whether in source code, object code or human readable form and all software programs and software systems that are classified as work-in-progress on the Closing Date.
“ Source Code Materials ” as it pertains to source code of any Software means: (a) the software, tools and materials utilized for the operation, development and maintenance of the Software; (b) documentation describing the names, vendors and version numbers of (i) the development tools

17

used to maintain or develop the Software and (ii) any third-party software or other applications that form part of the Software and are therefore required in order to compile, assemble, translate, bind and load the Software into executable releases; (c) all programmers’ notes, bug lists and technical information, systems and user manuals and documentation for the Software, including all job control language statements, descriptions of data structures, flow charts, technical specifications, schematics, statements or principles of operations, architecture standards and annotations describing the operation of the Software; and (d) all test data, test cases and test automation scripts used for the testing and validating the functioning of the Software.
“ Stock Consideration Shares ” means a number of shares of Parent Common Stock equal to the quotient of (i) the Aggregate Stock Consideration Amount divided by (ii) the Agreement Date NVTA Stock Value.
“ Stock Factor ” means 1.21055.
“ Stockholders ” means the holders of Company Capital Stock.
“ Strike Suit ” means any Action, threatened Action, notice or claim which, aside from the nuisance of the Action, notice or claim itself, does not represent or reflect a Liability for the Company.
“ Subsidiary ” means, with respect to a Party, any corporation, limited liability company, partnership, association, trust or other entity the accounts of which would be consolidated with those of such Party in such entity’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association, trust or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) are, as of such date, owned by such Party or one or more Subsidiaries of such Party.
“ Tax ” or “ Taxes ” means (a) any or all federal, state, local or foreign taxes or other assessments in the nature of taxes imposed by a Taxing Authority, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, and (b) any or all interest, penalties or additions to tax imposed by any Taxing Authority in connection with any item described in clause (a).
“ Tax Returns ” means, with respect to Taxes, any return, report, claim for refund, estimate, information return or statement, declaration of estimated Tax or other similar document relating to or required to be filed with any Taxing Authority with respect to Taxes, including any schedule or attachment thereto and including any amendment thereof.

18

“ Tax Sharing Agreement ” means any agreement relating to the sharing, allocation or indemnification of Taxes or amounts in lieu of Taxes, or any similar Contract or arrangement.
“ Taxing Authority ” means any Governmental Authority responsible for the administration, assessment and collection of any Taxes.
“ Technology ” means all inventions, works, discoveries, innovations, know-how, information (including ideas, research and development, formulas, algorithms, compositions, processes and techniques, data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, business and marketing plans and proposals, graphics, illustrations, artwork, documentation and manuals), databases, computer software, firmware, computer hardware, integrated circuits and integrated circuit masks, electronic, electrical and mechanical equipment and all other forms of technology, including improvements, modifications, works in process, derivatives, or changes, whether tangible or intangible, embodied in any form, whether or not protectable or protected by patent, copyright, mask work right, trade secret law, or otherwise and all documents and other materials recording any of the foregoing.
“ Third Party Claim ” refers to any Action that is instituted, or any claim that is asserted, by any Person not party to this Agreement in respect of an indemnifiable matter under this Agreement.
“ Transactions ” means any transaction or arrangement contemplated by this Agreement, including (a) the Merger, the Preferred Stock Conversion and the other transactions and arrangements described in the recitals to this Agreement, (b) the execution, delivery and performance of the Transaction Agreements other than this Agreement and (c) the payment of fees and expenses relating to such transactions by the Company and the Holders.
“ Transaction Agreements ” means this Agreement, the Written Consent and Joinder Agreements, the Parent RSU Award Agreements, the R&W Insurance Policy, the Certificate of Merger, the Employment and Non-Competition Agreements, and the Registration Rights Agreement.
“ Transaction Payroll Taxes ” means all employer portion payroll or employment Taxes incurred in connection with (a) cancellation of and payment for Company Options pursuant to Section 2.7.4 and (b) any Change of Control Payments.
“ Warrantholder ” means a holder of one or more Company Warrants.
Terms Defined Elsewhere in this Agreement.
For purposes of this Agreement, the following terms have meanings set forth at the section of this Agreement indicated opposite such term:

19

	
		
Term	Section	
“ Agreement ”	Preamble	
“ Allocation Schedule ”	Section 2.8	
“ Assets ”	Section 3.13	
“ Audited Financial Statements ”	Section 3.5.1(a)	
“ Balance Sheet Date ”	Section 3.5.1(a)	
“ Basket ”	Section 8.2.2(a)(i)	
“ Broker Fees ”	Section 3.21	
“ Certificate of Merger ”	Section 2.3	
“ Closing ”	Section 2.2	
“ Closing Date ”	Section 2.2	
“ Company ”	Preamble	
“ Company Charter Documents ”	Section 3.1.4	
“ Company Registrations ”	Section 3.15.3	
“ Competing Transaction ”    	Section 5.12	
“ Confidential Information ”	Section 5.6	
“ Conflict ”	Section 3.2.4	
“ Consultant ”	Section 3.1.2	
“ Continuing Employees ”	Section 5.9	
“ Current Consultant ”	Section 3.1.2	
“ Current Employee ”	Section 3.1.2	
“ D&O Tail Insurance ”	Section 5.10	
“ DGCL ”	Recitals	
“ Effective Time ”	Section 2.3	
“ Employee ”	Section 3.1.2	
“ Employment and Non-Competition Agreements ”	Section 5.9	
“ ERISA Affiliate ”	Section 3.10.3	
“ Estimated Balance Sheet ”	Section 2.8.5	
“ Exchange Agent ”	Section 2.12.1	
“ Final Calculation ”	Section 2.16.1	
“ Financial Statements ”	Section 3.5.1(a)	
“ First Indemnification Hold-Back Payment Date ”	Section 2.17	
“ General Survival Date ”	Section 8.1	
“ Holders’ Representative ”	Preamble	
“ Inbound IP Contracts ”	Section 3.15.4	
“ Indemnification Hold-Back Payment Dates ”	Section 2.17	
“ Initial Resolution Period ”	Section 2.16.1	
“ Interim Balance Sheet ”	Section 3.5.1(a)	
“ Interim Balance Sheet Date ”	Section 3.5.1(a)	
“ IP Contracts ”	Section 3.15.4	
“ Leased Real Property ”	Section 3.14.1	
“ Letter of Transmittal ”	Section 2.12.2	

20

	
		
Term	Section	
“ Material Contract ”	Section 3.12.3	
“ Merger ”	Recitals	
“ Merger Sub ”	Preamble	
“ Multiemployer Plan ”	Section 3.10.3	
“ Non-Offset Notice ”	Section 8.4.2	
“ Objection Notice ”	Section 2.16.1	
“ Objection Period ”	Section 2.16.1	
“ Offset Certificate ”	Section 8.3.2	
“ Offset Right ”	Section 8.3.1	
“ Outbound IP Contracts ”	Section 3.15.4	
“ Outside Date ”	Section 7.1.2	
“ Parent ”	Preamble	
“ Parent Material Adverse Effect ”	Section 4.2.2	
“ Parent Plan ”	Section 5.11.1	
“ Parent RSU Award Agreement ”	Recitals	
“ Parties ”	Preamble	
“ Payoff Amount ”	Section 2.9.1	
“ Per Share Allocation ”	Section 2.7.3(b)(i)	
“ Per Share Cash Amount ”	Section 2.7.3(c)(i)	
“ Post-Closing Adjustment ”	Section 2.16.3	
“ Real Property Leases ”	Section 3.14.1	
“ Related Party Transaction ”	Section 3.17	
“ Requisite Stockholder Approval ”	Section 3.2.2	
“ Reviewing Party ”	Section 2.16.2	
“ Second Indemnification Hold-Back Payment Date ”	Section 2.17	
“ Security Program ”	Section 3.15.7(g)	
“ Settlement ”	Section 8.4.1(d)	
“ Shrink Wrap Licenses ”	Section 3.15.1	
“ Stated Damages ”	Section 8.3.2	
“ Straddle Periods ”	Section 5.8.2(a)	
“ Survival Date ”	Section 8.1	
“ Surviving Corporation ”	Section 2.1	
“ Tax Claim ”	Section 5.8.3(a)	
“ Third Party Indemnification Claim Notice ”	Section 8.4.1(a)	
“ Title IV Plan ”	Section 3.10.3	
“ Top Supplier ”	Section 3.18	
“ Transfer Taxes ”	Section 3.18	
“ Written Consent and Joinder Agreement ”	Recitals	

21

ARTICLE II:      THE MERGER AND EFFECT OF THE MERGER
Section 2.1      The Merger . Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company, and the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall continue as the surviving corporation and a wholly owned Subsidiary of Parent. The Company after the Merger is sometimes referred to herein as the “ Surviving Corporation .”
Section 2.2      Closing. The closing of the Transactions (the “ Closing ”) shall take place at 10:00 a.m. (San Francisco time) on the second Business Day following the satisfaction or waiver of the conditions set forth in ARTICLE VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time) at the offices of Pillsbury Winthrop Shaw Pittman LLP, 12255 El Camino Real, Suite 300, San Diego, California 92130, unless another time, date or place is agreed to in writing by the Parties (the “ Closing Date ”).
Section 2.3      Effective Time . Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the Parties shall file with the Secretary of State of the State of Delaware a certificate of merger substantially in the form attached hereto as Exhibit D , executed in accordance with the relevant provisions of the DGCL (the “ Certificate of Merger ”). The Merger shall become effective upon the filing of the Certificate of Merger or at such later time as is agreed to by the Parties and specified in the Certificate of Merger (the time at which the Merger becomes effective is herein referred to as the “ Effective Time ”).
Section 2.4      Effects of the Merger . The Merger shall have the effects set forth in this Agreement and the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, (a) all the rights, privileges and powers of the Company and Merger Sub shall vest in the Surviving Corporation, (b) all of the property, real and personal, including causes of action and every other asset of Merger Sub and the Company, shall vest in the Surviving Corporation without further act or deed and (c) all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.
Section 2.5      Charter Documents of Surviving Corporation .
2.5.1      Certificate of Incorporation . At the Effective Time, the certificate of incorporation of the Company shall be (a) amended and restated so as to be identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be the name of the Company as of immediately prior to the Effective Time, and (b) the certificate of incorporation of the Surviving Corporation until thereafter amended as provided therein or by applicable Law.

22

2.5.2      Bylaws . At the Effective Time, the bylaws of the Company shall be (a) amended and restated so as to be identical to the bylaws of Merger Sub as in effect immediately prior to the Effective Time and (b) the bylaws of the Surviving Corporation until thereafter amended as provided in its Charter Documents and applicable Law.
Section 2.6      Management of the Surviving Corporation .
2.6.1      Board of Directors . Unless otherwise determined by Parent prior to the Effective Time, the Parties shall take all requisite action so that the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately following the Effective Time, until their respective successors are duly elected and qualified or their earlier death, resignation or removal in accordance with the Charter Documents of the Surviving Corporation.
2.6.2      Officers . Unless otherwise determined by Parent prior to the Effective Time, the Parties shall take all requisite action so that the officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation until their respective successors are duly appointed and qualified or their earlier death, resignation or removal in accordance with the Charter Documents of the Surviving Corporation.
Section 2.7      Effect of the Merger on Capital Stock . At the Effective Time, by virtue of the Merger and without any action to be taken on the part of the holder of any shares of the Company Capital Stock or any shares of capital stock of Merger Sub, or on the part of the Company, Parent, Merger Sub or any other Person, the following shall occur:
2.7.1      Capital Stock of Merger Sub . Each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and non-assessable share of common stock, par value $0.0001 per share, of the Surviving Corporation and collectively shall constitute the only outstanding shares of capital stock of the Surviving Corporation and each stock certificate of Merger Sub evidencing ownership of any such shares shall evidence ownership of such shares of common stock of the Surviving Corporation.
2.7.2      Cancellation of Securities Held by the Company . Any shares of Company Capital Stock that are owned by the Company immediately prior to the Effective Time shall be automatically canceled and shall cease to exist and no consideration shall be delivered in exchange therefor.
2.7.3      Conversion of Company Capital Stock .

23

(a)      Deemed Conversion . Each issued share of Company Preferred Stock outstanding prior to the Effective Time (other than shares to be canceled in accordance with Section 2.7.2 ) shall be deemed to have converted into shares of Company Common Stock in accordance with the Company’s certificate of incorporation (the “ Preferred Stock Conversion ”).
(b)      Consenting Stockholders . Each share of Company Common Stock issued and outstanding (including as a result of the Preferred Stock Conversion) immediately prior to the Effective Time (other than shares to be canceled in accordance with Section 2.7.2 and shares held by any Non-Consenting Stockholders (which, for clarity, includes any Dissenting Shares)) shall, subject to the terms and conditions of this Agreement, be converted into the right to receive (without interest) the following consideration, payable as set forth herein:
(i)      a fraction of a share of Parent Common Stock (such fraction, the “ Per Share Allocation ”) equal to the quotient of (x) the Stock Consideration Shares, divided by (y) the sum of (A) the Actual Outstanding Shares of Company Capital Stock, minus (B) the aggregate number of shares of Company Capital Stock (on an as converted to Company Common Stock basis) held by Non-Consenting Stockholders; provided , however , that only whole shares of Parent Common Stock will be issued and, when all fractional shares of Parent Common Stock to be issued to any Stockholder have been aggregated, any then remaining fractional share shall be rounded up to the nearest whole share of Parent Common Stock);
(ii)      an amount of cash equal to up to the quotient of (x) the Indemnification Hold-Back Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock;
(iii)      an amount of cash equal to up to the quotient of (x) the Adjustment Hold-Back Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock; and
(iv)      an amount of cash equal to up to the quotient of (x) the Expense Fund Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock.
(c)      Non-Consenting Stockholders . Each share of Company Common Stock issued and outstanding (including as a result of the Preferred Stock Conversion) immediately prior to the Effective Time and held by a Non-Consenting Stockholder shall, subject to the terms and conditions of this Agreement, be converted into the right to receive (without interest) the following consideration, payable as set forth herein:

24

(i)      an amount of cash equal to the product of (x) the Per Share Allocation, multiplied by (y) the Agreement Date NVTA Stock Value (such amount, the “ Per Share Cash Amount ”);
(ii)      an amount of cash equal to up to the quotient of (x) the Indemnification Hold-Back Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock;
(iii)      an amount of cash equal to up to the quotient of (x) the Adjustment Hold-Back Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock; and
(iv)      an amount of cash equal to up to the quotient of (x) the Expense Fund Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock.
2.7.4      Treatment of Company Options and Company Warrants.
(a)      Company Options . At the Effective Time, each Company Option that is unexpired, unexercised and outstanding immediately prior to the Effective Time, to the extent such Company Option is in-the-money as of immediately prior to the Effective Time, shall (i) become fully vested with respect to all shares subject to such Company Option (other than Company Options held by former Employees that are, by their terms, no longer eligible for vesting), and (ii) be cancelled in exchange for the right to receive (without interest) the following consideration for each share of Company Common Stock subject to such Company Option, payable as set forth herein:
(i)      an amount of cash equal to the sum of (x) the Per Share Cash Amount, minus (y) the exercise price per share of such Company Option;
(ii)      an amount of cash equal to up to the quotient of (x) the Indemnification Hold-Back Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock;
(iii)      an amount of cash equal to up to the quotient of (x) the Adjustment Hold-Back Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock; and
(i)      an amount of cash equal to up to the quotient of (x) the Expense Fund Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock.

25

Prior to the Effective Time, the Company will cause any unexpired, unexercised, outstanding, out-the-money Company Options to be terminated, with no further force or effect.
(b)      Company Warrants . Because the exercise price for each Company Warrant equals or exceeds the sum of the (x) Per Share Cash Amount and (y) the sum of the totals in Sections 2.7.4(a)(ii) through (iv) above, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub or the Company, each Company Warrant that is outstanding and unexercised immediately prior to the Effective Time will be cancelled and extinguished, pursuant to its terms, without payment of any consideration with respect thereto.
2.7.5      Rights Cease to Exist. As of the Effective Time, all shares of Company Capital Stock, and all options, warrants and other securities convertible, exercisable or exchangeable for, or otherwise granting the right to acquire, Company Capital Stock, shall no longer be outstanding, shall automatically be canceled and shall cease to exist and each holder of a Certificate shall cease to have any rights with respect thereto, except the rights set forth in this Section 2.7 .
Section 2.8      Delivery of Calculations . Not less than two (2) Business Days prior to the Closing Date, the Company shall prepare and deliver to Parent the following for Parent’s review and approval:
2.8.1      the Company’s calculation of the Closing Date Merger Consideration, setting forth, in reasonable detail, an estimation of each component thereof;
2.8.2      the Company’s calculations (setting forth the individual components) of (a) the Aggregate Gross Option and Warrant Payment, (b) the Aggregate Non-Consenting Stockholder Payment, (c) the Aggregate Stock Consideration Amount, (d) the Stock Consideration Shares, (e) the Per Share Allocation and (f) the Per Share Cash Amount;
2.8.3      the Company’s calculations of (a) the Fully Diluted Shares of Company Capital Stock, (b) the Actual Outstanding Shares of Company Capital Stock and (c) the aggregate number of shares of Company Capital Stock (on an as converted to Company Common Stock basis) held by Non-Consenting Stockholders;
2.8.4      a schedule of all Company Options and Company Warrants, with (a) exercise price information for each Company Option and Company Warrant as well as the Aggregate Exercise Price and (b) an indication of which Company Options and Company Warrants will be in-the-money;
2.8.5      the Company’s estimated balance sheet as of immediately prior to the Closing (the “ Estimated Balance Sheet ”), with separate schedules reflecting (a) the estimated

26

Closing Cash, (b) the estimated Company Debt, (c) the estimated Company Transaction and Bonus Expenses and (d) the estimated Closing Net Working Capital as well as the delta between the estimated Closing Net Working Capital and the Net Working Capital Threshold;
2.8.6      the name, address (or email address) and, if known, tax identification number of each Holder and:
(a)      in the instance of Stockholders, (i) the amount of Parent Common Stock to be issued to each Stockholder other than a Non-Consenting Stockholder pursuant to Sections 2.7.3(b)(i) as well as the potential cash payable to each such Stockholder pursuant to Sections 2.7.3(b)(ii) through (iv) and (ii) the amount of cash to be paid to each Non-Consenting Stockholder pursuant to Section 2.7.3(c)(i) as well as the potential cash payable to each Non-Consenting Stockholder pursuant to Sections 2.7.3(c)(ii) through (iv) ;
(b)      in the instance of Optionholders, the amount of cash to be paid to each Optionholder pursuant to Section 2.7.4(a)(i) as well as the potential cash payable to each Optionholder pursuant to Sections 2.7.4(a)(ii) through (iv) ; and
(c)      in the instance of Warrantholders, the amount of cash to be paid to each Warrantholder pursuant to Section 2.7.4(b)(i) as well as the potential cash payable to each Warrantholder pursuant to Sections 2.7.4(b)(ii) through (iv) ;
2.8.7      the Company’s determination of whether Taxes are required to be withheld from any payments to each Holder under this Agreement (assuming submission of a Form W-9 or Form W-8, as applicable); and
2.8.8      a certificate of a duly authorized officer of the Company certifying the foregoing on behalf of the Company.
The calculations listed in the foregoing Section 2.8.1 through 2.8.8 shall be set forth on a spreadsheet referred to herein as the “ Allocation Schedule ”. The Parties agree that Parent, Merger Sub and the Surviving Corporation will have the right to rely on the Allocation Schedule as setting forth a true, complete and accurate listing of all amounts due to be paid by Parent, Merger Sub and the Company to the Holders in exchange for Company Capital Stock. Parent, Merger Sub and the Surviving Corporation will not have any liability with respect to the allocation of any shares of Parent Common Stock or cash made to the Holders in accordance with the Allocation Schedule. Notwithstanding anything in this Agreement to the contrary, the Estimated Balance Sheet and the Company’s estimation of the Net Working Capital shall be consistent with the Accounting Methodology and shall reflect all vacation, sick leave, severance and/or other remuneration required by Law, Contract or policy of the Company to be paid to Employees for periods on or prior to the Closing Date.

27

Section 2.9      Payments At Closing . At the Closing, Parent shall make, or cause to be made, the following payments, by wire transfer of immediately available funds:
2.9.1      to each holder of Company Debt, the aggregate amount of Company Debt owed to such holder as of the Closing (the principal amounts of which are set forth on Schedule 3.5.8 ) pursuant to a payoff letter from such holder (i) indicating the amount required to discharge such Company Debt in full (the “ Payoff Amount ”) and (ii) agreeing to release applicable Liens upon receipt of the applicable Payoff Amount;
2.9.2      to the payees thereof, the Company Transaction and Bonus Expenses, in each case as directed in writing by the Company prior to the Closing pursuant to invoices or other evidence reasonably satisfactory to Parent, except that Parent shall cause Change of Control Payments to Employees to be paid through the Surviving Corporation’s payroll system; and
2.9.3      to the Exchange Agent, the aggregate cash for distribution to the Non-Consenting Stockholders as of immediately following the Closing pursuant to Section 2.7.3(c)(i) and in accordance with the Allocation Schedule.
Promptly following the Closing, Parent will pay directly, or through the Company’s payroll service as applicable (i.e., to Employees), the cash to be distributed to the Optionholders and the Warrantholders as of immediately following the Closing pursuant to Section 2.7.4 and in accordance with the Allocation Schedule.
Section 2.10      Issuances of Shares Following Closing . Within ten (10) Business Days after the Closing Date, Parent shall deliver certificates or book entries reflecting the shares of Parent Common Stock to be allocated among the Stockholders (other than the Non-Consenting Stockholders) pursuant to Section 2.7.3(b)(i) and in accordance with the Allocation Schedule; provided , however , that with respect to any shares of Company Capital Stock for which a properly completed Letter of Transmittal has not been received by the Exchange Agent, Parent shall be entitled to withhold the certificates or book entries reflecting the shares of Parent Common Stock issuable with respect to such shares of Company Capital Stock and to issue such shares of Parent Common Stock promptly following such receipt by the Exchange Agent.

28

Section 2.11      Non-Conversion .
2.11.1      Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, any Dissenting Shares shall not be converted into or represent a right to receive the applicable consideration for Company Capital Stock set forth in Section 2.7 , but instead the applicable Stockholder shall only be entitled to such rights as are provided by the DGCL. In the event that a Stockholder properly perfects such Stockholder’s appraisal, dissenters’ or similar rights by demanding and not effectively withdrawing or losing such Stockholder’s appraisal, dissenters’ or similar rights for any shares of Company Capital Stock, the Exchange Agent shall deliver to Parent such Stockholder’s portion of any cash otherwise allocable to such Dissenting Shares at the time such rights are perfected.
2.11.2      Withdrawal or Loss of Rights . Notwithstanding the provisions of Section 2.11.1 , if any Stockholder effectively withdraws or loses (through failure to perfect or otherwise) such Stockholder’s appraisal or dissenters’ rights with respect to any Dissenting Shares under the DGCL, then, within ten (10) Business Days of the later of the Effective Time and the occurrence of such event, (a) such Stockholder’s shares shall automatically convert into and represent only the right to receive the consideration for Company Capital Stock, as applicable, set forth in and subject to the provisions of this Agreement, upon surrender of the Certificate(s) formerly representing such shares and (b) (i) Parent (to the extent the following amount has been previously delivered by the Exchange Agent to Parent pursuant to Section 2.11.1 and not returned to the Exchange Agent) or the Exchange Agent shall deliver to such Stockholder such Stockholder’s portion of the cash attributable to such shares and (ii) Parent shall, subject to the provisions of Section 2.10 , deliver to such Stockholder certificates or book entries reflecting the shares of Parent Common Stock attributable to such shares.
2.11.3      Demands for Appraisal . The Company shall give Parent (a) prompt notice of any written demand for appraisal received by the Company pursuant to the applicable provisions of the DGCL and (b) the opportunity to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed), make any payment with respect to any such demands or offer to settle or settle any such demands. Any communication to be made by the Company to any Stockholder with respect to such demands must be submitted and consented to in writing by Parent prior to delivery to any such Stockholder.
Section 2.12      Exchange Agent; Exchange of Certificates .
2.12.1      Wilmington Trust, National Association, will act as exchange agent hereunder (in such capacity, the “ Exchange Agent ”) for the delivery of the aggregate cash for distribution to the Non-Consenting Stockholders as of immediately following the Closing pursuant

29

to Section 2.7.3(c)(i) and in accordance with the Allocation Schedule as well as the cash that may become distributable to the Stockholders as and when any portion of the Adjustment Hold-Back Amount, the Indemnification Hold-Back Amount or the Expense Fund Amount is released pursuant to the terms of this Agreement. At or prior to the Effective Time, Parent will deposit (or cause to be deposited) with the Exchange Agent, for the benefit of the Non-Consenting Stockholders, the aggregate cash for distribution to the Non-Consenting Stockholders as of immediately following the Closing pursuant to Section 2.7.3(c)(i) . Parent also will deposit (or cause to be deposited) with the Exchange Agent, for the benefit of the Stockholders, cash that may become distributable to the Stockholders as and when any portion of the Adjustment Hold-Back Amount or the Indemnification Hold-Back Amount is released pursuant to the terms of this Agreement. The Exchange Agent will hold and distribute the cash payable to the Stockholders pursuant to the provisions of an exchange agent agreement between Parent and the Exchange Agent.
2.12.2      Following the Effective Time, Parent shall cause the Exchange Agent to send to each Stockholder of record: (a) a letter of transmittal in a form mutually agreed upon by Parent and the Company (each, a “ Letter of Transmittal ”) (which shall specify that delivery shall be effected and risk of loss and title to the Certificates shall pass, only upon receipt of the Certificates by the Exchange Agent) and (b) instructions for use in effecting the surrender of the Certificates in exchange for the right to receive either (i) for a Stockholder other than Non-Consenting Stockholder, the amount of Parent Common Stock to be issued to such Stockholder pursuant to Section 2.7.3(b)(i) , as well as the potential cash payable to such Stockholder pursuant to Sections 2.7.3(b)(ii) through (iv) , or (ii) for a Non-Consenting Stockholder, the amount of cash to be paid to such Stockholder pursuant to Section 2.7.3(c)(i) , as well as the potential cash payable to such Stockholder pursuant to Sections 2.7.3(c)(ii) through (iv) . Upon surrender by a holder of a Certificate for cancellation to the Exchange Agent, together with such Letter of Transmittal, duly completed and validly executed in accordance with the instructions (and such other customary documents as may reasonably be required by the Exchange Agent), the holder of such Certificate shall be entitled to receive in exchange therefor the consideration, if any, provided for herein and the Certificate so surrendered shall thereafter be canceled. If payment of any portion of the consideration provided for herein is to be made to any Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition of payment that (i) the Certificate so surrendered be properly endorsed or otherwise be in proper form for transfer in accordance with this Section 2.12.2 and (ii) the Person requesting such payment shall have paid any transfer and other Taxes required by reason of the payment of the applicable portion of the consideration provided for herein to a Person other than the registered holder of such Certificate surrendered or shall have established to the reasonable satisfaction of Parent that such Tax either has been paid or is not applicable. After the Effective Time, each Certificate shall represent only the right to receive the applicable portion of the consideration provided for herein as contemplated by this ARTICLE II .

30

2.12.3      Transfer Books; No Further Ownership Rights in Company Stock . The right to receive the applicable portion of the consideration provided for herein upon the surrender for exchange of Certificates in accordance with the terms of this ARTICLE II shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Capital Stock previously represented by such Certificates and at the close of business on the day on which the Effective Time occurs, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Capital Stock that were outstanding immediately prior to the Effective Time. If, at any time after the Effective Time, Certificates are presented to Parent or the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this ARTICLE II .
2.12.4      Lost, Stolen or Destroyed Certificates . If any Certificate is lost, stolen or destroyed, upon the making of an affidavit of the fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Exchange Agent and Parent, the posting by such Person of a bond in such amount as the Exchange Agent and Parent may reasonably determine necessary and an indemnity against any claim that may be made with respect to such Certificate, the Exchange Agent shall pay or Parent shall issue, as applicable, in exchange for such lost, stolen or destroyed Certificate, the applicable portion of the cash consideration or the shares of Parent Common Stock to be paid or issued in respect of the shares of Company Capital Stock formerly represented by such Certificate, as contemplated by this ARTICLE II . Notwithstanding anything in this Agreement to the contrary, Parent shall not be obligated or required to post a bond for any Holder for any reason in connection with a lost, stolen or destroyed Certificate or otherwise.
2.12.5      Termination of Exchange Fund . At any time after six months following the Effective Time, Parent shall be entitled to require the Exchange Agent to deliver to it any amount distributed to the Exchange Agent in respect of such payments that has not been disbursed to the holders of the Certificates and thereafter such holders may look only to Parent (subject to abandoned property, escheat or other similar Laws) as general creditors thereof with respect to the payment of any portion thereof that may be payable upon surrender of any Certificates held by such holders.
Section 2.13      No Liability . Notwithstanding anything in this Agreement to the contrary, none of the Parties or the Exchange Agent shall be liable to any Person for any portion of the payments contemplated by this ARTICLE II delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.
Section 2.14      Withholding Taxes . Notwithstanding anything in this Agreement to the contrary, Parent, the Company, the Surviving Corporation and the Exchange Agent shall be entitled to deduct and withhold from that portion of any payments contemplated by this ARTICLE II or any other amount payable to a Holder pursuant to this Agreement, and shall pay to the appropriate Taxing Authority, such amounts that are required to be deducted and withheld with respect to the making

31

of such payments under any Tax Law. To the extent amounts are so deducted and withheld and paid to the appropriate Taxing Authority, such amounts shall be treated for purposes of this Agreement as having been paid to the Holder in respect of which such deduction and withholding were made.
Section 2.15      Adjustments . Notwithstanding any provision of this ARTICLE II to the contrary (but without in any way limiting the covenants in Section 5.1 (Conduct of Business)), if between the Agreement Date and the Effective Time the outstanding shares of any class or series of Company Capital Stock are changed into a different number of shares or a different class or series by reason of the occurrence or record date of any stock dividend, subdivision, reclassification, recapitalization, split, combination, exchange of shares or similar transaction, the per share consideration payable pursuant to Section 2.7 shall be appropriately adjusted to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination, exchange of shares or similar transaction.
Section 2.16      Post-Closing Adjustment Amount
2.16.1      Preparation of Closing Statement . Within one hundred twenty (120) days following the Closing Date, Parent shall prepare and deliver to Holders’ Representative a statement as of the Closing (the “ Final Calculation ”) setting forth its calculation of each of the following:
(a)      the Closing Cash;
(b)      the Closing Net Working Capital;
(c)      the Company Transaction and Bonus Expenses;
(d)      the Company Debt; and
(e)      the resulting Final Merger Consideration.
The Final Calculation shall be accompanied by such supporting documentation reasonably necessary to derive the numbers set forth therein. The Final Calculation shall be final, conclusive and binding upon the Parties unless Holders’ Representative delivers a written notice to Parent of any objection to the Final Calculation (the “ Objection Notice ”) within thirty (30) days (the “ Objection Period ”) after delivery of the Final Calculation. Any Objection Notice must set forth in reasonable detail (i) any item on the Final Calculation that Holders’ Representative believes has not been prepared in accordance with this Agreement and the correct amount of such item and (ii) Holders’ Representative’s alternative calculation of the Closing Cash, the Closing Net Working Capital, the Company Transaction and Bonus Expenses or Company Debt, as the case may be.  Any Objection Notice must specify, with reasonable particularity, all facts that form the basis of such disagreements

32

and all statements by Persons (who shall be identified by name) and documents relied upon by Holders’ Representative as forming the basis of such disagreement. If Holders’ Representative gives any such Objection Notice within the Objection Period, then Holders’ Representative and Parent shall attempt in good faith to resolve any dispute concerning the item(s) subject to such Objection Notice. If Holders’ Representative and Parent do not resolve the issues raised in the Objection Notice within thirty (30) days of the date of delivery of such notice (the “ Initial Resolution Period ”), such dispute shall be resolved in accordance with the procedures set forth in Section 2.16.2 . Any item or amount which has not been disputed in the Objection Notice shall be final, conclusive and binding on the Parties on the expiration of the Initial Resolution Period (for clarity, excluding any item or amount which is dependent on another item or amount that has been disputed in the Objection Notice).
2.16.2      Resolution of Disputes . If Parent and Holders’ Representative have not been able to resolve a dispute within the Initial Resolution Period, either Party may submit such dispute to and such dispute shall be resolved fully, finally and exclusively through the use of an independent international accounting firm selected to serve as such by mutual agreement of Parent and Holders’ Representative (such accounting firm, the “ Reviewing Party ”). The fees and expenses of the Reviewing Party incurred in the resolution of such dispute shall be borne by the parties in such proportion as is appropriate to reflect the relative benefits received by the Holders and Parent from the resolution of the dispute. For example, if Holders’ Representative challenges the calculation in the Final Calculation by an amount of $100,000, but the Reviewing Party determines that Holders’ Representative has a valid claim for only $40,000, Parent shall bear 40% of the fees and expenses of the Reviewing Party and Holders’ Representative on behalf of the Holders shall bear the other 60% of such fees and expenses. The Reviewing Party shall determine (with written notice thereof to Holders’ Representative and Parent) as promptly as practicable, but in any event within thirty (30) days following the date on which Final Calculation and written submissions detailing the disputed items are delivered to the Reviewing Party (a) whether the Final Calculation was prepared in accordance with the terms of this Agreement or, alternatively, (b) only with respect to the disputed items submitted to the Reviewing Party, whether and to what extent (if any) the Final Calculation requires adjustment and a written explanation in reasonable detail of each such required adjustment, including the basis therefor (it being understood that any determination of a disputed item shall be not greater or less than the amount of such disputed item as proposed by Parent in the Final Calculation or as proposed by Holders’ Representative in the Objection Notice). Parent and Holders’ Representative shall require the Reviewing Party to enter into a confidentiality agreement on terms agreeable to Parent, Holders’ Representative and the Reviewing Party. The procedures of this Section 2.16.2 are exclusive and the determination of the Reviewing Party shall be final and binding on the Parties. The decision rendered pursuant to this Section 2.16.2 may be filed as a judgment in any court of competent jurisdiction.

33

2.16.3      Post-Closing Purchase Price Adjustment .
(a)      The “ Post-Closing Adjustment ” shall be an amount equal to the Final Merger Consideration less the Closing Date Merger Consideration and, for the avoidance of doubt, may be a positive or a negative number or zero.
(b)      Without limiting the provisions of Section 8.2.1(a) (except to the extent of any double counting that would otherwise result), if the Post-Closing Adjustment is a negative number, the Adjustment Hold-Back Amount first, and the Indemnification Hold-Back Amount, second, shall be reduced by the absolute value of the Post-Closing Adjustment (i.e., offsetting the Post-Closing Adjustment against the Adjustment Hold-Back Amount and Indemnification Hold-Back Amount, as applicable) and Parent shall deliver to the Holders in accordance with the Allocation Schedule (or cause to be delivered by the Exchange Agent in the instance of the Stockholders) cash in an amount equal to any remaining portion of the Adjustment Hold-Back Amount.
(c)      If the Post-Closing Adjustment is a positive number, Parent shall deliver to the Holders in accordance with the Allocation Schedule (or cause to be delivered by the Exchange Agent in the instance of the Stockholders) cash in an amount equal to the Adjustment Hold-Back Amount plus the amount of the Post-Closing Adjustment.
(a)      If the Post-Closing Adjustment is zero, Parent shall deliver to the Holders in accordance with the Allocation Schedule (or cause to be delivered by the Exchange Agent in the instance of the Stockholders) cash in an amount equal to the Adjustment Hold-Back Amount.
2.16.4      No Effect on Representations and Warranties . For clarity, if any dispute is submitted to and finally resolved by the Reviewing Party, such final resolution shall be binding upon Parent and the Holders’ Representative with respect to any other disputes that may arise under this Agreement (meaning the resolution effected by the Reviewing Party will be deemed controlling with respect to such other disputes). Subject to the foregoing, the provisions of this Section 2.16 , as well as any adjustment to the Final Merger Consideration as a result of any of the Closing Cash, the Closing Net Working Capital, the Company Transaction and Bonus Expenses and the Company Debt, shall not otherwise diminish or otherwise affect the right or ability of Parent or any other Parent Indemnified Person to rely upon the provisions of this Agreement and any certificate or document delivered in connection herewith, including the representations of the Company set forth in ARTICLE III .
Section 2.17      Indemnification Hold-Back Amount and Payment . On the date that is six (6) months following the Closing Date (such date, the “ First Indemnification Hold-Back Payment Date ”), Parent shall deliver to the Holders in accordance with the Allocation Schedule (or cause to be delivered by the Exchange Agent in the instance of the Stockholders) cash in an amount equal

34

to half of the initial Indemnification Hold-Back Amount (reflecting any reductions to the Indemnification Hold-Back Amount made in accordance with Section 2.16.3(b) or ARTICLE VIII , it being understood that if such reductions equal or exceed half of the initial Indemnification Hold-Back Amount, then no release to the Holders will be made on such date); provided , however , that if, when any amount would otherwise be distributed pursuant to this Section 2.17 on the First Indemnification Hold-Back Payment Date, there shall exist a timely made good faith claim by Parent under ARTICLE VIII to exercise the Offset Right, all or a portion of such amount as determined by Parent (in its reasonable discretion) to represent the Losses at issue specified in such claim (including, if applicable, as to any specific Holder) shall be withheld from payment until such time as the claim has been finally resolved, in which case the Offset Right shall apply against such portion of the amount at issue resolved in favor of Parent and the balance of any withheld portion (if applicable) shall be distributed to the Holders (or, as applicable, to the affected Holders) as contemplated by this Agreement. On the date that is twelve (12) months following the Closing Date (such date, the “ Second Indemnification Hold-Back Payment Date ” and, together with the First Indemnification Hold-Back Amount, the “ Indemnification Hold-Back Payment Dates ”), Parent shall deliver to the Holders in accordance with the Allocation Schedule (or cause to be delivered by the Exchange Agent in the instance of the Stockholders) cash in an amount equal to the then-current balance of the Indemnification Hold-Back Amount (reflecting any reductions to the Indemnification Hold-Back Amount made in accordance with Section 2.16.3(b) or ARTICLE VIII ); provided , however , that if, when any amount would otherwise be distributed pursuant to this Section 2.17 on the Second Indemnification Hold-Back Payment Date, there shall exist a timely made good faith claim by Parent under ARTICLE VIII to exercise the Offset Right, all or a portion of such amount as determined by Parent (in its reasonable discretion) to represent the Losses at issue specified in such claim (including, if applicable, as to any specific Holder) shall be withheld from payment until such time as the claim has been finally resolved, in which case the Offset Right shall apply against such portion of the amount at issue resolved in favor of Parent and the balance of any withheld portion (if applicable) shall be distributed to the Holders (or, as applicable, to the affected Holders) as contemplated by this Agreement.
Section 2.18      Tax Consequences.  For federal income Tax purposes, the Merger is intended to constitute a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder. The Parties adopt this Agreement as a “plan of reorganization” within the meaning of Treasury Regulations Section 1.368-2(g). Notwithstanding any provision herein to the contrary, if Parent, in its reasonable discretion, believes that the intent of this Section 2.18 is served by substituting an amount of shares of Parent Common Stock in lieu of a portion of the cash otherwise distributable to the Stockholders upon release of any portion of the Indemnification Hold-Back Amount, then Parent may, with the Holders’ Representative’s prior written consent (not to be unreasonably withheld), effect such substitution and the value of such shares shall be determined based upon the average closing price of such shares on The New York

35

Stock Exchange for the period of 10 trading days ending two trading days prior to the date of any such release of any portion of the Indemnification Hold-Back Amount then at issue.
ARTICLE III:      REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to Parent and Merger Sub to enter into this Agreement and effect the Merger, with the understanding that Parent and Merger Sub are relying thereon in entering into this Agreement and consummating the Transactions (including the Merger), the Company hereby represents and warrants to Parent and Merger Sub, subject to such exceptions as are set forth in the Disclosure Schedule (provided that the Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections and subsections of this Agreement, and the disclosures in any section or subsection of the Disclosure Schedule shall qualify other sections and subsections of this Agreement only to the extent it is readily apparent on its face that such disclosure is applicable to such other sections and subsections), as of the Agreement Date and as of the Closing Date as follows:
Section 3.1      Organizational Matters .
3.1.1      Valid Existence; Good Standing . The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and has all requisite power and authority to own or lease all of its properties and assets and to carry on its business as now or currently proposed to be conducted. The Company is duly licensed or qualified to do business and is in good standing under the laws of Delaware and California, which represent all of the jurisdictions in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or licensed by it makes such licensing or qualification necessary.
3.1.2      Operations . California is the only state, and the United States is the only country, in which the Company has any employee or officer (each a “ Current Employee ”) or has assets or leases Real Property. Current Employees, together with any former employees or officers of the Company, are referred to herein individually as an “ Employee ” and collectively as “ Employees. ” Schedule 3.1.2 of the Disclosure Schedule lists each state and country in which the Company has any individual consultant or independent contractor or director (who is not an Employee) (each a “ Current Consultant ”) as of the Agreement Date. Current Consultants, together with any former individual consultant or independent contractor or director (who is not an Employee) of the Company, are referred to herein individually as a “ Consultant ” and collectively as “ Consultants. ”
3.1.3      Subsidiaries . The Company has no Subsidiaries. The Company does not own and never has owned, directly or indirectly, any shares of capital stock, voting securities, or

36

equity interests in any Person. The Company has no obligation to make an investment (in the form of a purchase of equity securities, loan, capital contribution or otherwise) directly or indirectly in any Person.
3.1.4      Corporate Documents . The Company has made available to Parent true and complete copies of the certificate of incorporation and bylaws of the Company in each case as the same may have been amended from time to time (the “ Company Charter Documents ”). All such Company Charter Documents are unmodified and in full force and effect and the Company is not in violation of any provision of the Company Charter Documents. The Company’s board of directors has not proposed or approved any amendment of any of the Company Charter Documents. The Company has made available to Parent and its representatives true and complete copies of the stock ledger of the Company and of the minutes of all meetings of the Stockholders, the board of directors and each committee of the board of directors of the Company held since the Reference Date.
3.1.5      Officers and Directors . Schedule 3.1.5 of the Disclosure Schedule lists all of the directors and officers of the Company as of the Agreement Date.
Section 3.2      Authority; Noncontravention; Voting Requirements .
3.2.1      Power and Authority . The Company has all necessary power and authority to execute and deliver this Agreement and the Transaction Agreements to which it is a party and to perform all of its obligations hereunder and thereunder and to consummate the Transactions (including the Merger).
3.2.2      Due Authorization of Agreement . The Company’s board of directors, at a meeting duly called and held pursuant to the DGCL, has unanimously (a) approved and declared advisable and in the best interests of the Company and its Stockholders the Transaction Agreements and the Transactions (including the Merger and the Preferred Stock Conversion) and (b) recommended that the Stockholders adopt this Agreement and approve the Transactions (including the Merger and the Preferred Stock Conversion). The execution, delivery and performance by the Company of this Agreement and the Transaction Agreements to which it is a party and the consummation by it of the Transactions (including the Merger and the Preferred Stock Conversion) have been duly authorized by the Company’s board of directors and, subject to adoption of this Agreement by the affirmative vote or written consent of the Stockholders representing the requisite number of shares of Company Capital Stock required under the DGCL and the Company Charter Documents (the “ Requisite Stockholder Approval ”), no other action on the part of the Company’s board of directors or its Stockholders is necessary to authorize the execution, delivery and performance by the Company of this Agreement and the Transaction Agreements to which it is a

37

party and the consummation by it of the Transactions (including the Merger and the Preferred Stock Conversion).
3.2.3      Valid and Binding Agreements . This Agreement and each of the other Transaction Agreements to which the Company is a party have been, or will be as of the Closing Date, duly executed and delivered by the Company. Assuming due authorization, execution and delivery of this Agreement and the other Transaction Agreements by the other Parties hereto and thereto, this Agreement constitutes and the other Transaction Agreements shall, when executed and delivered, constitute, the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except to the extent that their enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
3.2.4      No Conflict . Neither the execution and delivery by the Company of this Agreement or any Transaction Agreement to which the Company is a party nor the consummation of the Transactions (including the Merger and the Preferred Stock Conversion), nor compliance by the Company with any of the terms hereof or thereof, shall conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit or result in the creation of any Lien upon any of the properties or assets of the Company (any such event, a “ Conflict ”) under (a) any provision of the Company Charter Documents or any resolutions adopted by the Company’s board of directors or Stockholders, (b) any Material Contract to which the Company is a party or by which any of its properties or assets may be bound or affected, or (c) any Permit issued to the Company or any Order or Law applicable to the Company or any of its properties or assets (whether tangible or intangible). Following the Closing Date, the Company shall continue to be permitted to exercise all of its rights under all Material Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company would otherwise be required to pay pursuant to the terms of such Material Contracts had the Transactions contemplated by this Agreement not occurred.
Section 3.3      Capitalization .
3.3.1      Authorized and Issued Securities . The authorized capital stock of the Company consists of 26,000,000 shares of Company Common Stock and 12,058,512 shares of Company Preferred Stock, of which 2,531,319 shares are designated as Series A Preferred Stock, 4,537,636 shares are designated as Series A-1 Preferred Stock and 4,989,557 shares are designated as Series B Preferred Stock. The capitalization of the Company is as follows (other than shares of Company Capital Stock issued upon exercise of Company Options or Company Warrants set forth below or Company Common Stock issued upon conversion of Company Preferred Stock set forth below, in each case occurring between the Agreement Date and the Closing Date): (a) 6,064,727

38

shares of Company Common Stock are issued and outstanding, (b) no shares of Company Common Stock are held by the Company in its treasury, (c) 1,792,301 shares of Company Common Stock are subject to outstanding options under the Company Option Plan (i.e., the Company Options), (d) no outstanding options have been issued outside the Company Option Plan, (e) 2,268,819 shares of Company Common Stock are subject to the Company Warrants, (f) 12,058,512 shares of Company Preferred Stock are issued and outstanding, of which 2,531,319 shares are Series A Preferred Stock, 4,537,636 shares are Series A-1 Preferred Stock and 4,989,557 shares are Series B Preferred Stock, (g) no shares of Company Preferred Stock are subject to Company Options or Company Warrants, and (h) a sufficient number of each class and series of shares of Company Capital Stock is available for issuance upon exercise of outstanding Company Options and Company Warrants and upon conversion of the Company Preferred Stock into Company Common Stock. Each share of Company Preferred Stock is convertible into one share of Company Common Stock. Except as set forth in this Section 3.3.1 , there are no, and as of the Effective Time there shall be no, shares of Company Capital Stock, voting securities or equity interests of the Company issued and outstanding or any subscriptions, options, warrants, calls, convertible or exchangeable securities, rights, commitments or agreements of any character providing for the issuance of any shares of capital stock, voting securities or equity interests of the Company, including any representing the right to purchase or otherwise receive any Company Capital Stock (other than shares of Company Capital Stock issued upon exercise of Company Options or Company Warrants set forth above or Company Common Stock issued upon conversion of Company Preferred Stock set forth above, in each case occurring between the Agreement Date and the Closing Date).
3.3.2      Ownership of Stock, Options and Warrants . Schedule 3.3.2 of the Disclosure Schedule sets forth a complete and accurate list of each of the record holders of (a) each class or series of the Company Capital Stock and the number of shares of each such class or series of Company Capital Stock held by each Holder as of the Agreement Date and the number of shares or other securities into which such Company Capital Stock is convertible, listed by class and series, (b) all Company Options and the exercise price, date of grant and number of shares of Company Common Stock for which such Company Options are exercisable by each such Holder as of the Agreement Date and the expiration date and vesting schedules of each such Company Option, and (c) all Company Warrants, the exercise price, date of issuance and number and class of shares of Company Capital Stock for which such Company Warrants are exercisable as of the Agreement Date and the expiration date and vesting schedules of each such Company Warrant. All issued and outstanding shares of Company Capital Stock are owned of record and beneficially as of the Agreement Date, as set forth in Schedule 3.3.2 of the Disclosure Schedule.
3.3.3      Valid Issuance; No Preemptive or Other Rights .
(a)      All issued and outstanding shares of Company Capital Stock (i) are, and all shares of Company Capital Stock that may be issued pursuant to the exercise of Company

39

Options or Warrants and the conversion of outstanding shares of any class or series of Company Preferred Stock shall be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and nonassessable and (ii) are not subject to, nor were issued in violation of, any preemptive rights, rights of first offer or refusal, co-sale rights or similar rights arising under applicable Law or pursuant to the Company Charter Documents, or any Contract to which the Company is a party or by which it is bound and have been offered, issued, sold and delivered by the Company in compliance with all registration or qualification requirements (or applicable exemptions therefrom) of applicable federal, state and foreign securities Laws. Each Company Option granted under the Company Option Plan was duly authorized by all requisite corporate action on a date no later than the grant date (or such later date as is permitted under applicable law) and has an exercise price per share at least equal to the fair market value of a share of Company Common Stock on the grant date. Except as set forth in Schedule 3.3.3 of the Disclosure Schedule, the Company is not under any obligation to register any of its presently outstanding securities, or securities issuable upon exercise or conversion of such securities, under the Securities Act or any other Law.
(b)      The rights, preferences and privileges of the Company Capital Stock are as set forth in the Company Charter Documents. There is no liability for dividends accrued and/or declared but unpaid with respect to the outstanding Company Capital Stock. The Company is not subject to any obligation to repurchase, redeem or otherwise acquire any shares of Company Capital Stock or any other voting securities or equity interests (or any options, warrants or other rights to acquire any shares of Company Capital Stock, voting securities or equity interests) of the Company. Except as provided for in this Agreement or set forth in Schedule 3.3.3 of the Disclosure Schedule, to the Company’s Knowledge, there are no voting trusts or other agreements or understandings with respect to the voting of the Company Capital Stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the Company.
(c)      True and complete copies of all form agreements and instruments (and any amendments thereto, if applicable) relating to or issued under the Company Option Plan have been delivered to Parent; there are no agreements to amend, modify or supplement such agreements or instruments from the forms thereof provided to Parent; and all equity grants under the Company Option Plan have been made pursuant to agreements and instruments and do not deviate from such form agreements and instruments.
Section 3.4      No Consents or Approvals.  Except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL and the receipt of the Requisite Stockholder Approval, no consents or approvals of, filings with, or notices to any Governmental Authority are required to be made or obtained by the Company for the valid execution, delivery and performance of this Agreement or the other Transaction Agreements to which it is a

40

party, the consummation of the Transactions (including the Merger and the Preferred Stock Conversion), and the operation of the Company’s business in the ordinary course after Closing, including the continued validity of the Company’s Permits.
Section 3.5      Financial Matters .
3.5.1      Financial Statements .
(a)      Prior to the Agreement Date, the Company has delivered to Parent true and complete copies of the following financial statements of the Company (collectively, the “ Financial Statements ”): (i) the audited balance sheets and related audited statements of income, cash flows and stockholders’ equity as of and for the fiscal years ended December 31, 2016, 2017 and 2018 (such audited financial statements, collectively, the “ Audited Financial Statements ” and December 31, 2018, the “ Balance Sheet Date ”); (ii) the unaudited balance sheet and the related unaudited statements of income, cash flows and stockholders’ equity as of and for the three-month period ended March 31, 2019; and (iii) the unaudited balance sheet and the related unaudited statements of income, cash flows and stockholders’ equity as of and for the four-month period ended April 30, 2019 (the “ Interim Balance Sheet ” and such date the “ Interim Balance Sheet Date ”).
(b)      The books and records of the Company (i) have been and are being maintained in accordance with GAAP and (ii) are complete, properly maintained and do not contain or reflect any material inaccuracies or discrepancies.
3.5.2      Fair Presentation . The Financial Statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby. The Financial Statements fairly present the financial condition of the Company as of such dates and the results of operations of the Company for such periods, and were derived from and are consistent with the books and records of the Company; provided , however , that the Financial Statements as of and for the periods ended March 31, 2019 and on the Interim Balance Sheet Date are subject to normal year-end adjustments (which shall not be significant individually or in the aggregate). Since the Reference Date, the Company has not effected any significant change in any method of accounting or accounting practice.
3.5.3      Internal Controls; Financial Controls . The Company maintains systems of internal accounting and financial reporting controls that are sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures sufficient to provide reasonable assurance: (a) that the Company maintains records that in reasonable detail accurately and fairly reflect the Company’s transactions and dispositions of assets; (b) that transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP; (c) that receipts and expenditures are being made only in accordance with authorizations

41

of management and the Company’s board of directors; and (d) regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a significant effect on the Financial Statements. The Company has delivered to Parent a true and complete copy of any disclosure (or, if unwritten, a summary thereof) by any representative of the Company to the Company’s independent auditors relating to any “material weaknesses” (as such term is defined under GAAP) in internal controls and any “significant deficiencies” (as such term is defined under GAAP) in the design or operation of internal controls that would adversely affect the ability of the Company to record, process, summarize and report financial data. The Company has no Knowledge of any fraud or whistle-blower allegations, whether or not material, that involve management or other Employees or Consultants who have or had a significant role in the internal control over financial reporting of the Company. Since the Reference Date, there have been no significant changes in the Company’s internal control over financial reporting.
3.5.4      No Undisclosed Liabilities . The Company does not have any Liabilities that are not reflected or reserved against on the face of (and not in the notes to) the Financial Statements, except Liabilities (a) incurred by the Company in connection with the preparation, execution, delivery and performance of the Transaction Agreements and included in the Company Transaction and Bonus Expenses, (b) as set forth on Schedule 3.5.4 of the Disclosure Schedule, (c) which have arisen in the Ordinary Course of Business since the Interim Balance Sheet Date, or (d) that are executory performance obligations arising under Contracts to which the Company is a party or otherwise bound (that do not result from a breach or default thereunder) . For clarity, (x) the mere existence of a claim, complaint or notice from a third party involving the Company arising after the Agreement Date shall not constitute a breach of this Section 3.5.4 on the theory that such claim or the matters underlying such claim (absent an underlying breach of another applicable representation, warranty or covenant) constitute an unknown, unasserted, indeterminate, contingent, unaccrued, unmatured or other debt, liability or obligation of the Company and (y) this Section 3.5.4 is not intended to, and shall not be deemed to, address the subject matter of other representations and warranties in ARTICLE III that are qualified by the Knowledge of the Company.
3.5.5      Off-Balance-Sheet Arrangements . There are no “off-balance-sheet arrangements” (within the meaning of Item 303 of Regulation S-K promulgated by the SEC) with respect to the Company.
3.5.6      Inventory . All inventory of the Company as of the Agreement Date consists of a quality and quantity usable and saleable in the Ordinary Course of Business. All inventory not written off has been priced at the lower of cost or market value on a first in, first out basis. The quantities of each item of inventory as of the Agreement Date are reasonable in the present circumstances of the Company.

42

3.5.7      Bank Accounts . Schedule 3.5.7 of the Disclosure Schedule sets forth an accurate list and summary description (including name and address) of each bank and other financial institution in which the Company maintains an account (whether checking, savings or otherwise), lock box or safe deposit box and the names of the persons having signing authority or other access thereto. All cash in such accounts is held in demand deposits and is not subject to any restriction as to withdrawal.
3.5.8      Company Debt . Except as set forth in Schedule 3.5.8 of the Disclosure Schedule, there is no Company Debt. With respect to each item of Company Debt, Schedule 3.5.8 of the Disclosure Schedule accurately sets forth the name of the creditor, the Contract under which such debt was issued, the name and address of the creditor, the principal amount of the debt and a description of the collateral if secured. The Company is not in default with respect to any outstanding Company Debt or any instrument relating thereto, nor is there any event which, with the passage of time or giving of notice, or both, would result in a default, and no such Company Debt or any instrument or agreement thereto purports to limit the operation of the Company’s business. Complete and correct copies of all instruments (including all amendments, supplements, waivers and consents) relating to any Company Debt have been provided to Parent.
Section 3.6      Absence of Certain Changes or Events. Since the Balance Sheet Date, (a) there has not been a Company Material Adverse Effect and (b) there has not occurred any material damage, destruction or loss (whether or not covered by insurance) of any material asset of the Company that adversely affects the use thereof. Since the Balance Sheet Date, the Company has been operated in the Ordinary Course of Business. Without limiting the foregoing, since the Balance Sheet Date to the Agreement Date, the Company has not taken any action described in Section 5.1 that if taken after the Agreement Date and prior to the Effective Time would violate such provision.
Section 3.7      Legal Proceedings . Since the Reference Date to the Agreement Date, and following the Agreement Date except as to any Strike Suits, there have not been and there are no pending Actions, and to the Knowledge of the Company, there are no Actions threatened, in either case, by or against the Company, its properties or assets or any of the Company’s officers or directors in their capacities as such.
Section 3.8      Compliance with Laws; Permits.
3.8.1      The Company is and has at all times been, in compliance in all material respects with all Laws applicable to the Company or any of its properties, assets, business or operations, including the Health Care Laws. The Company holds all Permits necessary to conduct its business and own, lease and operate its properties and assets and all such Permits are in full force and effect. The Company is and has always been, in compliance in all material respects, with the terms of all Permits necessary to conduct its business and to own, lease and operate its properties

43

and facilities. Schedule 3.8.1 of the Disclosure Schedule sets forth a list of all Permits that are held by the Company. The Company has not received notice from any Governmental Authority claiming or alleging that the Company was not in compliance with all Laws applicable to the Company or its business or operations; the Company has not been assessed a material penalty with respect to any alleged failure by the Company to have or comply with any Permit.
3.8.2      Neither the Company, nor any of its officers, directors, Employees, Consultants or agents, have, in the operating of the Company’s business, engaged in any activities which are prohibited or are cause for material criminal or civil penalties or mandatory or permissive exclusion from Medicare, Medicaid or any other state or federal health care program under 42 U.S.C. §§ 1320a-7, 1320a-7a, 1320a-7b or 1395nn, 5 U.S.C. § 8901 et seq. (the Federal Employees Health Benefits program statute), or the regulations, agency guidance, or similar legal requirement promulgated pursuant to such statutes or any analogous state or local Laws.
3.8.3      Neither the Company, nor any of its directors, officers, Employees, Consultants, or agents, in their capacity as directors, officers, Employees, Consultants or agents of the Company, has, directly or indirectly given or agreed to give any illegal gift, contribution, payment or similar benefit to any supplier, customer, governmental official or employee or other Person.
3.8.4      (a) Each Employee and Consultant of the Company required to be licensed by an applicable Governmental Authority, professional body and/or medical body has or had such licenses during their time of service to the Company, (b) such licenses are or were in full force and effect during their time of service to the Company, and (c) to the Knowledge of the Company, there are no facts or circumstances that could reasonably be expected to result in any such licenses being suspended, revoked or otherwise lapse prematurely.
3.8.5      Neither the Company nor any of its Employees, Consultants, other agents, or vendors, solely in connection with their service to the Company, has been excluded, suspended, debarred or otherwise sanctioned by any Governmental Authority, including the U.S. Department of Health and Human Services Office of Inspector General or the General Services Administration.
3.8.6      The Company is and has at all times been in compliance in all material respects with all applicable Laws relating to the privacy, security, use and disclosure of health information, including “protected health information” or “PHI” as defined under HIPAA and information related to genetic testing and genetic test results, created, used, disclosed or stored in the course of the operations of the Company, including HIPAA and all applicable state, federal and international laws regarding the privacy and security of health information, including genetic testing and results. The Company has the necessary agreements with all of the Company’s “business associates” as such term is defined by and as such agreements are required by HIPAA. To the extent applicable, true and complete copies of all HIPAA and health information privacy policies that have

44

been used by the Company for the past three years have been made available to Parent and such privacy policies are in compliance with all applicable Laws relating to the privacy, security, use and disclosure of health information. The Company has at all times complied in all material respects with all rules, policies, and procedures established by the Company from time to time and as applicable with respect to privacy, security, data protection, or the collection and use of health information and genetic testing information created, used, disclosed or stored in the course of the operations of the Company. On or prior to the Agreement Date, and following the Agreement Date except as to any Strike Suits, no actions have been asserted or, to the Knowledge of the Company, threatened against the Company by any person alleging a violation of such person’s privacy, personal, or confidentiality rights under any such rules, policies, or procedures.
3.8.7      With respect to all health information, PHI, and genetic testing information as described in Section 3.8.7 of the Disclosure Schedule, the Company has taken reasonable steps (including implementing and monitoring compliance with administrative, physical and technical safeguards) to protect such information against loss and against unauthorized access, use, modification, disclosure, or other misuse. The Company maintains and has implemented security policies and procedures as required by HIPAA and other applicable laws. Since the three (3)-year period preceding the Agreement Date, there has been no “Breach of Unsecured PHI,” as defined under HIPAA, and no “Security Incident” as defined under HIPAA, resulting in the unauthorized use or disclosure of PHI. The Company maintains systems, policies and procedures to respond to incidents and complaints alleging violations of applicable privacy or security standards and to identify and report all Breaches of Unsecured Protected Health Information in accordance with Company’s legal and contractual obligations.
Section 3.9      Taxes .
3.9.1      The Company has paid all Taxes owed by the Company (without regard to whether or not such Taxes are or were disputed), whether or not shown on any Tax Return. Since the Balance Sheet Date, the Company has incurred no Liability for Taxes arising outside of the Ordinary Course of Business. There are no Liens for Taxes (other than Permitted Liens). The Company is not subject to any currently effective waiver of any statute of limitations in respect of Taxes or agreed to any currently effective extension of time with respect to a Tax assessment or deficiency.
3.9.2      The Company has timely filed (taking into account any extensions set forth on Section 3.9.2 of the Disclosure Schedule) all material Tax Returns that are required to have been filed by or with respect to the Company. All such Tax Returns were, when filed, true, correct and complete in all material respects. The Company is not the beneficiary of any currently effective extension of time within which to file any Tax Return, other than extensions of time to file Tax Returns obtained in the Ordinary Course of Business that are set forth on Section 3.9.2 of the

45

Disclosure Schedule. No written claim has ever been made by any Taxing Authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction, which claim has not be finally resolved.
3.9.3      The Company has withheld and paid all Taxes required to have been withheld and paid by it in connection with amounts paid or owing by the Company to any Employee, Consultant, creditor, Stockholder or other third party.
3.9.4      No deficiencies for any Taxes have been proposed or assessed in writing against or with respect to any Taxes due by, or Tax Returns of, the Company, which deficiencies have not been finally resolved, and there is no outstanding audit, assessment, dispute or claim concerning any Tax Liability of the Company either within the Company’s Knowledge or claimed, pending or raised by an authority in writing, which audit, assessment, dispute or claim has not been finally resolved.
3.9.5      The Company (a) is not nor has never been a member of an affiliated group (other than a group the common parent of which is Company) filing a consolidated federal income Tax Return and (b) has no Liability for Taxes of any Person arising from the application of Treasury Regulations Section 1.1502-6 or any analogous provision of state, local or foreign Tax Law, or as a transferee or successor, by Contract, or otherwise.
3.9.6      The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
3.9.7      The Company has disclosed on its federal income Tax Returns all positions taken therein that would reasonably be expected to give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.
3.9.8      The Company has not made any payments, is not obligated to make any payments and is not a party to any agreement, including this Agreement, that under certain circumstances could obligate it to make any payments that shall not be fully deductible under Section 280G of the Code.
3.9.9      The Company shall not be required to include an item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (a) change in method of accounting requested by the Company prior to the Closing; (b) “closing agreement” described in Section 7121 of the Code entered into by the Company with any Taxing Authority prior to the Closing; (c) installment sale or open transaction disposition made by the Company prior to the Closing; (d) prepaid amounts

46

received or paid by the Company prior to the Closing; or (e) any election under Section 108(i) of the Code.
3.9.10      The Company has not distributed stock of another Person, nor, to the Company’s Knowledge, has its stock been distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code.
3.9.11      The Company does not have nor has it ever had a permanent establishment in any foreign country. The Company does not engage nor has it ever engaged in a trade or business in any foreign country that would cause the Company to be obligated to pay Taxes or file Tax Returns in such country.
3.9.12      No Tax Returns of the Company have been audited or are currently the subject of an Action brought by a Taxing Authority. The Company has delivered or made available to Parent correct and complete copies of all federal and state income Tax Returns and all examination reports and statements of deficiencies filed, or assessed against and agreed to, by the Company with respect to Taxes for all taxable periods ending on or prior to the Agreement Date.
3.9.13      The Company does not own an interest in (a) a “controlled foreign corporation” as defined in Section 957 of the Code or (b) a “passive foreign investment company” within the meaning of Section 1297 of the Code.
3.9.1      The Company has not been a party to any “reportable transaction,” as defined in Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b) or any similar provision of state, local or foreign Tax Law.
3.9.2      All Taxes (including sales Tax, use Tax and value-added Tax) that were required to be collected or self-assessed by the Company have been duly collected or self-assessed, and all such amounts that were required to be remitted to any Taxing Authority have been duly remitted, and the Company has complied with all reporting requirements with respect thereto.
3.9.3      No power of attorney that has been granted by the Company with respect to any matter relating to the Taxes of the Company is currently in force.
3.9.4      The Company has never (a) made an election under Section 1362 of the Code to be treated as an S corporation for federal income Tax purposes or (b) made a similar election under any comparable provision of any state, local or foreign Tax Law.
3.9.5      The Company is not and has never have been a party to a transaction or agreement that is in conflict with the Tax rules on transfer pricing in any relevant jurisdiction and all transactions and agreements between or among the Company and any related parties and/or the

47

terms thereof have been conducted in an arm’s length manner consistent with the Company’s transactions or agreements with unrelated third parties.
Section 3.10      Employee Benefits and Labor Matters .
3.10.1      Plans and Arrangements . Schedule 3.10.1 sets forth a true and complete list of all Company Plans.
3.10.2      Plan Documents . With respect to each Company Plan, the Company has delivered to Parent a current, accurate and complete copy thereof (including amendments) or a copy of the representative form agreement thereof and, to the extent applicable, true and complete copies of the following documents with respect to each Company Plan: (a) any contracts or agreements, plans and related trust documents, insurance contracts or other funding arrangements, in each case as currently in effect, and all amendments thereto; (b) the results of the non-discrimination testing for the most recent three (3) years; (c) Forms 5500 and all schedules thereto for the most recent three (3) years; (d) the most recent actuarial report, if any; (e) the most recent IRS determination or opinion letter; (f) all correspondence, rulings or opinions issued by the DOL, IRS or any other Governmental Authority and all material correspondence from the Company to the DOL, IRS or other Governmental Authority other than routine reports, returns or other filings within the last three (3) years; (g) the most recent summary plan descriptions and any summaries of material modifications with respect thereto; and (h) written descriptions of all non-written Company Plans.
3.10.3      ERISA . No Company Plan is subject to Title IV of ERISA or is otherwise a Defined Benefit Plan as defined in Section 3(35) of ERISA (a “ Title IV Plan ”) and neither the Company nor any other entity (whether or not incorporated) that, together with the Company, would be treated as a single employer under Section 414 of the Code or Section 4001 of ERISA (each an “ ERISA Affiliate ”) has incurred any liability pursuant to Title IV of ERISA that remains unsatisfied. Neither the Company nor any ERISA Affiliate has sponsored, contributed or had an obligation to contribute, to any Title IV Plan, or any money purchase pension plan subject to Section 412 of the Code, within the past six (6) years. No Company Plan is or has been a multiemployer plan within the meaning of Section 3(37) of ERISA (a “ Multiemployer Plan ”) or a multiple employer welfare arrangement within the meaning of Section 3(40) of ERISA. During the past six (6) years, neither the Company nor any of its ERISA Affiliates has completely or partially withdrawn from any Multiemployer Plan and no termination liability to the United States Pension Benefit Guaranty Corporation or withdrawal liability to any Multiemployer Plan has been or is reasonably expected to be incurred with respect to any Multiemployer Plan by the Company nor any of its ERISA Affiliates. Neither the Company nor any other “disqualified person” or “party in interest,” as defined in Section 4975 of the Code and Section 3(14) of ERISA, respectively, has engaged in any “prohibited transaction,” as defined in Section 4975 of the Code or Section 406 of ERISA (which is not otherwise exempt), with respect to any Company Plan, nor, to the Company’s Knowledge, have there been

48

any fiduciary violations under ERISA that could subject the Company (or any Employee) to any material penalty or tax under Section 502(i) of ERISA or Section 4975 of the Code.
3.10.4      Status of Plans . Company Plans intended to qualify under Section 401 of the Code or other tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of the Code are so qualified and any trusts intended to be exempt from federal income taxation under the Code are so exempt. No Company Plan intended to qualify under Section 401 of the Code provides for participant plan loans. Nothing has occurred with respect to the operation of any Company Plans that could reasonably be expected to cause the loss of such qualification or exemption, or the imposition of any liability, penalty or Tax under ERISA or the Code. No event has occurred and no condition exists with respect to any Company Plan subject to the requirements of Code Section 401(a) that would subject the Company, either directly or by reason of an ERISA Affiliate of the Company, to any material Tax, fine, Lien, penalty or other liability imposed by ERISA, the Code or other applicable Laws. For each Company Plan with respect to which a Form 5500 has been filed, no material adverse change has occurred with respect to the matters covered by the most recent Form 5500 since the date thereof. Except as set forth at Schedule 3.10.4 , none of the Company Plans provides for post-employment life or health coverage for any participant or any beneficiary of a participant, except as may be required under Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code or any similar state law and at the expense of the participant or the participant’s beneficiary.
3.10.5      Contributions to Plans . All contributions required to have been made under any of the Company Plans or by Law (without regard to any waivers granted under Section 412 of the Code), have been timely made. There are no unfunded liabilities or benefits under any Company Plans that are not reflected in the Financial Statements.
3.10.6      Conformity with Laws . All Company Plans have been established, operated and maintained in accordance with their terms and with all applicable provisions of ERISA, the Code and other Laws. All amendments and actions required to bring the Company Plans into conformity in all material respects with all of the applicable provisions of the Code, ERISA and other applicable Laws have been made or taken, except to the extent that such amendments or actions are not required by Law to be made or taken until a date after the Effective Time. As of the Agreement Date, and following the Agreement Date except as to any Strike Suits, there are no pending Actions arising from or relating to the Company Plans (other than routine benefit claims), nor does the Company have any Knowledge of facts that could form or could reasonably be expected to form the basis for any such Action. There are no filings or applications pending with respect to the Company Plans with the IRS, the DOL or any other Governmental Authority. The Company has satisfied all obligations applicable to the Company or any ERISA Affiliate under Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA and each applicable state law relating to continuation of health or other coverage to any Employee of any ERISA Affiliate (or any dependent

49

or former dependent of such Employee) with respect to any qualifying event that has occurred on or before the Closing Date. Schedule 3.10.6 lists each individual who, as of the Agreement Date, (a) is currently receiving continuation coverage under COBRA under a Company Plan, or (b) is within his or her COBRA election period.
3.10.7      Leased Employees . The Company has no Employees who, during their period of service to the Company, are or were leased employees, and has no liability, contingent or otherwise, for any federal, state or local workers’ compensation contribution, with respect to any Employees who are or were leased employees.
3.10.8      Employment Matters .
(a)      Schedule 3.10.8, sets forth a true and complete listing of the Current Employees and the Current Consultants, as of the Agreement Date, including each such person’s name, job title or function and job location, as well as a true, correct and complete listing of his or her current salary or wage payable by the Company, and for each such Current Employee or such Current Consultant, the amount of all incentive compensation paid or payable to such person for the current calendar year, the amount of accrued but unused paid time off, description and amount of any material fringe benefits and each such Current Employee’s or such Current Consultant’s current status (as to leave or disability status and full time or part time, exempt or nonexempt and temporary or permanent status and as to classification as an employee, consultant, independent contractor, officer or director). Other than as fully reflected or specifically reserved against in accordance with GAAP in the Financial Statements (or as otherwise expressly permitted or required pursuant to this Agreement), neither the Company nor any Holder has paid or promised to pay any bonuses, commissions or incentives to any Employee or Consultant. The Company has delivered to Parent a true and complete copy of the employee handbook for the Company, if any and all other employment policies, if any, currently applicable to any Employee or Consultant.
(b)      As of the Agreement Date, to the Company’s Knowledge, no officer, Current Consultant or Current Employee at the level of manager or higher has disclosed any plans to terminate his, her or their employment or other relationship with the Company.
(c)      The Company has a USCIS Form I-9 that is validly and properly completed in accordance with applicable Law for each Employee with respect to whom such form is required by applicable Law. The Company has complied with all Department of Homeland Security, DOL and State Department regulations governing the employment of foreign national workers. The Company has complied with all Laws related to H-1B workers, including the payment of wages and the maintenance of public access files related to the filing of ETA-9035 Labor Condition Applications.
(d)      Except as set forth in Schedule 3.10.8(d) :

50

(i)      the Company has paid to each applicable Employee the entire amount of the bonus, if any, earned by such Employee for the year ended December 31, 2018 and no remaining bonus amounts for the year ended December 31, 2018, payable to any Employee, remain unpaid as of the Closing Date;
(ii)      since the Reference Date, (x) the Company has paid or made provision for payment of all salaries and wages, which are payable by the Company to any Employees, accrued through the Closing Date and is in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, collective bargaining, immigration, wages, hours and benefits, non-discrimination in employment, workers’ compensation, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Equal Employment Opportunity Act of 1972, ERISA, the Equal Pay Act, the National Labor Relations Act, the Fair Labor Standards Act, the Americans with Disabilities Act of 1990, the Vietnam Era Veterans Reemployment Act, the Family and Medical Leave Act and any and all similar applicable state and local Laws; and (y) the Company has not been engaged in any unfair employment practice;
(iii)      since the Reference Date, the Company has not received a written notice, citation, complaint or charge asserting any violation or liability under the federal Occupational Safety and Health Act of 1970 or any similar applicable Law regulating employee health and safety;
(iv)      (u) None of the Current Employees is represented by any labor union or other labor representative with respect to his or her employment with the Company; (v) there are no labor, collective bargaining agreements or similar arrangements binding on the Company with respect to any Current Employees; (w) since the Reference Date, no petition has been filed nor has any proceeding been instituted by any Employee or group of Employees with the National Labor Relations Board or similar Governmental Authority seeking recognition of a collective bargaining agreement; (x) to the Company’s Knowledge, there are no Persons attempting to represent or organize or purporting to represent for bargaining purposes any of the Current Employees; (y) since the Reference Date to the Agreement Date, there has not occurred or, to the Company’s Knowledge, has not been threatened any strikes, slowdowns, picketing, work stoppages or concerted refusals to work or other similar labor activities with respect to Employees; and (z) no grievance or arbitration or other proceeding arising out of or under any collective bargaining agreement relating to the Company is pending or, to the Company’s Knowledge, threatened;
(v)      since the Reference Date, the Company has not received notice of any charge or complaint pending before the Equal Employment Opportunity Commission or similar Governmental Authority alleging unlawful discrimination in employment practices, or before the National Labor Relations Board or similar Governmental Authority alleging any unfair

51

labor practice, by the Company, nor, to the Knowledge of the Company, has any such charge been threatened;
(vi)      (x) all Current Employees of the Company are employed on an at-will basis and their employment can be terminated at any time for any reason without any amounts being owed to such individual other than with respect to wages, compensation and benefits accrued before such termination; and (y) the Company’s relationships with all individuals who act as Consultants to the Company can be terminated at any time for any reason without notice or any amounts being owed to such individual other than with respect to compensation or payments accrued before such termination;
(vii)      since the Reference Date, the Company has not effectuated: (x) a “plant closing” (as defined in the WARN Act, or any similar Law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company; or (y) a “mass layoff” (as defined in the WARN Act, or any similar Law) affecting any site of employment or facility of the Company; and
(viii)      any individual performing services for the Company who has been classified as an independent contractor, or as an employee of some other entity whose services are leased to the Company, has been correctly classified and is in fact not a common law employee of the Company or any Subsidiary.
3.10.9      Effect of Transaction . Except for the payment of the Merger consideration under ARTICLE II or as otherwise expressly contemplated by this Agreement, neither the execution and delivery of the Transaction Agreements by the Company nor the consummation of the Transactions (including the Merger and the Preferred Stock Conversion) by the Company, shall result in (a) any payment becoming due to any Employee, (b) the provision of any benefits or other rights to any Employee, (c) the increase, acceleration or provision of any payments, benefits or other rights to any Employee, whether or not any such payment, right or benefit would constitute a “parachute payment” within the meaning of Section 280G of the Code, (d) require any contributions or payments to fund any obligations under any Company Plan, or (e) the forgiveness in whole or in part of any outstanding loans made by the Company to any Person. No amount so disclosed is an “excess parachute payment” within the meaning of Section 280G of the Code.
3.10.10      Compliance with Section 409A of the Code . To the extent that any Company Plan is a “Nonqualified Deferred Compensation Plan,” as such term is defined in Section 409A of the Code, such Company Plan is in documentary and operational compliance with Section 409A of the Code and all applicable guidance issued by the IRS thereunder (or could be made compliant without applicable penalties in accordance with such guidance). No payment pursuant to any Company Plan or other arrangement to any “service provider” (as such term is defined in

52

Section 409A of the Code and the United States Treasury Regulations and IRS guidance thereunder) to the Company would subject any person to tax pursuant to Section 409A(1) of the Code, whether pursuant to the Transactions or otherwise. There is no Contract or arrangement to which the Company, or to the Knowledge of the Company, any Company Affiliate is a party or by which it is bound to compensate any of its current or former employees, independent contractors or directors for additional income or excise taxes paid pursuant to Sections 409A or 4999 of the code.
3.10.11      Plans Outside the United States . No Company Plan is subject to the laws of any jurisdiction other than the United States of America.
3.10.12      Plan Termination . Each Company Plan can be amended, terminated or otherwise discontinued in accordance with its terms, without material Liability to the Company, the Surviving Corporation, Parent or any of their Affiliates (other than ordinary administrative expenses typically incurred in a termination event). Neither the Company nor any of its Affiliates has announced its intention to modify or amend any Company Plan or adopt any arrangement or program which, once established, would come within the meaning of a Company Plan, and each asset held under any Company Plan may be liquidated or terminated without the imposition of any material redemption fee, surrender charge or comparable Liability.
Section 3.11      Environmental Matters . The Company is, and at all times has been, in compliance with all applicable Environmental Laws. There is no Action relating to or arising under Environmental Laws that is pending or, to the Knowledge of the Company, threatened against or affecting the Company or any Real Property or Premises currently or formerly owned, operated or leased by the Company. The Company has not received any notice of, or entered into, or assumed by Contract or operation of Law, any obligation, liability, order, settlement, judgment, injunction or decree relating to or arising under Environmental Laws. To the Knowledge of the Company, there are no facts, circumstances or conditions existing with respect to the Company or any Real Property or Premises currently or formerly owned, operated or leased by the Company or any property or facility to or at which the Company transported or arranged for the disposal or treatment of Hazardous Materials that would reasonably be expected to result in the Company incurring any Environmental Liability. The Company has not stored, treated, disposed of, arranged for or permitted the disposal of, transported, handled or released any substance (including any Hazardous Materials) or owned, occupied or operated any Premises or property in a manner that has given or would reasonably be expected to give rise to any material Liabilities (including any Liabilities for response costs, corrective action costs, personal injury, natural resource damages, property damage or any investigative, corrective or remedial obligations) pursuant to CERCLA or any other Environmental Laws. No property or facility now or, to the Knowledge of the Company, previously owned, occupied or operated by the Company, is currently listed or proposed for listing on the National Priorities List or the Comprehensive Environmental Response, Compensation and Liability Information System, both promulgated under CERCLA, or on any analogous state or local registry list and, to

53

the Knowledge of the Company, no off-site location at which the Company has disposed or arranged for the disposal of any waste is listed or proposed to be listed on the National Priorities List or on any analogous state or local list. The Company has made available to Parent a true and complete list of environmental reports, audits assessments and investigations in the Company’s possession or control which relate to the Premises and the Real Property in the Company’s possession or control. There have been no Releases at any Real Property and there are no above-ground, nor to the Company’s Knowledge, underground, storage tanks, oil/water separators, sumps, septic systems, or polychlorinated biphenyls (PCBs) or any PCB-containing equipment located on any Real Property.
Section 3.12      Contracts .
3.12.1      Specified Material Contracts . Except as set forth in Schedule 3.12.1 of the Disclosure Schedule, as of the Agreement Date, the Company is not a party to, does not have any obligations, rights or benefits under and none of its assets or properties are bound by any:
(a)      Contracts that purport to limit, curtail or restrict the ability of the Company or its Affiliates to conduct business in any geographic area or line of business or restrict the Persons with whom the Company or any of its future Subsidiaries or Affiliates may do business;
(b)      Contracts: (i) with any Employee and any offer letters for employment or consulting with the Company, that (x) provide for anticipated annual compensation or other payments in excess of $100,000 for any individual (other than employment offers terminable at will with no severance or acceleration liability), including any Contracts with individuals providing for any commission-based compensation in excess of such amount, (y) provide for the payment of non-qualified deferred compensation subject to Section 409A of the Code, or (z) provide for potential severance payments or other severance benefits; and (ii) with any Consultant and any offer letters to enter into consulting agreements with the Company, that provide for anticipated annual payments in excess of $100,000 for any individual, including any Contracts with individuals providing for any commission-based payments in excess of such amount;
(c)      Contracts with any labor union or other labor representative of Employees (including any collective bargaining agreement);
(d)      Contracts with any present or former officer, director or Stockholder of the Company, or any Affiliate of such officer, director or Stockholder (other than employment offers terminable at will with no severance or acceleration liability), including, but not limited to, any agreement providing for the employment of, furnishing of services by, rental of assets from or to, or otherwise requiring payments to, any such officer, director, Stockholder or Affiliate, in each case, other than (i) advances or reimbursements for travel and entertainment expenses consistent

54

with Company policy and practice or (ii) employee benefits generally available to Employees (including stock options);
(e)      Contracts under which the Company has advanced or loaned any money to any of the Employees or Affiliates of the Company where there is still an outstanding amount due to the Company under such Contract, other than advances or reimbursements for travel and entertainment expenses consistent with Company policy and past practice;
(f)      Contracts granting any power of attorney with respect to the affairs of the Company or otherwise conferring agency or other power or authority to bind the Company other than to officers and attorneys in the Ordinary Course of Business;
(g)      Partnership or joint venture agreements;
(h)      Contracts for the acquisition, sale or lease of properties or assets other than in the Ordinary Course of Business;
(i)      Contracts with a Governmental Authority;
(j)      Loan or credit agreements, indentures, notes or other Contracts evidencing indebtedness for borrowed money (contingent or otherwise) by the Company, or any Contracts pursuant to which indebtedness for borrowed money (contingent or otherwise) is guaranteed by the Company, or any guarantees of the foregoing by third parties for the Company’s benefit;
(k)      Mortgages, pledges, security agreements, deeds of trust or other Contracts granting a Lien other than Permitted Lien on any material property or assets of the Company;
(l)      Voting agreements or registration rights agreements relating to Company Capital Stock to which the Company is a party;
(m)      Lease or rental Contracts relating to personal property;
(n)      Contracts providing for indemnification by the Company other than (i) customary indemnities against breach of the obligations contained in such Contract that were entered into in the Ordinary Course of Business and (ii) customary indemnities against infringement of Intellectual Property Rights contained in non-exclusive licenses entered into in the Ordinary Course of Business;
(o)      Any Contract with any supplier or provider of goods or services that are incorporated into, or related to the development of, any Product and Service involving

55

consideration in excess of $50,000 in the current or either of the two (2) previous fiscal years (other than purchase orders for goods entered into in the Ordinary Course of Business);
(p)      Any Contracts to (i) provide services to any Person involving consideration in excess of $50,000 in the current or either of the two (2) previous fiscal years, or (ii) perform any service or sell or lease any product which grants the other party or any third party “most favored nation” status, “most favored customer” pricing, preferred pricing, exclusive sales, distribution, marketing or other exclusive rights, or rights of first refusal or rights of first negotiation;
(q)      Contracts related to the manufacturing, transport, transfer, distribution or storage of any Product and Service involving consideration in excess of $50,000 in the current or either of the two (2) previous fiscal years;
(r)      Contracts relating to capital expenditures and involving obligations after the Agreement Date in excess of $50,000 and not cancelable without penalty;
(s)      Contracts relating to the disposition or acquisition of material assets or any ownership interest in any entity;
(t)      Contracts with any Person, including any financial advisor, broker, finder, investment banker or other Person, providing advisory services to the Company in connection with the Transactions; and
(u)      Contracts to enter into or negotiate the entering into of any of the foregoing.
3.12.2      Documentation . The Company has made available to Parent (a) true and complete copies of each written Material Contract and (b) a summary of each oral Material Contract, together with any and all amendments, supplements and “side letters” thereto.
3.12.3      Status of Material Contracts . Each of the Contracts required to be listed in Schedule 3.12.1 , each of the Real Property Leases and each of the IP Contracts (collectively, the “ Material Contracts ”) is valid and binding on the Company and in full force and effect and is enforceable in accordance with its terms by the Company, except to the extent that their enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles. The Company is not in material breach or default under any Material Contract, nor does any condition exist that, with notice or lapse of time or both, would constitute a breach or default in any respect thereunder by the Company or that would result in material liability to the Company. To the Knowledge of the Company, (a) no other party to any Material Contract is in default thereunder and (b) no condition exists that with notice or lapse of time or both would constitute a default in

56

any material respect by any such other party thereunder. As of the Agreement Date, and following the Agreement Date except as to any Strike Suits, the Company has not received notice of any termination or cancellation of any Material Contract and to the Company’s Knowledge, no other party to a Material Contract has plans to terminate or cancel such Material Contract. The Company has not and, to the Knowledge of the Company as of the Agreement Date and following the Agreement Date except as to any Strike Suits, no other party to any Material Contract has repudiated any material provision of any Material Contract. The Company is not disputing and, to the Knowledge of the Company, no other party to such Material Contract is disputing, any material provision of any Material Contract. As of the Agreement Date, and following the Agreement Date except as to any Strike Suits, none of the parties to any Material Contract is renegotiating any material amounts paid or payable to or by the Company under such Material Contract or any other material term or provision thereof.
Section 3.13      Assets: Title, Sufficiency, Condition . The Company has good, valid and sufficient title to or sole and exclusive leasehold interest in or adequate right to use all of its tangible assets whether real or personal property, including those located on its Premises or reflected in the Interim Balance Sheet as being owned by the Company or acquired after the date thereof (other than inventory disposed of in the Ordinary Course of Business since the date of the Interim Balance Sheet) (the “ Assets ”), free and clear of all Liens except Permitted Liens. The Assets constitute, in all material respects, all of the assets, properties and rights of every type and description that are used in and necessary for the conduct of the Company’s business as currently conducted. All of the material fixtures and other material improvements to the Leased Real Property and all of the tangible personal property other than the inventory (a) are in all material respects adequate and suitable for their present uses, (b) in good working order, operating condition and state of repair (ordinary wear and tear excepted) and (c) have been maintained in all respects in accordance with normal industry practice.
Section 3.14      Real Property .
3.14.1      Schedule 3.14.1 of the Disclosure Schedule (a) sets forth a list of the addresses of all real property leased, subleased or licensed by or for which a right to use or occupy has been granted to the Company (the “ Leased Real Property ”), and (b) identifies, with respect to each Leased Real Property, each lease, sublease, license or other Contract under which such Leased Real Property is occupied or used, including the date of and legal name of each of the parties to such lease, sublease, license or other Contract and each amendment, modification, supplement or restatement thereto (the “ Real Property Leases ”).
3.14.2      The Company does not own, and has never owned, any real property.

57

3.14.3      There are no written or oral leases, subleases, licenses, concessions, occupancy agreements or other Contracts granting to any other Person the right to use or occupancy of any of the Leased Real Property and there is no Person (other than the Company) in possession of any of the Leased Property. With respect to each Real Property Lease that is a sublease, to the Company’s Knowledge, the representations and warranties in this Section 3.14 and Section 3.12.3 are true and correct with respect to the underlying lease.
3.14.4      The Company has made available to Parent true, accurate and complete copies of the Real Property Leases, in each case as amended or otherwise modified and in effect, together with any extension notices and other material correspondence, lease summaries, notices or memoranda of lease, estoppel certificates and subordination, non-disturbance and attornment agreements related thereto and no Real Property Lease has been modified in any material respect, except to the extent that such modifications are disclosed by the copies delivered to Parent prior to Closing. With respect to each of the Real Property Leases, (a) the Company has a valid and enforceable leasehold interest in each parcel or tract of real property leased by it, free and clear of all Liens (including liens arising out of any attachment, judgement or execution) affecting the Leased Real Property or the estate or interest created by the Real Property Leases except for the Permitted Liens; (b) there are no existing defaults thereunder by the Company or, to the Knowledge of the Company, any other party to the Real Property Leases; (c) no event has occurred which (with notice, lapse of time or both) would constitute a breach or default thereunder by the Company or, to the Knowledge of the Company, any other party to the Real Property Leases, or that could permit the termination, modification, or acceleration of rent thereunder; (d) there are no pending disputes, actions or proceedings that were brought by the Company against a lessor under a Real Property Lease alleging that such lessor is in default or has committed a breach under such Real Property Lease; (e) the Company has not received any notice from any Governmental Authority of a violation of any governmental requirements (including Environmental Laws) with respect to any of the Leased Real Property and to the Company’s Knowledge, the Leased Real Property is not in violation of any material requirements of same; and (f) the Company has not used, generated, stored, released, discharged, transported, handled, or disposed of any hazardous materials on, in or in connection with any parcel of Leased Real Property except as expressly permitted pursuant to the terms of the Real Property Leases.
3.14.5      No eminent domain, condemnation or zoning, building code or other moratorium Action is pending or, to the Company’s Knowledge, threatened, that would preclude or materially impair the use of any Leased Real Property. None of the Company’s current uses of the Leased Real Property violates in any material respect any restrictive covenant or zoning ordinance that affects any of the Leased Real Property. There have been no special assessments filed, or, to the Company’s Knowledge, proposed against the Leased Real Property or any portion thereof. None of the Leased Real Property has been damaged or destroyed by fire or other casualty.

58

3.14.6      All Premises are supplied with utilities and other services necessary for the operation of such Premises as the same are currently operated or currently proposed to be operated, all of which utilities and other services are provided via public roads or via irrevocable appurtenant easements benefitting the parcel of Leased Real Property on which such Premises is located, in each case, to the extent necessary for the conduct of the Company’s business.
Section 3.15      Intellectual Property; Technology; Privacy and Security; Information Systems; Disaster Recovery .
3.15.1      Company IP .
(a)      The Company owns or has the right to use all Company Technology and all Intellectual Property Rights therein for all purposes necessary or useful to the Company’s business as presently conducted. Except for (i) the Technology and Intellectual Property Rights licensed to the Company under the Inbound IP Contracts and (ii) off the shelf, “click wrap” or “shrink wrap” license agreements for software that is generally commercially available to the public on reasonable terms (“ Shrink Wrap Licenses ”), in each case with annual, aggregate payments (including license, maintenance and support fees) not in excess of $50,000 individually, none of the Company Technology or Company Intellectual Property Rights is owned by any third party. The Company exclusively owns all Company Technology and all Company Intellectual Property Rights that are owned or purported to be owned by the Company free and clear of all Liens other than with respect to the Permitted Liens, including Proprietary Software.
(b)      Schedule 3.15.1(b) contains a list and description of any computer software programs that are Proprietary Software. Except as disclosed by Schedule 3.15.1(b) (i) Proprietary Software is not subject to any transfer, assignment, change of control, site, equipment, or other operational limitations; (ii) the Company has maintained and protected all Proprietary Software (including all source code and system specifications) with appropriate proprietary notices (including the notice of copyright in accordance with the requirements of 17 U.S.C. § 401), confidentiality and non-disclosure agreements and such other measures as are reasonably necessary to protect the Intellectual Property Rights contained therein or relating thereto, and none of the source code of any Proprietary Software has been published, disclosed or delivered to any Person by the Company or any employee, consultant, contractor or agent of the Company; (iii) 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 Proprietary Software; (iv) all Proprietary Software has been registered or is eligible for protection and registration under applicable copyright law; (v) the Company has copies of all releases or separate versions of all Proprietary Software so that the same may be subject to registration in the United States Copyright Office; (vi) the Company has complete and exclusive right, title and interest in and to all Proprietary Software; (vii) the Company has developed the Proprietary Software through its own efforts and for its own

59

account without the aid or use of any consultants, agents, independent contractors or Persons (other than Persons that are (x) employees of the Company or (y) consultants or independent contractors of the Company listed on Schedule 3.15.1(b)(vii)(y) of the Disclosure Schedule); (viii) the Proprietary Software includes the source code, system documentation, statements of principles of operation and schematics, as well as any pertinent commentary, explanation, program (including compilers), workbenches, tools and higher level (or “proprietary”) language used for the development, maintenance, and implementation thereof, so that a trained computer programmer could develop, maintain, support, compile and deploy all releases or separate versions of the same; (ix) the Source Code Materials for the Proprietary Software are complete and accurate; and (x) there are no Contracts in effect with respect to the marketing, distribution, or licensing of the Proprietary Software by any other Person.
3.15.2      Infringement . Neither (a) the operation of the business of the Company, including as presently conducted, nor (b) any of the Products and Services or Company Technology (including current and proposed) has infringed upon, diluted, misappropriated or violated, or will infringe upon, dilute, misappropriate or violate, any Intellectual Property Rights of any Person. The Company has not (i) received any written charge, complaint, claim, demand, or notice alleging infringement, dilution, misappropriation or violation of the Intellectual Property Rights of any Person (including any demand to refrain from using or to license any Intellectual Property Rights of any Person in connection with the conduct of the Company’s business) or (ii) agreed to, and has no contractual obligation to, indemnify any Person for or against any interference, infringement, dilution, misappropriation or violation with respect to any Intellectual Property Rights. To the Company’s Knowledge, no Person has infringed upon, diluted, misappropriated or violated any Company Intellectual Property Rights at any time during the three (3)-year period preceding the Agreement Date. As of the Agreement Date, and following the Agreement Date except as to any Strike Suits, there are no pending or, to the Company’s Knowledge, threatened claims against the Company or any facts or circumstances supporting a claim challenging the Company’s ownership of the Company Intellectual Property Rights or alleging that any of the Company Intellectual Property Rights are invalid or unenforceable.
3.15.3      Scheduled IP . Schedule 3.15.3 identifies all patents, patent applications, registered trademarks and copyrights, applications for trademark and copyright registrations, domain names, registered design rights and other forms of registered Intellectual Property Rights and applications therefor owned by or exclusively licensed to the Company (collectively, the “ Company Registrations ”). Except as set forth in Schedule 3.15.3 , all Company Registrations have been duly maintained (including the payment of fees) and are not expired, cancelled or abandoned. Schedule 3.15.3 also identifies each trade name, each unregistered trademark, service mark, or trade dress and each unregistered copyright owned or exclusively licensed by the Company that, in each case, is material to the business of the Company.

60

3.15.4      IP Contracts . Schedule 3.15.4 identifies under separate headings each Contract under which the Company uses or licenses Company Technology or Company Intellectual Property Rights that are material to the operation of the business of the Company as presently conducted and that any Person besides the Company owns, including Software other than Proprietary Software that is licensed to or used by the Company or any of its Affiliates and is related to Company’s business (“ Third Party Software ”) (other than Shrink Wrap Licenses) (collectively “ Inbound IP Contracts ”) or under which the Company has granted any Person any right or interest in Company Intellectual Property Rights including any right to use or access any item of the Company Technology (the “ Outbound IP Contracts ”, and together with the Inbound IP Contracts, the “ IP Contracts ”). None of the Inbound IP Contracts or Shrink Wrap Licenses are subject to any transfer, assignment, change of control, site, equipment, or other operational limitations. Except as provided in the Inbound IP Contracts and Shrink Wrap Licenses, the Company does not owe any royalties or other payments or otherwise have any liability to any Person for the use of any Intellectual Property Rights or Technology. The Company has paid all fees, royalties and other payments applicable to the past and current use or exploitation intellectual property provided for by the Inbound IP Contracts and Shrink Wrap Licenses, and no fees, royalties or other payments provided by the Inbound IP Contracts and Shrink Wrap Licenses are due or otherwise required to be paid by the Company or any of its Affiliates within thirty (30) days following the Closing Date or otherwise due as a result of, or attributable to, the Transactions contemplated herein (including the Merger).
3.15.5      Confidentiality and Invention Assignments . The Company has maintained practices designed to ensure the protection of the confidentiality of the Company’s confidential information and trade secrets and has required any Employee, Consultant or third party with access, or to whom it has disclosed its confidential information, to execute contracts requiring them to maintain the confidentiality of such information and use such information only in accordance with such contracts. All Employees and Consultants of the Company who (a) in the normal course of their duties are involved in the creation of Company Technology that is incorporated in any Product and Service of the Company or (b) have in fact created any Company Technology that is incorporated in any Product and Service of the Company, have executed contracts that irrevocably assign to the Company on a worldwide royalty-free basis all of such Persons’ respective rights, including Intellectual Property Rights relating to such Product and Service. To the Knowledge of the Company, no Employee or Consultant is in violation of any term of any such agreement, including any patent disclosure agreement or other employment contract or any other contract or agreement relating to the relationship of any such Employee or Consultant with the Company. All authors of any works of authorship in the Company Technology have waived their moral rights and have agreed to a covenant not to assert their moral rights, in each case, to the extent permitted by applicable law or such authors prepared such works in jurisdictions that do not recognize moral rights.
3.15.6      Open Source Software . Except as disclosed on Schedule 3.15.6 , none of the Company Technology, Proprietary Software, nor any Product and Service of the Company

61

(including any software, middleware, firmware) constitutes, contains, or is dependent upon any Public Software. The software disclosed on Schedule 3.15.6 has never been provided, delivered or distributed to any Person other than those Employees and Consultants of the Company working on the development of Company’s software, firmware or middleware for the benefit of the Company and has never been delivered or distributed in any form (object code, executable code or source code form) to any Person other than those Employees and Consultants of the Company working on the development of Company’s software, firmware or middleware for the benefit of the Company, including delivery via electronic transmission, by physical delivery on tangible media (either as stand-alone software or as a part of any other software), loan, delivery or transmission as part of the transfer of hardware or components, or any other form of delivery or distribution, temporary or permanent. None of the Company Technology, Proprietary Software, nor any Product and Service of the Company is subject to any IP Contract or other contractual obligation that would require the Company to publicly divulge any source code or trade secret that is part of the Company Technology.
3.15.7      Privacy and Data Security .
(a)      The use and dissemination by the Company of any Personal Data is in compliance in all material respects with the Company’s privacy policies and terms of use, industry standards, all applicable Information Privacy and Security Laws, Personal Data Obligations, and all Contracts to which the Company is bound. No Personal Data is stored or otherwise maintained outside the United States by the Company or any third party. The Company has not engaged in cross-border processing of Personal Data. True and complete copies of all privacy policies that have been used by the Company in the past three (3) years have been provided to Parent. The Company has consistently posted a privacy policy in a clear and conspicuous location on all websites and any mobile applications owned or operated by the Company.
(b)      The Company does not Collect or Use Personal Data from any Person in any manner other than as described in the Contracts or, to the extent applicable, any privacy policies delivered to Parent.
(c)      The Company maintains policies and procedures regarding data security and privacy and maintains administrative, technical and physical safeguards that are commercially reasonable and, in any event, in compliance with industry standards, all applicable Information and Privacy and Security Laws and all Contracts to which the Company is bound. True and complete copies of all such policies and procedures have been provided to Parent. The Company has complied at all times in all material respects with the terms of all Contracts to which the Company is a party relating to data privacy, security or breach notification (including provisions that impose conditions or restrictions on the collection, use, disclosure, transmission, destruction, maintenance, storage, or safeguarding of Personal Data).

62

(d)      Except as set forth on Schedule 3.15.7(d) , at any time during the three (3)-year period preceding the Agreement Date, there have been no security breaches relating to, or violations of any security policy or Information Privacy and Security Law regarding, or any unauthorized access, disclosure, or use of, any data or information used by the Company, including Personal Data. No notice has been provided to the Company by a third party vendor or any other person of any security breach relating to Personal Data. The Company has not experienced a loss or unauthorized disclosure, use, or breach of privacy or security of any Personal Data in the custody or control of the Company that would have required notice to any third Person (including any Governmental Entity or parties to any Contract) under any applicable Law. No Person (including any Governmental Authority) has commenced any Action relating to the Company’s information privacy or data security practices, or to the Knowledge of the Company, threatened any such Action or made any complaint, investigation, or inquiry relating to such practices.
(e)      The Company does not (i) have or solicit any customers in the European Economic Area, or (ii) knowingly process, transmit, or store any Personal Data of any Persons located in the European Economic Area.
(f)      The Company has taken all required steps to limit access to Personal Data to: (i) those Company personnel and third-party vendors providing services to or on behalf of the Company who have a need to know such Personal Data in the execution of their duties to the Company; and (ii) such other Persons permitted to access such Personal Data in accordance with the privacy policies and terms of use, industry standards, all applicable Information Privacy and Security Laws and all Contracts to which the Company is bound.
(g)      The Company maintains a commercially reasonable written technical information security program that contains administrative, technical and physical safeguards (including encryption) compliant in all material respects with industry standards and applicable Information Privacy and Security Laws (the “ Security Program ”). The Company’s Security Program is designed to: (i) protect the integrity and confidentiality of Personal Data; (ii) protect against reasonably anticipated threats or hazards to the security of Personal Data; (iii) protect against the unauthorized access, disclosure or use of Personal Data; (iv) address computer and network security; and (v) provide for the secure destruction and disposal of Personal Data. The Security Program has been updated as required by all applicable Information Privacy and Security Laws. All third-party vendors or persons with access to Personal Data have entered into contracts or written agreements with the Company requiring that such vendors or persons maintain a substantially similar security program.
(h)      The Company is in material compliance with all applicable Information Privacy and Security Laws regarding the Collection and Use of the Personal Data of any individual.

63

(i)      The Company controls the access to its computer and information technology networks through the utilization of industry-standard or better security measures that are designed to prevent unauthorized access to such networks. All of the Company’s security measures are designed to be materially consistent with or exceed industry standards and the requirements of applicable Laws and are designed to (i) prevent the unauthorized disclosure of confidential information (including Personal Data) of the Company’s customers, (ii) prevent access without express authorization (and immediately terminate such unauthorized access) to the networks and information system of the Company’s customers through the networks of the Company and (iii) facilitate the Company’s identification of the person making or attempting to make such unauthorized access.
3.15.8      Effect of Transactions on Company Technology Rights or Data Privacy . The Transactions (including the Merger) shall not adversely affect the Company’s ownership of any Company Technology or the Company’s legal right and ability to continue using the Company Technology in the operation of the Company’s business on or after the Effective Time to the same extent as the Company Technology is used in the operation of the business prior to the Effective Time. The Transactions (including the Merger) (including any transfer of Personal Data resulting from the Transactions) (a) comply with all Personal Data Obligations of the Company, and (b) comply (and the disclosure to, transfer to, and use by the Parent of such Personal Data after the Closing will comply) with all Information Privacy and Security Laws (including any such Laws and regulations in the jurisdictions where the Personal Data is collected). Following the Effective Time, the Surviving Corporation shall continue to have the right to use such Personal Data on identical terms and conditions as the Company enjoyed immediately prior to the Effective Time.
3.15.9      Information Systems . The Company owns, leases or licenses all Information Systems that are used in, or necessary for, the business of the Company, including the capacity and ability to process current peak volumes in a timely manner. The Information Systems are in good working condition, comply with all service level requirements of related Contracts and are adequate and have sufficient capacity for the conduct of the Company’s business as currently conducted. The Information Systems consist of appropriate infrastructure and capacity to scale up the Company’s business in a foreseeable manner as needed for the conduct of the business as presently conducted, and there are no restrictions in Contracts relating to the Information Systems that could materially restrict or impair such scaling up. In the last twelve (12) months, there have been no material failures, breakdowns, outages or unavailability of such Information Systems and the DR Plans were not activated other than for testing purposes. On and after the Effective Time, the Information Systems shall be in the possession, custody or control of the Surviving Corporation, along with all tools, documentation and other materials relating thereto, as existing immediately prior to the Effective Time.

64

3.15.10      Disaster Recovery . The Company has delivered to Parent a true and complete copy of any current DR Plans. To the Knowledge of the Company, the DR Plans are consistent with or exceed industry standards and applicable Laws. The DR Plans are designed to ensure, at a minimum, the ability of the Company to resume operations and performance of services promptly and ensure redundancy of all data and information material to the operation of the Company that the Company is required to maintain pursuant to any Contract, internal policy or applicable Law. The Company has conducted testing of the DR Plans not less frequently than annually (and in any event, upon a material change to the DR Plans) and corrected any material deficiencies in the DR Plans or deficiencies in compliance of the Company with the DR Plans.
Section 3.16      Insurance. Schedule 3.16 of the Disclosure Schedule sets forth as of the Agreement Date a list of all policies of property, general liability, directors and officers, fiduciary, employment, title, workers’ compensation, environmental, product liability, cyber liability and other forms of insurance maintained by the Company and all pending outstanding claims against such insurance policies. The Company has made available to Parent complete and correct copies of all such policies, together with all endorsements, riders and amendments thereto. There are no disputes with the insurers of any such policies or any claims pending under such policies as to which coverage has been reserved, questioned, denied or disputed by the insurers of such policies. Each such policy is in full force and effect, all premiums that are due and payable under all such policies have been paid and the Company is otherwise in compliance in all material respects with the terms of such policies. The Company has not failed to give proper notice of any claim under any such policy in a valid and timely fashion. The Company has not received any notice of non-renewal, cancellation or termination of any insurance policy in effect on the Agreement Date or within the past five (5) years.
Section 3.17      Related Party/Affiliate Transactions . There are no Liabilities of the Company to any Related Party other than ordinary course, Employee- and director-related compensation and reimbursement Liabilities and executory performance obligations (e.g., ongoing information rights) under Contracts entered into in connection with the grant or purchase and sale of Company Capital Stock, Company Options and Company Warrants or indemnification Contracts for directors and officers. No Related Party has any interest in any property (real, personal or mixed, tangible or intangible) used by the Company in the conduct of its business. The Company is not subject to any ongoing transactions pursuant to which the Company purchases any services (other than pursuant to an employment relationship), products, or Technology from, or sells or furnishes any services, products or Technology to, any Related Party. All transactions pursuant to which any Related Party has purchased any services (other than pursuant to an employment relationship), products, or Technology from, or sold or furnished any services, products or technology to, the Company (each a “ Related Party Transaction ”) have been on an arms-length basis on terms no less favorable to the Company than would be available from an unaffiliated party.

65

Section 3.18      Suppliers. Schedule 3.18 of the Disclosure Schedule sets forth true and complete lists of the top ten suppliers of the Company (measured in terms of total expenses) attributable to each such Person (a) during the year ended December 31, 2018, and (b) during the four-month period ended April 30, 2019 (each Person identified on at least one of such lists, a “ Top Supplier ”), showing the total purchases by the Company from each such Top Supplier during such period. Since the Balance Sheet Date to the Agreement Date, no Top Supplier has (i) ceased or materially reduced its sales or provision of services to the Company or changed the pricing or other terms of the business it does with the Company, or (ii) to the Knowledge of the Company threatened to cease or materially reduce such sales or provision of services, other than in the Ordinary Course of Business. As of the Agreement Date, no Top Supplier has pending or to the Company’s Knowledge, has any reasonable basis to threaten, any Action against the Company.
Section 3.1      Disclaimer of Warranties . Except for the representations and warranties contained in this ARTICLE III , neither the Company nor any other Person on behalf of the Company makes any other express or implied representation or warranty with respect to the Company or with respect to any other information provided to Parent, and the Company hereby disclaims any other representations or warranties, whether made by the Company or any of its Affiliates, officers, directors, employees, agents or representatives.
Section 3.2      Certain Business Practices.  Neither the Company nor any Employee or agent, acting on behalf of the Company, has (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity, (b) made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, (c) consummated any transaction, made any payment, entered into any Contract or arrangement or taken any other action in violation of Section 1128B(b) of the Social Security Act, as amended or (d) made any other unlawful payment of a type similar to those described above in this Section 3.20 .
Section 3.3      Brokers and Other Advisors.  Except as set forth on Schedule 3.21 of the Disclosure Schedule, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses, in connection with the Transactions (including the Merger) or any prior merger, acquisition or divestiture transaction based upon arrangements made by or on behalf of the Company or any of its Affiliates (any such fees, commissions and reimbursement expenses, the “ Broker Fees ”). Notwithstanding anything in this Agreement to the contrary, there are no fees or expenses related to the Transactions (including the Merger) payable by the Company to any third party other than the Company Transaction and Bonus Expenses.

66

ARTICLE IV:      REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to the Company as of the Agreement Date and as of the Closing Date as follows:
Section 4.1      Organization, Standing and Corporate Power.  Each of Parent and Merger Sub is a corporation duly incorporated, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated.
Section 4.2      Authority; Noncontravention .
4.2.1      Power; Enforceability . Each of Parent and Merger Sub has all requisite corporate power and corporate authority to execute and deliver the Transaction Agreements to which it is a party and to perform its obligations thereunder and to consummate the Transactions (including the Merger). The execution, delivery and performance by each of Parent and Merger Sub of the Transaction Agreements to which it is a party and the consummation by Parent and Merger Sub of the Transactions (including the Merger), have been duly authorized and approved by their respective Boards of Directors (and prior to the Effective Time shall be adopted by Parent as the sole Stockholder of Merger Sub) and no other corporate action on the part of Parent or Merger Sub is necessary to authorize the execution, delivery and performance by Parent and Merger Sub of the Transaction Agreements to which it is a party and the consummation by it of the Transactions (including the Merger). This Agreement has been and, when delivered at the Closing, the other Transaction Agreements to which Parent or Merger Sub is a party shall be, duly executed and delivered by Parent and Merger Sub. Assuming due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement constitutes and the other Transaction Agreements to which Parent or Merger Sub is a party shall, when delivered at the Closing, constitute, the legal, valid and binding obligations of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with their respective terms, except to the extent that their enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
4.2.2      No Violations . Neither the execution and delivery of the Transaction Agreements to which Parent or Merger Sub is a party, nor the consummation by Parent or Merger Sub of the Transactions (including the Merger), nor compliance by Parent and Merger Sub with any of the terms or provisions thereof, shall (a) violate any provision of the Charter Documents of Parent or Merger Sub or (b) assuming that the consents and approvals referred to in Section 4.3 are obtained and the filings referred to in Section 4.3 are made, (i) violate any Law applicable to Parent or Merger Sub or any of their respective properties or assets, or (ii) constitute a default under, result in the termination of or cancellation under, or result in the creation of any Lien upon any of the

67

respective properties or assets of, Parent or Merger Sub under, any of the terms, conditions or provisions of any material Contract to which Parent or Merger Sub is a party, except for such violations, losses, defaults, terminations, cancellations, accelerations or Liens as, individually or in the aggregate, would not reasonably be expected to prevent or materially delay or materially impair the ability of Parent or Merger Sub to consummate the Merger or other Transactions or perform their respective obligations under the Transaction Agreements, (a “ Parent Material Adverse Effect ”).
4.2.3      Financing . At the Closing, Parent will have sufficient funds to permit Parent and Merger Sub to consummate the Transactions contemplated by this Agreement and the other Transaction Agreements, including the payment in full of the amounts payable to the Holders under ARTICLE II.
Section 4.3      Governmental Approvals . Except for (a) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL and (b) filings required under and compliance with other applicable requirements of, any Antitrust Laws and foreign antitrust Laws (in each case, if required), no consents or approvals of, or filings, declarations or registrations with, any Governmental Authority are necessary for the execution and delivery of this Agreement by Parent and Merger Sub or the consummation by Parent and Merger Sub of the Transactions (including the Merger), other than such other consents, approvals, filings, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Section 4.4      Ownership and Operations of Merger Sub . Parent is the record owner of all of the outstanding capital stock of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Transactions, has engaged in no other business activities and has conducted its operations only as contemplated hereby.
Section 4.5      SEC Documents .
4.5.1      Parent has filed all reports, registration statements and proxy statements required to be filed by it with the SEC since January 1, 2018, and Parent has made available to the Holders (including through the SEC’s EDGAR database) true, correct and complete copies of all such reports (collectively, “ Parent’s SEC Documents ”). As of their respective dates, each of the Parent’s SEC Documents complied in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), and none of the Parent’s SEC Documents, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

68

4.5.2      Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Parent’s SEC Documents was prepared in accordance with GAAP throughout the periods indicated (except as may be indicated in the notes thereto and except that financial statements included with interim reports do not contain all notes to such financial statements) and each fairly presented in all material respects the consolidated financial position, results of operations and changes in stockholders’ equity and cash flows of Parent and its consolidated subsidiaries as at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal year-end adjustments which are not expected, individually or in the aggregate, to be material).
Section 4.6      Shares of Common Stock . The shares of Parent Common Stock to be issued and delivered to the Stockholders in accordance with this Agreement, when so issued and delivered, will be (a) duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Charter Documents of Parent or any agreement to which Parent is a party, and (b) based in part upon the statements of each Stockholder in such Stockholder’s Written Consent and Joinder Agreement, issued pursuant to available and valid exemptions from the registration and qualification provisions of applicable federal and state securities laws.
Section 4.7      Non-Reliance . Parent and Merger Sub acknowledge and agree that except for the representations and warranties contained in ARTICLE III , neither the Company nor any other Person on behalf of the Company makes, and neither Parent nor Merger Sub has relied upon, any other express or implied representation or warranty with respect to the Company or with respect to any other information provided to Parent, and that the Company hereby disclaims any other representations or warranties, whether made by the Company or any of its Affiliates, officers, directors, employees, agents or representatives.
ARTICLE V:      ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1      Conduct of Business . Except as expressly permitted by this Agreement, or with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed), as set forth in Schedule 5.1 of the Disclosure Schedule or as required by applicable Law, from the Agreement Date until the Effective Time or the earlier termination of this Agreement pursuant to ARTICLE VII (Termination), the Company shall (a) conduct its business in the Ordinary Course of Business and in compliance with all applicable Laws, (b) use commercially reasonable efforts to maintain and preserve intact its present business organization and the goodwill of those having business relationships with it (including by using commercially reasonable efforts to maintain the value of its assets and technology and preserve its relationships with Current Employees, suppliers, strategic partners, licensors, licensees, regulators, landlords and others having business relationships with the Company) and retain the services of its present officers, directors and Current Employees

69

(other than any terminations for cause) and (c) maintain in full force and effect all insurance policies described in Section 3.16 . Without limiting the generality of the foregoing, except as expressly permitted by this Agreement, or with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed), as set forth in Schedule 5.1 of the Disclosure Schedule or as required by applicable Law, until the Effective Time, the Company shall not:
5.1.1      issue, sell, grant, dispose of, amend any term of, grant registration rights with respect to, pledge or otherwise encumber any shares of its capital stock or other equity interests, or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares of its capital stock or other equity interests, or any rights, warrants, options, calls, commitments or any other agreements of any character to purchase or acquire any shares of its capital stock or other equity interests or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for, any shares of its capital stock or other equity interests; provided , however , that the Company may issue shares of Company Common Stock upon the conversion of outstanding shares of Company Preferred Stock or the exercise of Company Options or Company Warrants that are outstanding on the Agreement Date and in accordance with the terms thereof;
5.1.2      except as otherwise required under a written agreement in existence on the date hereof, amend (including by reducing an exercise price or extending a term) or waive any of its rights under, or accelerate the vesting under, any provision of the Company Option Plan or any agreement evidencing any outstanding stock option, warrant or other right to acquire capital stock of the Company or any restricted stock purchase agreement or any similar or related contract;
5.1.3      redeem, purchase or otherwise acquire or cancel any of its outstanding shares of capital stock or equity interests, or any rights, warrants, options, calls, commitments or any other agreements of any character to acquire any shares of its capital stock or equity interests;
5.1.4      declare, set aside funds for the payment of or pay any dividend on, or make any other distribution (whether in cash, stock or property) in respect of, any shares of its capital stock or other equity interests or make any payments to the Stockholders in their capacity as such;
5.1.5      split, combine, subdivide, reclassify or take any similar action with respect to any shares of the Company’s capital stock;
5.1.6      form any Subsidiary;
5.1.7      incur, guarantee, issue, sell, repurchase, prepay or assume any (a) Company Debt, or issue or sell any options, warrants, calls or other rights to acquire any debt securities of the Company; (b) obligations of the Company issued or assumed as the deferred purchase price of property (but excluding trade accounts payable arising in the Ordinary Course of Business); (c)

70

conditional sale obligations of the Company; (d) obligations of the Company under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities arising in the Ordinary Course of Business); (e) obligations of the Company for the reimbursement of any obligor on any letter of credit; or (f) obligations of the type referred to in clauses (a) through (e) of other Persons for the payment of which the Company is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations;
5.1.8      sell, transfer, lease, license, mortgage, encumber or otherwise dispose of or subject to any Lien other than a Permitted Lien (including pursuant to a sale-leaseback transaction or an asset securitization transaction), any of its properties or assets;
5.1.9      make any capital expenditure involving in excess of $50,000;
5.1.10      acquire or agree to acquire in any manner (whether by merger or consolidation, the purchase of an equity interest in or a material portion of the assets of or otherwise) any business or any corporation, partnership, association or other business organization or division thereof other than the acquisition of inventory and equipment in the Ordinary Course of Business;
5.1.11      make any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or loan or advance funds to any Person (other than travel and similar advances to its Employees in the Ordinary Course of Business in an aggregate amount at any one time of not more than $5,000);
5.1.12      with respect to Contracts, (a) enter into, adopt, terminate, modify, renew or amend (including by accelerating material rights or benefits under) any Material Contract (or any Contract that would constitute a Material Contract if in effect on the Agreement Date), (b) enter into or extend the term or scope of any Contract that purports to restrict the Company, or any current or future Subsidiary of the Company, from engaging in any line of business or in any geographic area, (c) enter into any Contract that could be breached by, or require the consent of any third party in order to continue in full force following consummation of the Transactions (including the Merger), or (d) release any Person from, or modify or waive any material provision of, any confidentiality or non-disclosure agreement;
5.1.13      (a) hire or terminate any employees, (b) increase the annual level of compensation payable or to become payable by the Company to any of its directors or Current Employees, (c) grant any bonus, benefit or other direct or indirect compensation to any director, Current Employee or Current Consultant other than in the Ordinary Course of Business, (d) increase the coverage or benefits available under or otherwise modify or amend or terminate any (or create any new) Company Plan, except as required by applicable Law or by the terms of any Company Plan, (e) enter into any employment, deferred compensation, severance, consulting, non-competition or similar agreement to which the Company is a party (or amend any such agreement in any material

71

respect) or enter into any agreement involving a Current Employee or Current Consultant, except, in each case, as required by applicable Law from time to time in effect or by the terms of any Company Plan or (f) enter into any Related Party Transaction;
5.1.14      make, change or revoke any material election concerning Taxes or Tax Returns, file any amended Tax Return or any Tax Return inconsistent with past practice, enter into any closing agreement or Contract with any Taxing Authority with respect to Taxes, settle any Tax claim or assessment (other than by paying Taxes in the Ordinary Course of Business), surrender any right to claim a refund of Taxes, request any Tax ruling or agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of Taxes;
5.1.15      make any changes in financial or Tax accounting methods, principles or practices (or change an annual accounting period), except as required by applicable Law or GAAP;
5.1.16      amend the Company Charter Documents;
5.1.17      adopt a plan or agreement for or carry out any complete or partial liquidation, dissolution, restructuring, recapitalization, merger, consolidation or other reorganization other than as required by the provisions of the Transaction Agreements;
5.1.18      pay, repurchase, prepay, discharge, settle or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) in excess of $25,000 in any one instance or $50,000 in the aggregate, other than the payment, discharge, settlement or satisfaction in accordance with the terms of the Liabilities reflected in the Balance Sheet;
5.1.19      initiate, settle, agree to settle, waive or compromise any Action;
5.1.20      accelerate, beyond the normal collection cycle, collection of accounts receivable or delay beyond normal payment terms payment of any accounts payable;
5.1.21      accelerate or defer the construction of any Premises;
5.1.22      accelerate or defer the purchase of fixtures, equipment, leasehold improvements, or other capital expenditures;
5.1.23      grant or agree to grant any license to any of the Company’s Intellectual Property Rights;
5.1.24      hire, appoint or, except as required by the terms of this Agreement, terminate, any director or officer of the Company (other than a termination for cause);

72

5.1.25      enter into any lease (either as lessor or lessee) or other form of use or occupancy agreement for the use or occupancy of any real property or amend, in any respect, or terminate any of the Real Property Leases; or
5.1.26      agree to take any of the foregoing actions.
Nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, rights to control any operations of the Company prior to the Effective Time.
Section 5.2      Stockholder and other Holder Approvals . As promptly as practicable after the execution of this Agreement, the Company shall, in accordance with its Charter Documents and applicable Law, provide to its Stockholders an Information Statement and other appropriate documents in connection with the obtaining of written consents of the Stockholders in favor of the adoption of this Agreement and the transactions and arrangements contemplated by this Agreement (including the Merger, the Preferred Stock Conversion and the issuances contemplated by the Parent RSU Award Agreements). The Information Statement shall include the unanimous recommendation of the board of directors of the Company in favor of the adoption of this Agreement and the transactions contemplated by this Agreement (including the Merger, the Preferred Stock Conversion and the issuances contemplated by the Parent RSU Award Agreements). Notwithstanding anything to the contrary contained in this Agreement, the Information Statement and any other materials submitted to the Stockholders in connection with the transactions contemplated by this Agreement shall be subject to prior review and reasonable approval by Parent. The Company shall use its commercially reasonable efforts to obtain Written Consent and Joinder Agreements from all (100%) of the Stockholders. Concurrently with the other actions contemplated by this Section 5.2 , the Company shall provide the remaining Holders with information substantially identical to that contained in the Information Statement and any other documents provided to the Stockholders hereunder, and shall use its commercially reasonable efforts to obtain Written Consent and Joinder Agreements from all (100%) of such Holders.

73

Section 5.3      Commercially Reasonable Efforts .
5.3.1      Actions Required to Consummate Transactions . Subject to the terms and conditions of this Agreement, from the Agreement Date until the Closing Date or the earlier termination of this Agreement pursuant to ARTICLE VII (Termination), each of the Parties shall use (and shall cause its Affiliates to use) commercially reasonable efforts to promptly (a) take, or cause to be taken, all actions and do, or cause to be done, all things, necessary, proper or advisable to cause the conditions to closing of the other Parties hereunder to be satisfied and to consummate and make effective the Transactions (including the Merger and the Preferred Stock Conversion), in each case, as expeditiously as practicable, and (b) obtain all approvals, consents, registrations, Permits, authorizations and other confirmations from any Governmental Authority or third party necessary, proper or advisable to consummate the Transactions (including the Merger and the Preferred Stock Conversion).
5.3.2      Governmental Authorities . Each of the Parties shall use its commercially reasonable efforts to (a) cooperate with each other in connection with any investigation or other inquiry by or before a Governmental Authority relating to the Transactions (including the Merger and the Preferred Stock Conversion), including any proceeding initiated by a private party and (b) keep the other Parties informed in all material respects and on a reasonably timely basis of any material communication received by such Party from, or given by such Party to, any Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the Transactions. In furtherance and not in limitation of the covenants of the Parties contained in this Section 5.3 , each of the Parties shall use its commercially reasonable efforts to resolve such objections, if any, as may be asserted by a Governmental Authority or other Person with respect to the Transactions (including the Merger and the Preferred Stock Conversion).
Section 5.4      Public Announcements . Unless otherwise required by (a) applicable Law, (b) stock exchange requirements, or (c) any disclosure made in connection with the enforcement of any right or remedy relating to this Agreement or the transactions contemplated hereunder or any dispute resolution proceeding hereunder, no Party to this Agreement other than Parent shall at any time make any public announcement or disclosure in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Parties (which consent shall not be unreasonably withheld or delayed).
Section 5.5      Access to Information .
5.5.1      Access . Subject to the requirements of applicable Law, the Company shall afford to Parent and Parent’s Representatives, from time to time prior to the earlier of (a) the Effective

74

Time or (b) the termination of the Agreement pursuant to Section 7.1 , access during normal business hours upon reasonable advance notice to (i) all of the Company’s Premises, books, reports, Contracts, assets, filings with and applications to Governmental Authorities, records and correspondence (in each case, whether in physical or electronic form) and (ii) to the Representatives of the Company as Parent may reasonably request and the Company shall furnish promptly to Parent all information and documents concerning its business, financial condition and operations, properties and personnel related to the consummation of the Merger or the ownership or operation of the Company’s business as Parent may reasonably request and Parent shall be allowed to make copies of such information and documents.
5.5.2      Updated Financials . Promptly, but in no event later than ten (10) calendar days after the end of each month from the Agreement Date until the Closing Date, the Company shall provide Parent with a copy of the true and correct unaudited balance sheets and related statements of income and cash flows of the Company as of and for the period ended the most-recent month-end prepared using the Company’s books and records and in accordance with GAAP consistently applied, together with a copy of the standard monthly reporting package provided to the Company’s management.
Section 5.6      Confidentiality.  Holders’ Representative, on behalf of the Holders, acknowledges that the success of the Surviving Corporation after the Closing Date depends upon the preservation of the confidentiality of the Confidential Information (as hereinafter defined), that the preservation of the confidentiality of the Confidential Information is an essential premise of the bargain between the Parties and Parent and Merger Sub would be unwilling to enter into this Agreement in the absence of this Section 5.6 . Accordingly, Holders’ Representative, on behalf of all Holders, shall, and shall use its commercially reasonable efforts to cause its Affiliates and their respective Representatives to, keep confidential all documents and information involving or relating to the Company or its business that are confidential or proprietary in nature (the “ Confidential Information ”), unless (a) compelled to disclose such Confidential Information by Law so long as, to the extent permitted by Law, reasonable prior notice of such disclosure is given to Parent and the Company and a reasonable opportunity is afforded Parent and the Company to contest the same, (b) disclosed in an Action brought by a Party in pursuit of its rights or in the exercise of its remedies hereunder, or (c) disclosed to any Governmental Authority or other involved party (e.g., opposing counsel, expert witnesses, investigators) in connection with defending against claims by Parent against the Holders or the Holders’ Representative . The provisions of this Section 5.6 shall survive the Closing Date indefinitely.
Section 5.7      Notification of Certain Matters . The Company shall provide prompt written notice to Parent and Parent shall provide prompt written notice to the Company upon becoming aware (a) that any representation or warranty made by such Party in this Agreement was untrue when made or subsequently has become untrue such that the condition in Section 6.1.1 or

75

Section 6.2.1 (as applicable) would not be satisfied, (b) of any failure by such Party to comply with or satisfy any of its covenants or agreements hereunder such that the condition in Section 6.1.2 or Section 6.2.2 (as applicable) would not be satisfied, (c) of the occurrence or nonoccurrence of any event that could reasonably be expected to cause any condition precedent to any obligation of any other Party to consummate the Transactions (including the Merger and the Preferred Stock Conversion) not to be satisfied at or prior to the Closing Date, (d) of any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Transactions (including the Merger and the Preferred Stock Conversion), to the extent such consent is not already contemplated by this Agreement or the Schedules hereto, (e) of any notice or other communication from any Governmental Authority in connection with the Transactions (including the Merger and the Preferred Stock Conversion), or (f) of the commencement or known threat of commencement of any Action regarding the Transactions (including the Merger and the Preferred Stock Conversion) or otherwise relating to such Party; provided , however , that neither the delivery of any notice pursuant to this Section 5.7 nor obtaining any information or knowledge in any investigation pursuant to Section 5.5 or otherwise shall (i) cure any breach of, or non-compliance with, any representation or warranty requiring disclosure of such matter, or any breach of any other provision of this Agreement, (ii) amend or supplement any scheduled disclosure made by the Company in ARTICLE III or (iii) limit the remedies available to the Party receiving, or entitled to receive, such notice, including remedies pursuant to ARTICLE II (Merger), ARTICLE VI (Conditions Precedent), ARTICLE VII (Termination), ARTICLE VIII (Indemnification) or ARTICLE IX (Misc.).
Section 5.8      Tax Matters.
5.8.1      Company-Prepared Tax Returns . The Company shall, at the Company’s expense, prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company for all taxable periods ending on or before the Closing Date and which are due on or before the Closing Date, and the Company shall pay or cause to be paid all Taxes shown as due on such Tax Returns. All such Tax Returns shall be prepared in accordance with the past practices of the Company, to the extent permitted by applicable Law. Not less than fifteen (15) Business Days prior to the due date (after applicable extensions) of any such Tax Return, the Company shall submit such Tax Return for Parent’s review and comment. The Company shall consider in good faith any changes to such Tax Returns that are reasonably requested by Parent, and Parent and the Surviving Corporation shall reasonably assist in causing such Tax Returns to be timely filed, as necessary.
5.8.2      Parent-Prepared Tax Returns .
(a)      Parent shall prepare or cause to be prepared and file or cause to be filed all Tax Returns of the Company (i) for taxable periods that end after the Closing Date, including all Tax Returns for all complete taxable periods including but not ending on the Closing Date

76

(collectively, the “ Straddle Periods ”), and (ii) for taxable periods ending on or before the Closing Date and which are due after the Closing Date. Parent shall cause the Surviving Corporation to pay all Taxes shown as due on such Tax Returns. Parent shall permit Holders’ Representative a reasonable period of time, but not less than fifteen (15) Business Days, to review and comment, prior to filing, on each Tax Return for a Straddle Period or that is described in clause (ii) of the first sentence of this Section 5.8.2(a) . Parent and the Surviving Corporation shall consider in good faith any changes to such Tax Returns that are reasonably requested by Holders’ Representative with respect to Taxes for which the Holders would bear liability pursuant to this Agreement. The Holders shall reimburse Parent in accordance with the provisions of ARTICLE XIII for any Pre-Closing Taxes due with respect to such Tax Returns, including as determined pursuant to Section 5.8.2(b) .
(b)      In the case of any Straddle Period, the amount of Taxes allocable to the portion of the Straddle Period ending on the Closing Date shall be determined as follows: (i) in the case of Taxes imposed on a periodic basis (such as real or personal property Taxes), the product of the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) multiplied by a fraction, the numerator of which is the number of calendar days in the Straddle Period ending on and including the Closing Date and the denominator of which is the number of calendar days in the entire relevant Straddle Period; and (ii) in the case of Taxes not described in clause (i) above (such as franchise Taxes, Taxes that are based upon or related to income or receipts, based upon occupancy or imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible)), the amount of any such Taxes shall be determined as if such taxable period ended as of the close of business on the Closing Date, except that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions), other than with respect to property placed in service after the Closing, shall be allocated on a per diem basis.
5.8.3      Tax Contests .
(a)      After the Closing, each of Parent, on the one hand, and Holders’ Representative, on the other hand, shall promptly notify the other Party in writing upon receipt from a Taxing Authority of any written notice of any pending or threatened audit, examination, claim, dispute or controversy relating to Taxes (a “ Tax Claim ”) with respect to the Company for a Pre-Closing Tax Period or any Losses for which such other Party (or any of its Affiliates) could be liable pursuant to this Agreement; provided , however , the failure to give such notice shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party has been materially prejudiced as a result of such failure.
(b)      With respect to any Tax Claim relating to Taxes or Tax Returns within the scope of Section 5.8.1 , the Holders shall, through Holders’ Representative, solely at the Holders’

77

own cost and expense, control all proceedings in connection with such Tax Claim (including selection of counsel); provided , however , Holders’ Representative (on behalf of the Holders) (i) shall keep Parent fully informed regarding such Tax Claim, (ii) shall allow Parent and its counsel (at Parent’s expense) to participate in (but not control the conduct of) the defense of such Tax Claim and (iii) shall not settle, compromise or otherwise resolve such Tax Claim without the written consent of Parent, which consent shall not be unreasonably withheld, conditioned or delayed.
(c)      With respect to any Tax Claim relating to Taxes or Tax Returns within the scope of Section 5.8.2(a) , Parent shall, solely at Parent’s own cost and expense, control all proceedings in connection with such Tax Claim (including selection of counsel); provided , however , that to the extent that any such Tax Claim (i) could reasonably be expected to result in the Holders being liable for any additional Taxes hereunder, or (ii) concerns the qualification of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code, (x) Parent shall keep Holders’ Representative fully informed regarding such Tax Claim, (y) Holders’ Representative and its counsel (at the Holders’ expense) may participate in (but not control the conduct of) the defense of such Tax Claim, and (z) Parent shall not settle, compromise or otherwise resolve such Tax Claim without the written consent of Holders’ Representative, which consent shall not be unreasonably withheld, conditioned or delayed.
(d)      Any dispute, controversy or claim between Parent and Holders’ Representative with respect to the defense of any Tax Claim, as described in this Section 5.8.3 , shall be resolved pursuant to Section 5.8.9 .
5.8.4      Certification . Parent and Holders’ Representative agree, upon request from the other Party, to use their commercially reasonable efforts to obtain any certificate or other document from any Taxing Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the contemplated Transactions (including the Merger and the Preferred Stock Conversion)).
5.8.5      Tax Sharing Agreements.  The Company shall terminate all Tax allocation agreements or Tax sharing agreements with respect to the Company as of the Closing Date and shall ensure that such agreements are of no further force or effect on and after the Closing Date and that there shall be no further liabilities or obligations imposed on any of the Company under any such agreements.
5.8.6      Cooperation . Following the Closing Date, Parent, the Surviving Corporation and Holders’ Representative shall, as reasonably requested by any Party: (a) assist any other Party in preparing and filing any Tax Returns relating to the Company that such other Party is responsible for preparing and filing; (b) cooperate in preparing for any Tax audit of, or dispute with any Taxing Authority regarding and any judicial or administrative proceeding relating to,

78

liability for Taxes, in the preparation or conduct of litigation or investigation of claims and in connection with the preparation of financial statements or other documents to be filed with any Taxing Authority, in each case with respect to the Company; (c) make available to the other Parties and to any Taxing Authority as reasonably requested all information, records and documents relating to Taxes relating to the Company (at the cost and expense of the requesting Party); (d) provide timely notice to the other Parties in writing of any pending or threatened Tax audits or assessments relating to the Company for taxable periods for which any such other Party is responsible; and (e) furnish the other Parties with copies of all correspondence received from any Taxing Authority in connection with any Tax audit or information request with respect to any taxable periods (or portion thereof) for which any such other Party is responsible. For the avoidance of doubt, the cooperation noted in this Section 5.8.6 shall include signing any Tax Returns, amended Tax Returns, claims or other documents with respect to any audit, litigation or other proceedings with respect to Taxes, the retention and (upon the other Party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.
5.8.7      Amended Tax Returns . Parent shall not cause or permit the Surviving Corporation or any Affiliate of Parent to amend any Tax Return of or with respect to the Company that relates to Taxes that are subject to indemnification by the Holders hereunder without the prior written consent of Holders’ Representative (which consent shall not be unreasonably withheld, conditioned or delayed); provided , however , that no such consent shall be required for an amendment of any Tax Return to be consistent with applicable Tax Law.
5.8.8      Transfer Taxes . The Holders shall be solely liable for any real property transfer or gains Tax, stamp Tax, stock transfer Tax, or other similar Tax imposed as a result of or in connection with the Merger (collectively, the “ Transfer Taxes ”), and any penalties or interest with respect to the Transfer Taxes. The Parties shall cooperate in filing all necessary Tax Returns and other documentation with respect to the Transfer Taxes.
5.8.9      Dispute Resolution for Taxes . With respect to any dispute, controversy or claim relating to Taxes between Parent and the Holders or the Company (prior to the Closing), or between Parent and the Holders (for any Tax for which an indemnity claim may exist under this Agreement), Parent and the Holders or the Company, as applicable, shall cooperate in good faith to resolve such dispute, controversy or claim between them for a period of thirty (30) days from the date written notice of such dispute, controversy or claim is received by Parent or Holders’ Representative, as the case may be; but if the applicable parties are unable to resolve such dispute, controversy or claim, the parties shall submit the dispute, controversy or claim for resolution, which resolution shall be final, conclusive and binding on the parties, to a mutually agreed upon national accounting firm or a mutually agreed upon tax lawyer who is a partner in a law firm, that, in each

79

case, is: (a) familiar with transactions or operations of the sort at issue; and (b) independent with respect to each Party. Notwithstanding anything in this Agreement to the contrary, the fees and expenses of the mutually agreed upon firm or person, as described in the preceding sentence, relating to any dispute as to the amount of Taxes owed shall be paid by Parent, on the one hand, and the Holders, on the other hand, in proportion to each Party’s respective liability for the portion of Taxes in dispute, as determined by such mutually agreed upon firm or person.
5.8.10      Reorganization . The Parties adopt this Agreement as a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3. It is intended by the Parties hereto that the Merger shall constitute a “reorganization” within the meaning of Section 368(a) of the Code, and each Party to this Agreement will take all commercially reasonable action to cause the Merger to so qualify and shall not take any action or position before a Governmental Authority which is inconsistent with the intent to treat the Merger as a “reorganization” within the meaning of Section 368(a), unless otherwise required by a determination (within the meaning of Section 1313(a)(1) of the Code or any comparable provision of state or local Law). Further, each Party hereto shall cause all Tax Returns to be filed on the basis of treating the Merger as a “reorganization” within the meaning of Section 368(a) of the Code unless otherwise required by a determination (within the meaning of Section 1313(a)(1) of the Code or any comparable provision of state or local Law).
Section 5.9      Employment Related Agreements.  As promptly as practicable after the execution of this Agreement, the Company shall use commercially reasonable efforts to cause each Current Employee identified on Exhibit E hereto (the “ Continuing Employees ”) to execute and deliver to Parent an employment and non-competition agreement or offer letter substantially in the form(s) attached hereto as Exhibit F , which agreement shall become binding and effective as of the Closing Date (collectively, the “ Employment and Non-Competition Agreements ”).
Section 5.10      Officers and Directors Insurance and Indemnification . Prior to the Closing Date, the Company shall obtain a prepaid extended reporting period or tail policy insuring the current and former officers or directors of the Company (the “ D&O Indemnified Persons ”) under the current program of directors’ and officers’ liability insurance maintained by the Company which shall be effective commencing with the Closing Date and ending six (6) years thereafter and which shall afford coverage for actual or alleged acts or omissions occurring at, during or prior to the Closing Date including with respect to the Transactions (including the Merger) (the “ D&O Tail Insurance ”). The Company shall bear the cost of such insurance coverage and such costs which, to the extent not paid prior to the Closing Date, shall be included in the determination of the Company Transaction and Bonus Expenses and paid by Parent pursuant to 2.9.2 . Parent will cause the Surviving Corporation to use commercially reasonable efforts to enforce the D&O Tail Insurance upon request of the D&O Indemnified Persons and will not allow the Surviving Corporation to cancel the D&O Tail Insurance during its term. In addition, for a period of six (6) years following

80

the Closing Date, Parent and the Surviving Corporation agree to indemnify and hold harmless, reimburse, exculpate from liability, and advance expenses to all D&O Indemnified Persons to the same extent and on the same terms as such persons are entitled to indemnification, reimbursement, exculpation or expense advancement by Company as of the Agreement Date, whether pursuant to applicable documents (including the certificate of incorporation or bylaws), individual indemnification agreements, by Law or otherwise, for acts or omissions or matters which occurred or arose at or prior to the Closing (regardless of whether any proceeding relating to any D&O Indemnified Person’s rights to indemnification, exculpation, or expense advancement with respect to any such matters, acts, or omissions is commenced before or after the Closing); provided that no D&O Indemnified Person may seek indemnification, reimbursement, exculpation, or advancement of expenses from Parent or the Surviving Corporation for amounts such D&O Indemnified Person owes or may owe to any Parent Indemnified Person under the provisions set forth in ARTICLE VIII. Any claims for indemnification made under this Section 5.10 on or prior to the sixth (6 th ) anniversary of the Closing Date shall survive until the final resolution thereof. The Surviving Corporation shall, and Parent shall cause the Surviving Corporation or its successors to, pay all costs and expenses (including reasonable attorneys’ fees) incurred by any D&O Indemnified Person (or his or her heirs, personal representatives, successors, or assigns) in any legal action brought by such person that is successful to enforce the obligations of Parent, the Surviving Corporation, or its successors under this Section 5.10 . The obligations of Parent, the Surviving Corporation, and its successors under this Section 5.10 shall not be terminated, amended, or otherwise modified in such a manner as to adversely affect any D&O Indemnified Person (or his or her heirs, personal representatives, successors, or assigns) without the prior written consent of such D&O Indemnified Person (or his or her heirs, personal representatives, successors, or assigns, as applicable).
Section 5.11      Employee Matters and Company Plans .
5.11.1      Continuing Employees . Nothing in this Agreement shall give rise to any obligation by Parent to retain any Current Employee, any group of Current Employees of the Company or any Company Plan following the Closing Date. Continuing Employees who become eligible to participate in any welfare benefit plan or pension plan (intended to qualify under Section 401(a) of the Code) of Parent (each a “ Parent Plan ”) shall receive credit for purposes of eligibility and vesting for years of service with the Company prior to the Effective Time to the extent that such service was recognized under the corresponding Company Plan prior to the Effective Time; provided that such service shall not be recognized if and to the extent that it would result in the duplication of benefits or is not possible or practical under a Parent Plan. For clarity, service credit shall not be given for benefit accrual, early retirement subsidies or entitlement purposes under any Parent Plan and shall not be given for any purpose under any Parent plans or programs other than welfare benefit plans or pension plans, including any equity plans, but excluding any personal time off plans and vacation programs.

81

5.11.2      Company Plans . The Company shall cease contributions to and terminate all of the Company Plans effective immediately prior to Closing. Any such cessation or termination shall be undertaken (a) in accordance with the governing documents and Contracts for the Company Plans (including through plan amendment) and (b) in conformance with applicable Laws.
5.11.3      No Third-Party Beneficiaries . This Section 5.11 is not intended to amend any benefit plans or arrangements of Parent or any of its Subsidiaries, to limit the ability of Parent or any of its Subsidiaries to amend, modify or terminate any of such benefit plans or arrangements or to confer third-party beneficiary rights on any Person who is not a Party to this Agreement.
Section 5.12      No Negotiations, Etc . The Company shall not and shall cause the Holders and their respective Representatives not to, directly or indirectly solicit, initiate, or enter into any discussions or negotiations or continue in any way any discussions or negotiations with any Person or group of Persons regarding any Competing Transaction. The Company shall promptly but not later than forty-eight (48) hours following the occurrence of the relevant event notify Parent orally and in writing if any inquiries, proposals, or requests for information concerning a Competing Transaction are received by the Company, the Holders or any of their respective Representatives. The written notice shall include the identity of the Person making such inquiry, proposal, or request and the terms and conditions thereof as well as a copy of such inquiry proposal or request. For purposes of this Agreement, “ Competing Transaction ” means a transaction or a series of related transactions (other than the Transactions, including the Merger) involving (a) any sale of stock or other equity interests in the Company (provided the Company may issue shares of Company Common Stock upon the conversion of outstanding shares of Company Preferred Stock or the exercise of Company Options or Company Warrants that are outstanding on the Agreement Date and in accordance with the terms thereof), (b) a merger, consolidation, share exchange, business combination, or other similar transaction involving the Company, (c) any sale, lease, exchange, license (other than in the Ordinary Course of Business), mortgage, pledge, transfer, or other disposition of the assets of the Company (other than disposition of inventory in the Ordinary Course of Business), or (d) any other transaction or series of transactions which could reasonably preclude the consummation of the Transactions (including the Merger).
Section 5.13      Termination of the Company Option Plan and Investor Rights Arrangements . The Company shall take (or cause to be taken) all actions necessary or appropriate to terminate, effective as of the Effective Time, (a) the Company Option Plan (as well as all Company Options) and (b) the following investor rights arrangements with respect to shares of Company Capital Stock: Amended and Restated Registration Rights Agreement by and among the Company and certain of the Company’s investors, dated as of January 31, 2019; the Amended and Restated Stockholders Agreement by and among the Company and certain of the Company’s investors, dated as of January 31, 2019; and the Side Letter Agreement by and among Casdin Partners Master Fund

82

L.P., Casdin Venture Opportunities Fund, L.P., Eli Casdin, Hywel Jones, and the Company, dated as of January 31, 2019 (the “ Company Investor Rights Arrangements ”).
Section 5.14      Registration of Stock Consideration Shares . Parent agrees to register the Stock Consideration Shares for public resale on a Form S-3ASR pursuant to the registration rights agreement substantially in the form attached hereto as Exhibit G (the “Registration Rights Agreement”). Notwithstanding anything herein to the contrary, following registration of the Stock Consideration Shares, each Consenting Holder, by virtue of approving the Merger and the execution of a Written Consent and Joinder Agreement, shall agree not to sell any shares of Parent Common Stock issued to such Consenting Holder, if the sale of such shares would, when combined with the sale of any other shares of Parent Common Stock by such Holder in any one (1)-day period, exceed five percent (5%) of the average daily trading volume of Parent Common Stock on the New York Stock Exchange over the five (5) trading days preceding such date of sale; provided , however , that if the aggregate number of Stock Consideration Shares represents less than fifty percent (50%) of the average daily trading volume of Parent Common Stock on the New York Stock Exchange over the five (5) trading days preceding the Closing, such resale volume limitations shall not apply. Any waiver or release of the restrictions in this Section 5.14 granted to a particular Consenting Holder will be made available to all other Consenting Holders on a proportionate basis.
Section 5.15      Amendment or Termination of AKESOgen Agreement . Prior to the Effective Time, the Company shall take (or cause to be taken) all actions necessary or appropriate to, at the Company’s election, either (a) amend, effective as of the Effective Time, that certain Master Services Agreement, dated as of June 8, 2015, by and between the Company and AKESOgen, Inc., such that, following the Effective Time, such Contract will be terminable at will and without prior notice or any termination-related payment by the Company or (b) terminate such Contract in full prior to the Effective Time.
ARTICLE VI:      CONDITIONS TO CLOSING
Section 6.1      Conditions to Obligations of Parent and Merger Sub . The obligations of Parent and Merger Sub to effect the Transactions (including the Merger) are subject to the satisfaction (or waiver by Parent) at or prior to the Closing of the following conditions:
6.1.1      Representations and Warranties . The representations and warranties of the Company contained in ARTICLE III of this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on the Closing Date, except for those representations and warranties (a) qualified by “materiality” or “Company Material Adverse Effect” (which representations and warranties were true and correct in all respects) or (b) which address matters only as of a particular date (which representations were so true and correct as of such particular date).

83

6.1.2      Performance of Obligations of Company . The Company shall have performed in all material respects the covenants, agreements and obligations required to be performed by it under this Agreement at or prior to the Closing; provided that, with respect to any such covenants, agreements or obligations which are subject to materiality, Material Adverse Effect, substantial compliance or similar materiality qualifications, the Company shall have performed such covenants, agreements and obligations in all respects.
6.1.3      No Litigation . No Action shall have been instituted, commenced or threatened and no Action shall remain pending that seeks to or could reasonably be expected to (a) restrain, prevent, enjoin, prohibit or make illegal the Transactions (including the Merger), or (b) cause any of the Transactions (including the Merger) to be rescinded following the Closing Date.
6.1.4      Employment and Non-Competition Agreements . The Employment and Non-Competition Agreements described in Section 5.9 shall have been executed and delivered to Parent at least two (2) Business Days prior to the Closing Date and no such Employment and Non-Competition Agreement shall have been amended, terminated, cancelled or repudiated.
6.1.5      Resignation of Officers and Directors . Parent shall have received resignations, in form and substance reasonably satisfactory to Parent, effective as of the Effective Time, from each officer and director of the Company, other than those continuing officers and directors specified to the Company by Parent in writing at least two (2) Business Days prior to the Closing Date.
6.1.6      Delivery of Closing Certificates . Parent shall have received:
(a)      Secretary’s Certificate . A certificate dated as of the Closing Date, signed by the Secretary of the Company, certifying on behalf of the Company (i) the continued effectiveness of the Company Charter Documents, (ii) the names and incumbency of each of the officers of the Company executing this Agreement and each of the other Transaction Agreements, (iii) the valid adoption of resolutions of the board of directors of the Company approving this Agreement and the consummation of the Transactions (including the Merger and the Preferred Stock Conversion) and (iv) that the Holders have adopted and approved this Agreement and the transactions and arrangements contemplated by this Agreement (including the Merger, the Preferred Stock Conversion and the issuances contemplated by the Parent RSU Award Agreements (the aggregate amount thereof and the portion thereof allocated to the Chief Executive Officer of the Company));
(b)      Closing Certificate . A certificate dated as of the Closing Date, signed by the Chief Executive Officer or the Chief Financial Officer of the Company certifying on behalf of the Company that the conditions precedent set forth in Section 6.1.1 , Section 6.1.2 , Section 6.1.3 , Section 6.1.7 , Section 6.1.8 , Section 6.1.9 , Section 6.1.10 , Section 6.1.11 , Section 6.1.12 , and Section 6.1.14 have been met;

84

(c)      Certificates from Officers and Directors . Without limiting the other provisions of this Agreement, a certificate dated as of the Closing Date, executed by each officer and director of the Company, w hereby each such officer and director is deemed to have made the statements and omissions of the Company in ARTICLE III of this Agreement for purposes of Sections 8.2.1(a)(iv) and 8.2.2(h) .
(d)      Allocation Schedule Certificate . A certificate dated as of the Closing Date, signed by the Chief Executive Officer or the Chief Financial Officer of the Company certifying on behalf of the Company that the Allocation Schedule is true and correct in all respects;
(e)      Good Standing Certificates . Certificates of good standing with respect to the Company issued by the Company’s jurisdiction of organization and the jurisdiction of the Company’s principal place of business, dated not more than five (5) Business Days prior to the Closing Date;
(f)      FIRPTA Certificate . A certificate dated as of the Closing Date, signed by the Chief Executive Officer or Chief Financial Officer of the Company conforming to the requirements of Treasury Regulations Sections 1.897-2(h) and 1.1445-2(c)(3); and
(g)      Certificate of Merger . The Certificate of Merger, duly executed by the Company.
6.1.7      Release of Liens . Parent shall have received payoff letters, in form and substance reasonably satisfactory to Parent, from each lender to the Company evidencing the aggregate amount of Company Debt outstanding and owing to such lender as of the Closing Date and an agreement that, if such aggregate amount is paid to such lender on the Closing Date, such indebtedness shall be repaid in full and that all related Liens shall be released forthwith. In addition, Parent shall have received evidence, in a form satisfactory to Parent, that any outstanding Liens of the Company (other than Permitted Liens), any related UCC filings (other than those related to Permitted Liens) and any related filings with the USPTO Assignment Division have been terminated.
6.1.8      Transaction Expenses . Parent shall have received written statements from the Company’s outside legal counsel and any financial advisor, accountant or other Person who provided services to the Company (other than Employees who provided such services only in their capacities as such), or who is otherwise entitled to any compensation from the Company, in connection with services provided with respect to this Agreement or any of the Transactions, setting forth the total amount of unpaid Company Transaction and Bonus Expenses that remain payable to such Person with respect to services rendered through the Closing Date.
6.1.9      No Material Adverse Effect . Since the Interim Balance Sheet Date, no Company Material Adverse Effect shall have occurred that is continuing.

85

6.1.10      280G Stockholder Approval or Disapproval . With respect to any Employee who may be considered a “disqualified individual” under Section 280G of the Code and who is eligible to receive payments and/or benefits that may constitute “excess parachute payments” under Section 280G of the Code (including the Parent RSU Award Agreements for Continuing Employees), the Company shall have submitted such parachute payments to the Stockholders for approval and the Stockholders shall have (a) approved, pursuant to the method provided for in the regulations promulgated under Section 280G of the Code, any such “excess parachute payments” or (b) shall have voted upon and disapproved such “excess parachute payments,” and, as a consequence, such “excess parachute payments” shall not be paid or provided for in accordance with applicable Law.
6.1.11      No Injunctions or Restraints . No Order shall be in effect (a) enjoining, restraining, preventing or prohibiting consummation of the Transactions (including the Merger), (b) causing any of the Transactions (including the Merger) to be rescinded following the Closing Date, (c) imposing limitations on the ability of the Surviving Corporation to effectively conduct its business following the Closing Date or (d) compelling Parent or the Company to dispose of any portion of the Company’s business or assets.
6.1.12      Governmental Consents . All filings with and consents of any Governmental Authority required to be made or obtained in connection with the Merger and the other transactions contemplated by this Agreement shall have been made or obtained and shall be in full force and effect and any waiting period under any applicable antitrust or competition law, regulation or other Law shall have expired or been terminated.
6.1.13      Exchange Agreement . The Exchange Agreement shall have been executed and delivered by the Exchange Agent to Parent at or prior to the Effective Time and shall not have been amended, terminated, cancelled or repudiated.
6.1.14      Stockholder Approval; Written Consent and Joinder Agreements . The adoption of this Agreement shall have been duly approved by the Requisite Stockholder Approval, and the Company shall have delivered to Parent Written Consent and Joinder Agreements duly executed by the Holders of at least 97.5% of the Company Capital Stock and 73.9% of the in-the-money Company Options and Company Warrants.
6.1.15      No Company Options, Warrants, Investor Rights Arrangements or Plans . The Company shall have provided Parent with evidence reasonably satisfactory to Parent as to the termination of (a) the Company Option Plan, (b) all outstanding Company Options, (c) all outstanding Company Warrants, (d) all Company Investor Rights Arrangements and (e) all Company Plans.
6.1.16      Credit Facility Waiver or Consent . Parent shall have received any consent, amendment or waiver required pursuant to the terms of that certain Note Purchase Agreement dated

86

as of November 6, 2018 between Oberland Capital Management and Parent (as it may be amended and/or restated from time to time) such that none of the Transactions (including the Merger) shall cause or represent a breach of event of default thereunder.
6.1.17      R&W Insurance Policy . The R&W Insurance Policy shall be in full force and effect, including for the period between the date hereof and the Closing, in accordance with its terms.
6.1.18      RSUs and Form S-8 . Subject in each instance to the condition set forth in Section 6.1.10 regarding approval of the Parent RSU Award Agreements (pursuant to the method provided for in the regulations promulgated under Section 280G of the Code), Parent shall have received duly executed Parent RSU Award Agreements from each Continuing Employee, and none of such agreements shall have been amended, terminated, cancelled or repudiated by any Continuing Employee. In addition, the shares of Parent’s Common Stock underlying the Parent RSU Award Agreements shall be registered on Form S-8, which shall be filed with the SEC prior to the grant of the Parent RSU Award Agreements by Parent.
6.1.19      Registration Rights Agreement . The Registration Rights Agreement shall have been executed and delivered to Parent by each Consenting Holder receiving any of the Stock Consideration Shares and shall not have been amended, terminated, cancelled or repudiated.
Section 6.2      Conditions to Obligation of the Company. The obligation of the Company to effect the Transactions (including the Merger) is subject to the satisfaction (or waiver, if permissible under applicable Law) prior to the Closing of the following conditions:
6.2.1      Representations and Warranties . Each of the representations and warranties of Parent and Merger Sub contained in ARTICLE IV that is qualified by “materiality”, “Parent Material Adverse Effect” or a similar qualifier shall be true and correct in all respects, and each of such representations and warranties that is not so qualified shall be true and correct in all material respects, in each case, at and as of the Closing Date, except for representations and warranties made as a of a specified date, the accuracy of which will be determined only as of the specified date.
6.2.2      Performance of Obligations of Parent and Merger Sub . Parent and Merger Sub shall have performed in all material respects all covenants, agreements and obligations required to be performed by them under this Agreement prior to the Closing.
6.2.3      Delivery of Closing Certificate . The Company shall have received a certificate dated as of the Closing Date signed by Chief Executive Officer or Chief Financial Officer of Parent and the certifying that the conditions precedent set forth in Section 6.2.1 and Section 6.2.2 have been met.

87

6.2.4      Stockholder Approval . The Company shall have received the Requisite Stockholder Approval.
6.2.5      RSUs and Form S-8 . Subject in each instance to the condition set forth in Section 6.1.10 regarding approval of the Parent RSU Award Agreements (pursuant to the method provided for in the regulations promulgated under Section 280G of the Code) as “parachute payments,” each Continuing Employee shall have received a duly executed Parent RSU Award Agreement from Parent, and none of such agreements shall have been amended, terminated, cancelled or repudiated by Parent. In addition, the shares of Parent’s Common Stock underlying the Parent RSU Award Agreements shall be registered on Form S-8.
6.2.6      Registration Rights Agreement . The Registration Rights Agreement shall have been executed and delivered by Parent to the Company and shall not have been amended, terminated, cancelled or repudiated.
ARTICLE VII:      TERMINATION
Section 7.1      Termination . This Agreement may be terminated and the Transactions (including the Merger) abandoned at any time prior to the Closing (whether before or after the adoption of this Agreement by the Stockholders):
7.1.1      By the mutual written consent of the Company and Parent;
7.1.2      By either the Company or Parent, upon written notice to the other Party, if the Merger shall not have been consummated on or before the date which is thirty (30) days after the Agreement Date, which date may be extended from time to time by mutual written consent of Parent and the Company (such date, as it may be so extended from time to time, the “ Outside Date ”); provided , however , that the right to terminate this Agreement under this Section 7.1.2 shall not be available to a Party whose failure to perform any of its obligations under this Agreement has been a principal cause of or directly resulted in the failure of the Merger to occur on or before the Outside Date;
7.1.3      By the Company or Parent, if any final and non-appealable Order or any Law has the effect of enjoining, restraining, preventing, prohibiting or making illegal the consummation of the Merger;
7.1.4      By Parent, if any of the representations or warranties of the Company set forth in ARTICLE III shall not be true and correct or if the Company has failed to perform any covenant or agreement on the part of the Company set forth in this Agreement (including an obligation to consummate the Closing) such that the condition to Closing set forth in Section 6.1.1

88

or Section 6.1.2 would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, are not cured on or prior to the earlier of (a) ten (10) days after written notice thereof is delivered to the Company and (b) the Outside Date; provided that this provision shall not be available to Parent if Parent is then in breach of this Agreement;
7.1.5      By the Company, if any of the representations or warranties of Parent set forth in ARTICLE IV shall not be true and correct or if Parent has failed to perform any covenant or agreement on the part of Parent set forth in this Agreement (including an obligation to consummate the Closing) such that the conditions to Closing set forth in either Section 6.2.1 or Section 6.2.2 would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, are not cured on or prior to the earlier of (a) ten (10) days after written notice thereof is delivered to Parent and (b) the Outside Date; provided that this provision shall not be available to the Company if the Company is then in breach of this Agreement; and
7.1.6      By Parent, upon written notice to the Company, if since the Interim Balance Sheet Date the Company has experienced a Material Adverse Effect.
Section 7.2      Effect of Termination . In the event this Agreement is terminated pursuant to Section 7.1 , this Agreement shall become null and void (other than the provisions of this ARTICLE VII , Section 5.4 (Public Announcement), Section 5.6 (Confidentiality), Section 9.14 (Governing Law), and Section 9.15 (Exclusive Jurisdiction; Venue; Service of Process), all of which shall survive termination of this Agreement and remain in full force and effect, without further liability on the part of the Parties or any of their respective directors, officers or Affiliates, except that nothing shall relieve any Party from liability related to claims sounding in contract, tort or otherwise related to a willful breach of this Agreement prior to the termination of this Agreement.
ARTICLE VIII:      SURVIVAL AND INDEMNIFICATION
Section 8.1      Survival.  All representations and warranties of the Parties contained in this Agreement or any other Transaction Agreement or in any certificate or schedule delivered hereunder or thereunder shall survive the Closing until the date that is twelve (12) months after the Closing Date (the “ General Survival Date ”); provided , however , that, (a) the Fundamental Representations shall survive until the expiration of the statute of limitations applicable to the subject matter thereof and (b) all of the covenants, agreements and obligations of the Parties contained in this Agreement or any other document, certificate, schedule or instrument delivered or executed in connection herewith (i) that contemplate performance solely prior to the Closing shall survive the Closing (solely for purposes of being subject to an indemnification claim under this ARTICLE VIII ) until the General Survival Date and (ii) that contemplate performance following the Closing shall survive

89

the Closing and continue in full force and effect until fully performed and (c) claims for indemnification under this ARTICLE VIII pursuant to clauses (ii)-(iv) and (vi)-(ix) Section 8.2.1(a) may only be brought until the expiration of the statute of limitations applicable to the subject matter thereof (the General Survival Date or the last day of any of the periods specified in clauses (a) and (b) and (c) of this Section 8.1 , each alternatively referred to herein as the “ Survival Date ”). Notwithstanding the foregoing, if a claim or notice with respect to recovery under the indemnification provisions hereof is given in accordance with the terms hereof prior to the applicable Survival Date, the claim and any representations and warranties or covenants underlying such claim, shall continue until such claim is finally resolved pursuant to the terms of this ARTICLE VIII . Notwithstanding anything in this Agreement to the contrary, claims for intentional fraud with scienter (“ Fraud ”) shall survive until expiration of the applicable statute of limitations.
Section 8.2      Indemnification .
8.2.1      Indemnification by Holders and Parent .
(a)      Subject to the terms, conditions and limitations of this ARTICLE VIII , (i) from and after the Agreement Date until the Closing, the Company, and (ii) following the Closing, each Consenting Holder, and with respect to any recoveries against the Indemnity Hold-Back Amount, Adjustment Hold-Back Amount or Expense Fund Amount, each other Holder (who shall be deemed bound by references in this ARTICLE VIII to “Consenting Holders” in such regard as the context requires), severally (in accordance with it Pro Rata Portion) and not jointly, shall indemnify and hold harmless each Parent Indemnified Person from and against any Loss which such Parent Indemnified Person suffers, sustains or becomes subject to, as a result of or based upon or arising out of (and whether or not involving a Third Party Claim):
(i)      any breach of, or misrepresentation or inaccuracy in, any of the representations or warranties (other than the Company Fundamental Representations) made by the Company in this Agreement or in any other Transaction Agreement to which it is a party, including in any certificate delivered by or on behalf of the Company pursuant hereto;
(ii)      any errors or omission in the calculations delivered to Parent pursuant to Section 2.8 ;
(iii)      any inaccuracy in the Allocation Schedule;
(iv)      any Fraud committed by the Company, including any director, officer or Employee of the Company, under this Agreement or any other Transaction Agreement;

90

(v)      any breach of, or misrepresentation or inaccuracy in, any of the Company Fundamental Representations;
(vi)      solely with respect to any Holder who has not executed a Written Consent and Joinder Agreement, any appraisal rights exercised by such Holder to the extent not covered by amounts returned to the Parent with respect to Dissenting Shares pursuant to Section 2.12 , and any other Action brought by such Holder or any other Person claiming rights by, through or associated with such Holder that seeks to challenge any of the Transactions (including the Merger) based on adequacy of the consideration received by such Holder (or all Holders) or claims that any director or officer of the Company breached any fiduciary duty owed to the Company or any of the Holders in connection with the negotiation, approval, execution or performance of any of the Transactions (including the Merger);
(vii)      any Action brought by a Holder or any other Person claiming rights by, through or associated with such Holder that seeks to challenge the sufficiency of the disclosure by the Company regarding the terms of any of the Transactions (including the Merger) or any other arrangements or transactions contemplated hereby (including the Employment and Non-Competition Agreements and the Parent RSU Award Agreements);
(viii)      any breach of or failure to perform any covenant or agreement of (A) the Company provided for in this Agreement or any other Transaction Agreement with respect to covenants required to be performed prior to the Closing or (B) Holders’ Representative; and
(ix)      any nonpayment by the Closing Date’s end of any Pre-Closing Taxes (taking into account estimated payments of, and any other amounts creditable against, such Taxes), but only to the extent such Taxes (x) were not included in the computation of the Closing Net Working Capital as finally determined and (y) do not result from any action of Parent on the Closing Date following the Closing.
(b)      Subject to the terms, conditions and limitations of this ARTICLE VIII , Parent shall indemnify and hold harmless each Holder Indemnified Person from and against any Loss which such Holder Indemnified Person suffers, sustains or becomes subject to, as a result of or based upon or arising out of (and whether or not involving a Third Party Claim):
(i)      any breach of, or misrepresentation or inaccuracy in any of the representations or warranties (other than the Parent Fundamental

91

Representations) made by Parent or Merger Sub in this Agreement or in any other Transaction Agreement to which it is a party, including in any certificate delivered by or on behalf of Parent pursuant hereto;
(ii)      any breach of, or misrepresentation or inaccuracy in any of the Parent Fundamental Representations; and
(iii)      any breach of or failure to perform any covenant or agreement of Parent or Merger Sub provided for in this Agreement or any other Transaction Agreement.
8.2.2      Limitations on Claims . Notwithstanding the foregoing:
(a)      With respect to any claim seeking recovery of any Loss under Section 8.2.1(a)(i) above (other than with respect to any claims arising from any Fraud described in Section 8.2.1(a)(iv) ):
(i)      No Consenting Holder will have any Liability for any such Loss until the aggregate amount of all such Losses exceeds an amount equal to 0.50% of the Purchase Price (the “ Basket ”) (whereupon the Parent Indemnified Persons shall be entitled to be indemnified only for the amount of their Losses that exceed the Basket);
(ii)      The Consenting Holders will not have any Liability for any such Loss to the extent that the aggregate amount of all such Losses for which Consenting Holders have Liability exceeds the Indemnification Hold-Back Amount; and
(iii)      For any such Loss to the extent (x) recoverable under the R&W Policy, the Parent Indemnified Persons shall be entitled to recover such Loss in the following order and priority: (1) first, to the extent that the Consenting Holders’ portion of the retention under the R&W Insurance Policy (i.e. 0.50% of the Purchase Price) remains unsatisfied, against the Indemnification Hold-Back Amount, and (2) second, under the R&W Insurance Policy; or (y) not recoverable under the R&W Policy (whether by amount, coverage or otherwise), against the Indemnification Hold-Back Amount.
(b)      With respect to any claim seeking recovery of any Loss under Section 8.2.1(a) above other than as addressed in Sections 8.2.2(a) above, the Parent Indemnified Persons shall be entitled to recover such Loss in the following order and priority: (i) first, to the extent that

92

the Consenting Holders’ portion of the retention under the R&W Insurance Policy (i.e. 0.50% of the Purchase Price) remains unsatisfied and such Loss is covered by the R&W Insurance Policy, against the Indemnification Hold-Back Amount until such retention is satisfied, (ii) second, under the R&W Insurance Policy to the extent such Loss is covered by the R&W Insurance Policy, (iii) third, against the remaining Indemnification Hold-Back Amount (if any), and (iv) otherwise, directly from the Consenting Holders.
(c)      No Parent Indemnified Person shall be entitled to recover any Losses under this ARTICLE VIII to the extent the amount of such Losses has actually been recovered by such Parent Indemnified Person from a Person other than another Party to this Agreement (including under the R&W Insurance Policy) or the Holders, and each Parent Indemnified Person shall, to the extent applicable, use commercially reasonable efforts to seek indemnification, contribution or other redress pursuant to the terms of any Contract to which the Company or Parent is a party and by which such Person has the right to seek indemnification, contribution or other redress from any third party. If a Parent Indemnified Person receives any amounts under applicable insurance policies or third party indemnification or contribution payments subsequent to its receipt of an indemnification payment by the Contributing Holders (including from the Indemnification Hold-Back Amount), then such Parent Indemnified Person will, without duplication, promptly reimburse the Contributing Holders (including by replenishing the Indemnification Hold-Back Amount) for any payment made by such Contributing Holders up to the amount received by the Parent Indemnified Person.
(d)      The Parent Indemnified Persons shall not be entitled to indemnification with respect to any Losses as a result of or based upon or arising from any claim or Liability to the extent such claim or Liability is taken into account in determining the amount of any adjustment to the Closing Date Merger Consideration in accordance with Section 2.16 .
(e)      If any Indemnifying Party makes any indemnification payment pursuant to this ARTICLE VIII or otherwise by reason of the transactions contemplated hereby under any theory of recovery, such Indemnifying Party shall be subrogated, to the extent of such payment and to the extent permitted by applicable Law, to any rights and remedies of the Indemnified Person to recoup such amounts from third parties with respect to the matters giving rise to indemnification hereunder. Notwithstanding anything in this Agreement to the contrary, no Holder shall be subrogated to any rights or remedies, or otherwise make any claim, (i) under the R&W Insurance Policy, or (ii) against the Company or the Surviving Corporation or any other Parent Indemnified Person (regardless of the facts or the kind of Loss at issue), and each Consenting Holder, by virtue of approving the Merger and the execution of a Written Consent and Joinder Agreement, expressly waives any right of subrogation, contribution, advancement, indemnification or other claim (x) under the R&W Insurance Policy, or (y) against the Company or the Surviving Corporation

93

or any other Parent Indemnified Person with respect to any indemnification obligation to which such Consenting Holder may become subject under or in connection with this Agreement.
(f)      The aggregate amount of all Losses for which a Consenting Holder shall be liable pursuant to Section 8.2.1(a) shall be the amount of the Final Merger Consideration actually received by such Consenting Holder (with shares of Parent Common Stock deemed, for this purpose, to have a value equal to the Agreement Date NVTA Stock Value); provided , however , that such limit shall not apply to any Consenting Holder in the instance of any Fraud of such Consenting Holder or any Person affiliated with such Consenting Holder who has served as an officer, director, employee or consultant of the Company. For clarity, the liability limits set forth in this Agreement are intended to be overlapping and not separate (which means that (x) each level of liability limit is nested within all higher levels of liability limits and (y) any recoveries against a particular liability limit will count simultaneously against any overlapping liability limits and any higher liability limits).
(g)      Notwithstanding any other provision of this Agreement, no Indemnifying Party shall have any liability or indemnification obligation for any Losses related to or arising from the amount, value or condition of any Tax asset or attribute (e.g., net operating loss carryforward or Tax credit carryforward) or the ability of Parent, the Surviving Corporation or any of their Affiliates to utilize any such Tax asset or attribute in any taxable period or portion thereof (including any Straddle Period) beginning on or after the Closing Date.
(h)      Notwithstanding any other provision of this Agreement, in no event will any Consenting Holder be liable for any other Consenting Holder’s breach of such other Consenting Holder’s representations, warranties, covenants, or agreements contained in any Written Consent and Joinder Agreement, Letter of Transmittal, Employment and Non-Competition Agreement or other ancillary agreement hereto to which such other Consenting Holder is a party.
8.2.3      Calculation of Losses . For the purposes of determining the existence of a breach of any representation or warranty and calculating the amount of Losses pursuant to this ARTICLE VIII , the representations and warranties of the Company in this Agreement that are qualified by materiality or Company Material Adverse Effect shall be deemed to be made without such materiality or Company Material Adverse Effect qualifiers; provided , however , that this Section 8.2.3 shall not apply to the terms “Material Contract” or “material asset” and shall not be deemed render references to “Company Material Adverse Effect” to mean “Adverse Effect” or “Effect”.
Section 8.3      Offset Right .
8.3.1      Offset Right . Without limiting any other remedies of the Parent Indemnified Persons, from and after the Effective Date, and subject to the limitations set forth in this ARTICLE VIII , the Parent Indemnified Persons shall be entitled to recover (the “ Offset Right ”)

94

against the Indemnification Hold-Back Amount the amount of any Losses as to which the Holders are obligated to indemnify and hold the Parent Indemnified Persons harmless from under Section 8.2.1(a) .
8.3.2      Exercise of Offset Right . To exercise the Offset Right, Parent shall (on behalf of Parent or any other Parent Indemnified Persons at issue), prior to the Indemnification Hold-Back Payment Dates, as is applicable, deliver to Holders’ Representative at the notice address set forth in Section 9.2 (as the same may be amended from time to time as provided therein and including all Persons to be copied on any notice to Holders’ Representative), a certificate signed by Parent (an “ Offset Certificate ”): (a) stating in good faith that one or more of the Parent Indemnified Persons has suffered, sustained or become subject to Losses which are entitled to be recovered pursuant to the Offset Right (the “ Stated Damages ”); and (b) specifying to the extent practicable in reasonable detail the individual items of Stated Damages and the nature of the breach or other circumstance to which each such item is related. Upon the timely delivery of an Offset Certificate stating a bona fide claim for Stated Damages, any distribution of the Indemnification Hold-Back Amount shall be stayed to the extent of the Stated Damages as provided in Section 2.17 .
8.3.3      Perfection of Offset Right . After the expiration of a period of thirty (30) days following the time of delivery of an Offset Certificate to Holders’ Representative, the Offset Right shall be deemed perfected as to the applicable Stated Damages and the Indemnification Hold-Back Amount shall be reduced by an equal amount unless, prior to the expiration of such thirty (30) day period, Holders’ Representative objects in a written statement delivered to Parent to the claims made in the Offset Certificate, setting forth in reasonable detail the objections to the claim for Stated Damages.
8.3.4      Objection to Offset Right . If Holders’ Representative shall timely object in writing to an exercise of the Offset Right by Parent, Holders’ Representative and Parent shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims within thirty (30) days after such objection. If Holders’ Representative and Parent should so agree on a claim, a memorandum setting forth such agreement shall be prepared and signed by such parties, which shall include a statement of the amount of resulting reduction in the Indemnification Hold-Back Amount.
8.3.5      Settlement of Offset Right . If no agreement can be reached after good faith negotiation between Holders’ Representative and Parent pursuant to Section 8.3.4 , either Parent or Holders’ Representative may initiate an Action with the state or federal courts located in the City and County of San Francisco, California to resolve such dispute. The decision of any such court as to the validity and amount of any claim in such Offset Certificate shall be binding and conclusive upon the parties.

95

Section 8.4      Claims for Indemnification; Resolution of Conflicts .
8.4.1      Third-Party Claims .
(a)      In the event that any Action is instituted, or that any Third Party Claim is asserted, the Indemnified Person seeking indemnification for any related Loss (including a Parent Indemnified Person seeking indemnification for any related loss through an Offset Right) shall notify the Indemnifying Party of any such Action or claim promptly after receiving notice thereof (each, a “ Third Party Indemnification Claim Notice ”); provided , however , that no delay on the part of the Indemnified Person in giving any such notice shall relieve an Indemnifying Party of any indemnification obligations unless, and only to the extent that, such Indemnifying Party is actually and materially prejudiced by such delay and then only to the extent of such prejudice. Subject to the provisions of this Section 8.4.1 , and assuming the Indemnified Person does not have the right to elect or does not choose to elect in its Third Party Indemnification Claim Notice to assume the defense of the Third Party Claim in accordance with clause (e) of this Section 8.4.1 , the Indemnifying Party shall be entitled at its own expense to conduct and control the defense and settlement of such Third Party Claim on behalf of the Indemnified Person through counsel chosen by the Indemnifying Party and reasonably acceptable to the Indemnified Person if the Indemnifying Party notifies the Indemnified Person in writing within thirty (30) days (or sooner, if the nature of the Third Party Claim so requires) of its intent to do so and confirms that the Indemnifying Party shall be obligated to indemnify the Indemnified Person against all resulting Losses. If the Indemnifying Party does not elect within thirty (30) days (or sooner, if the nature of the Third Party Claim so requires) to defend against, negotiate, settle or otherwise deal with any Third Party Claim, the Indemnified Person may defend against, negotiate, settle or otherwise deal with such Third Party Claim with counsel of its choice (it being understood that if the Indemnified Person declines to assume such defense, any default judgment resulting therefrom shall not be determinative of, or evidentiary support for, the existence or amount of indemnifiable Losses related to such Third Party Claim).
(b)      If the Indemnifying Party elects to defend against, negotiate, settle or otherwise deal with any Third Party Claim:
(i)      the Indemnifying Party shall use its commercially reasonable efforts to defend such Third Party Claim;
(ii)      the Indemnified Person, prior to the period in which the Indemnifying Party assumes the defense of such matter, may take such reasonable actions to preserve any and all rights with respect to such matter, without such actions being construed as a waiver of the Indemnified Person’s rights to defense and indemnification pursuant to this Agreement and without such actions being determinative of the amount of any indemnifiable Losses,

96

except to the extent the Indemnifying Party’s ability to defend such action is actually and materially prejudiced by such actions; and
(iii)      the Indemnified Person may participate in the defense of such Third Party Claim with separate counsel at its own expense or, if so requested by the Indemnifying Party or, if in the reasonable opinion of counsel to the Indemnified Person, a conflict or potential conflict exists between the Indemnified Person and the Indemnifying Party that would make such separate representation advisable, at the reasonable expense of the Indemnifying Party.
(c)      In connection with this Section 8.4.1 , the Parties agree to:
(i)      cooperate with each other in connection with the defense, negotiation or settlement of any such Third Party Claim;
(ii)      make available witnesses in a timely manner to provide testimony through declarations, affidavits, depositions, or at hearing or trial and to work with each other in preparation for such events consistent with deadlines dictated by the particular Third Party Claim;
(iii)      preserve all documents and things required by litigation hold orders pending with respect to particular Third Party Claims; and
(iv)      provide such documents and things to each other, consistent with deadlines dictated by a particular matter, as required by legal procedure or court order, or if reasonably requested by another Party hereto;
provided that such cooperation referenced in clauses (i) through (iv) shall not be required if it could reasonably be expected to result in a waiver of any attorney-client, work product or other privilege, and provided further that the Parties shall use commercially reasonable efforts to avoid production of confidential information (consistent with Law), and to cause all communications among Employees, counsel and others representing any party to a Third Party Claim to be made so as to preserve any applicable attorney-client or work-product privileges.
(d)      Except as permitted in this Section 8.4.1 , the Indemnifying Party shall not, without the written consent of the Indemnified Person(s) (such consent not to be unreasonably conditioned, withheld or delayed), settle or compromise any Third Party Claim or permit a default or consent to entry of any judgment (each a “ Settlement ”); provided , however , that an Indemnified Person’s written consent shall not be required if (i) the claimant provides such Indemnified Person an unqualified release from all liability in respect of the Third Party Claim, (ii) such Settlement

97

does not impose any additional liabilities or obligations on the Indemnified Person and (iii) with respect to any non-monetary provision of such Settlement, such provisions could not have, or be reasonably expected to have, any adverse effect on the business, assets, financial condition or results of operations of the Indemnified Person and its Subsidiaries, if any. Any Settlement or compromise that does not comply with the preceding sentence shall not be determinative of the amount of Losses with respect to any related claims for indemnification pursuant to this ARTICLE VIII . The costs incurred by Holders’ Representative pursuant to participating in the defense of any Third Party Claims shall constitute Holders’ Representative Expenses.
(e)      Notwithstanding anything in this Agreement to the contrary, if (i) a Third Party Claim seeks relief other than the payment of monetary damages, (ii) the subject matter of a Third Party Claim relates to the ongoing business of the Indemnified Person, which Third Party Claim, if decided against the Indemnified Person, would adversely affect the ongoing business of the Indemnified Person in any material respect, (iii) the claim for indemnification relates to or arises in connection with any criminal proceeding, action or indictment, or (iv) the Indemnified Person reasonably concludes that the amount of the Third Party Claim and associated defense costs shall exceed the limits on the Indemnifying Party’s obligations under Section 8.2.2 or the Indemnifying Party’s financial resources available to defend against the Third Party Claim, then, in each such case, the Indemnified Person alone shall be entitled to contest, defend and settle such Third Party Claim. If the Indemnified Person elects to exercise such right to contest, defend and settle such Third Party Claim, then the Indemnified Person shall notify the Indemnifying Party of such election within thirty (30) days of the later of (x) receiving the applicable Third Party Indemnification Claim Notice or (y) the occurrence of the event giving rise to the Indemnified Person’s right to make such election pursuant to clause (i), (ii) or (iii) of this Section 8.4.1(e) . In such event, the Indemnified Person shall instead have the right to be represented by counsel of its choice (of which it shall notify the Indemnifying Party) and to defend against, negotiate, settle or otherwise deal with any Third Party Claim. If the Indemnified Person elects to defend against, negotiate, settle or otherwise deal with any Third Party Claim, then (1) the Indemnified Person shall use its commercially reasonable efforts to defend such Third Party Claim, conduct such defense in a good faith and reasonably diligent manner, keep the Indemnifying Party reasonably informed of the status of such defense, and use commercially reasonable efforts to cooperate with the Indemnifying Party with respect to such defense during the course of such defense, (2) the Indemnifying Party may participate, at its own expense, in the defense of such Third Party Claim and shall be entitled to receive copies of complaints, pleadings, notices and material communications with respect to such Third Party Claim, and (3) any settlement or compromise of such Third Party Claim effected by the Indemnified Person without the prior written consent of the Indemnifying Party will not be determinative of the existence or amount of indemnifiable Losses for such Third Party Claim. If the Indemnified Person does not elect to contest, defend and settle such Third Party Claim, then the Indemnifying Party shall then have the right (but not the obligation) to contest and defend such Third Party Claim as described

98

above in Section 8.4.1(a) (it being understood that if the Indemnified Person does not elect to contest, defend and settle such Third Party Claim, any default judgment entered in connection therewith will not be determinative of the existence or amount of indemnifiable Losses for such Third Party Claim). Notwithstanding the foregoing, any Third Party Claims in respect of Taxes shall be governed by Section 5.8.3 rather than this Section 8.4.1 . To the extent that the provisions of this Section 8.4.1 conflict with the provisions of Section 5.8.3 , Section 5.8.3 shall control.
8.4.2      Notification of Other Indemnification Claims . In order for a Parent Indemnified Person to be entitled to any indemnification for claims other than as contemplated or covered by the Offset Right (although, for the avoidance of doubt, a claim tendered pursuant to the Offset Right shall suffice for all purposes even if not covered, or fully covered, by the Offset Right), such Parent Indemnified Person shall, promptly upon the discovery of the matter giving rise to any Losses, notify Holders’ Representative in writing of such Losses specifying in reasonable detail the nature of such Losses and the amounts of liability estimated to accrue therefrom (a “ Non-Offset Notice ”). The failure to so notify Holders’ Representative shall not relieve any Holder from any liability that such Holder may have to Parent, except to the extent that any such Holder is materially prejudiced as a result of such failure. Thereafter, Parent shall keep Holders’ Representative reasonably updated with respect to the status of the Losses at issue and the defense thereof. Holders’ Representative may object to a claim for indemnification set forth in a Non-Offset Notice by delivering a notice to the Parent Indemnified Person seeking indemnification within thirty (30) days of the delivery of the Non-Offset Notice, setting forth in reasonable detail the objections to the claim. If Holders’ Representative either notifies the applicable Indemnified Person that it does not object or does not object in writing by the end of such thirty (30)-day period, such failure to so object shall be an irrevocable acknowledgment that the Parent Indemnified Person is entitled to the full amount of the claims set forth in such Non-Offset Notice, and Holders’ Representative (as well as the Holders) shall take all necessary actions under this Agreement to effect payment in respect thereof. If Holders’ Representative shall timely object in writing to a Non-Offset Notice, Holders’ Representative and Parent shall attempt in good faith to agree upon the rights of the respective parties with respect to such claim within thirty (30) days after such objection. If Holders’ Representative and Parent should so agree on a claim, a memorandum setting forth such agreement shall be prepared and signed by Holders’ Representative and Parent. If no agreement can be reached after good faith negotiation between Holders’ Representative and Parent, either Parent (or any Parent Indemnified Person) or Holders’ Representative may initiate an Action with the state or federal courts located in the City and County of San Francisco, California to resolve such dispute. The decision of any such court as to the validity and amount of any claim in such Non-Offset Notice shall be binding and conclusive upon the parties.
8.4.3      Claims Unaffected by Investigation . The right of an Indemnified Person to indemnification or to assert or recover on any claim hereunder shall not be affected by any investigation conducted with respect to, or any knowledge acquired or capable of being acquired,

99

at any time, whether before or after the execution and delivery of this Agreement or the Closing, with respect to the accuracy of or compliance with any of the representations, warranties, covenants, or agreements set forth in this Agreement. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or agreement, shall not affect the right to indemnification or other remedy based on such representation, warranty, covenant or agreement.
8.4.4      Surviving Corporation . The Parties acknowledge and agree that if the Surviving Corporation suffers, incurs or otherwise becomes subject to any Losses as a result of or in connection with any misrepresentation or inaccuracy in or breach of any representation, warranty, covenant or agreement, then (without limiting any of the rights of the Surviving Corporation as an Indemnified Person) Parent shall also be deemed, by virtue of its ownership of the stock of the Surviving Corporation, to have incurred Losses as a result of and in connection with such misrepresentation, inaccuracy or breach.
8.4.5      Exclusive Remedy . Subject to Section 9.9 and Section 5.8 , and except as otherwise expressly set forth in this Agreement (including the provisions of Section 2.16 ), the Parties acknowledge and agree that the remedies provided for in this ARTICLE VIII shall be the Parties’ sole and exclusive remedy with respect to any and all claims for any breach, inaccuracy, misrepresentation or nonperformance, as applicable, of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement , meaning that the survival periods and liability limits set forth in this ARTICLE VIII shall control notwithstanding any statutory or common law provisions or principles to the contrary . Notwithstanding the foregoing or any other provision of this Agreement to the contrary, there shall be no limits on the remedies of any Parent Indemnified Person or Holder Indemnified Person, or the liability of any Holder or Parent, for any Fraud personally committed by any Holder or its affiliates (including, for this purpose, any officers or directors of the Company who have committed Fraud on behalf of the Company) or committed by Parent or its affiliates, whether such Fraud was committed under or outside of this Agreement or by (i) knowingly directing the insertion of false or misleading statements in this Agreement or (ii) failing to correct any statement in this Agreement known to be false or misleading, it being understood that with respect to any such Fraud committed by any officers or directors of the Company on behalf of the Company, such Fraud will not be attributable to such Holder pursuant to this sentence unless such Holder had actual knowledge of such Fraud.
8.4.6      Indemnification Adjusts Merger Consideration for Tax Purposes . Each Party shall, including retroactively, treat indemnification payments under this Agreement as well as exercises of the Offset Right as adjustments to the consideration paid in the Merger for Tax purposes to the extent permitted under applicable Law.

100

8.4.7      No Subrogation . Each Holder (on behalf of itself and each Person affiliated with such Holder who has served as an officer, director, employee or consultant of the Company) agrees not to make any claim for indemnification against any Parent Indemnified Person based on the fact that such Holder (or any Person affiliated with such Holder who has served as an officer, director, employee or consultant of the Company) was a controlling person, director, Employee or agent of the Company (whether such claim is for Losses of any kind or otherwise and whether such claim is pursuant to Law, a Charter Document, a Contract or otherwise) with respect to the amount of any claim brought by a Parent Indemnified Person against any Holder (or any Person affiliated with such Holder who has served as an officer, director, employee or consultant of the Company) under or relating to this Agreement or any other Transaction Agreement or the Transactions in such Holder’s capacity as an indemnifying Holder under this ARTICLE VIII . With respect to any claim brought by a Parent Indemnified Person against any Holder (or any Person affiliated with such Holder who has served as an officer, director, employee or consultant of the Company) under or relating to this Agreement, any Transaction Agreement or the Transactions in such Holder’s capacity as an indemnifying Holder under this ARTICLE VIII , such Holder (on behalf of itself and each Person affiliated with such Holder who has served as an officer, director, employee or consultant of the Company) expressly waives any right of subrogation, contribution, advancement, indemnification or other claim against the Company with respect to the amount of any indemnification obligation or any other liability to which such Holder (or any Person affiliated with such Holder who has served as an officer, director, employee or consultant of the Company) may become subject under or in connection with this Agreement in such Holder’s capacity as an indemnifying Holder under this ARTICLE VIII .
8.4.8      Specific Element of Consideration . The indemnification obligations of the Holders in this ARTICLE VIII are, without limitation, (a) a specific element of the consideration that induced Parent to enter into this Agreement and to perform its obligations as contemplated hereby and (b) intended to be fully enforceable on the terms provided in this ARTICLE VIII .
Section 8.5      Holders’ Representative .
8.5.1      Appointment . By virtue of approving the Merger and the execution of a Written Consent and Joinder Agreement, each of the Holders shall irrevocably nominate, constitute and appoint Holders’ Representative as his or her attorney in fact and exclusive agent with full power of substitution, to act in the name, place and stead of the Holders for purposes of executing any documents and taking any actions that Holders’ Representative may, in its sole discretion, determine to be necessary, desirable or appropriate in connection with any claim for indemnification, compensation or reimbursement under this ARTICLE VIII . Fortis Advisors LLC hereby accepts its appointment as Holders’ Representative.

101

8.5.2      Authority . The Holders grant to Holders’ Representative full authority to: (i) execute, deliver, acknowledge, certify and file on behalf of each such Holder (in the name of any or all of the Holders or otherwise) any and all documents that Holders’ Representative may, in its sole discretion, determine to be necessary, desirable or appropriate, in such forms and containing such provisions as Holders’ Representative may, in its sole discretion, determine to be appropriate, in performing its duties as contemplated by this Section 8.5 and (ii) do or refrain from doing any further act or deed on behalf of the Holders which the Holders’ Representative deems necessary or appropriate in its sole discretion relating to the subject matter of this Agreement. Notwithstanding the foregoing, the Holders’ Representative shall have no obligation to act on behalf of the Holders, except as expressly provided herein and in the Holders’ Representative Engagement Agreement, and for purposes of clarity, there are no obligations of the Holders’ Representative in any ancillary agreement, schedule, exhibit or the Disclosure Schedule. Notwithstanding anything in any Transaction Agreement to the contrary: (a) each Indemnified Person shall be entitled to deal exclusively with Holders’ Representative on all matters relating to any claim for indemnification, compensation, reimbursement or set off (including Offset Rights) pursuant to ARTICLE VIII ; and (b) the Parent, each Parent Indemnified Person, the Exchange Agent, and each Holder shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of any Holder by Holders’ Representative and on any other action taken or purported to be taken on behalf of any Holder by Holders’ Representative as fully binding upon such Holder. A decision, act, consent or instruction of Holders’ Representative, including an amendment, extension or waiver of this Agreement (or any provision hereof) pursuant to Section 9.4 or Section 9.5 shall constitute a decision of the Holders and shall be final, binding and conclusive upon the Holders and such Holders’ successors as if expressly confirmed and ratified in writing by such Holder, and all defenses which may be available to any Holder to contest, negate or disaffirm the action of the Holders’ Representative taken in good faith under this Agreement or the Holders’ Representative Engagement Agreement are waived. The Exchange Agent, Parent, Merger Sub, and the Surviving Corporation may rely upon any such decision, act, consent or instruction of Holders’ Representative as being the decision, act, consent or instruction of the Holders. The Exchange Agent, Parent, Merger Sub, and the Surviving Corporation are hereby relieved from any liability to any Person for any acts done by them in accordance with such decision, act, consent or instruction of Holders’ Representative.
8.5.3      Power of Attorney . The powers, immunities and rights to indemnification granted to the Holders’ Representative Group hereunder: (a) are coupled with an interest and are irrevocable; (b) may be delegated by Holders’ Representative; (c) shall survive the death, incompetence, bankruptcy, dissolution or incapacity, as applicable, of each of the Holders and shall be binding on any successor thereto; and (d) shall survive the delivery of an assignment by any Holder of the whole or any fraction of his, her or its interest in the Indemnification Holdback Amount.

102

8.5.4      Replacement . If Holders’ Representative is dissolved, resigns or is otherwise unable to fulfill its responsibilities hereunder, the Holders shall (by consent of those Persons entitled, or who were entitled, to at least a majority of the Indemnification Hold-Back Amount), within ten (10) days after such dissolution, resignation or inability, appoint a successor to Holders’ Representative reasonably satisfactory to Parent. Any such successor shall succeed Holders’ Representative as Holders’ Representative hereunder. If for any reason there is no Holders’ Representative at any time, all references herein to Holders’ Representative shall be deemed to refer to the Holders who may take action by the written consent of Persons entitled to at least a majority of any further distributions hereunder. The immunities and rights to indemnification shall survive the resignation or removal of the Holders’ Representative or any member of the Advisory Group and the Closing and/or any termination of this Agreement.
8.5.5      Indemnification; Holders’ Representative Expenses . Certain Holders have entered into an engagement agreement (the “ Holders’ Representative Engagement Agreement ”) with the Holders’ Representative to provide direction to the Holders’ Representative in connection with its services under this Agreement and the Holders’ Representative Engagement Agreement (such Holders, including their individual representatives, collectively hereinafter referred to as the “ Advisory Group ”). Neither the Holders’ Representative, nor its members, managers, directors, officers, contractors, agents and employees nor any member of the Advisory Group (collectively, the “ Holders’ Representative Group ”) shall be liable to the Holders for any action taken or omitted to be taken by it as Holders’ Representative except in the case of willful misconduct or gross negligence. The Holders shall severally, but not jointly, indemnify and defend the Holders’ Representative and hold Holders’ Representative harmless from and against all Holders’ Representative Expenses arising out of or in connection with the acceptance or administration of its duties hereunder or under the Holders’ Representative Engagement Agreement. The Holders’ Representative may recover such Holders’ Representative Expenses first, from the Expense Fund, second, from any distribution of the Indemnification Holdback Amount otherwise distributable to the Holders at the time of distribution, and third, directly from the Holders.
8.5.6      No Expenditures; Reliance on Allocation Schedule . The Holders acknowledge that the Holders’ Representative shall not be required to expend or risk its own funds or otherwise incur any financial liability in the exercise or performance of any of its powers, rights, duties or privileges or pursuant to this Agreement or the transactions contemplated hereby. Furthermore, the Holders’ Representative shall not be required to take any action unless the Holders’ Representative has been provided with funds, security or indemnities which, in its determination, are sufficient to protect the Holders’ Representative against the costs, expenses and liabilities which may be incurred by the Holders’ Representative in performing such actions. The Holders’ Representative shall be entitled to: (i) rely upon the Allocation Schedule, (ii) rely upon any signature believed by it to be genuine, and (iii) reasonably assume that a signatory has proper authorization to sign on behalf of the applicable Holder or other party.

103

8.5.7      Expense Fund . Upon the Closing, Parent shall wire to the Holders’ Representative $250,000 (the “ Expense Fund Amount ” ) . The Expense Fund Amount shall be held by the Holders’ Representative in a segregated client account and shall be used (i) for the purposes of paying directly or reimbursing the Holders’ Representative for any Holders’ Representative Expenses incurred pursuant to this Agreement or the Holders’ Representative Engagement Agreement, or (ii) as otherwise determined by the Advisory Group (the “ Expense Fund ”). The Holders’ Representative is not providing any investment supervision, recommendations or advice and shall have no responsibility or liability for any loss of principal of the Expense Fund other than as a result of its gross negligence or willful misconduct. The Holders’ Representative is not acting as a withholding agent or in any similar capacity in connection with the Expense Fund, and has no tax reporting or income distribution obligations. The Holders will not receive any interest on the Expense Fund and assign to the Holders’ Representative any such interest. Subject to Advisory Group approval, the Holders’ Representative may contribute funds to the Expense Fund from any consideration otherwise distributable to the Holders. As soon as reasonably determined by the Holders’ Representative that the Expense Fund is no longer required to be withheld, the Holders’ Representative shall distribute the remaining Expense Fund (if any) to the Exchange Agent and/or Parent, as applicable, for further distribution to the Holders.
ARTICLE IX:      GENERAL PROVISIONS
Section 9.1      Interpretation . The following rules shall apply to the interpretation and construction of the terms and provisions of this Agreement and the other Transaction Agreements:
9.1.1      Provisions .
(a)      When a reference is made in this Agreement or another Transaction Agreement to an “Article,” “Section,” “Exhibit” or “Schedule,” such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.
(b)      The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(c)      Whenever the words “include,” “includes,” or “including” are used in this Agreement or any other Transaction Agreement, such words shall be deemed to be followed by the words “without limitation.”
(d)      The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement unless otherwise expressly indicated in the accompanying text.

104

(e)      The use of “or” is not intended to be exclusive unless otherwise expressly indicated in the accompanying text.
(f)      The defined terms contained in this Agreement or any of the other Transaction Agreements are applicable to the singular as well as the plural forms of such terms. Reference to the masculine gender shall be deemed to also refer to the feminine gender and vice versa .
(g)      A reference to documents, instruments or agreements also refers to all addenda, exhibits or schedules thereto.
(h)      Any reference to a provision or part of a Law shall include a reference to that provision or part as it may be renumbered or amended from time to time and any successor provision or part or any renumbering or amendment thereof unless otherwise indicated herein.
(i)      References to “deliver,” “furnish,” “provided” or “made available” means that such documents or information referenced are contained, as of a date which is at least five (5) Business Days prior to the Agreement Date, in the Company’s “Santa Barbara - Irvine” electronic data room hosted by Dropbox, Inc.
(j)      When calculating the period of time before which, within which or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.
9.1.2      No Presumption . The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall be used to favor or disfavor any Party by virtue of the authorship of any provision of this Agreement.
Section 9.2      Notices. All notices, waivers, consents and other communications to any Party hereunder shall be in writing and shall be deemed given (a) when personally delivered, (b) when receipt is electronically confirmed, if sent by facsimile or email of a .pdf document, or (c) one (1) Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with proof of receipt, in each case to the Parties at the address, or if applicable, facsimile number or email address following such Party’s name below or such other address, facsimile number or email address as such Party may subsequently designate to the other Parties by notice in accordance with this Section 9.2 :
If to Parent or Merger Sub, to:

105

Invitae Corporation
1400 16th Street
San Francisco, CA 94103
Attention: Tom Brida, General Counsel
Email:
with copies (which shall not constitute notice) to:
Pillsbury Winthrop Shaw Pittman LLP
12255 El Camino Real, Suite 300
San Diego, California 92130
Attention: Mike Hird
Email: mike.hird@pillsburylaw.com
If to the Company (prior to the Closing), to:
Singular Bio, Inc.
455 Mission Bay Blvd. South
San Francisco, CA 94158
Attention: Hywel Jones
Email:

with a copy (which shall not constitute notice) to:
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
550 Allerton Street
Redwood City, CA 94063
Attention: Daniel Green and Andrew Luh
Email: dgreen@gunder.com and aluh@gunder.com 
If to Holders’ Representative, to:
Fortis Advisors LLC
Attention: Notices Department
Email: notices@fortisrep.com
Facsimile: (848) 408-1843

with a copy (which shall not constitute notice) to:
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
550 Allerton Street
Redwood City, CA 94063
Attention: Daniel Green and Andrew Luh
Email: dgreen@gunder.com and aluh@gunder.com

106

Section 9.3      Assignment and Succession.  Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by any of the Parties without the written consent of the other Parties, except that Parent or Merger Sub may, without the prior consent of any other Party, collaterally assign this Agreement to any lender; provided that no such assignment shall relieve the assigning Party of any of its obligations hereunder. Any assignment of this Agreement or any of the rights, interests or obligations hereunder not permitted under this Section 9.3 shall be null and void ab initio . Subject to the foregoing terms of this Section 9.3 , this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
Section 9.4      Amendment or Supplement.  Subject to the requirements of applicable Law, this Agreement may be amended at any time by execution of an instrument in writing identifying itself as an amendment signed, when amended prior to the Closing, by Parent, Merger Sub and the Company and, when amended on or after the Closing, by Parent, the Company and Holders’ Representative. For purposes of this Section 9.4 , the Consenting Holders have agreed pursuant to the Written Consent and Joinders that any amendment of this Agreement consented to by Holders’ Representative shall be binding on and enforceable against them, whether or not they have signed this Agreement or such amendment.
Section 9.5      Waivers.  No waiver of any provision of this Agreement shall be valid and binding unless it is in writing and signed by the Party against whom the waiver is to be effective. No failure on the part of any Party in exercising any right, privilege or remedy hereunder and no delay on the part of any Party in executing any right, privilege or remedy under this Agreement, shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right hereunder. No notice to or demand on a Party made hereunder shall operate as a waiver of any right of the Party giving such notice or making such demand to take further action without notice or demand as permitted hereunder.
Section 9.6      Entire Agreement . This Agreement, including the Schedules and Exhibits hereto and the other documents referred to herein which form a part hereof, the Confidentiality Agreement and the Transaction Agreements contain the entire understanding of the Parties with respect to the subject matter contained herein and therein. This Agreement supersedes all prior and contemporaneous, agreements, arrangements, contracts, discussions, negotiations, undertakings and understandings (whether written or oral) between the Parties with respect to such subject matter (other than the Confidentiality Agreement and Transaction Agreements). Upon the Closing, the Confidentiality Agreement shall automatically terminate and none of the Parties shall have any further Liability or obligation thereunder.

107

Section 9.7      No Third-Party Beneficiaries . Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the Parties) any right, benefit or remedy of any nature whatsoever under this Agreement, except that after the Effective Time, (a) Parent Indemnified Persons shall be third party beneficiaries for purposes of enforcing the rights granted to such Parent Indemnified Persons, (b) Holder Indemnified Persons shall be third party beneficiaries for purposes of enforcing the rights granted to such Holder Indemnified Persons, and (c) the D&O Indemnified Persons shall be shall be third party beneficiaries for purposes of enforcing the rights granted to such D&O Indemnified Persons. For the avoidance of doubt, no consent of any Indemnified Person shall be necessary to amend any provision of this Agreement.
Section 9.8      Remedies Cumulative . Except as otherwise provided in this Agreement (including Section 8.4.5 , which shall exclusively control on the topic of monetary remedies following the Closing ) , all rights and remedies of each of the Parties shall be cumulative and the exercise of any one or more rights or remedies shall not preclude the exercise of any other right or remedy available hereunder or under applicable Law.
Section 9.9      Specific Performance. The Parties agree that each of the Parties would be irreparably harmed 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 the other Parties could not be compensated adequately by monetary damages alone. Accordingly, the Parties agree that, in addition to any other remedy to which such Party may be entitled to at Law or in equity, each Party shall be entitled to temporary, preliminary and/or permanent injunctive relief or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement (including the right to compel the other Parties to cause the Merger to be consummated on the terms and subject to conditions set forth in this Agreement) without having to prove irreparable harm or that monetary damages would be inadequate. The Parties expressly waive any requirement under any Law that the other Parties obtain any bond or give any other undertaking in connection with any action seeking injunctive relief or specific performance of any of the provisions of this Agreement. Each of the Parties further agrees that in the event of any action for specific performance relating to this Agreement or the Merger, such Party shall not assert and hereby waives the defense that a remedy at Law would be adequate or that specific performance is not an appropriate remedy for any reason in Law or equity.
Section 9.10      Severability . If a court of competent jurisdiction finds that any term or provision of the Agreement is invalid, illegal or unenforceable under any Law or public policy, the remaining provisions of the Agreement shall remain in full force and effect if the economic and legal substance of this Agreement and the Merger shall not be affected in any manner materially adverse to any Party. Any such term or provision found to be illegal, invalid or unenforceable only in part or in degree shall remain in full force and effect to the extent not invalid, illegal or unenforceable. Upon the determination that any term or provision is invalid, illegal or unenforceable,

108

the Parties intend that such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent possible under applicable Law and compatible with the consummation of the Transactions as originally intended.
Section 9.11      Costs and Expenses.  Except as otherwise specified herein, whether or not the Merger is consummated, each Party shall pay all costs and expenses it has incurred in connection with this Agreement and the Merger.
Section 9.12      Time of Essence . The Parties acknowledge that the Outside Date specified in Section 7.1.2 is essential and therefore agree that no Party wishing to terminate this Agreement in accordance with Section 7.1 shall be required to extend the Outside Date to allow any other Party to satisfy any condition or perform any obligation under this Agreement.
Section 9.13      Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original copy of this Agreement and all of which, when taken together, shall constitute one instrument. The exchange of copies of this Agreement and manually executed signature pages by transmission by facsimile or by email of a .pdf of a handwritten original signature or signatures to the other Parties shall constitute effective execution and delivery of this Agreement and may be used in lieu of the original Agreement for all purposes. The signature of a Party transmitted by facsimile or other electronic means shall be deemed to be an original signature for any purpose.
Section 9.14      Governing Law . This Agreement and all claims or causes of action (whether sounding in contract or tort) arising under or related to this Agreement, shall be governed by and construed in accordance with, the Laws of the State of California, without regard to any rule or principle that might refer the governance or construction of this Agreement to the Laws of another jurisdiction.
Section 9.15      Exclusive Jurisdiction; Venue; Service of Process . In any action or proceeding between any of the Parties arising under or related to this Agreement, the other Transaction Agreements or the Merger, each of the Parties (a) knowingly, voluntarily, irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state or federal courts located in the City and County of San Francisco, California, (b) agrees that all claims in respect of any such action or proceeding shall be heard and determined exclusively in accordance with clause (a) of this Section 9.15 , (c) waives any objection to the laying of venue of any such action or proceeding in such courts, including any objection that any such action or proceeding has been brought in an inconvenient forum or that the court does not have jurisdiction over any Party and (d) agrees that service of process upon such Party in any such action or proceeding shall be effective if such process is given as a notice in accordance with Section 9.2 . The Parties agree that

109

any Party may commence a proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.
Section 9.16      Consent to Representation; Privileged Communications . If the Holders’ Representative so desires, acting on behalf of the Holders and without the need for any consent or waiver by Company, Parent, or Merger Sub, Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP (“ Gunderson ”) shall be permitted to represent the Holders’ Representative or the Holders after the Closing in connection with any matter, including anything related to the transactions contemplated by this Agreement, any other agreements referenced herein or any disagreement or dispute relating thereto. Without limiting the generality of the foregoing, after the Closing, Gunderson shall be permitted to represent the Holders’ Representative, the Holders, any of their agents and Affiliates, or any one or more of them, in connection with any negotiation, transaction, or dispute (including any litigation, arbitration, or other adversary proceeding) with Parent, the Company, or any of their agents or Affiliates under or relating to this Agreement, any transaction contemplated by this Agreement, and any related matter, such as claims or disputes arising under other agreements entered into in connection with this Agreement, including with respect to any indemnification claims. Parent, Merger Sub, and the Company further agree that, as to all communications among Gunderson and the Holders’ Representative and the Holders and their respective Affiliates (individually and collectively, the “ Seller Group ”) that relate in any way to the transactions contemplated by this Agreement, the attorney-client privilege and the exception of client confidence belongs solely to the Seller Group and may be controlled only by the Seller Group and shall not pass to or be claimed by Parent, Sub, and Company, because the interests of Parent and its Affiliates were directly adverse to the Company, the Holders and the Holders’ Representative at the time such communications were made. This right to the attorney-client privilege shall exist even if such communications may exist on the Company’s computer system or in documents in the Company’s possession. Notwithstanding the foregoing, in the event that a dispute arises between Parent, Merger Sub, and the Company, on the one hand, and a Person other than a party to this Agreement, on the other hand, after the Closing, the Company may assert the attorney-client privilege to prevent disclosure to such third-party of confidential communications by Gunderson to the Company; provided, however, that the Company may not waive such privilege without the prior written consent of the Holders’ Representative.
* * *
[ Signature page follows ]
IN WITNESS WHEREOF , the Parties have caused this Agreement and Plan of Merger and Reorganization to be duly executed and delivered as of the date first above written.

110

INVITAE CORPORATION
By: /s/ Sean E. George, Ph.D.    
Name: Sean E. George, Ph.D.
Title: President and Chief Executive Officer
SANTA BARBARA MERGER SUB, INC.
By: /s/ Tom Brida    
Name: Tom Brida
Title: President and Chief Executive Officer

[Signature Page to Agreement and Plan of Merger and Reorganization]

IN WITNESS WHEREOF , the Parties have caused this Agreement and Plan of Merger and Reorganization to be duly executed and delivered as of the date first above written.
SINGULAR BIO, INC.
By: /s/ Hywel Jones    
Name: Hywel Jones
Title: Chief Executive Officer

IN WITNESS WHEREOF , the Parties have caused this Agreement and Plan of Merger and Reorganization to be duly executed and delivered as of the date first above written.
HOLDERS’ REPRESENTATIVE
By: /s/ Ryan Simkin    
Name: Ryan Simkin
Its: Managing Director
Email: notices@fortisrep.com

CONSENT AND JOINDER AGREEMENT
THIS CONSENT AND JOINDER AGREEMENT (this “ Agreement ”) is entered into as of June __, 2019 by and between Invitae Corporation, a Delaware corporation (“ Acquiror ”), and the undersigned holder (each, solely as to himself, herself or itself, “ Holder ”) of shares of capital stock (or options or warrants to purchase capital stock) of Singular Bio, Inc., a Delaware corporation (the “ Company ”), effective as to Holder as of the date set forth on Holder’s signature page hereto (such date, as to Holder, the “ Effective Date ”). Terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Merger Agreement (as defined below). If the terms of this Agreement conflict in any way with the provisions of the Merger Agreement, then the provisions of the Merger Agreement shall control.
RECITALS
WHEREAS, Holder is executing and delivering this Agreement in connection with that certain Agreement and Plan of Merger, dated as of June 14, 2019 (as it may be amended from time to time in accordance with its terms, the “ Merger Agreement ”), by and among Acquiror, Project Santa Barbara Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Acquiror (“ Merger Sub ”), the Company and Holders’ Representative, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving such merger as a wholly owned subsidiary of Acquiror (the “ Merger ”).
WHEREAS, Holder understands and acknowledges that the Company, Merger Sub and Acquiror are entitled to rely on (i) the truth and accuracy of Holder’s representations contained herein and (ii) Holder’s performance of the obligations set forth herein.
NOW, THEREFORE, in consideration of the representations, warranties, covenants, agreements and obligations contained herein and in the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as set forth herein.
1.      Representations, Warranties and Covenants of Holder . If Holder is a Stockholder, an Optionholder holding in-the-money Company Options or a Warrantholder holding in-the-money Company Warrants (each, a “ Participating Holder ”), Holder hereby represents, warrants and covenants, as of the Effective Date, to Acquiror as follows:

1.1      Holder has (a) prior to entering into this Agreement and delivering his, her or its written consent approving the Transactions in the form attached hereto as Exhibit A (the “ Written Consent ”), received a copy of the Merger Agreement and familiarized himself, herself or itself with the terms and conditions contained therein, including, without limitation, provisions relating to post-Closing adjustments to the consideration owed to the Participating Holders under the Merger Agreement (the “ Merger Consideration ”), the payment and allocation of the consideration to be paid to the Participating Holders, the indemnification obligations of each Indemnifying Party, the withholding of the amounts constituting the Indemnification Holdback Amount and the Adjustment Holdback Amount, the appointment of Holders’ Representative to perform the functions on behalf of the Participating Holders as set forth in the Merger Agreement, and the indemnification of Holders’ Representative; (b) not otherwise relied on any Person (other than Holder’s personal attorney, tax or financial advisor) in connection with Holder’s investigation of the accuracy or sufficiency of the information provided in the Information Statement circulated herewith, or his, her or its decision to approve the Transactions, enter into this Agreement or otherwise; and (c) in accordance with Sections 228(a) and 228(c) of the DGCL, irrevocably with respect to all shares of capital stock consented in writing to the adoption and approval of the Written Consent.
1.2      Holder (if Holder is a Stockholder) is the beneficial or record owner of, or exercises voting power over, that number of shares of Company Capital Stock set forth on the signature page hereto (all such shares owned beneficially or of record by Holder, or over which Holder exercises voting power, on the Effective Date, collectively, the “ Shares ”). The Shares constitute Holder’s entire interest in the outstanding shares of the capital stock of the Company and Holder is not the beneficial or record holder of, and does not exercise voting power over, any other outstanding shares of capital stock of the Company. Holder has sole right to vote and execute stockholder written consents and sole power of disposition and sole power to agree and to issue instructions with respect to all Shares and the other matters contemplated herein, with no restrictions on Holder’s right and powers of voting or disposition pertaining thereto and no Person not a signatory to this Agreement has a beneficial interest in or a right to acquire or vote any of the Shares. The Shares are and will be at all times up until the Expiration Time (as defined below) free and clear of any security interests, liens, claims, pledges, options, rights of first refusal, co-sale rights, agreements, limitations on Holder’s voting rights, charges and other encumbrances of any nature that could adversely affect the Merger, the Merger Agreement or the exercise or fulfillment of the rights and obligations of the Company, Acquiror, Merger Sub or Holder under this Agreement or the Merger Agreement. Holder’s principal residence or place of business is set forth on the signature page hereto. As used herein, the term “ Expiration Time ” shall mean the earliest occurrence of (a) the Effective Time, (b) the date and time of the valid termination of the Merger Agreement in accordance with its terms, (c) such date and time designated by Acquiror in a written notice to Holder, and (d) termination of this Agreement by mutual consent of the parties hereto.
1.3      If Holder is a corporation, limited partnership or limited liability company, Holder is an entity duly organized, validly existing and, where applicable, in good standing under the laws of the jurisdiction in which it is incorporated, organized or constituted.

1.4      Holder has all requisite power, capacity and authority to enter into this Agreement and to perform his, her or its obligations under this Agreement and consummate the Transactions and the other transactions contemplated hereby. The execution and delivery of this Agreement by Holder and the consummation by Holder of the Transactions and the other transactions contemplated hereby have been duly authorized by all necessary entity action, if any, on the part of Holder (or its board of directors or similar governing body, as applicable), and no other actions or proceedings on the part of Holder are necessary to authorize the execution and delivery by Holder of this Agreement and the consummation by Holder of the Transactions and the other transactions contemplated hereby. This Agreement has been duly executed and delivered by Holder and, assuming the due authorization, execution and delivery of this Agreement by Acquiror, constitutes a valid and binding obligation of Holder, enforceable against Holder in accordance with its terms, subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and (b) rules of law governing specific performance, injunctive relief and other equitable remedies.
1.5      The execution and delivery of this Agreement by Holder does not, and the performance by Holder of his, her or its agreements and obligations hereunder will not, conflict with, result in a breach or violation of or default under (with or without notice or lapse of time or both), or require notice to or the consent of any Person under, any provisions of the organizational documents of Holder (if applicable), or any agreement, commitment, law, rule, regulation, judgment, order or decree to which Holder is a party or by which Holder is, or any of his, her or its assets are, bound, except for such conflicts, breaches, violations or defaults that would not, individually or in the aggregate, prevent or delay consummation of the Merger, the other Transactions and the other transactions contemplated by this Agreement or otherwise prevent or materially delay Holder from performing his, her or its obligations under this Agreement.
1.6      As of the date hereof, there is no action, suit, claim or proceeding of any nature pending, or to the knowledge of Holder, threatened in writing, against Holder or any of Holder’s properties (whether tangible or intangible), nor to the knowledge of Holder is there any investigation pending or threatened in writing by any Governmental Authority against Holder or any of Holder’s properties (whether tangible or intangible) (or, if and to the extent that Holder is an entity, any of Holder’s officers or directors (in their capacities as such)), that would prevent or materially delay Holder from performing his, her or its obligations under this Agreement.
1.7      Holder hereby agrees that after executing the Written Consent setting forth the Stockholders’ resolutions required by the Merger Agreement pursuant to Section 1.1(c) , Holder shall not revoke or rescind such Written Consent or any resolution contained therein and further agrees not to adopt any resolutions rescinding or revoking such Written Consent or any resolution contained therein or otherwise precluding the approval of the Merger and the adoption of the Merger Agreement at any time prior to the Expiration Time. Holder agrees that he, she or it will not bring, commence, institute, maintain, prosecute, participate in or voluntarily aid any Action, in any court or before any Governmental Authority, that challenges the validity of or seeks to enjoin the operation of any provision of such Written Consent (including this Agreement

or the execution and delivery of the Merger Agreement and the consummation of the Merger and the other Transactions).
1.8      Holder is not obligated for the payment of any fees or expenses of any broker, investment banker, financial advisor or similar Person in connection with the Merger Agreement and the Transactions for which Acquiror or the Company may become liable.
1.9      Holder has had an opportunity to review with his, her or its own tax advisors the tax consequences of the Merger and the other Transactions. Holder understands that he, she or it must rely solely on his, her or its advisors with respect to such tax consequences and not on any statements or representations made by Acquiror, the Company or any of their agents or representatives. Holder understands that Holder (and not Acquiror, the Company or the Surviving Corporation) shall be responsible for Holder’s tax liability that may arise as a result of the Merger or the other Transactions.
2.      Holder Representations as to the Parent Shares . If Holder is a Stockholder, Holder hereby represents and warrants to Acquiror as follows:
2.1      Holder acknowledges and understands that the shares of Parent Common Stock to be issued and delivered to Holder in accordance with the Merger Agreement (the “ Parent Shares ”) have not been registered under the 1933 Act in reliance, in part, on the representations present in this Agreement.
2.2      Holder acknowledges and understands that the Parent Shares are being acquired by Holder for investment purposes for Holder’s own account only and not for sale or with a view to distribution of all or any part of such shares. Holder has no present plan or intention to sell, exchange or otherwise dispose of any of the Parent Shares.
2.3      Holder understands that the Parent Shares will be “restricted securities” under the federal securities laws in that the Parent Shares will be acquired from Acquiror in a transaction not involving a public offering, and that under such laws and applicable regulations the Parent Shares may be resold without registration under the 1933 Act only in certain limited circumstances and that otherwise the Parent Shares must be held indefinitely.
2.4      Holder understands the resale limitations imposed by the 1933 Act as well as Rule 144 (“ Rule 144 ”) of the Securities and Exchange Commission (the “ SEC ”) and the conditions which must be met in order for Rule 144 to be available for resale of “restricted securities,” including the requirement that the Parent Shares must be held for at least six (6) months after issuance from Acquiror (or one (1) year in the absence of publicly available information about Acquiror) and the condition that there be available to the public current information about Acquiror under certain circumstances.
2.5      Holder understands that, except as set forth in the Merger Agreement and Registration Rights Agreement, Acquiror is under no obligation to register the Parent Shares under the 1933 Act or to qualify the Parent Shares under any other applicable state securities laws.

2.6      Holder certifies that, in connection with the issuance of the Parent Shares, at no time was Holder presented with, or solicited by, any form of general solicitation or general advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio; or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
2.7      Holder understands that the certificates evidencing the Parent Shares may bear one or all of the following legends (or substantially similar legends):

a.	“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.”	

		
b.	Any legend required by applicable state securities laws.	
2.8      Holder understands that stop transfer instructions may be given to Acquiror’s transfer agent with respect to the Parent Shares.
2.9      If Holder has checked the box next to “Yes” with respect to the question, “Is Holder an ‘accredited investor’?” on the signature page of this Agreement, Holder certifies that it, he or she is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Otherwise, Holder represents that it, he or she together with its, his or her purchaser representative, has such knowledge and experience in financial and business matters that it, he or she is capable of evaluating the merits and risks of the prospective investment in the Parent Shares.
2.10      Holder acknowledges that it, he or she has been able to review the books and records of Acquiror, including but not limited to any financial records, and ask questions of its management. Holder is not aware of any misstatement of any fact or information and Holder understands that statements of opinion or projections made by Acquiror are not a guaranty or assurance of actual performance or intended to be statements of fact. Holder has been advised that it is Holder’s responsibility to seek its, his or her own independent tax and financial advice with respect to the proper reporting and treatment of the Merger, the other Transactions and the other transactions contemplated by this Agreement for federal and state tax purposes.

2.11      Holder acknowledges and understands that pursuant to Section 5.14 of the Merger Agreement and by virtue of executing this Agreement, Holder is agreeing not to sell any of the Parent Shares, if the sale of such shares would, when combined with the sale of any other shares of Parent Common Stock by such Holder in any one (1)-day period, exceed five percent (5%) of the average daily trading volume of Parent Common Stock on the New York Stock Exchange over the five (5) trading days preceding such date of sale; provided , however , that if the aggregate number of Stock Consideration Shares represents less than fifty percent (50%) of the average daily trading volume of Parent Common Stock on the New York Stock Exchange over the five (5) trading days preceding the Closing, such resale volume limitations shall not apply. Any waiver or release of the restrictions in this Section 2.11 granted to a particular holder under any Consent and Joinder Agreement of like tenor to this Agreement will be made available to the Holder hereunder on a proportionate basis.
3.      Release and Waiver; Consent; Termination of Existing Agreements . All Holders agree as follows :
3.1      Holder’s portion of the Merger Consideration represents the only consideration to be received by Holder in exchange for the Company Capital Stock or other Company securities owned by Holder. Effective as of, and contingent upon, the Effective Time, in exchange for such consideration and as a condition and inducement to the Company’s, Acquiror’s and Merger Sub’s willingness to enter into the Merger Agreement, Holder, for himself, herself or itself and on behalf of his, her or its heirs, legal representatives, successors and assigns (which, for clarity, excludes any portfolio companies of any venture capital, private equity or angel investor in the Company) (collectively, the “ Relevant Persons ”), hereby irrevocably, unconditionally and forever acquits, releases, waives and discharges Acquiror, the Company and Merger Sub, and each of their respective officers, directors, employees, agents, divisions, affiliated corporations, subsidiaries, Affiliates, managers affiliated non-corporation entities, representatives, successors, predecessors and assigns (individually and collectively, the “ Released Parties ”) from any and all past, present and future debts, losses, costs, accounts, reckonings, bills, sums of money, bonds, suits, actions, causes of action, liabilities, contributions, attorneys’ fees, interest, damages, punitive damages, expenses, controversies, covenants, Contracts, promises, judgments, Liabilities, claims, potential claims, counterclaims, cross-claims, or demands, in law or in equity, asserted or unasserted, express or implied, known or unknown, matured or unmatured, contingent or vested, liquidated or unliquidated, of any kind or nature or description whatsoever, that any of the Relevant Persons had, presently has or may hereafter have or claim or assert to have against any of the Released Parties by reason of any act, omission, transaction, occurrence, conduct, circumstance, condition, harm, matter, cause or thing that has occurred or existed at any time from the beginning of time up to and including the Effective Time, that in any way arise from or out of, are based upon or relate to (a) such Relevant Person’s or Relevant Persons’, as applicable, ownership or purported ownership of securities of the Company or (b) the negotiation or entry into this Agreement, the Merger Agreement or any of the other documents referenced in the Merger Agreement or the consummation of any of the Transactions; provided , however , that the foregoing release shall not apply to or encompass (i) any claim such Relevant Person’s or Relevant Persons’, as applicable, representative may have, in his or her capacity as a director or officer of the Company, for indemnification, exculpation or advancement

of expenses, whether pursuant to an indemnification agreement, under the Company Charter Documents as in effect immediately prior to the Closing or pursuant to applicable Law or under the D&O Tail Insurance, (ii) any claim such Relevant Person or Relevant Persons, as applicable, may have to enforce after the Effective Time his, her or its rights under the Merger Agreement and each agreement attached as an exhibit thereto or entered into in connection therewith, (iii) any claim such Relevant Person or Relevant Persons, as applicable, might have to enforce his, her or its rights under this Agreement, (iv) any right of contribution against another holder of Company securities, and (v) any claim that cannot be waived or released by Law (collectively, the “ Excluded Claims ”) (after taking into account such Excluded Claims, the “ Holder Claims ”). The foregoing release is intended to be complete, global and all-encompassing and specifically includes claims that are known, unknown, fixed, contingent or conditional with respect to the matters described herein. With respect to such Holder Claims, Holder hereby expressly waives any and all rights conferred upon him, her or it by any statute or rule of law that provides that a release does not extend to claims that the claimant does not know or suspect to exist in his, her or its favor at the time of executing the release, which if known by him, her or it must have materially affected his, her or its settlement with the released party, including the following provisions of California Civil Code Section 1542 to the extent applicable to Holder: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
3.2      Holder hereby waives any and all rights to contest or object to the execution and delivery of the Merger Agreement, the Company’s Board of Directors’ actions in approving and recommending the Merger, the consummation of the Merger and the other Transactions, the execution and delivery of a Written Consent and the granting of the Requisite Stockholder Approval, or to seek damages or other legal or equitable relief in connection therewith. Any and all existing agreements between the Company and Holder, solely in his, her or its capacity as a holder of Company Capital Stock or other Company securities, including any investment agreement, stock purchase agreement, carve-out bonus plans, equity incentive plans, stockholders agreements, registration rights agreements, management rights letters, or side letters (but for clarity excluding any indemnification agreements or indemnification, exculpation or expense advancement provisions in the Company Charter Documents) shall, contingent upon the occurrence of the Closing, automatically terminate and be of no force and effect effective immediately prior to the Effective Time, and Holder hereby agrees, solely in his, her or its capacity as a holder of Company Capital Stock or other Company securities, to the waiver of any rights of first refusal, preemptive rights, rights to notice, rights of co-sale, registration rights, information rights and similar rights of Holder under any such agreements or otherwise. As of and subject to the Closing, Holder, in his, her or its capacity as a holder of Company Capital Stock or other Company securities (and not as an officer, employee, lender or any other non-securityholder capacity), will not be entitled to any indemnity, reimbursement or other similar rights from Acquiror, the Company or their respective subsidiaries, including by virtue of Holder’s investment in the Company or any other Contract, and no obligation, liability or other circumstances shall exist at the Effective Time that give or may give rise to any liability of Acquiror, the Company

or their respective subsidiaries to Holder in such capacity, other than as specifically set forth in the Merger Agreement and this Agreement. From and after the Effective Time, Holder’s right to receive consideration and Holder’s right to be indemnified and held harmless as a Holder Indemnified Person, on the terms and subject to the conditions set forth in the Merger Agreement, shall constitute Holder’s sole and exclusive rights against the Company and/or Acquiror in respect of Holder’s ownership of the Shares or other Company securities or status as a Holder of the Company or any agreement or instrument with the Company pertaining to the Shares or other Company securities.
3.3      Notwithstanding the foregoing, nothing in this Section 3 releases any claims relating to (a) Relevant Persons’ claims after the Effective Time under the Merger Agreement and Registration Rights Agreement (including, but not limited to Acquiror’s failure to make any payments as required in the Merger Agreement and claims in Holder’s capacity as a Holder Indemnified Person); (b) if Holder is or was an employee or other service provider of the Company, any rights such Holder is entitled to by virtue of his or her status as an employee or other service provider of the Company, including (i) any right to any earned unpaid non-equity-based employment compensation due from the Company to Holder in the ordinary course of business, (ii) any right to expense reimbursements for reasonable and necessary business expenses incurred prior to the Effective Time (and documented and submitted promptly after being incurred) and consistent with prior Company policy and practice, (iii) any right to unreimbursed claims under employee health and welfare plans to the extent consistent with terms of applicable governing plan documents and (iv) the entitlement to continuation coverage benefits or any other similar benefits required to be provided by Law; (c) agreements between Holder on the one hand, and Acquiror and/or its Affiliates (other than Company), on the other, that are unrelated to Holder’s position as a securityholder of the Company; (d) any claims made on behalf of Holder by Holders’ Representative pursuant to the terms of the Merger Agreement; (e) any right of contribution against another securityholder of the Company; (f) rights to any indemnification to which Holder is entitled pursuant to any indemnification agreement, any indemnity provision of the Company Charter Documents or the D&O Tail Insurance and (g) any other Excluded Claims.
4.      Confidentiality .
4.1      Holder shall hold any information regarding this Agreement, the Merger Agreement and the Merger in strict confidence and shall not divulge any such information to any third Person; provided that Holder may disclose such information (a) to his, her or its attorneys, accountants, tax advisors, consultants and other third party professionals to the extent necessary to obtain their services in connection with monitoring Holder’s interests in the Company and Holder’s rights under the Merger Agreement or other agreements entered into in connection with the Merger, including his, her or its rights to receive proceeds from the Merger (provided that such advisors are subject to a similar obligation of confidentiality at least as protective as that set forth herein), (b) to any existing or prospective Affiliate, partner, member, parent or subsidiary of Holder in the ordinary course of his, her or its business or pursuant to its customary investor communications practices, provided that, in each case, Holder informs the Person receiving the information that such information is confidential and such Person is subject to a similar obligation of confidentiality at least as protective as that set forth herein, (c) to the

extent Acquiror has publicly disclosed such information, (d) to the extent that Holder is required by applicable Law or this Agreement to divulge or disclose such information, in which case Holder shall reasonably cooperate with Acquiror in advance to limit such disclosure to the extent permitted under applicable Law, (e) to the extent required as part of Holder’s or any of its Affiliate’s financial statements or Tax Returns, (f) to employees, advisors, agents or consultants of the Holders’ Representative in connection with the performance of the Holders’ Representative’s duties under the Merger Agreement, and (g) as reasonably relevant for enforcing the rights of Holder or Holders’ Representative or defending against assertions by Acquiror as disclosed to any Governmental Authority or other involved party (e.g., opposing counsel, expert witnesses, investigators) in connection with any dispute resolution proceedings involving a dispute between Acquiror or another Parent Indemnified Person, on the one hand, and Holder or the Holders’ Representative, on the other hand (collectively, the “ Disclosure Exceptions ”). Neither Holder, nor any of his, her or its Affiliates (other than the Company, whose actions shall be governed by the Merger Agreement), shall issue or cause the publication of any press release or other public announcement with respect to this Agreement, the Merger, the Merger Agreement, the Transactions or the other transactions contemplated hereby without the prior written consent of Acquiror, except as may be required by applicable Law, in which circumstance such announcing party shall make reasonable efforts to notify Acquiror as early as reasonably practicable before such publication.
4.2      Holder further acknowledges that the success of the Surviving Corporation after the Closing Date depends upon the preservation of the confidentiality of the Confidential Information (as defined below), that the preservation of the confidentiality of the Confidential Information is an essential premise of the bargain between the parties to the Merger Agreement and that Acquiror and Merger Sub would be unwilling to enter into the Merger Agreement in the absence of Holder’s agreement to the obligations set forth in this Section 4.2. Accordingly, Holder, shall, and shall use its commercially reasonable efforts to cause its Affiliates and their respective Representatives to, keep confidential all proprietary and confidential documents and information involving or relating to the Company or its business not addressed in Section 4.1 (the “ Confidential Information ”), unless (a) compelled to disclose such Confidential Information by Law so long as, to the extent permitted by Law, reasonable prior notice of such disclosure is given to Acquiror and the Company and a reasonable opportunity is afforded Acquiror and the Company to contest the same or (b) disclosed in an Action brought by a party to the Merger Agreement in pursuit of such party’s rights or in the exercise of such party’s remedies thereunder. For clarity, the term “Confidential Information” excludes any information (i) that has come into the public domain through no fault of Holder or (ii) that was lawfully disclosed to Holder by a third party without an obligation to keep such information confidential.
5.      Agreement to Indemnification Provisions; Appointment of Holders’ Representative .
5.1      By executing and delivering this Agreement, Holder (if Holder is a Participating Holder) acknowledges and agrees to be bound by the indemnification provisions set forth in the Merger Agreement, including (a) the indemnification obligations of Holder contained in Article VIII of the Merger Agreement and (b) the withholding of the Indemnification

Holdback Amount to provide recourse to Acquiror for any exercise of the Offset Right by the Parent Indemnified Persons in accordance with Section 8.3 of the Merger Agreement. Holder further acknowledges, agrees and approves the appointment of Holders’ Representative as the representative, agent and attorney-in-fact on behalf of Holder, all as set forth in Section 8.5 of the Merger Agreement, and the taking by Holders’ Representative of any and all actions and the making of any decisions required or permitted to be taken by Holders’ Representative under the Merger Agreement, including the exercise of all powers, authority and responsibilities set forth in Section 8.5 of the Merger Agreement, in each case, from and after the Closing. Holder further acknowledges and agrees that (i) any amendment of the Merger Agreement consented to by Holders’ Representative shall be binding on and enforceable against Holder, whether or not Holder has signed the Merger Agreement or such amendment, and (ii) any proceeds from the Merger Consideration, shall be payable, if at all, pursuant to the terms and conditions of the Merger Agreement.
5.2      Holder acknowledges and agrees that, notwithstanding anything in this Agreement or the Merger Agreement to the contrary, Holder shall not be subrogated to any rights or remedies, or otherwise make any claim, (a) under the R&W Insurance Policy, or (b) against the Company or the Surviving Corporation or any other Parent Indemnified Person (regardless of the facts or the kind of Loss at issue), and Holder expressly waives any right of subrogation, contribution, advancement, indemnification or other claim (i) under the R&W Insurance Policy, or (ii) against the Company or the Surviving Corporation or any other Parent Indemnified Person with respect to any indemnification obligation or any other liability to which Holder may become subject under or in connection with this Agreement or the Merger Agreement. Holder (on behalf of itself, himself or herself and each Person affiliated with Holder who has served as an officer, director, employee or consultant of the Company) further agrees not to make any claim for indemnification against any Parent Indemnified Person based on the fact that Holder (or any Person affiliated with Holder who has served as an officer, director, employee or consultant of the Company) was a controlling person, director, Employee or agent of the Company (whether such claim is for Losses of any kind or otherwise and whether such claim is pursuant to Law, a Charter Document, a Contract or otherwise) with respect to the amount of Loss for which Holder is liable in its capacity as a Consenting Holder with respect to any claim brought by a Parent Indemnified Person against any Holder (or any Person affiliated with such Holder who has served as an officer, director, employee or consultant of the Company) under or relating to this Agreement, the Merger Agreement, any other Transaction Agreement or the Transactions. With respect to the amount of Loss for which Holder is liable in its capacity as a Consenting Holder with respect to any claim brought by a Parent Indemnified Person against Holder (or any Person affiliated with Holder who has served as an officer, director, employee or consultant of the Company) under or relating to this Agreement, the Merger Agreement, any other Transaction Agreement or the Transactions, Holder (on behalf of itself, himself or herself and each Person affiliated with Holder who has served as an officer, director, employee or consultant of the Company) expressly waives any right of subrogation, contribution, advancement, indemnification or other claim against the Company with respect to any indemnification obligation or any other liability to which Holder (or any Person affiliated with Holder who has served as an officer, director, employee or consultant of the Company) may become subject under or in connection with this Agreement.

6.      Dissenters’ Rights; Appraisal Rights . Holder agrees not to exercise any rights of appraisal or any dissenters’ rights that Holder may have (whether under applicable Law or otherwise) or could potentially have or acquire in connection with the Merger. Holder hereby further agrees not to commence or participate in, and to take all actions necessary to opt out of any class in any class action with respect to any claim, derivative or otherwise, against the Company, Acquiror or Merger Sub or any of their respective successors (i) challenging the validity of, or seeking to enjoin or delay the operation of, any provision of this Agreement or the Merger Agreement (including any claim seeking to enjoin or delay the Closing) or (ii) alleging a breach of any duty of the Company’s Board of Directors in connection with the Merger Agreement, this Agreement or the Transactions.
7.      Miscellaneous .
7.1      Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or mailed by registered or certified mail (return receipt requested) or sent via email to the parties hereto at the following address (or at such other address for a party as shall be specified by like notice):

(a)	if to Acquiror or Merger Sub, to:	
Invitae Corporation
1400 16th Street
San Francisco, CA 94103
Attention: Tom Brida, General Counsel
Email:
with a copy (which shall not constitute notice) to:
Pillsbury Winthrop Shaw Pittman LLP
12255 El Camino Real, Suite 300
San Diego, California 92130
Attn: Mike Hird
Email: mike.hird@pillsburylaw.com

(b)	if to Holder, to the address set forth for Holder on the signature page hereof.	
7.2      Interpretation . When a reference is made herein to Articles, Sections, subsections, Schedules or Exhibits, such reference shall be to an Article, Section or subsection of, or a Schedule or an Exhibit to this Agreement unless otherwise indicated. The headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” Where a reference is made to a Contract, instrument or applicable Law, such reference is to such Contract,

instrument or applicable Law as amended, modified or supplemented, including (in the case of Contracts or instruments) by waiver or consent and (in the case of applicable Law) by succession of comparable successor law and references to all attachments thereto and instruments incorporated therein. Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender and neutral forms of such words, (b) words using the singular or plural number also include the plural or singular number, respectively, (c) the terms “hereof,” “herein,” “hereto,” “hereunder” and derivative or similar words refer to this entire Agreement, (d) references to clauses without a cross-reference to a Section or subsection are references to clauses within the same Section or, if more specific, subsection, (e) references to any Person include the successors and permitted assigns of that Person, (f) references from or through any date shall mean, unless otherwise specified, from and including or through and including, respectively, (g) the phrases “provided to” and “delivered to” and phrases of similar import mean that a true, correct and complete paper or electronic copy of the information or material referred to has been delivered to the party to whom such information or material is to be provided, and (h) a sentence containing “and/or” shall be construed to read as if the sentence is included twice, once with “and” construction and once with an “or” construction. The symbol “$” refers to United States Dollars. 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.” All references to “days” shall be to calendar days unless otherwise indicated as a “Business Day.” Any action otherwise required to be taken on a day that is not a Business Day shall instead be taken on the next succeeding Business Day, and if the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day. Unless indicated otherwise, all mathematical calculations contemplated by this Agreement shall be rounded to the tenth decimal place, except in respect of payments, which shall be rounded to the nearest whole United States cent.
7.3      Specific Performance; Injunctive Relief . The parties hereto acknowledge that Acquiror will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreements of Holder set forth herein. Therefore, it is agreed that, in addition to any other remedies that may be available to Acquiror upon any such violation of this Agreement, Acquiror shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to Acquiror at law or in equity and Holder hereby waives any and all defenses that could exist in his, her or its favor in connection with such enforcement and waives any requirement for the security or posting of any bond in connection with such enforcement.
7.4      Counterparts . This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective as to Acquiror and Holder on the Effective Date, it being understood that all parties need not sign the same counterpart.
7.5      Non-assignability; Third Party Beneficiaries . Neither this Agreement nor any of the rights, interests, or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by Holder without the prior written consent of Acquiror, and any such assignment or delegation that is not consented to shall be null and void.

This Agreement, together with any rights, interests or obligations of Acquiror hereunder, may be assigned or delegated in whole or in part by Acquiror to any direct or indirect wholly owned subsidiary of Acquiror, without the consent of or any action by Holder upon notice by Acquiror to Holder as provided herein; provided that Acquiror shall remain liable for all of its obligations under this Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns (including any Person to whom any Shares are sold, transferred or assigned). All authority conferred herein shall survive the death or incapacity of Holder and in the event of Holder’s death or incapacity, any obligation of Holder hereunder shall be binding upon the heirs, personal representatives, successors and assigns of Holder. The Parent Indemnified Persons, the Released Persons and Holders’ Representative are each an intended third party beneficiary of this Agreement and may enforce this Agreement against Holder as though a party hereto.
7.6      Severability . In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement shall continue in full force and effect and the application of such provision to other Persons or circumstances shall be interpreted so as reasonably to effect the intent of the parties hereto. The parties hereto further agree to use their commercially reasonable efforts to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that shall achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.
7.7      Remedies Cumulative . Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party hereto shall be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party hereto of any one remedy shall not preclude the exercise of any other remedy and nothing herein shall be deemed a waiver by any party hereto of any right to specific performance or injunctive relief, and the parties hereto hereby waive the requirement of any posting of a bond in connection with the remedies described herein.
7.8      Governing Law; Submission to Jurisdiction; Consent to Service of Process . This Agreement and all claims arising out of this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California (whether arising in contract, tort, equity or otherwise), without regard to any conflicts of law principles that would result in the application of any law other than the law of the State of California. The parties hereby irrevocably and unconditionally submit to the exclusive jurisdiction of the state or federal courts located in the City and County of San Francisco, California, solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby, and, to the fullest extent permitted by applicable Law, hereby waive, and agree not to assert, as a defense in any Action for the interpretation or enforcement hereof or thereof, that it is not subject thereto or that such Action may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties irrevocably and unconditionally agree that all claims with respect to such Action shall be heard and determined in the state or federal courts in the City and County

of San Francisco, California. The parties hereby consent to and grant any such court jurisdiction over such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such Action in the manner provided for notices in Section 7.1 or in such other manner as may be permitted by applicable Law, shall be valid and sufficient service thereof. With respect to any particular Action, venue shall lie solely in the state or federal courts in the City and County of San Francisco, California.
7.9      Termination . This Agreement shall terminate and shall have no further force or effect from and after the Expiration Time, and thereafter there shall be no liability or obligation on the part of Holder, provided that (i) if the Closing occurs, the provisions of Section 1 (Representations, Warranties, and Covenants of Holder), Section 2 (Holder Representations as to the Parent Shares), Section 3 (Release and Waiver; Consent; Termination of Existing Agreements), Section 4 (Confidentiality), Section 6 (Dissenters’ Rights; Appraisal Rights), and this Section 7 (Miscellaneous) survive any termination of this Agreement and remain in full force and effect for a period of three (3) years following the Closing Date, (ii) Section 5 (Agreement to Indemnification Provisions; Appointment of Holders’ Representative) shall survive any termination of this Agreement and remain in full force and effect for the same applicable underlying periods for which indemnification is available to the Parent Indemnified Persons pursuant to Article VIII of the Merger Agreement; provided , that , no such termination shall relieve any party from liability for any Fraud or any willful breach of this Agreement prior to such termination.
7.10      Amendment; Extension; Waiver . Subject to applicable Law, the parties hereto may amend this Agreement by authorized action at any time pursuant to an instrument in writing signed on behalf of each of the parties hereto; provided that after the Requisite Stockholder Approval is obtained, no amendment shall be made to this Agreement that by applicable Law requires further approval by Holder without such further approval. To the extent permitted by applicable Law, Acquiror and Holder may cause this Agreement to be amended at any time after the Closing by execution and delivery of an instrument in writing signed on behalf of Acquiror and Holder. At any time at or prior to the Closing, any party hereto may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other party hereto owed to such party, (b) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto and (c) waive any breaches of any of the covenants, agreements, obligations or conditions for the benefit of such party contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing that is signed on behalf of Acquiror and Holder. Without limiting the generality or effect of the preceding sentence, no failure to exercise or delay in exercising any right under this Agreement shall constitute a waiver of such right, and no waiver of any breach or default shall be deemed a waiver of any other breach or default of the same or any other provision herein.
7.11      Rules of Construction . The parties hereto agree that they have been (or have had the opportunity to be) represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any Law, regulation, holding

or rule of construction providing that ambiguities in an agreement or other document shall be construed against the party drafting such agreement or document.
7.12      Additional Documents, Etc . Holder shall execute and deliver any additional documents necessary to carry out the purpose and intent of this Agreement. Without limiting the generality or effect of the foregoing or any other obligation of Holder hereunder, Holder hereby authorizes Acquiror to deliver a copy of this Agreement to the Company and hereby agrees that each of the Company and Acquiror may rely upon such delivery as conclusively evidencing the consents, waivers and terminations of Holder referred to in Section 3 , in each case for purposes of all agreements and instruments to which such elections, consents, waivers and/or terminations are applicable or relevant.
7.13      Indemnification Limitations . Notwithstanding anything to the contrary contained herein, except in the case of (i) Fraud by Holder or (ii) Fraud by or on behalf of the Company where Holder knew of or participated in such Fraud, the total Liability of Holder under this Agreement, when combined with the total Liability of Holder under the Merger Agreement, shall be limited to the aggregate amount of proceeds payable to Holder pursuant to the Merger Agreement (meaning such Liability under this Agreement will be calculated net of all other claims recovered against Holder under the Merger Agreement and vice versa).
7.14      Acknowledgements . Each party to this Agreement acknowledges that (a) Pillsbury Winthrop Shaw Pittman LLP (“ Pillsbury ”), counsel for Acquiror and Merger Sub, represented Acquiror and Merger Sub in connection with this Agreement, the Merger and the other Transactions, (b) Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP (“ Gunderson ”), counsel for the Company, represented the Company in connection with this Agreement, the Merger and the other Transactions, (c) neither Pillsbury nor Gunderson has represented Holder in connection with this Agreement, the Merger or otherwise and (d) Holder acknowledges that he, she or it has had the opportunity to consult with his, her or its own counsel.
[ SIGNATURE PAGES FOLLOW ]

IN WITNESS WHEREOF, the parties hereto have caused this Consent and Joinder Agreement to be executed as of the date written below.

INVITAE CORPORATION
By:     
Name:     
Title:     

IN WITNESS WHEREOF, the parties hereto have caused this Consent and Joinder Agreement to be executed as of the date written below.

HOLDER:

(Print Name of Holder)

(Signature)

(Name and Title If Signing on Behalf of an Entity)

(Print Address)

(Print Telephone Number)

(Social Security or Tax I.D. Number)

Date (the Effective Date):
Is Holder an “accredited investor” as defined on Exhibit B ?    Yes     No
Shares beneficially owned on the date hereof:
     shares of Common Stock
     shares of Series A Preferred Stock
     shares of Series A-1 Preferred Stock
     shares of Series B Preferred Stock

Other equity interests beneficially owned on the date hereof
     Shares of Company Common Stock subject to Company Stock Options

     Shares of Company Common Stock subject to Company Warrants

CONSENT AND JOINDER AGREEMENT
&
WRITTEN CONSENT OF THE STOCKHOLDERS OF
SINGULAR BIO, INC.

SPOUSAL CONSENT

I      , spouse of _      , having the legal capacity, power and authority to do so, hereby confirm that I have read and approve the Consent and Joinder Agreement (the “ Agreement ”) and the written consent of the stockholders (the “ Consent ”) attached as Exhibit A to the Agreement and delivered to my spouse for execution in connection with the transactions contemplated by that certain Agreement and Plan of Merger, dated as of June 14, 2019, by and among Invitae Corporation, a Delaware corporation (“ Acquiror ”), Project Santa Barbara Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Acquiror (“ Merger Sub ”), Singular Bio, a Delaware corporation (the “ Company ”) and Holders’ Representative (as defined therein), pursuant to which Merger Sub will merge with and into the Company, with the Company surviving such merger as a wholly owned subsidiary of Acquiror. In consideration of the terms and conditions as set forth in the Agreement and the matters set forth in the Consent, I hereby appoint my spouse as my attorney in fact with respect to the exercise of any rights and obligations under the Agreement and the Consent, and agree to be bound by the provisions of the Agreement and the Consent insofar as I may have any rights or obligations in the Agreement or in the Consent under the community property laws of the State of California or similar laws relating to marital or community property in effect in the state of our residence as of the date of the Agreement or the Consent.

Date:         
Signature of Spouse:     
Printed Name of Spouse:     

Exhibit 2.2

STOCK PURCHASE AND MERGER AGREEMENT
among
INVITAE CORPORATION,
JUMANJI, LLC,
JUNGLA INC.,

THE SELLERS IDENTIFIED HEREIN
and
FORTIS ADVISORS LLC ,
solely in its capacity as SELLERS’ REPRESENTATIVE
July 11, 2019

1

	
			
TABLE OF CONTENTS	
 	 	Page	
Article I CERTAIN DEFINITIONS; CONSTRUCTION	2	
1.1	Certain Definitions	2	
Article II THE CONTEMPLATED TRANSACTIONS	19	
2.1	Purchase and Sale of the Shares	19	
2.2	Options	20	
2.3	No Fractional Shares; Offset Right	20	
2.4	Other Closing Payments	21	
2.5	Closing	21	
2.6	The Merger	22	
2.7	The Effective Time	22	
2.8	Conversion of Shares in the Merger	22	
2.9	Delivery of Calculations	22	
2.1	Withholding	24	
2.11	Post-Closing Adjustment	24	
2.12	Indemnification Hold-Back Amount and Payment	26	
2.13	Milestones.	26	
Article III REPRESENTATIONS AND WARRANTIES WITH RESPECT TO EACH SELLER	27	
3.1	Title	28	
3.2	Authority	28	
3.3	Non-Contravention	28	
3.4	Governmental Consents	28	
3.5	Litigation	28	
3.6	No Broker and No Transaction Expenses	28	
3.7	Investment	28	
3.8	Taxes	30	
3.9	No Other Representations or Warranties	30	
Article IV REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY	31	
4.1	Organizational Matters	31	
4.2	Noncontravention	32	
4.3	Capitalization	32	
4.4	No Consents or Approvals	33	
4.5	Financial Matters	34	
4.6	Absence of Certain Changes or Events	35	
4.7	Legal Proceedings	36	
4.8	Compliance with Laws; Permits	36	

1

	
			
4.9	Taxes	37	
4.1	Employee Benefits and Labor Matters	40	
4.11	Environmental Matters	44	
4.12	Contracts	45	
4.13	Assets: Title, Sufficiency, Condition	48	
4.14	Real Property	48	
4.15	Intellectual Property; Technology; Privacy and Security; Information Systems; Disaster Recovery	49	
4.16	Insurance	54	
4.17	Related Party/Affiliate Transactions	54	
4.18	Suppliers	54	
4.19	Certain Business Practices	55	
4.2	Brokers and Other Advisors	55	
4.21	No Other Representations or Warranties	55	
Article V REPRESENTATIONS AND WARRANTIES OF BUYER	55	
5.1	Organization	55	
5.2	Authority; Non-Contravention	55	
5.3	Governmental Approvals	56	
5.4	SEC Documents	56	
5.5	Shares of Common Stock	57	
5.6	Absence of Certain Changes or Events	57	
5.7	Availability of Funds	57	
5.8	No Reliance	57	
Article VI CERTAIN AGREEMENTS OF THE PARTIES	58	
6.1	Conduct of the Business	58	
6.2	Actions Required to Consummate Transactions	61	
6.3	Governmental Authorities	61	
6.4	Public Announcements	61	
6.5	Access to Information	62	
6.6	Confidentiality	62	
6.7	Notification of Certain Matters	63	
6.8	Tax Matters	63	
6.9	Non-Competition, Non-Solicitation and Non-Hire Covenants	66	
6.1	Release	67	
6.11	Employment Related Agreements	68	
6.12	Employee Matters and Company Plans	68	
6.13	No Negotiations, Etc	69	
6.14	Termination of the Company Option Plan and Investor Rights Arrangements	69	
6.15	Registration of Shares	69	
Article VII CONDITIONS TO CLOSING	70	

2

	
			
7.1	Conditions to Obligations of Buyer and Merger Sub	70	
7.2	Conditions to Obligation of the Sellers	73	
Article VIII TERMINATION	73	
8.1	Termination	73	
8.2	Effect of Termination	74	
Article IX SURVIVAL AND INDEMNIFICATION	74	
9.1	Survival	74	
9.2	Indemnification	75	
9.3	Offset Right	78	
9.4	Claims for Indemnification; Resolution of Conflicts	80	
9.5	Sellers’ Representative	84	
Article X GENERAL PROVISIONS	86	
10.1	Interpretation	86	
10.2	Notices	88	
10.3	Assignment and Succession	89	
10.4	Amendment or Supplement	89	
10.5	Waivers	89	
10.6	Entire Agreement	90	
10.7	No Third-Party Beneficiaries	90	
10.8	Remedies Cumulative	90	
10.9	Specific Performance	90	
10.1	Severability	90	
10.11	Costs and Expenses	91	
10.12	Time of Essence	91	
10.13	Counterparts	91	
10.14	Governing Law	91	
10.15	Exclusive Jurisdiction; Venue; Service of Process	91	
10.16	Consent to Representation.	91	

SCHEDULES AND EXHIBITS

Schedule A – Sellers
Schedule 2.13(b) – Allocated Resources
Schedule 6.9 – Sellers Subject to Non-Competition and Non-Solicitation Provisions
Schedule 6.14 – Investors’ Rights Arrangements
Exhibit A – Milestone Schedule
Exhibit B – Certificate of Merger
Exhibit C – Form of Employment Agreements
Exhibit D – Registration Rights Agreement
Exhibit E – Stanford License Amendment
Exhibit F – Form of Option Cancellation and Joinder Agreement
STOCK PURCHASE AND MERGER AGREEMENT
THIS STOCK PURCHASE AND MERGER AGREEMENT (this “ Agreement ”) is entered into and dated as of July 11, 2019 (the “ Agreement Date ”) by and among: (a) each of the Persons set forth on Schedule A hereto (collectively referred to herein as the “ Sellers ”, and each individually as a “ Seller ”); (b) the Sellers’ Representative (as defined below), but solely with respect to the provisions expressly applicable to the Sellers’ Representative as set forth herein; (c) Invitae Corporation, a Delaware corporation (“ Buyer ”); (d) Jumanji, LLC, a Delaware limited liability company and a wholly owned subsidiary of Buyer (“ Merger Sub ”); and (e) Jungla Inc., a Delaware corporation (the “ Company ”). Each of the Sellers, Buyer, Merger Sub and Sellers’ Representative may be individually referred to herein as a “ Party ” and collectively referred to herein as the “ Parties .” Capitalized terms used herein have the meanings ascribed thereto in Article I or elsewhere in this Agreement as identified in Article I .
RECITALS
WHEREAS , as of the Agreement Date, the Sellers collectively own all of the outstanding shares (the “ Shares ”) of common stock, par value $0.00001 per share (“ Company Common Stock ”), and preferred stock, par value $0.00001 per share (“ Company Preferred Stock ”, and together with Company Common Stock, “ Company Capital Stock ”), of the Company;
WHEREAS , pursuant to the terms and conditions of this Agreement, on the Closing Date, Buyer is purchasing from the Sellers and the Sellers are selling to Buyer all of the Shares representing 100% of the Company Capital Stock (such purchase and sale, the “ Stock Purchase ”);
WHEREAS , in connection with the transactions contemplated hereby, each option to acquire shares of Company Common Stock (a “ Company Option ”) that is unexpired, unexercised and outstanding immediately prior to the Closing (i) that is a Vested Company Option shall be cancelled in exchange for the right to receive (without interest) the consideration set forth herein and (ii) each other Company Option that is not a Vested Company Option shall be cancelled for no consideration;
WHEREAS , as part of the same overall transaction, promptly following the Stock Purchase, the Company will merge with and into Merger Sub (the “ Merger ”), pursuant to which Merger Sub would continue as the surviving entity and become a wholly owned subsidiary of Buyer, upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS , for U.S. federal income Tax purposes, it is intended that the Stock Purchase and the Merger contemplated herein, shall be considered together as a single integrated transaction for U.S. federal income Tax purposes and the Stock Purchase and the Merger shall qualify as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Code; and
WHEREAS , the sole member of Merger Sub has approved this Agreement and the transactions contemplated by this Agreement and the documents referenced herein, including the Merger, upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE , in consideration of the foregoing and the mutual agreements and covenants set forth below, and intending to be legally bound hereby, the Parties hereby agree as follows:
Article I 

 CERTAIN DEFINITIONS; CONSTRUCTION
1.1      Certain Definitions . The following terms shall have the following meanings in this Agreement:
“ Accounting Methodology ” means the accounting methods, practices and procedures used to prepare the Financial Statements.
“ Action ” means any claim, controversy, suit, action or cause of action, litigation, arbitration, investigation, opposition, interference, audit, hearing, demand, assessment, complaint, citation, proceeding, order or other legal proceeding (whether sounding in contract or tort or otherwise, whether civil, criminal, administrative or otherwise and whether brought at law or in equity or under arbitration or administrative regulation).
“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. For the avoidance of doubt, from and after the Closing Date, the Company shall be deemed not to be an Affiliate of the Sellers.
“ Aggregate Exercise Amount ” means the aggregate exercise price of all Vested Company Options outstanding and unexercised as of immediately prior to the Closing.
“ Aggregate Option Payment ” means the aggregate amount (net of applicable exercise prices) payable to the Company Optionholders pursuant to Section 2.2(a)(i) .
“ Anti-Kickback Statute ” means the Federal Health Care Program Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), and all regulations promulgated thereunder.
“ Base Cash Amount ” means $15,000,000.
“ Base Purchase Price ” means $50,000,000.
“ Business ” means the development and commercialization of solutions for the augmentation and optimization of variant interpretation in clinical genetic and genomic testing using predictive models.
“ Business Day ” means any day other than a Saturday, Sunday or any other day on which banking institutions in San Francisco, California are authorized or required by Law or order to remain closed.
“ Buyer Fundamental Representations ” means the representations and warranties contained in Section 5.1 (Organization) and Section 5.2 (Authority; Noncontravention).
“ Buyer Indemnified Person ” means each of the Company (following the Closing), Buyer, Merger Sub (a/k/a the Surviving Entity) and their respective Affiliates and each of the respective equity holders, directors, officers, employees, agents, successors and assigns of each of the foregoing Persons.
“ Buyer’s Common Stock ” means shares of Buyer’s common stock, par value $0.0001 per share, or any other shares of capital stock into which such common stock may be reclassified, converted or exchanged.
“ CERCLA ” is defined within the definition of “Environmental Laws” below.
“ Change in Control Payments ” means (a) any bonus, severance or other payment that is created, accelerated, accrues or becomes payable by the Company to any present or former director, stockholder, Employee or Consultant, including pursuant to an employment agreement, Company Plan or any other Contract, and any employer-side Taxes payable in connection therewith and (b) without duplication of any other amounts included within the definition of Company Transaction and Bonus Expenses, any other payment, expense or fee that accrues or becomes payable by the Company to any Governmental Authority or other Person under any Law or Contract, including in connection with the making of any filings, the giving of any notices or the obtaining of any consents, authorizations or approvals, in each case of (a) and (b) as a result of the consummation of the Transactions (including the Stock Purchase and the Merger) or in connection with the execution and delivery of the Agreement or any other Transaction Agreement.
“ Charter Documents ” means, with respect to any entity, the articles of incorporation and bylaws or similar organizational documents of such entity.
“ Closing Cash ” means the fair market value of all cash and cash equivalents held by the Company as of the Closing (before taking into account the consummation of the transactions contemplated hereby), determined in accordance with the Accounting Methodology, excluding, to the extent applicable, (a) outstanding (uncleared) checks, drafts, wire transfers or deposits in transit, and other debits and credits in-process, (b) restricted balances, (c) amounts held in escrow, (d) amounts held in banks outside of the United States in accounts that cannot be readily expatriated due to foreign exchange controls or other applicable Laws, (e) the proceeds of any casualty loss with respect to any asset held or owned by the Company (to the extent that any such asset has not been repaired or replaced or the liability for the repair or replacement of such asset has not been paid or accrued as a current liability), and (f) cash received with respect to unperformed work or installations and reflected as deferred revenues on the Estimated Balance Sheet.
“ Closing Net Working Capital ” means, as of the Closing, an amount equal to (a) the current assets of the Company (excluding Closing Cash) reduced by (b) the liabilities of the Company (excluding Company Debt), in each case as determined in accordance with the Accounting Methodology.
“ Code ” means the United States Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
“ Collection and Use ” (and its variants) means the collection, use interception, storage, receipt, purchase, sale, maintenance, transmission, transfer, disclosure, processing and/or use of Personal Data.
“ Company Debt ” means, as at any time with respect to the Company, without duplication, all Liabilities with respect to principal, accrued and unpaid interest, penalties, premiums and any other fees, expenses and breakage costs on and other payment obligations arising under any (a) indebtedness for borrowed money (including amounts outstanding under overdraft facilities), (b) indebtedness issued in exchange for or in substitution for borrowed money, (c) obligations for the deferred purchase price of property, goods or services other than trade payables arising in the Ordinary Course of Business (but including any deferred purchase price Liabilities, earnouts, contingency payments, seller notes, promissory notes or similar Liabilities, in each case, related to past acquisitions by the Company and for the avoidance of doubt, whether or not contingent), (d) obligations evidenced by any note, bond, debenture, guarantee or other debt security or similar instrument or Contract, (e) all liabilities under capitalized leases, (f) all obligations, contingent or otherwise, in respect of amounts drawn under letters of credit and banker’s acceptance or similar credit transactions, (g) obligations under Contracts relating to interest rate protection or other hedging arrangements, to the extent payable if such Contract is terminated at Closing, and (h) guarantees of the types of obligations described in sub clauses (a) though (g) above.
“ Company Fundamental Representations ” means the representations and warranties contained in Section 4.1(a) and (d) (Organizational Matters), Section 4.2 (Noncontravention), Section 4.3 (Capitalization), Section 4.4 (No Consents or Approvals), Section 4.9 (Taxes), and Section 4.20 (Brokers and Other Advisors).
“ Company Intellectual Property Rights ” means all Intellectual Property Rights owned by the Company or used by the Company in connection with the Company’s Business as Currently Conducted or Proposed, including all Intellectual Property Rights owned by the Company in and to Company Technology.
“ Company Intermediate Representations ” means the representations and warranties contained in Section 4.15 (Intellectual Property; Technology; Privacy and Security; Information Systems; Disaster Recovery).
“ Company Material Adverse Effect ” means, with respect to the Company, any fact, condition, event, occurrence, change, circumstance or effect that, individually or in the aggregate with all other facts, conditions, changes, circumstances and effects with respect to which such defined term is used in this Agreement, is, or would reasonably be expected to become, materially adverse to (a) the business, assets, operations, results of operations or condition (financial or otherwise) of the Company, or (b) the Company’s ability to, in a timely manner, perform its obligations under the Transaction Agreements to which it is a party, or to consummate the Transactions under such Transaction Agreements; provided , however , that any determination of whether there has been a Company Material Adverse Effect pursuant to clause (b) above shall not include any effect, change, event, occurrence or state of facts: (i) that generally affects the industry in which the Company operates so long as the Company is not disproportionately affected thereby relative to other participants in such industry; (ii) that results from general economic or political conditions in any country where the Company’s business is conducted so long as the Company is not disproportionately affected relative to the other companies therein; (iii) arising out of or attributable to any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv) arising out of or attributable to any acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any changes in applicable Laws or accounting rules (including GAAP) or the enforcement, implementation or interpretation thereof; (vi) any natural or man-made disaster or acts of God; (vii) any failure by the Company to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded); or (viii) that results from the taking or announcement of any action specifically contemplated or required to be taken by this Agreement.
“ Company Option Plan ” means the Company’s 2016 Equity Incentive Plan.
“ Company Optionholder ” means each Person holding a Company Option.
“ Company Plans ” means (a) “employee benefit plans” (as defined in Section 3(3) of ERISA, as amended), (b) individual employment, consulting, change in control, severance or other agreements or arrangements and (c) other benefit plans, policies, agreements or arrangements, including bonus or other incentive compensation, stock purchase, equity or equity-based compensation, deferred compensation, profit sharing, change in control, severance, pension, retirement, welfare, sick leave, vacation, loans, salary continuation, health, dental, disability, flexible spending account, service award, fringe benefit, life insurance and educational assistance plan, policies, agreements or arrangements, whether written or oral, under which any Employee, Consultant or director of the Company participates and which is maintained, contributed to or participated in by the Company, or with respect to which the Company has or may have any obligation or liability, contingent or otherwise.
“ Company Platform ” means the Company’s Functional Modeling Platform, which is the product being developed and commercialized by the Company as of the date hereof.
“ Company Technology ” means any and all Technology that is owned by the Company or used in connection with the Company’s Business as Currently Conducted or Proposed, including Proprietary Software.
“ Company Transaction and Bonus Expenses ” means an amount equal to (a) the aggregate fees and expenses payable or reimbursable by the Company to third parties in connection with negotiation, entering into and consummation of this Agreement and the Transactions, including the fees and expenses of investment bankers, finders, consultants, attorneys, accountants and others advisors engaged by the Company in connection with the Transactions, plus (b) all Change in Control Payments, plus (c) all employer portion payroll or employment Taxes incurred in connection with the treatment of the Company Options in connection with the Transactions (including cancellation, exercise or payment) or any Change in Control Payments, less (d) the reasonable and documented out-of-pocket fees and expenses of the Company in connection with the preparation and delivery of the audited Financial Statements in connection herewith. For the avoidance of doubt, the following shall not constitute Company Transaction and Bonus Expenses: (i) any severance payments as a result of any terminations effected by Buyer after the Closing or requested by Buyer in connection with the Closing; (ii) any “double trigger” change of control obligations which have, as a second trigger, any termination effected by Buyer after the Closing or requested by Buyer in connection with the Closing; and (iii) any retention or similar bonus awarded by Buyer or committed to be paid by Buyer following the Closing.
“ Company’s Business as Currently Conducted or Proposed ” means (i) the development and integration of the Company Platform – also known as the Functional Modeling Platform (“ FMP ”) – a research tool that optimizes evidence support for the clinical interpretation of genetic and genomic variation in the human genome (and human cancer genomes) through the generation, quality-control, and provision of predictive models, and (ii) the exploitation of the Company Platform and its predictive models in support of clinical interpretation of genetic and genomic variation. To achieve this, the FMP applies diverse dry-lab ( e.g. computational) and wet-lab ( e.g. cellular) techniques to generate, update, and validate Evidence Models (“ EMs ”), examining the predictive power of EMs to guide clinical variant interpretations in diverse contexts ( e.g. genes and diseases). In the FMP, computational EMs – such as Variant Interpretation Engines, Multi-Dimensional Hotspots, and Molecular Stability Engines – are generated through the Molecular Evidence Platform, with variants generated and introduced into computational models for characterization in silico . In contrast, cellular EMs – such as Deep Mutational Learning assays – are generated through the Cellular Evidence Platform, with variants generated and introduced into cellular models ( e.g. via lentiviral expression, site-specific recombination, or other techniques) for characterization in vivo ( e.g. mammalian cell-lines). The following five types of EMs are covered by the Company’s Business as Currently Conducted or Proposed: (1) Variant Interpretation Engines (VIEs), (2) Multi-Dimensional Hotspots (MDHs), (3) Molecular Stability Engines (MSEs), (4) Deep Mutational Assays (DMAs), and (5) Deep Mutational Learning (DMLs).
“ Competitive Business ” means any business or other undertaking which, directly or indirectly, constitutes engagement (whether direct or indirect and whether wholly or partially) in, or otherwise substantively overlaps or competes with, the Business.
“ Continuing Employees ” means Carlos Araya, Alexandre Colavin, Samskruthi Padigepati and Jason Reuter.
“ Contract ” means any contract, loan or credit agreement, debenture, note, guaranty, bond, mortgage, indenture, deed of trust, license, lease or other agreement, arrangement or instrument (in each case, as applicable, whether written or oral) that is legally binding.
“ DGCL ” means the General Corporation Law of the State of Delaware.
“ Disclosure Schedule ” means a document delivered by the Sellers to Buyer referring to the representations and warranties in Article IV .
2      “ DLLCA ” means the Delaware Limited Liability Company Act.
“ DOL ” means the United States Department of Labor.
“ DR Plans ” means the Company’s disaster recovery and business continuity plans.
“ Environmental Laws ” means all Laws relating in any way to the environment, preservation or reclamation of natural resources, the presence, management or Release of, or exposure to, Hazardous Materials, or to human health and safety, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.) (“ CERCLA ”), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.) and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), each of their state and local counterparts or equivalents, each of their foreign and international equivalents and any transfer of ownership notification or approval statute, as each has been amended and the regulations promulgated pursuant thereto.
“ Environmental Liabilities ” means, with respect to any Person, all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, liens, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any Action, claim or demand by any other Person or in response to any violation of Environmental Law, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or administrative regulation, to the extent based upon, related to, or arising under or pursuant to any Environmental Law, environmental Permit, order or agreement with any Governmental Authority or other Person, which relates to any environmental, health or safety condition, violation of Environmental Law or Release or threatened Release of Hazardous Materials.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ European Economic Area ” means the member countries of the European Union, Norway, Iceland and Lichtenstein.
“ False Claims Act ” means the Federal False Claims Act, 31 U.S.C. § 3729 et seq., and all regulations promulgated thereunder.
“ Final Purchase Price ” means the sum of (a) the Base Purchase Price, plus (b) the Closing Cash, minus (c) the Company Debt, minus (d) the Company Transaction and Bonus Expenses, minus (e) the amount, if any, by which the Net Working Capital Threshold exceeds the Closing Net Working Capital, plus (f) the amount, if any, by which the Closing Net Working Capital exceeds the Net Working Capital Threshold, plus (g) the Aggregate Exercise Amount.
“ Fully Diluted Shares of Company Capital Stock ” means the sum, without duplication, of (a) the aggregate number of shares of Company Capital Stock (on an as converted to Company Common Stock basis) that are issued and outstanding immediately prior to the Closing, plus (b) the aggregate number of shares of Company Capital Stock issuable upon exercise of all Vested Company Options immediately prior to the Closing.
“ Fundamental Representations ” means, collectively, the Seller Fundamental Representations, the Company Fundamental Representations and the Buyer Fundamental Representations.
“ GAAP ” means the generally accepted accounting principles in the United States.
“ Governmental Authority ” means any (a) nation, region, state, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) department, agency or instrumentality of a foreign or other government, including any state-owned or state-controlled instrumentality of a foreign or other government, (d) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department or other entity and any court or other tribunal), (e) international or multinational organization formed by states or governments, (f) organization that is designated by executive order pursuant to Section 1 of the United States International Organizations Immunities Act (22 U.S.C. 288 of 1945), as amended and the rules and regulations promulgated thereunder or (g) other body entitled to exercise any administrative, executive, judicial, legislative, police or regulatory authority.
“ Hazardous Materials ” means any material, substance or waste that is regulated, classified, or otherwise characterized under or pursuant to any Environmental Law as “hazardous”, “toxic”, a “pollutant”, a “contaminant”, “radioactive” or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold, urea formaldehyde insulation, chlorofluorocarbons and all other ozone-depleting substances.
“ Health Care Laws ” means any Laws relating to health care regulatory and reimbursement matters, including (a) the Federal Ethics in Patient Referrals Act, 42 U.S.C. § 1395nn, and all regulations promulgated thereunder, (b) the Anti-Kickback Statute, (c) the False Claims Act, (d) the Occupational Safety and Health Act, and all regulations, agency guidance or similar legal requirements promulgated thereunder that apply to the Company or its business, (e) the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 321 et seq., and all regulations promulgated thereunder, (f) the Public Health Service Act, 42 U.S.C. § 201 et seq., and all regulations, agency guidance or similar legal requirements promulgated thereunder, (g) the Clinical Laboratory Improvement Amendments, 42 U.S.C. § 263a, and all regulations, agency guidance or similar legal requirements promulgated thereunder, (h) applicable Laws of the United States Drug Enforcement Administration, (i) the Medicare Act, 42 U.S.C. § 1395 et seq., and all regulations, agency guidance, or similar legal requirements promulgated thereunder, (j) state self-referral, anti-kickback, fee-splitting and patient brokering Laws, (k) Information Privacy and Security Laws, including those related to genetic testing and the privacy of genetic testing results, and (l) state Laws governing the licensure and operation of clinical laboratories and billing for clinical laboratory services.
“ HIPAA ” means, collectively, the Health Insurance Portability and Accountability Act of 1996 as amended by the Health Information Technology for Economic and Clinical Health Act (“ HITECH ”), implementing regulations promulgated thereunder and related guidance issued from time to time.
“ Holders ” means, collectively, the Sellers and the Company Optionholders, to the extent they hold Vested Company Options.
“ Holder Indemnified Persons ” means the Holders and their Affiliates and each of their respective equity holders, directors, officers, employees, agents, successors and assigns.
“ Indemnification Cap ” means the sum of (a) the Indemnification Hold-Back Amount plus (b) 10% of any Milestone Amounts that become payable under the terms of this Agreement through exercise of the Offset Right.
“ Indemnification Cap as Supplemented ” means the sum of (a) the Indemnification Hold-Back Amount plus (b) $7,500,000 ( i.e. , 50% of the potential aggregate Milestone Amounts).
“ Indemnification Hold-Back Amount ” means $5,000,000.
“ Indemnified Person ” means a Buyer Indemnified Person or a Holder Indemnified Person, as applicable.
“ Indemnifying Party ” means Buyer, the Sellers or the Participating Optionholders (including, where applicable, Sellers’ Representative on behalf of the Sellers and the Participating Optionholders), as applicable; provided , however , that with respect to the Offset Right as it applies to the Indemnification Hold-Back Amount, the obligation to contribute to the Indemnification Hold-Back Amount and the Offset Right as it applies to the Milestone Amounts, all Holders will be treated as Indemnifying Parties.
“ Information Privacy and Security Laws ” means all applicable Laws concerning the privacy and/or security of Personal Data (including any Laws of jurisdictions where the Personal Data was collected), and all regulations promulgated thereunder, including, where applicable, HIPAA, state data privacy and breach notification Laws, state social security number protection Laws, any applicable Laws concerning requirements for website and mobile application privacy policies and practices, data or web scraping, call or electronic monitoring or recording or any outbound communications (including, outbound calling and text messaging, telemarketing, and e-mail marketing), the European Union Directive 95/46/EC, the European Union General Data Protection Regulation (GDPR), the Federal Trade Commission Act, the Gramm Leach Bliley Act, the Fair Credit Reporting Act, the Fair and Accurate Credit Transaction Act, the CAN-SPAM Act, the Telephone Consumer Protection Act, Children’s Online Privacy Protection Act, and state consumer protection Laws.
“ Information System ” means software, hardware, computer and telecommunications equipment and other information technology and related services.
“ Intellectual Property Rights ” means the entire right, title and interest in and to all proprietary rights of every kind and nature however denominated, throughout the world, including: (a) patents, industrial designs, copyrights, mask work rights, trade secrets, database rights and all other proprietary rights in Technology; (b) trademarks, trade names, service marks, service names, brands, trade dress, logos and other indicia of origin and the goodwill and activities associated therewith; (c) domain names, rights of privacy and publicity; (d) any and all registrations, applications, recordings and common-law rights regarding any of the foregoing; and (e) all Actions and rights to sue at law or in equity for any past or future infringement or other impairment of any of the foregoing, including the right to receive all proceeds and damages therefrom and all rights to obtain renewals, continuations, divisions, or other extensions of legal protections pertaining thereto.
“ IRS ” means the United States Internal Revenue Service.
“ Knowledge ” means (a) with respect to any individual, the actual knowledge following due inquiry of the specified individual, and (b) with respect to any entity, the actual knowledge of the executive officers of such entity following due inquiry; provided , however , the term “ Knowledge of the Company ” means the actual knowledge following due inquiry of Carlos Araya, Alexandre Colavin and Jason Reuter.
“ Law ” means any United States federal, state or local or any foreign law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, agency guidance or similar legal requirement or any Order or any Permit granted under any of the foregoing or any similar provision having the force or effect of law and includes Health Care Laws.
“ Liability ” means, with respect to any Person, any liability or obligation of such Person whether known or unknown, whether asserted or not asserted, whether determined, determinable or otherwise, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether directly incurred or consequential, whether due or to become due and whether or not required under GAAP to be accrued on the financial statements of such Person.
“ Lien ” means any charge, encumbrance, claim, community or other marital property interest, equitable ownership interest, collateral assignment, lien (statutory or otherwise), license, option, pledge, security interest, mortgage, deed of trust, attachment, right of way, easement, restriction, encroachment, encumbrance, servitude, right of first offer or first refusal, buy/sell agreement and any other restriction or covenant with respect to, or condition governing the use, construction, voting (in the case of any equity interest), transfer, receipt of income or exercise of any other attribute of ownership of any kind or nature whatsoever affecting or attached to any asset.
“ Loss ” means, with respect to any Person, any cost, damage (including incidental and consequential damages as well as any diminution in value, including as to shares of capital stock, in each case, only to the extent such damages are reasonably foreseeable), expense, Liability, loss, injury, deficiency and Tax, including interest, penalties, fees, fines, reasonable out-of-pocket legal, accounting and other professional fees and reasonable out-of-pocket expenses incurred in the investigation, collection, prosecution, determination, defense and settlement of such Losses (including, in each case, in connection with the enforcement of any claim for indemnification hereunder), that is incurred or suffered by such Person; provided, that “Losses” shall not include punitive damages (unless such punitive damages are payable in connection with a Third Party Claim).
“ Milestones ” means those milestones set forth on Exhibit A hereto (the “ Milestone Schedule ”).
“ Milestone Amount ” means, with respect to each of the four (4) Milestones, $3,750,000 per Milestone.
“ Net Working Capital Threshold ” means $0.
“ Nonqualified Deferred Compensation Plan ” has the meaning given such term in Section 409A(d)(1) of the Code.
“ Order ” means any order, injunction (whether temporary, preliminary or permanent), judgment, decree, assessment, award or ruling enacted, promulgated, issued, entered, amended or enforced by any Governmental Authority.
“ Ordinary Course of Business ” means the ordinary course of business of the Company consistent with past practice.
“ Participating Optionholder ” means each Company Optionholder that holds Vested Company Option(s) and has executed and delivered to Buyer an Option Cancellation and Joinder Agreement at or prior to Closing.
“ Per Share Milestone Amount ” means, with respect to each Milestone, the quotient of (1) the Milestone Amount for such Milestone divided by (2) the Fully Diluted Shares of Company Capital Stock.
“ Permit ” means any permit, license, franchise, certificate, accreditation approval, registration, notification or authorization from any Governmental Authority, or required by any Governmental Authority to be obtained, maintained or filed.
“ Permitted Liens ” means: (a) statutory liens with respect to the payment of Taxes, in all cases which are not yet due or payable or that are being contested in good faith by appropriate actions and for which appropriate reserves with respect thereto have been established on the books and records of the Company to the extent required in accordance with GAAP; and (b) statutory liens of landlords, suppliers, mechanics, carriers, materialmen, warehousemen, service providers or workmen and other similar Liens imposed by Law created in the Ordinary Course of Business the existence of which could not constitute a default or breach under any of the Company’s Contracts for amounts that are not yet delinquent and are not, individually or in the aggregate significant; (c) building, zoning, entitlement and other land use regulations imposed by any Governmental Authority with jurisdiction over the Leased Real Property which are not violated by the current use or occupancy of such Leased Real Property, and (d) easements, conditions, covenants and restrictions that are of record with respect to the Leased Real Property which are not violated by the current use or occupancy of such Leased Real Property or the operation of the Company’s business or that do not and shall not adversely affect the value, or impair the use or current occupancy of the Leased Real Property.
“ Person ” means any natural person, corporation, limited liability company, partnership, association, trust or other entity, including a Governmental Authority.
“ Personal Data ” means, as applicable, (a) any and all information about an individual that either contains data elements that identify the individual or with respect to which there is a reasonable basis to believe the information can be used to identify the individual, (b) any information that enables a Person to contact the individual (such as information contained in a cookie or an electronic device fingerprint) and (c) any and all other information, the collection, use, sharing, transfer or other processing of which is regulated by any applicable Law in relation to data protection, data privacy or personal privacy, including personal healthcare information. Personal Data includes (i) personal identifiers such as name, address, Social Security Number, date of birth, driver’s license number or state identification number, Taxpayer Identification Number and passport number, (ii) financial information, including credit or debit card numbers, account numbers, access codes, consumer report information and insurance policy number, (iii) demographic information, (iv) unique biometric data, such as fingerprint, retina or iris image, voice print or other unique physical representation and (v) individual medical or health information (including information of patients, customers, employees, workers, contractors, and third parties who have provided information to the Company, and including information relating to services provided by or to third parties).
“ Personal Data Obligations ” means the Company’s privacy policies (or applicable terms of use) as published on any Company websites or mobile applications or any other privacy policies (or applicable terms of use), Contracts, and any applicable Information Privacy and Security Laws.
“ Pre-Closing Tax Period ” means (a) any taxable period ending on or before the Closing Date and (b) with respect to a Straddle Period, any portion thereof ending on and including the Closing Date.
“ Pre-Closing Taxes ” means all Taxes of, or imposed on, the Company with respect to any Pre-Closing Tax Period.
“ Premises ” means any building, plant, improvement or structure located on the Leased Real Property.
“ Products and Services ” (including its variations such as Product or Service) means any product or service that the Company currently offers or sells or has offered or sold at any time in the past, or intends to offer or sell in the Company’s Business as Currently Conducted or Proposed.
“ Proprietary Software ” means any Software that is owned by Company and is related to the Company’s Business as Currently Conducted or Proposed.
“ Pro Rata Share ” means, with respect to any Seller or Participating Optionholder, the portion of the Total Purchase Price to which such Seller or Participating Optionholder is allocated pursuant to the terms of this Agreement relative to the Total Purchase Price allocated to all Sellers and Participating Optionholders (expressed as a percentage, rounded to four decimal places, and as set forth in the Allocation Schedule); provided, however, that with respect to the Offset Right as it applies to the Indemnification Hold-Back Amount and the Milestone Amounts, “Pro Rata Share” will be calculated with reference to all Holders rather than Sellers and Participating Optionholders only.
“ Public Software ” means any software that is (a) distributed as free software or as open source software (e.g., Linux), (b) subject to 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 Company Intellectual Property Rights through any means, (c) licensed or distributed under any Public Software License or under less restrictive free or open source licensing and distribution models such as those obtained under the BSD, MIT, Boost Software License and the Beer-Ware Public Software Licenses or any similar licenses, (d) a public domain dedication or (e) derived from in any manner (in whole or in part), links to, relies on, is distributed with, incorporates or contains any software described in (a) through (d) above.
“ Public Software License ” means any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: (a) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (b) the Artistic License (e.g., PERL); (c) the Mozilla Public License; (d) the Netscape Public License; (e) the Sun Community Source License (SCSL); (f) the Sun Industry Standards License (SISL); (g) the Apache License; and (h) any licenses that are defined as OSI (Open Source Initiative) licenses as listed on the Opensource.org website.
“ Reference Date ” means February 17, 2016.
“ Related Party ” means (a) any current or former director (or nominee), or officer of the Company, (b) any five percent (5%) or greater stockholder of the Company on a fully-diluted basis and (c) any relative, spouse, officer, director or Affiliate of any of the foregoing Persons.
“ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing of or migrating into or through the environment or any natural or man-made structure.
“ Representatives ” means, with respect to any Person, the officers, employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives of such Person.
“ Restrictive Term ” means the period commencing on the Closing Date and ending on the third (3 rd ) anniversary of the Closing Date.
“ SEC ” means the United States Securities and Exchange Commission.
“ Securities Act ” means The Securities Act of 1933, as amended.
“ Seller Fundamental Representations ” means each of the representations and warranties contained in Article III .
“ Sellers’ Representative Expenses ” means the loss, liability, damage, fine, penalty, fee, judgment amount paid in settlement, or expense of any nature incurred by Sellers’ Representative arising out of or in connection with the administration of its duties as Sellers’ Representative, including reasonable legal fees and other costs and expenses of defending or preparing to defend against any claim or liability in the premises and in connection with seeking recovery from insurers, unless such loss, liability or expense is caused by such Sellers’ Representative’s willful misconduct or gross negligence.
“ Series Seed Preferred Stock ” means the Company’s Series Seed Preferred Stock, par value $0.00001 per share.
“ Shrink Wrap Licenses ” means off the shelf, “click wrap” or “shrink wrap” license agreements for software or Technology that is generally commercially available to the public on standardized terms.
“ Software ” means computer software programs and software systems, including all databases, compilations, tool sets, compilers, higher level or “proprietary” languages, related documentation and materials (including all Source Code Materials), whether in source code, object code or human readable form and all software programs and software systems that are classified as work-in-progress on the Closing Date.
“ Source Code Materials ” as it pertains to source code of any Software means: (a) the software, tools and materials utilized for the operation, development and maintenance of the Software; (b) documentation describing the names, vendors and version numbers of (i) the development tools used to maintain or develop the Software and (ii) any third-party software or other applications that form part of the source code version of the Software and are required in order to compile, assemble, translate, bind and load the Software into executable releases; (c) all programmers’ notes, bug lists and technical information, systems and user manuals and documentation for the Software, including all job control language statements, descriptions of data structures, flow charts, technical specifications, schematics, statements or principles of operations, architecture standards and annotations describing the operation of the Software; and (d) all test data, test cases and test automation scripts used for the testing and validating the functioning of the Software.
“ Subsidiary ” means, with respect to a Party, any corporation, limited liability company, partnership, association, trust or other entity the accounts of which would be consolidated with those of such Party in such entity’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association, trust or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power (or, in the case of a partnership, more than 50% of the general partnership interests) are, as of such date, owned by such Party or one or more Subsidiaries of such Party.
“ Tax ” or “ Taxes ” means (a) any or all federal, state, local or foreign taxes or other assessments in the nature of taxes imposed by a Taxing Authority, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, and (b) any or all interest, penalties or additions to tax imposed by any Taxing Authority in connection with any item described in clause (a).
“ Tax Returns ” means, with respect to Taxes, any return, report, claim for refund, estimate, information return or statement, declaration of estimated Tax or other similar document filed or required to be filed with any Taxing Authority with respect to Taxes, including any schedule or attachment thereto and including any amendment thereof.
“ Tax Sharing Agreement ” means any agreement relating to the sharing, allocation or indemnification of Taxes or amounts in lieu of Taxes, or any similar Contract or arrangement, other than any Contract or arrangement entered into in the ordinary course of business the purpose of which is not primarily related to Taxes.
“ Taxing Authority ” means any Governmental Authority responsible for the administration, assessment and collection of any Taxes.
“ Technology ” means all inventions, works, discoveries, innovations, know-how, information (including ideas, research and development, formulas, algorithms, compositions, processes and techniques, data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, business and marketing plans and proposals, graphics, illustrations, artwork, documentation and manuals), databases, computer software, firmware, computer hardware, integrated circuits and integrated circuit masks, electronic, electrical and mechanical equipment, reagents and all other forms of technology, including improvements, modifications, works in process, derivatives, or changes, whether tangible or intangible, embodied in any form, and all documents and other materials recording any of the foregoing.
“ Third Party Claim ” refers to any Action that is instituted, or any claim that is asserted, by any Person not party to this Agreement in respect of an indemnifiable matter under this Agreement.
“ Total Purchase Price ” means the sum of (a) the Final Purchase Price, plus (b) the aggregate value of shares of Buyer’s Common Stock and cash issued upon achievement of the Milestones pursuant to Sections 2.1(b)(v) and 2.2(a)(iv) .
“ Trailing Average Share Price ” means the average closing price for shares of Buyer’s Common Stock on the New York Stock Exchange (or any other exchange which is then the primary exchange upon which shares of Buyer’s Common Stock are traded) for the immediately preceding period of twenty (20) trading days, as adjusted by any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction with respect to shares of Buyer’s Common Stock during such twenty (20) trading day period.
“ Transactions ” means any transaction or arrangement contemplated by this Agreement, including (a) the Stock Purchase, the Merger and the other transactions and arrangements described in the recitals to this Agreement, (b) the execution, delivery and performance of the Transaction Agreements other than this Agreement and (c) the payment of fees and expenses relating to such transactions by the Company and the Sellers.
“ Transaction Agreements ” means this Agreement and the Option Cancellation and Joinder Agreements.
“ Upfront Per Option Share Consideration ” means the quotient of (a) the sum of (i) the Upfront Purchase Price, minus (ii) the Indemnification Hold-Back Amount, minus (iii) the Expense Fund Amount, divided by (b) the Fully Diluted Shares of Company Capital Stock.
“ Upfront Per Share Cash Consideration ” means the quotient of (a) the sum of (i) the Base Cash Amount, minus (ii) the Aggregate Option Payment, minus (iii) the Expense Fund Amount, divided by (b) the number of Shares issued and outstanding immediately prior to the Closing.
“ Upfront Per Share Stock Consideration ” means the quotient of (a) the Upfront Stock Consideration Shares, divided by (b) the number of Shares issued and outstanding immediately prior to the Closing.
“ Upfront Purchase Price ” means the sum of (a) the Base Purchase Price, plus (b) the estimated Closing Cash, minus (c) the estimated Company Debt, minus (d) the Company Transaction and Bonus Expenses, minus (e) the amount, if any, by which the Net Working Capital Threshold exceeds the estimated Closing Net Working Capital, plus (f) the amount, if any, by which the estimated Closing Net Working Capital exceeds the Net Working Capital Threshold, plus (g) the Aggregate Exercise Amount.
“ Upfront Stock Consideration Shares ” means a number of shares of Buyer’s Common Stock equal to the quotient of (a) the Upfront Stock Consideration Value, divided by (b) the Trailing Average Share Price calculated as of the Determination Date.
“ Upfront Stock Consideration Value ” means the sum of (a) the Upfront Purchase Price, minus (b) the Base Cash Amount, minus (c) the Indemnification Hold-Back Amount, minus (d) the Aggregate Exercise Amount.
“ Vested Company Option ” means the portion of each Company Option that is vested and exercisable effective as of immediately prior to the Effective Time, including any Company Options that have the vesting thereon accelerated in connection with the Transactions hereunder (which shall include all Company Options held by Jason Reuter, Samskruthi Padigepati and Birgit Funke).
Terms Defined Elsewhere in this Agreement.
For purposes of this Agreement, the following terms have meanings set forth at the section of this Agreement indicated opposite such term:

				
Term	Section	 	
“ 1934 Act ”	Section 5.4(a)	 	
“ Advisory Group ”	Section 9.5(e)	
“ Agreement ”	Preamble	 	
“ Agreement Date ”	Preamble	 	
“ Allocation Schedule ”	Section 2.9	 	
“ Allocated Resources ”	Section 2.13(b)	 	
“ Assets ”	Section 4.13	 	
“ Balance Sheet Date ”	Section 4.5(a)(i)	 	
“ Buyer ”	Preamble	 	
“ Buyer Material Adverse Effect ”	Section 5.2(b)	 	
“ Buyer Plan ”	Section 6.12(a)	 	
“ Buyer’s SEC Documents ”	Section 5.4(a)	 	
“ Certificate of Merger ”	Section 2.6	 	
“ Closing ”	Section 2.5	 	
“ Closing Date ”	Section 2.5	 	
“ Company ”	Preamble	 	
“ Company Capital Stock ”	Recitals	 	
“ Company Charter Documents ”	Section 4.1(d)	 	
“ Company Common Stock ”	Recitals	 	
“ Company Investor Rights Arrangements ”	Section 6.14	 	
“ Company Option ”	Recitals	 	
“ Company Preferred Stock ”	Recitals	 	
“ Company Registrations ”	Section 4.15(c)	 	
“ Competing Transaction ”    	Section 6.13	 	
“ Confidential Information ”	Section 6.6	 	
“ Conflict ”	Section 4.2	 	
“ Consultant ”	Section 4.1(b)	 	
“ Current Consultant ”	Section 4.1(b)	 	
“ Current Employee ”	Section 4.1(b)	 	
“ Deductible ”	Section 9.2(b)(i)(A)	 	
“ Determination Date ”	Section 2.9	 	
“ Effective Time ”	Section 2.6	 	
“ Employee ”	Section 4.1(b)	 	
“ Employment Agreements ”	Section 6.11	 	
“ ERISA Affiliate ”	Section 4.10(c)	 	
“ Estimated Balance Sheet ”	Section 2.9(e)	 	
“ Expense Fund ”	Section 9.5(f)	 	
“ Expense Fund Amount ”	Section 9.5(f)	 	
“ Expert ”	Section 2.13(d)	 	
“ Final Calculation ”	Section 2.11(a)	 	
“ Financial Statements ”	Section 4.5(a)(i)	 	
“ Firm ”	Section 10.16(a)	 	
“ General Survival Date ”	Section 9.1	 	
“ Inbound IP Contracts ”	Section 4.15(d)	 	
“ Indemnification Hold-Back Payment Date ”	Section 2.12	 	
“ Initial Resolution Period ”	Section 2.11(a)	 	
“ Interim Balance Sheet ”	Section 4.5(a)(i)	 	
“ Interim Balance Sheet Date ”	Section 4.5(a)(i)	 	
“ IP Contracts ”	Section 4.15(d)	 	
“ Leased Real Property ”	Section 4.14(a)	 	
“ Material Contracts ”	Section 4.12(c)	 	
“ Merger ”	Recitals	 	
“ Merger Sub ”	Recitals	 	
“ Milestone Date ”	Section 2.1(b)(v)	 	
“ Milestone Period ”	Section 2.13(a)	 	
“ Multiemployer Plan ”	Section 4.10(c)	 	
“ Non-Offset Notice ”	Section 9.4(b)	 	
“ Objection Notice ”	Section 2.11(a)	 	
“ Objection Period ”	Section 2.11(a)	 	
“ Offset Certificate ”	Section 9.3(b)	 	
“ Offset Right ”	Section 9.3(a)	 	
“ Option Cancellation and Joinder Agreement ”	Section 7.1(r)	 	
“ Outbound IP Contracts ”	Section 4.15(d)	 	
“ Outside Date ”	Section 8.1(b)	 	
“ Parties ”	Preamble	 	
“ Payoff Amount ”	Section 2.4(a)	 	
“ Post-Closing Adjustment ”	Section 2.11(c)(i)	 	
“ Real Property Leases ”	Section 4.14(a)	 	
“ Registration Rights Agreement ”	Section 6.15	 	
“ Related Party Transaction ”	Section 4.17	 	
“ Released Parties ”	Section 6.10	 	
“ Reviewing Party ”	Section 2.11(b)	 	
“ Rule 144 ”	Section 3.7(d)	 	
“ Security Program ”	Section 4.15(g)(vii)	 	
“ Sellers ”	Preamble	 	
“ Sellers’ Representative ”	Section 9.5(a)	 	
“ Sellers’ Representative Engagement Agreement ”	Section 9.5(e)	 	
“ Sellers’ Representative Group ”	Section 9.5(e)	 	
“ Settlement ”	Section 9.4(a)(iv)	 	
“ Shares ”	Recitals	 	
“ Stanford License ”	Section 4.15(b)	 	
“ Stated Damages ”	Section 9.3(b)	 	
“ Stock Purchase ”	Recitals	 	
“ Straddle Periods ”	Section 6.8(b)(i)	 	
“ Survival Date ”	Section 9.1	 	
“ Surviving Entity ”	Section 2.6	 	
“ Tax Claim ”	Section 6.8(c)(i)	 	
“ Third Party Indemnification Claim Notice ”	Section 9.4(a)(i)	 	
“ Title IV Plan ”	Section 4.10(c)	 	
“ Top Supplier ”	Section 4.18	 	
“ Transfer Taxes ”	Section 6.8(h)	 	
ARTICLE II     

 THE CONTEMPLATED TRANSACTIONS
2.1      Purchase and Sale of the Shares .
(a)      Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, each Seller shall sell, transfer and deliver to Buyer, and Buyer shall purchase from each Seller, all of such Seller’s Shares as set forth on the Allocation Schedule, which Shares shall be sold to Buyer free and clear of all Liens (other than Liens arising under applicable securities laws).
(b)      In full payment for the Shares of such Seller and subject to the provisions of this Agreement (including the Offset Right), Buyer shall deliver to each Seller the following:
(i)      within five (5) Business Days after the Closing Date, a certificate or book entry reflecting an amount of shares of Buyer’s Common Stock equal to the product of (x) the number of Shares set forth opposite Seller’s name on the Allocation Schedule, multiplied by (y) the Upfront Per Share Stock Consideration;
(ii)      on the Closing Date, an amount of cash equal to the product of (x) the number of Shares set forth opposite Seller’s name on the Allocation Schedule, multiplied by (y) the Upfront Per Share Cash Consideration;
(iii)      an amount of cash equal to the product of (x) the number of Shares set forth opposite Seller’s name on the Allocation Schedule, multiplied by (y) the quotient of (1) the amount of any Post-Closing Adjustment (to the extent payable in accordance with Section 2.11(c)(iii) ), divided by (2) the Fully Diluted Shares of Company Capital Stock;
(iv)      on the Indemnification Hold-Back Payment Date (in accordance with Section 2.12 ), a certificate or book entry reflecting an amount of shares of Buyer’s Common Stock equal to the product of (x) the quotient of (1) the number of Shares set forth opposite Seller’s name on the Allocation Schedule, divided by (2) the Fully Diluted Shares of Company Capital Stock, multiplied by (y) the quotient of (1) the Indemnification Hold-Back Amount, to the extent released to the Holders as provided herein, divided by (2) the Trailing Average Share Price, calculated as of the Determination Date;
(v)      within five (5) Business Days after any Milestone is determined to have been achieved (whether by Buyer in its reasonable discretion or by arbitration pursuant to the terms of Section 2.13(d) - the date of any such determination, a “ Milestone Date ”), a certificate or book entry reflecting an amount of shares of Buyer’s Common Stock equal to the quotient of (x) the product of (1) the number of Shares set forth opposite Seller’s name on the Allocation Schedule, multiplied by (2) the Per Share Milestone Amount for such Milestone, divided by (y) the Trailing Average Share Price calculated as of the Milestone Date for such Milestone; and
(vi)      an amount of cash equal to up to the quotient of (x) the Expense Fund Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock.
2.2      Options . It is acknowledged and agreed by all of the Parties that:
(a)      At the Closing, each Company Option that is a Vested Company Option and is unexpired, unexercised and outstanding immediately prior to the Closing shall be cancelled in exchange for the right to receive (without interest) the following consideration for each share of Company Common Stock issuable upon the exercise of such Company Option as of immediately prior to the Closing, payable as set forth herein:
(i)      an amount of cash equal to the difference of (x) the Upfront Per Option Share Consideration minus (y) the exercise price per share of Company Common Stock issuable upon the exercise of such Company Option;
(ii)      an amount of cash equal to the quotient of (x) the amount of any Post-Closing Adjustment (to the extent payable in accordance with Section 2.11(c)(iii) ), divided by (y) the Fully Diluted Shares of Company Capital Stock;
(iii)      an amount of cash equal to up to the quotient of (x) the Indemnification Hold-Back Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock;
(iv)      promptly following any Milestone Date, an amount of cash equal to the Per Share Milestone Amount for the applicable Milestone; and
(v)      an amount of cash equal to up to the quotient of (x) the Expense Fund Amount, to the extent released to the Holders as provided herein, divided by (y) the Fully Diluted Shares of Company Capital Stock.
On the first payroll period following the Closing, Indemnification Hold-back Payment Date or any Milestone Date, Buyer will pay directly, or through Merger Sub ’s payroll service, as applicable (i.e., to Employees), the cash to be distributed to the Company Optionholders as of immediately following the Closing, Indemnification Hold-back Payment Date or any Milestone Date, as applicable, pursuant to this Section 2.2 and in accordance with the Allocation Schedule. Any other Company Options that are not a Vested Company Option and are unexpired, unexercised and outstanding immediately prior to the Closing shall be cancelled for no consideration.
2.3      No Fractional Shares; Offset Right . Notwithstanding any provision herein to the contrary (a) no fractional shares of Buyer’s Common Stock shall be issued pursuant to this Article II (with the intended effect that any shares of Buyer’s Common Stock shall be rounded up to the nearest whole number); (b) in no event shall the total number of shares of Buyer’s Common Stock issued hereunder exceed 19.9% of the total number of shares of Buyer’s Common Stock outstanding immediately prior to the Closing (not including any shares of Buyer’s Common Stock that are owned by Buyer and without assuming the conversion or exercise of any options, warrants or other convertible securities) if Buyer has not first obtained the required stockholder approval of the issuance of such number of shares of Buyer’s Common Stock pursuant to applicable stock exchange listing rules (in which event Buyer shall exercise good faith efforts to obtain such required stockholder approval if the 19.9% cap will have any effect with respect to any issuance of Buyer’s Common Stock pursuant to this Agreement; provided , however , that in the event that Buyer is unable to obtain such required stockholder approval on or before the next annual meeting of Buyer’s stockholders following the date on which Buyer would otherwise become obligated to issue shares of Buyer’s Common Stock in excess of the 19.9% cap, then Buyer shall pay the equivalent value of such shares in cash to the Sellers based on the Trailing Average Share Price calculated as of (i) the Determination Date, if such shares become issuable upon release of any portion of the Indemnification Hold-Back Amount, or (ii) the applicable Milestone Date, if such shares become issuable upon achievement of any Milestone); (c) if, when shares of Buyer’s Common Stock and cash would otherwise be distributed or payable pursuant to Section 2.1(b)(iv) , Section 2.1(b)(v) , Section 2.2(a)(iii) and Section 2.2(a)(iv) , as applicable, there shall exist a good faith claim by Buyer to exercise the Offset Right, all or a portion of such shares and cash as determined by Buyer (in its reasonable discretion, but subject to the limitations set forth in Article IX ) to represent the Losses at issue (including, if applicable, as to any specific Holders) shall be withheld from payment until such time as the claim has been perfected, in which case the Offset Right shall apply (subject to the limitations set forth in Article IX) against such portion of the shares and cash at issue and the balance of any withheld portion (if applicable) shall be distributed to the Holders (or, as applicable, to the affected Holders) as contemplated by this Agreement; and (d) no Holder may assign or transfer any right to receive shares of Buyer’s Common Stock or cash pursuant to this Agreement without the prior written consent of Buyer (which may be withheld in Buyer’s sole discretion).
2.4      Other Closing Payments . At the Closing, Buyer shall make, or cause to be made, the following additional payments, by wire transfer of immediately available funds:
(a)      to each holder of Company Debt, the aggregate amount of Company Debt owed to such holder as of the Closing (the principal amounts of which are set forth on Section 4.5(h) of the Disclosure Schedule) pursuant to a payoff letter from such holder (i) indicating the amount required to discharge such Company Debt in full (the “ Payoff Amount ”) and (ii) agreeing to release applicable Liens upon receipt of the applicable Payoff Amount; and
(b)      to the payees thereof, the Company Transaction and Bonus Expenses, in each case as directed in writing by the Company prior to the Closing pursuant to invoices or other evidence reasonably satisfactory to Buyer, except that Buyer shall cause Change in Control Payments to Employees to be paid through the Company’s payroll system.
2.5      Closing . The closing of the Transactions (the “ Closing ”) shall take place at 10:00 a.m. (San Francisco time) on the second Business Day following the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time) at the offices of Pillsbury Winthrop Shaw Pittman LLP, 12255 El Camino Real, Suite 300, San Diego, California 92130, unless another time, date or place is agreed to in writing by the Parties (the “ Closing Date ”).
2.6      The Merger . Promptly after the Closing, and in all cases on the Closing Date, Buyer shall cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware a certificate of merger in the form attached hereto as Exhibit B (the “ Certificate of Merger ”), executed in accordance with the relevant provisions of the DGCL and the DLLCA, and shall make all other filings or recordings required under the DGCL and DLLCA in order to consummate the Merger. The Merger shall become effective at the time the Certificate of Merger is filed with the Secretary of State of the State of Delaware (the “ Effective Time ”). At the Effective Time, Buyer shall cause the Company to merge with and into Merger Sub in accordance with the DGCL and the DLLCA, whereupon the separate existence of the Company shall cease, and Merger Sub will be the surviving entity. The surviving entity after the Merger is sometimes referred to hereinafter as the “ Surviving Entity .”
2.7      The Effective Time . At the Effective Time, the Merger shall have the effects set forth in this Agreement, the Certificate of Merger and in the applicable provisions of the DGCL and the DLLCA. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Merger Sub and the Company shall vest in the Surviving Entity, and all debts, liabilities and duties of Merger Sub and the Company shall become the debts, liabilities and duties of the Surviving Entity. At the Effective Time, the certificate of formation of Merger Sub, as in effect immediately prior to the Effective Time, shall be the certificate of formation of the Surviving Entity at the Effective Time, until thereafter amended in accordance with the DLLCA and as provided in such certificate of formation; provided, however, that at the Effective Time, Article I of the certificate of formation of the Surviving Entity shall be amended and restated in its entirety to read as follows: “The name of the limited liability company is Jungla LLC”. At the Effective Time, the limited liability company agreement of Merger Sub, as in effective immediately prior to the Effective Time, shall be the limited liability company agreement of the Surviving Entity at the Effective Time.
2.8      Conversion of Shares in the Merger . Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any further action on the part of Buyer, Merger Sub, the Company, any Sellers or member of Merger Sub:
(a)      each share of Company Capital Stock outstanding immediately prior to the Effective Time shall be canceled and shall cease to exist and no consideration shall be delivered in exchange therefor; and
(b)      each limited liability company interest in Merger Sub outstanding immediately prior to the Effective Time shall remain unchanged and continue to remain outstanding as a limited liability company interest in the Surviving Entity. At the Effective Time, Buyer shall continue as the sole member of the Surviving Entity.
2.9      Delivery of Calculations . Not less than two (2) Business Days prior to the Closing Date (the “ Determination Date ”), the Sellers shall cause the Company to prepare and deliver to Buyer the following for Buyer’s review and approval (which shall not be unreasonably withheld, conditioned or delayed):
(a)      the Company’s calculation of the Upfront Purchase Price, setting forth, in reasonable detail, an estimation of each component thereof;
(b)      the Company’s calculation of the Upfront Stock Consideration Value, the Upfront Stock Consideration Shares, the Upfront Per Share Stock Consideration, the Upfront Per Share Cash Consideration and the Upfront Per Option Share Consideration;
(c)      a schedule of all Shares, including the name of the Seller holding each of the Shares, together with each Seller’s Pro Rata Share (calculated based on both (i) the number of shares of Company Capital Stock held by, or issuable upon exercise of any Vested Company Options held by, all Sellers and Participating Optionholders, and (ii) the number of shares of Company Capital Stock held by, or issuable upon exercise of any Vested Company Options held by, all Holders);
(d)      a schedule of all Company Options, with (i) the name of the Company Optionholder holding each Company Option, (ii) exercise price information for each Company Option as well as the Aggregate Exercise Amount, (iii) whether it is a Vested Company Option, (iv) the Company’s calculation of the Aggregate Option Payment, and (v) each Company Optionholder’s Pro Rata Share (calculated based on both (x) the number of shares of Company Capital Stock held by, or issuable upon exercise of any Vested Company Options held by, all Sellers and Participating Optionholders, and (y) the number of shares of Company Capital Stock held by, or issuable upon exercise of any Vested Company Options held by, all Holders);
(e)      the Company’s estimated balance sheet as of immediately prior to the Closing (the “ Estimated Balance Sheet ”), with separate schedules reflecting (i) the estimated Closing Cash, (ii) the estimated Company Debt, (iii) the estimated Company Transaction and Bonus Expenses and (iv) the estimated Closing Net Working Capital as well as the delta between the estimated Closing Net Working Capital and the Net Working Capital Threshold;
(f)      the name, address, email address and tax identification number of each Holder and:
(i)      in the instance of the Sellers, the amount of Buyer’s Common Stock and cash to be issued or paid to each Seller pursuant to Sections 2.1(b)(i), and 2.1(b)(ii) , respectively, as well as the potential amount of Buyer’s Common Stock issuable to each Seller pursuant to Sections 2.1(b)(iv) and 2.1(b)(v) and potential cash payable to each Seller pursuant to Section 2.1(b)(vi) ;
(ii)      in the instance of Company Optionholders, the amount of cash to be paid to each Company Optionholder pursuant to Section 2.2(a)(i) as well as the potential cash payable to each Company Optionholder pursuant to Sections 2.2(a)(iii), 2.2(a)(iv) and 2.2(a)(v) ; and
(g)      a certificate of a duly authorized officer of the Company certifying the foregoing deliverables (i.e., clauses (a) through (f)).
The calculations listed in the foregoing Sections 2.9(a) through 2.9(f) shall be set forth on a spreadsheet referred to herein as the “ Allocation Schedule ”. The Parties agree that Buyer and the Company will have the right to rely on the Allocation Schedule as setting forth a true, complete and accurate listing of all amounts due to be paid by Buyer to the Holders in exchange for Company Capital Stock and Company Options. Neither Buyer nor the Company will have any liability with respect to the allocation of any shares of Buyer’s Common Stock or cash made to the Holders in accordance with the Allocation Schedule. Notwithstanding anything in this Agreement to the contrary, the Estimated Balance Sheet and the Company’s estimation of the Closing Net Working Capital shall be consistent with the Accounting Methodology and shall reflect all vacation, sick leave, severance and/or other remuneration required by Law, Contract or policy of the Company to be paid to Employees for periods on or prior to the Closing.
2.10      Withholding . Notwithstanding anything in this Agreement to the contrary, (a) Buyer shall be under no obligation to make the payments or issue the shares described in Section 2.1(b) to any Seller until such Seller has delivered to Buyer a Form W-9 (Request for Taxpayer Identification Number and Certification) or a Form W-8, as applicable, executed by such Seller, and (b) the Company shall be entitled to deduct and withhold from that portion of any payments contemplated by this Article II or any other amount payable to a Holder pursuant to this Agreement, and shall pay to the appropriate Taxing Authority, such amounts that are required to be deducted and withheld with respect to the making of such payments under any Tax Law. To the extent amounts are so deducted and withheld and paid to the appropriate Taxing Authority, such amounts shall be treated for purposes of this Agreement as having been paid to the Holder in respect of which such deduction and withholding were made.
2.11      Post-Closing Adjustment .
(a)      Preparation of Closing Statement . Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to Sellers’ Representative a statement as of the Closing (the “ Final Calculation ”) setting forth its calculation of each of the following:
(i)      the Closing Cash;
(ii)      the Closing Net Working Capital;
(iii)      the Company Transaction and Bonus Expenses;
(iv)      the Company Debt; and
(v)      the resulting Final Purchase Price.
The Final Calculation shall be accompanied by such supporting documentation reasonably necessary to derive and support the numbers set forth therein. The Final Calculation shall be final, conclusive and binding upon the Parties unless Sellers’ Representative delivers a written notice to Buyer of any objection to the Final Calculation (the “ Objection Notice ”) within thirty (30) days (the “ Objection Period ”) after delivery of the Final Calculation. Any Objection Notice must set forth in reasonable detail (x) any item on the Final Calculation that Sellers’ Representative believes has not been prepared in accordance with this Agreement and the correct amount of such item and (y) Sellers’ Representative’s alternative calculation of the Closing Cash, the Closing Net Working Capital, the Company Transaction and Bonus Expenses or Company Debt, as the case may be. Any Objection Notice must specify, with reasonable particularity, all facts that form the basis of such disagreements. If Sellers’ Representative gives any such Objection Notice within the Objection Period, then Sellers’ Representative and Buyer shall attempt in good faith to resolve any dispute concerning the item(s) subject to such Objection Notice. If Sellers’ Representative and Buyer do not resolve the issues raised in the Objection Notice within thirty (30) days of the date of delivery of such notice (the “ Initial Resolution Period ”), such dispute shall be resolved in accordance with the procedures set forth in Section 2.11(b) . Any item or amount which has not been disputed in the Objection Notice shall be final, conclusive and binding on the Parties on the expiration of the Initial Resolution Period.
(b)      Resolution of Disputes . If Buyer and Sellers’ Representative have not been able to resolve a dispute within the Initial Resolution Period, either Party may submit such dispute to and such dispute shall be resolved fully, finally and exclusively through the use of an independent international accounting firm selected to serve as such by mutual agreement of Buyer and Sellers’ Representative (such accounting firm, the “ Reviewing Party ”). The fees and expenses of the Reviewing Party incurred in the resolution of such dispute shall be borne by the parties in such proportion as is appropriate to reflect the relative benefits received by the Holders and Buyer from the resolution of the dispute. For example, if Sellers’ Representative challenges the calculation in the Final Calculation by an amount of $100,000, but the Reviewing Party determines that Sellers’ Representative has a valid claim for only $40,000, Buyer shall bear 40% of the fees and expenses of the Reviewing Party and Sellers’ Representative on behalf of the Holders shall bear the other 60% of such fees and expenses. The Reviewing Party shall determine (with written notice thereof to Sellers’ Representative and Buyer) as promptly as practicable, but in any event within thirty (30) days following the date on which Final Calculation and written submissions detailing the disputed items are delivered to the Reviewing Party (i) whether the Final Calculation was prepared in accordance with the terms of this Agreement or, alternatively, (ii) only with respect to the disputed items submitted to the Reviewing Party, whether and to what extent (if any) the Final Calculation requires adjustment and a written explanation in reasonable detail of each such required adjustment, including the basis therefor. Buyer and Sellers’ Representative shall require the Reviewing Party to enter into a confidentiality agreement on terms agreeable to Buyer, Sellers’ Representative and the Reviewing Party. The procedures of this Section 2.11(b) are exclusive and the determination of the Reviewing Party shall be final and binding on the Parties. The decision rendered pursuant to this Section 2.11(b) may be filed as a judgment in any court of competent jurisdiction.
(c)      Post-Closing Purchase Price Adjustment .
(i)      The “ Post-Closing Adjustment ” shall be an amount equal to the Final Purchase Price less the Upfront Purchase Price and, for the avoidance of doubt, may be a positive or a negative number.
(ii)      Without limiting the provisions of Section 9.2(a)(i) (except to the extent of any double counting that would otherwise result), if the Post-Closing Adjustment is a negative number, the Indemnification Hold-Back Amount shall be reduced by the absolute value of the Post-Closing Adjustment (i.e., offsetting the Post-Closing Adjustment against the Indemnification Hold-Back Amount).
(iii)      If the Post-Closing Adjustment is a positive number, Buyer shall deliver to each Holder an amount of cash as provided in Sections 2.1(b)(iii) or 2.2(a)(ii) , as applicable.
(d)      No Effect on Representations and Warranties . The provisions of this Section 2.11 , as well as any adjustment to the Final Purchase Price as a result of any of the Closing Cash, the Closing Net Working Capital, the Company Transaction and Bonus Expenses and the Company Debt, shall not diminish or otherwise affect the right or ability of Buyer or any other Buyer Indemnified Person to rely upon the provisions of this Agreement and any certificate or document delivered in connection herewith, including the representations of the Sellers set forth in Article III and Article IV .
2.12      Indemnification Hold-Back Amount and Payment . On the date that is twelve (12) months following the Closing Date (such date, the “ Indemnification Hold-Back Payment Date ”), Buyer shall deliver (i) to the Company Optionholders (or to the Company for any payments for Vested Company Options held by Employees to be paid in accordance with Section 2.2 ), the amount of cash payable pursuant to Section 2.2(a)(iii) (reflecting any reductions to the Indemnification Hold-Back Amount made in accordance with Section 2.11(c)(ii) or Article IX ) and (ii) to the Sellers, certificates or book entries reflecting the Buyer’s shares to be distributed pursuant to Section 2.1(b)(iv) (reflecting any reductions to the Indemnification Hold-Back Amount made in accordance with Section 2.11(c)(ii) or Article IX ); provided, however, that if, when any amount would otherwise be distributed pursuant to this Section 2.12 , there shall exist a good faith claim by Buyer to exercise the Offset Right, all or a portion of such amount as determined by Buyer (in its reasonable discretion, but subject to the limitations set forth in Article IX ) to represent the Losses at issue (including, if applicable, as to any specific Holder) shall be withheld from payment until such time as the claim has been perfected, in which case the Offset Right shall apply (subject to the limitations set forth in Article IX ) against such portion of the amount at issue and the balance of any withheld portion (if applicable) shall be distributed to the Holders (or, as applicable, to the affected Holders) (or to the Company for any payments for Vested Company Options held by Employees to be paid in accordance with Section 2.2 ) as contemplated by this Agreement.
2.13      Milestones .
(a)      Determining Achievement of Milestones . Buyer shall exercise reasonable, good faith efforts to assess on a regular basis whether Milestones have been achieved, and in any event Buyer shall assess such achievement no less frequently than each regularly scheduled meeting of Buyer’s Board of Directors. Notwithstanding any provision in this Agreement to the contrary, any Milestones which have not been achieved on or before the first regularly scheduled meeting of Buyer’s Board of Directors following the date which is twenty-four (24) months after the Closing (such period following the Closing until the date of such meeting of Buyer’s Board of Directors, the “ Milestone Period ”) shall no longer be eligible for achievement for purposes of this Agreement.
(b)      Resource Allocation . During the Milestone Period, Buyer shall (or shall cause its Affiliates to) exercise commercially reasonable efforts to allocate resources as set forth on Schedule 2.13(b) (the “ Allocated Resources ”) to activities which support or that are otherwise directed toward achievement of the Milestones, it being understood that “commercially reasonable efforts” for purposes of this Section 2.13(b) shall mean the level of efforts typically devoted by similarly situated companies in Buyer’s industry to develop and commercialize products and services of similar market potential, project potential or strategic value, based on conditions then prevailing.
(c)      Rights Upon Sale . In the event of (i) the consummation of a merger of Buyer or a subsidiary of Buyer with or into another entity if Persons who were not stockholders of Buyer immediately prior to such merger own immediately after such merger 50% or more of the voting power of the outstanding securities of each of Buyer (or its successor) and any direct or indirect parent corporation of Buyer (or its successor), (ii) the sale, transfer or other disposition of all or substantially all of Buyer’s assets, (iii) Buyer directly or indirectly ceases the development and/or commercialization of the Company Platform, or (iv) Buyer directly or indirectly sells or otherwise transfers (including by way of exclusive license) the Company Platform to any Person that is not an Affiliate, in each case during the Milestone Period, the Milestone Date for any Milestone that has not yet been achieved shall be the date of the consummation of the merger, sale, transfer or other disposition at issue and in the case of an event described in subsection (i) or (ii) of this Section 2.13(c) the value of any shares of Buyer’s Common Stock distributable pursuant to Section 2.1(b)(v) shall be paid in cash (based on the Per Share Milestone Amount(s) for the applicable Milestone(s)).
(d)      Dispute Resolution . If Sellers’ Representative shall dispute any non-determination by Buyer as to the achievement of any Milestone, then Sellers’ Representative may invoke the following technical determination process by providing written notice thereof to Buyer. Within fifteen (15) days of such notice, Buyer and Sellers’ Representative shall jointly select one unaffiliated, independent academic in the field of genetics to act as expert (the “ Expert ”); provided , however , that any Expert shall be required to execute a non-disclosure agreement in form and substance reasonably satisfactory to Buyer. Buyer shall provide the Expert with all necessary data, results and financial projections within thirty (30) days after the Expert is selected, and the Expert shall resolve any dispute described in the first sentence of this Section 2.13(d) by evaluating such information and, as applicable, engaging in discussions with Buyer’s employees with substantive knowledge of the underlying matters. The fees of the Expert shall be paid at Buyer’s and Sellers’ Representative’s (on behalf of the Holders) joint expense (50:50), except that Buyer shall reimburse Sellers’ Representative for its share of such fees if the Expert’s determination reverses Buyer’s position and Sellers’ Representative shall reimburse Buyer for its share of such fees if the Expert’s determination upholds Buyer’s position. The hearing shall be held within sixty (60) days of the Expert being selected, and the Expert shall be requested to reach a final determination within ten (10) days after the hearing. The Expert’s determination shall be binding for purposes of this Agreement.
ARTICLE III     

 REPRESENTATIONS AND WARRANTIES WITH RESPECT TO EACH SELLER
Each of the Sellers hereby, severally and not jointly, represents and warrants to Buyer as of the Agreement Date and as of the Closing Date as follows:
3.1      Title . As of the Agreement Date, such Seller has sole record and beneficial ownership of all of the Shares set forth opposite such Seller’s name on Schedule A attached hereto. The Shares set forth opposite such Seller’s name on Schedule A attached hereto represent all of such Seller’s outstanding capital stock of the Company (whether vested or unvested) as of the Agreement Date. Aside from the Shares set forth opposite such Seller’s name on Schedule A attached hereto, such Seller has no current or future right to (nor have any promises or inducements been made to such Seller with respect to) any equity, stock options or other ownership interest in the Company.
3.2      Authority . Such Seller has all requisite power and full legal right to enter into this Agreement and to perform all of such Seller’s agreements and obligations hereunder. This Agreement has been duly executed and delivered by such Seller and constitutes the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, or (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
3.3      Non-Contravention . The execution and delivery of this Agreement by such Seller and the consummation by such Seller of the transactions contemplated hereby will not constitute a material violation of, or be in conflict in any material respect with, any Order applicable to such Seller.
3.4      Governmental Consents . No consent, approval or authorization of, or registration, qualification or filing with, any Governmental Authority is required for the execution and delivery by such Seller of this Agreement or the consummation by such Seller of the transactions contemplated hereby.
3.5      Litigation . There is no Action pending or, to such Seller’s Knowledge, threatened which in any manner challenges or seeks to prevent, enjoin, materially alter or materially delay the consummation by such Seller of the transactions contemplated by this Agreement.
3.6      No Broker and No Transaction Expenses . No finder, broker, agent or other similar intermediary has acted for or on behalf of such Seller in connection with the negotiation of this Agreement or the consummation of the transactions contemplated hereby. Such Seller has not engaged any third party advisor for which the Company will have any liability, including brokers, finders, financial advisors, accountants, counsel and any other third party service providers, arising from, incurred in connection with or incident to the process by which the Company, such Seller (as applicable) and, to such Seller’s Knowledge, any other Seller solicited, discussed and negotiated strategic alternatives and/or this Agreement and the transactions contemplated hereby.
3.7      Investment .
(a)      Such Seller (i) has experience investing in unregistered and restricted securities of companies, (ii) has such knowledge and experience in financial and business matters that such Seller is capable of evaluating the merits and risks of an acquisition of shares of Buyer’s Common Stock as represented hereby, (iii) by reason of such Seller’s financial and business experience, has the capacity to protect such Seller’s interest in connection with the acquisition of shares of Buyer’s Common Stock as represented hereby, (iv) is financially able to bear the economic risk of an investment in shares of Buyer’s Common Stock as represented hereby, including the total loss thereof, (v) is either (x) an individual or (y) a Person that is not an individual and was not formed solely for the purpose of acquiring shares of Buyer’s Common Stock, (vi) has received and reviewed all information such Seller considers necessary or appropriate for deciding about an investment in shares of Buyer’s Common Stock, (vii) has had an opportunity to ask questions and receive answers from Buyer and its officers and employees regarding an investment in shares of Buyer’s Common Stock and regarding the business, financial affairs and other aspects of Buyer, and (viii) has further had the opportunity to obtain any information (to the extent Buyer possess or can acquire such information without unreasonable effort or expense) which such Seller deems necessary to evaluate an investment in shares of Buyer’s Common Stock and to verify the accuracy of information otherwise provided to such Seller.
(b)      Such Seller is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act.
(c)      Such Seller acknowledges and understands that (i) the shares of Buyer’s Common Stock issuable to such Seller as contemplated hereby have not been registered under the Securities Act in reliance, in part, on the representations and warranties of Seller in this Section 3.7(c) and (ii) such shares are being acquired by such Seller for investment purposes for such Seller’s own account only and not for sale or with a view to distribution of all or any part of such shares. Such Seller has no present plan or intention to sell, exchange or otherwise dispose of any of the shares of Buyer’s Common Stock issuable to such Seller as contemplated hereby.
(d)      Such Seller understands (i) that the shares of Buyer’s Common Stock issuable to such Seller as contemplated hereby are “restricted securities” under the federal securities laws in that such shares will be acquired from Buyer in a transaction not involving a public offering, and that under such laws and applicable regulations such shares may be resold without registration under the Securities Act only in certain limited circumstances and that otherwise such shares must be held indefinitely, and (ii) the resale limitations imposed by the Securities Act as well as Rule 144 (“ Rule 144 ”) of the SEC and the conditions which must be met in order for Rule 144 to be available for resale of “restricted securities,” including the requirement that the shares of Buyer’s Common Stock issuable to such Seller as contemplated hereby, unless registered for resale under the Securities Act, must be held for at least six (6) months after issuance from Buyer (or (1) year in the absence of publicly available information about Buyer) and the condition that there be available to the public current information about Buyer under certain circumstances.
(e)      Such Seller further agrees not to make any disposition of all or any portion of the shares of Buyer’s Common Stock issuable to such Seller as contemplated hereby unless and until: (i) there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement, any applicable requirements of state securities laws, and any applicable Buyer policies concerning trading blackout periods; or (ii) such Seller shall have notified Buyer of the proposed disposition and shall have furnished Buyer with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by Buyer, such Seller shall have furnished to Buyer a written opinion of counsel, reasonably satisfactory to Buyer, that such disposition will not require registration of any securities under the Securities Act or the consent of or a permit from appropriate authorities under any applicable state securities law; provided , however , that (x) Buyer will not require opinions of counsel for transactions made pursuant to Rule 144 so long as Buyer is provided on a timely basis with all certificates and other information Buyer may reasonably request to permit Buyer to determine that the subject disposition is, in fact, exempt from the registration requirements of the Securities Act pursuant to Rule 144, (y) in addition to the other matters set forth in this paragraph, such Seller shall promptly forward to Buyer a copy of any Form 144 filed with the SEC with respect to any proposed disposition and a letter from the executing broker satisfactory to Buyer evidencing compliance with Rule 144, and (z) if Rule 144 is amended or if the SEC’s interpretations thereof in effect at the time of any proposed disposition have changed from its present interpretations thereof as of the Closing Date, such Seller shall provide Buyer with such additional documents and assurances as Buyer may reasonably require.
(f)      Such Seller understands that the certificates evidencing the shares of Buyer’s Common Stock issuable to such Seller as contemplated hereby may bear one or all of the following legends (or substantially similar legends):
(i)      “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.”
(ii)      Any legend required by applicable state securities laws.
Such Seller understands and agrees that stop transfer instructions may be given to Buyer’s transfer agent with respect to the shares of Buyer’s Common Stock issuable to such Seller as contemplated hereby.
(g)      Such Seller has carefully read the provisions of this Agreement, including the provisions of this Article III , and has discussed their requirements and other applicable limitations upon such Seller’s ability to sell, transfer or otherwise dispose of the shares of Buyer’s Common Stock issuable to such Seller as contemplated hereby, to the extent that such Seller felt necessary, with such Seller’s personal counsel or counsel to the Company.
3.8      Taxes . Seller has been advised and has had the opportunity to seek the advice of such Seller’s tax advisor and to make such Seller’s own determination with respect to this Agreement and the transactions contemplated hereby.
3.9      No Other Representations or Warranties . Except for the representations and warranties contained in this Article III , such Seller has not made and does not make any other express or implied representation or warranty, either written or oral, on behalf of such Seller.
ARTICLE IV     

 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
Except as set forth on the Disclosure Schedule, the Company hereby represents and warrants to Buyer and Merger Sub as of the Agreement Date and as of the Closing Date as follows:
4.1      Organizational Matters .
(a)      Valid Existence; Good Standing . The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and has all requisite power and authority to own or lease all of its properties and assets and to carry on its business as now or currently proposed to be conducted. The Company is duly licensed or qualified to do business and is in good standing under the laws of Delaware and California, which represent all of the jurisdictions in which the nature of the business conducted by it or the character or location of the properties and assets owned, leased or licensed by it makes such licensing or qualification necessary.
(b)      Operations . California is the only state, and the United States is the only country, in which the Company has any employee or officer (each a “ Current Employee ”) or has assets or leases real property. Current Employees, together with any former employees or officers of the Company, are referred to herein individually as an “ Employee ” and collectively as “ Employees. ” Section 4.1(b) of the Disclosure Schedule lists each state and country in which the Company has any individual consultant or independent contractor or director (who is not an Employee) (each a “ Current Consultant ”) as of the Agreement Date. Current Consultants, together with any former individual consultant or independent contractor or director (who is not an Employee) of the Company, are referred to herein individually as a “ Consultant ” and collectively as “ Consultants. ”
(c)      Subsidiaries . The Company has no Subsidiaries. The Company does not own and never has owned, directly or indirectly, any shares of capital stock, voting securities, or equity interests in any Person. The Company has no obligation to make an investment (in the form of a purchase of equity securities, loan, capital contribution or otherwise) directly or indirectly in any Person.
(d)      Corporate Documents . The Company has delivered to Buyer true and complete copies of the certificate of incorporation and bylaws of the Company in each case as the same may have been amended from time to time (the “ Company Charter Documents ”). All such Company Charter Documents are unmodified and in full force and effect and the Company is not in violation of any provision of the Company Charter Documents. The Company’s board of directors has not proposed or approved any amendment of any of the Company Charter Documents. The Company has delivered to Buyer and its representatives true and complete copies of the stock ledger of the Company and of the minutes of all meetings of the stockholders, the board of directors and each committee of the board of directors of the Company held since the Reference Date.
(e)      Officers and Directors . Section 4.1(e) of the Disclosure Schedule lists all of the directors and officers of the Company as of the Agreement Date.
4.2      Noncontravention . Neither the execution and delivery of this Agreement nor the consummation of the Transactions shall conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit or result in the creation of any Lien upon any of the properties or assets of the Company (any such event, a “ Conflict ”) under (a) any provision of the Company Charter Documents or any resolutions adopted by the Company’s board of directors or the Sellers, (b) any material Contract to which the Company is a party or by which any of its properties or assets may be bound or affected, or (c) any Permit issued to the Company or any Order or Law applicable to the Company or any of its properties or assets (whether tangible or intangible). Immediately following the Closing Date, the Company shall continue to be permitted to exercise all of its rights under all material Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company would otherwise be required to pay pursuant to the terms of such material Contracts had the Transactions contemplated by this Agreement not occurred.
4.3      Capitalization .
(a)      Authorized and Issued Securities . The authorized capital stock of the Company consists of 15,700,000 shares of Company Common Stock and 4,459,633 shares of Company Preferred Stock, all of which shares are designated as Series Seed Preferred Stock. The capitalization of the Company is as follows: (i) 8,500,000 shares of Company Common Stock are issued and outstanding, (ii) no shares of Company Common Stock are held by the Company in its treasury, (iii) 1,553,722 shares of Company Common Stock are subject to outstanding options under the Company Option Plan (i.e., the Company Options), 744,428 shares of which are subject to Vested Company Options and 809,294 shares of which are subject to Company Options that are not Vested Company Options, (iv) no outstanding options have been issued outside the Company Option Plan, (v) 4,074,251 shares of Company Preferred Stock are issued and outstanding, all of which shares are Series Seed Preferred Stock, (vi) no shares of Company Preferred Stock are subject to Company Options, and (vii) a sufficient number of each class and series of shares of Company Capital Stock is available for issuance upon exercise of outstanding Company Options and upon conversion of the Company Preferred Stock into Company Common Stock. Each share of Company Preferred Stock is convertible into one share of Company Common Stock. Except as set forth in this Section 4.3(a) , there are no, and as of the Closing there shall be no, shares of Company Capital Stock, voting securities or equity interests of the Company issued and outstanding or any subscriptions, options, warrants, calls, convertible or exchangeable securities, rights, commitments or agreements of any character providing for the issuance of any shares of capital stock, voting securities or equity interests of the Company, including any representing the right to purchase or otherwise receive any Company Capital Stock.
(b)      Ownership of Stock, Options and Warrants . Section 4.3(b) of the Disclosure Schedule sets forth a complete and accurate list of each of the record holders of (i) each class or series of the Company Capital Stock and the number of shares of each such class or series of Company Capital Stock held by each Seller as of the Agreement Date and the number of shares or other securities into which such Company Capital Stock is convertible, listed by class and series, (ii) all Company Options and the exercise price, date of grant and number of shares of Company Common Stock for which such Company Options are exercisable by each such Company Optionholder as of the Agreement Date and the expiration date of each such Company Option. All issued and outstanding shares of Company Capital Stock are owned of record and beneficially, as set forth in Section 4.3(b) of the Disclosure Schedule.
(c)      Valid Issuance; No Preemptive or Other Rights .
(i)      All issued and outstanding shares of Company Capital Stock (x) are, and all shares of Company Capital Stock that may be issued pursuant to the exercise of Company Options and the conversion of outstanding shares of any Company Preferred Stock shall be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and nonassessable and (y)  are not subject to, nor were issued in violation of, any preemptive rights, rights of first offer or refusal, co-sale rights or similar rights arising under applicable Law or pursuant to the Company Charter Documents, or any Contract to which the Company is a party or by which it is bound and have been offered, issued, sold and delivered by the Company in compliance with all registration or qualification requirements (or applicable exemptions therefrom) of applicable federal, state and foreign securities Laws. Each Company Option granted under the Company Option Plan was duly authorized by all requisite corporate action on a date no later than the grant date and has an exercise price per share at least equal to the fair market value of a share of Company Common Stock on the grant date. The Company is not under any obligation to register any of its presently outstanding securities, or securities issuable upon exercise or conversion of such securities, under the Securities Act or any other Law.
(ii)      The rights, preferences and privileges of the Company Capital Stock are as set forth in the Company Charter Documents. There is no liability for dividends accrued and/or declared but unpaid with respect to the outstanding Company Capital Stock. The Company is not subject to any obligation to repurchase, redeem or otherwise acquire any shares of Company Capital Stock or any other voting securities or equity interests (or any options, warrants or other rights to acquire any shares of Company Capital Stock, voting securities or equity interests) of the Company. To the Company’s Knowledge, there are no voting trusts or other agreements or understandings with respect to the voting of the Company Capital Stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the Company.
(iii)      True and complete copies of all form agreements and instruments (and any amendments thereto, if applicable) relating to or issued under the Company Option Plan have been delivered to Buyer; there are no agreements to amend, modify or supplement such agreements or instruments from the forms thereof provided to Buyer; and all equity grants under the Company Option Plan have been made pursuant to agreements and instruments and do not materially deviate from such form agreements and instruments.
4.4      No Consents or Approvals . Except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, no consents or approvals of, filings with, or notices to any Governmental Authority or Person are required to be made or obtained by the Company for the valid execution, delivery and performance of this Agreement or the other Transaction Agreements to which it is a party, the consummation of the Transactions (including the Stock Purchase and the Merger), and the operation of the Company’s business in the ordinary course after Closing, including the continued validity of the Company’s Permits.
4.5      Financial Matters .
(a)      Financial Statements .
(i)      Prior to the Agreement Date, the Company has delivered to Buyer true and complete copies of the following financial statements of the Company (collectively, the “ Financial Statements ”): (w) the audited balance sheet and related audited statements of income, cash flows and stockholders’ equity as of and for the fiscal year ended December 31, 2018 (December 31, 2018, the “ Balance Sheet Date ”); (x) the unaudited balance sheets and related unaudited statements of income, cash flows and stockholders’ equity as of and for the fiscal years ended December 31, 2016 and 2017; (y) the unaudited balance sheet and related unaudited statements of income, cash flows and stockholders’ equity as of and for the three-month period ended March 31, 2019; and (z) the unaudited balance sheet and related unaudited statements of income, cash flows and stockholders’ equity as of and for the five -month period ended May 31 , 2019 (the “ Interim Balance Sheet ” and such date the “ Interim Balance Sheet Date ”).
(ii)      The books and records of the Company (x) have been and are being maintained in accordance with GAAP and (y) are complete, properly maintained and do not contain or reflect any material inaccuracies or discrepancies.
(b)      Fair Presentation . The Financial Statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby. The Financial Statements fairly present the financial condition of the Company as of such dates and the results of operations of the Company for such periods, and were derived from and are consistent with the books and records of the Company; provided , however , that the Financial Statements as of March 31, 2019 and the Interim Balance Sheet Date and for the three-month and five -month periods ended March 31, 2019 and the Interim Balance Sheet Date are subject to normal year-end adjustments (which shall not be material individually or in the aggregate). Since the Reference Date, the Company has not effected any material change in any method of accounting or accounting practice.
(c)      Internal Controls; Financial Controls . The Company maintains systems of internal accounting and financial reporting controls that are sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures sufficient to provide reasonable assurance: (i) that the Company maintains records that in reasonable detail accurately and fairly reflect, in all material respects, the Company’s transactions and dispositions of assets; (ii) that transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP; (iii) that receipts and expenditures are being made only in accordance with authorizations of management and the Company’s board of directors; and (iv) regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Financial Statements. The Company has delivered to Buyer a true and complete copy of any disclosure (or, if unwritten, a summary thereof) by any representative of the Company to the Company’s independent auditors relating to any material weaknesses in internal controls and any significant deficiencies in the design or operation of internal controls that would adversely affect the ability of the Company to record, process, summarize and report financial data. The Company has no Knowledge of any fraud or whistle-blower allegations, whether or not material, that involve management or other Employees or Consultants who have or had a significant role in the internal control over financial reporting of the Company. Since the Reference Date, there have been no material changes in the Company’s internal control over financial reporting.
(d)      No Undisclosed Liabilities . The Company does not have any Liabilities of the type required to be reflected as liabilities on a balance sheet prepared in accordance with GAAP that are not reflected or reserved against on the face of (and not in the notes to) the Financial Statements, except Liabilities (i) incurred by the Company in connection with the preparation, execution, delivery and performance of the Transaction Agreements and included in the Company Transaction and Bonus Expenses, or (ii) which have arisen in the Ordinary Course of Business since the Interim Balance Sheet Date and which are not in excess of $25,000 in the aggregate.
(e)      Off-Balance-Sheet Arrangements . There are no “off-balance-sheet arrangements” (within the meaning of Item 303 of Regulation S-K promulgated by the SEC) with respect to the Company.
(f)      Inventory . All inventory of the Company as of the Agreement Date, if any, consists of a quality and quantity usable and saleable in the Ordinary Course of Business. All inventory not written off has been priced at the lower of cost or market value on a first in, first out basis. The quantities of each item of inventory as of the Agreement Date are reasonable in the present circumstances of the Company.
(g)      Bank Accounts . Section 4.5(g) of the Disclosure Schedule sets forth an accurate list and summary description (including name and address) of each bank and other financial institution in which the Company maintains an account (whether checking, savings or otherwise), lock box or safe deposit box and the names of the persons having signing authority or other access thereto. All cash in such accounts is held in demand deposits and is not subject to any restriction as to withdrawal.
(h)      Company Debt . Except as set forth in Section 4.5(h) of the Disclosure Schedule, there is no Company Debt. With respect to each item of Company Debt, Section 4.5(h) of the Disclosure Schedule accurately sets forth the name of the creditor, the Contract under which such debt was issued, the name and address of the creditor, the principal amount of the debt and a description of the collateral if secured. The Company is not in default with respect to any outstanding Company Debt or any instrument relating thereto, nor is there any event which, with the passage of time or giving of notice, or both, would result in a default, and no such Company Debt or any instrument or agreement thereto purports to limit the operation of the Company’s business. Complete and correct copies of all instruments (including all amendments, supplements, waivers and consents) relating to any Company Debt have been provided to Buyer.
4.6      Absence of Certain Changes or Events . Since the Balance Sheet Date, (a) there have not been any events, changes, occurrences or circumstances that, individually or in the aggregate, have had or could reasonably be expected to have a Company Material Adverse Effect and (b) there has not occurred any damage, destruction or loss (whether or not covered by insurance) of any material asset of the Company that materially and adversely affects the use thereof. Since the Interim Balance Sheet Date, the Company has been operated in the Ordinary Course of Business. Without limiting the foregoing, since the Interim Balance Sheet Date the Company has not taken any action described in Section 6.1 that if taken after the Agreement Date and prior to the Closing would violate such provision.
4.7      Legal Proceedings . Since the Reference Date, there have not been and there are no pending Actions, and to the Knowledge of the Company, there are no Actions threatened, in either case, by or against the Company, its properties or assets or any of the Company’s officers or directors in their capacities as such, nor to the Knowledge of the Company, are there any circumstances that would constitute a basis therefor.
4.8      Compliance with Laws; Permits .
(a)      The Company is and has at all times been, in compliance in all material respects with all Laws applicable to the Company or any of its properties, assets, business or operations, including the Health Care Laws. The Company holds all Permits necessary to conduct its business and own, lease and operate its properties and assets and all such Permits are in full force and effect. The Company is and has always been, in compliance in all material respects, with the terms of all Permits necessary to conduct its business and to own, lease and operate its properties and facilities. Section 4.8(a) of the Disclosure Schedule sets forth a list of all Permits that are held by the Company. The Company has not received written notice from any Governmental Authority claiming or alleging that the Company was not in compliance with all Laws applicable to the Company or its business or operations; the Company has not been assessed a material penalty with respect to any alleged failure by the Company to have or comply with any Permit.
(b)      Neither the Company, nor any of its officers, directors, Employees, Consultants or agents, have, in the operating of the Company’s business, engaged in any activities which are prohibited or are cause for material criminal or civil penalties or mandatory or permissive exclusion from Medicare, Medicaid or any other state or federal health care program under 42 U.S.C. §§ 1320a-7, 1320a-7a, 1320a-7b or 1395nn, 5 U.S.C. § 8901 et seq. (the Federal Employees Health Benefits program statute), or the regulations, agency guidance, or similar legal requirement promulgated pursuant to such statutes or any analogous state or local Laws.
(c)      Neither the Company, nor any of its directors, officers, Employees, Consultants, or agents has, directly or indirectly given or agreed to give any illegal gift, contribution, payment or similar benefit to any supplier, customer, governmental official or employee or other Person.
(d)      (i) Each Employee and Consultant of the Company required to be licensed by an applicable Governmental Authority, professional body and/or medical body has such licenses, (ii) such licenses are in full force and effect, and (iii) to the Knowledge of the Company, there are no facts or circumstances that could reasonably be expected to result in any such licenses being suspended, revoked or otherwise lapse prematurely.
(e)      Neither the Company nor any of its Employees, Consultants or agents has been excluded, suspended, debarred or otherwise sanctioned by any Governmental Authority, including the U.S. Department of Health and Human Services Office of Inspector General or the General Services Administration.
(f)      The Company is, and since the Reference Date has been, in compliance in all material respects with all applicable Information Privacy and Security Laws relating to the privacy, security, use and disclosure of health information, including “protected health information” or “PHI” as defined under HIPAA and information related to genetic testing and genetic test results, created, used, disclosed or stored in the course of the operations of the Company. The Company has the necessary agreements with any “business associates” of the Company (as such term is defined by and as such agreements are required by HIPAA). True and complete copies of all HIPAA and health information privacy policies that have been used by the Company for the past three years have been provided to Buyer and such privacy policies are in compliance with all applicable Information Privacy and Security Laws. Since the Reference Date, the Company has complied in all material respects with all Personal Data Obligations. No actions have been asserted or, to the Knowledge of the Company, threatened against the Company by any person alleging a violation of such person’s privacy, personal, or confidentiality rights under any such rules, policies, or procedures.
(g)      With respect to all health information, “protected health information” or “PHI,” as such term is defined under HIPAA, and genetic testing information as described in Section 4.8(f) , the Company has taken commercially reasonable steps (including implementing and monitoring compliance with administrative, physical and technical safeguards) designed to ensure that such information is protected against loss and against unauthorized access, use, modification, disclosure, or other misuse. Since the Reference Date, there has been no “Breach of Unsecured PHI,” as defined under HIPAA, and no “Security Incident” as defined under HIPAA, resulting in the unauthorized use or disclosure of PHI. The Company maintains systems, policies and procedures to respond to incidents and complaints alleging violations of applicable privacy or security standards and to identify and report all Breaches of Unsecured PHI in accordance with Company’s legal and contractual obligations.
4.9      Taxes .
(a)      The Company has paid all Taxes owed by the Company (without regard to whether or not such Taxes are or were disputed), whether or not shown on any Tax Return. Since the Balance Sheet Date, the Company has incurred no Liability for Taxes arising outside of the Ordinary Course of Business. There are no Liens for Taxes (other than Permitted Liens). The Company is not subject to any currently effective waiver of any statute of limitations in respect of Taxes or agreed to any currently effective extension of time with respect to a Tax assessment or deficiency.
(b)      The Company has timely filed all material Tax Returns that are required to have been filed by or with respect to the Company. All such Tax Returns were, when filed, true, correct and complete in all material respects. The Company is not the beneficiary of any currently effective extension of time within which to file any Tax Return. No written claim has ever been made by any Taxing Authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction, which claim has not be finally resolved.
(c)      The Company has withheld and paid all Taxes required to have been withheld and paid by it in connection with amounts paid or owing by the Company to any Employee, Consultant, creditor, stockholder or other third party.
(d)      No deficiencies for any Taxes have been proposed or assessed in writing against or with respect to any Taxes due by, or Tax Returns of, the Company, which deficiencies have not been finally resolved, and there is no outstanding audit, assessment, dispute or claim concerning any Tax Liability of the Company either within the Company’s Knowledge or claimed, pending or raised by an authority in writing, which audit, assessment, dispute or claim has not been finally resolved.
(e)      The Company (i) is not nor has never been a member of an affiliated group (other than a group the common parent of which is Company) filing a consolidated federal income Tax Return and (ii) has no Liability for Taxes of any Person arising from the application of Treasury Regulation Section 1.1502-6 or any analogous provision of state, local or foreign Tax Law, or as a transferee or successor, or pursuant to a Tax Sharing Agreement.
(f)      The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(g)      The Company has disclosed on its federal income Tax Returns all positions taken therein that would reasonably be expected to give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.
(h)      The Company has not made any payments, is not obligated to make any payments and is not a party to any agreement, including this Agreement, that under certain circumstances could obligate it to make any payments to any “disqualified individual” within the meaning of Section 280G of the Code that shall not be fully deductible under Section 280G of the Code.
(i)      The Company shall not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting requested by the Company prior to the Closing; (ii) agreement entered into by the Company with any Taxing Authority prior to the Closing; (iii) installment sale or open transaction disposition made by the Company prior to the Closing; (iv) prepaid amounts received or paid by the Company prior to the Closing other than amounts consistent with the deferred revenue shown on the Estimated Balance Sheet; (v) application by the Company of the long-term method of accounting prior to the Closing; (vi) any cancellation of debt income recognized by the Company pursuant to Section 108 of the Code with respect to the Company Debt that is properly allocable to the Pre-Closing Tax Period; or (vii) deferral of income under Section 108(i) of the Code as a result of any reacquisition of a debt instrument by the Company occurring prior to the Closing.
(j)      Within the last two years, the Company has not distributed stock of another Person, nor, to the Company’s Knowledge, has its stock been distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code.
(k)      The Company does not have nor has it ever had a permanent establishment in any foreign country. The Company does not engage nor has it ever engaged in a trade or business in any foreign country that would cause the Company to be obligated to pay Taxes or file Tax Returns in such country.
(l)      The Company has delivered to Buyer correct and complete copies of all federal and state income Tax Returns filed and all examination reports and statements of deficiencies filed, or assessed against and agreed to, by the Company with respect to Taxes for all taxable periods ending on or prior to the Agreement Date.
(m)      The Company does not own an equity interest in any Person that is treated as (i) a “controlled foreign corporation” as defined in Section 957 of the Code or (ii) a “passive foreign investment company” within the meaning of Section 1297 of the Code.
(n)      Section 4.9(n) of the Disclosure Schedule lists all jurisdictions (whether foreign or domestic) in which the Company pays Taxes or files Tax Returns and the nature of the Taxes, if any, paid in such jurisdictions by the Company.
(o)      The Company has not been a party to any “reportable transaction,” as defined in Section 6707A(c)(1) of the Code and Treasury Regulation Section 1.6011-4(b) or any similar provision of state, local or foreign Tax Law.
(p)      All Taxes (including sales tax, use tax and value-added tax) that were required to be collected or self-assessed by the Company have been duly collected or self-assessed, and all such amounts that were required to be remitted to any Taxing Authority have been remitted.
(q)      No power of attorney that has been granted by the Company with respect to any matter relating to the Taxes of the Company is currently in force.
(r)      The Company has never (i) made an election under Section 1362 of the Code to be treated as an S corporation for federal income tax purposes or (ii) made a similar election under any comparable provision of any state, local or foreign Tax Law.
(s)      The Company has never been a “personal holding company” within the meaning of Section 542 of the Code.
(t)      The Company is not and has never have been a party to a transaction or agreement that is in conflict with the Tax rules on transfer pricing in any relevant jurisdiction and all transactions and agreements between or among the Company and any related parties and/or the terms thereof have been conducted in an arm’s length manner consistent with the Company’s transactions or agreements with unrelated third parties.
(u)      No representation or warranty is made herein regarding the amount or availability in any Tax period or portion thereof beginning after the Closing Date of any net operating loss carryforward, capital loss carryforward, research and development credit or other Tax attribute arising in any Pre-Closing Tax Period, nor may any representation or warranty in this Section 4.9 , other than Section 4.9(e) and Section 4.9(i) , be relied on for purposes of any Tax period beginning after the Closing Date.
4.10      Employee Benefits and Labor Matters .
(a)      Plans and Arrangements . Section 4.10(a) of the Disclosure Schedule sets forth a true and complete list of all Company Plans.
(b)      Plan Documents . With respect to each Company Plan, the Company has delivered to Buyer a current, accurate and complete copy thereof (including amendments) or a copy of the representative form agreement thereof and, to the extent applicable, true and complete copies of the following documents with respect to each Company Plan: (i) any Contracts or agreements, plans and related trust documents, insurance Contracts or other funding arrangements, in each case as currently in effect, and all amendments thereto; (ii) the results of the non-discrimination testing for the most recent three (3) years; (iii) Forms 5500 and all schedules thereto for the most recent three (3) years; (iv) the most recent actuarial report, if any; (v) the most recent IRS determination or opinion letter; (vi) all correspondence, rulings or opinions issued by the DOL, IRS or any other Governmental Authority and all material correspondence from the Company to the DOL, IRS or other Governmental Authority other than routine reports, returns or other filings within the last three (3) years; (vii) the most recent summary plan descriptions and any summaries of material modifications with respect thereto; and (viii) written descriptions of all non-written Company Plans.
(c)      ERISA . No Company Plan is subject to Title IV of ERISA or is otherwise a Defined Benefit Plan as defined in Section 3(35) of ERISA (a “ Title IV Plan ”) and neither the Company nor any other trade or business (whether or not incorporated) that, together with the Company, would be treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(m) or (o) of the Code (each an “ ERISA Affiliate ”) has incurred any liability pursuant to Title IV of ERISA that remains unsatisfied. Neither the Company nor any ERISA Affiliate has sponsored, contributed or had an obligation to contribute, to any Title IV Plan, or any money purchase pension plan subject to Section 412 of the Code, within the past six (6) years. No Company Plan is or has been a multiemployer plan within the meaning of Section 3(37) of ERISA (a “ Multiemployer Plan ”) or a multiple employer welfare arrangement within the meaning of Section 3(40) of ERISA. During the past six (6) years, neither the Company nor any of its ERISA Affiliates has completely or partially withdrawn from any Multiemployer Plan and no termination liability to the United States Pension Benefit Guaranty Corporation or withdrawal liability to any Multiemployer Plan has been or is reasonably expected to be incurred with respect to any Multiemployer Plan by the Company nor any of its ERISA Affiliates. Neither the Company nor any other “disqualified person” or “party in interest,” as defined in Section 4975 of the Code and Section 3(14) of ERISA, respectively, has, to the Company’s Knowledge, engaged in any “prohibited transaction,” as defined in Section 4975 of the Code or Section 406 of ERISA (which is not otherwise exempt), with respect to any Company Plan, nor, to the Company’s Knowledge, have there been any fiduciary violations under ERISA that could subject the Company (or any Employee) to any material penalty or tax under Section 502(i) of ERISA or Section 4975 of the Code.
(d)      Status of Plans . Company Plans intended to qualify under Section 401 of the Code or other tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of the Code has received a favorable determination letter from the IRS or is the subject of a favorable prototype opinion letter from the IRS as to its qualification under the Code and any trusts intended to be exempt from federal income taxation under the Code are so exempt. To the Knowledge of the Company, nothing has occurred with respect to the operation of any Company Plans that could reasonably be expected to cause the loss of such qualification or exemption. No event has occurred and no condition exists with respect to any Company Plan subject to the requirements of Code Section 401(a) that would subject the Company to any material Tax, fine, Lien, penalty or other liability imposed by ERISA, the Code or other applicable Laws. For each Company Plan with respect to which a Form 5500 has been filed, no material adverse change has occurred with respect to the matters covered by the most recent Form 5500 since the date thereof. None of the Company Plans provides for post-employment life or health coverage for any participant or any beneficiary of a participant, except as may be required under Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code, any similar state law and at the expense of the participant or the participant’s beneficiary.
(e)      Contributions to Plans . All contributions required to have been made under any of the Company Plans or by Law (without regard to any waivers granted under Section 412 of the Code), if any, have been timely made. There are no unfunded liabilities or benefits under any Company Plans that are not reflected in the Financial Statements.
(f)      Conformity with Laws . All Company Plans have been established, operated and maintained in accordance with their terms and with all applicable provisions of ERISA, the Code and other Laws. All amendments and actions required to bring the Company Plans into conformity in all material respects with all of the applicable provisions of the Code, ERISA and other applicable Laws have been made or taken, except to the extent that such amendments or actions are not required by Law to be made or taken until a date after the Closing. There are no pending Actions arising from or relating to the Company Plans (other than routine benefit claims), nor does the Company have any Knowledge of facts that could form or could reasonably be expected to form the basis for any such Action. There are no filings or applications pending with respect to the Company Plans with the IRS, the DOL or any other Governmental Authority. The Company has satisfied obligations applicable to the Company under Section 4980B of the Code, Part 6 of Subtitle B of Title I of ERISA and each applicable state law relating to continuation of health or other coverage to any Employee (or any dependent or former dependent of such Employee) with respect to any qualifying event that has occurred on or before the Closing Date. Section 4.10(f) of the Disclosure Schedule lists each individual who, as of the Agreement Date, (i) is currently receiving continuation coverage under COBRA under a Company Plan, or (ii) is within his or her COBRA election period.
(g)      Leased Employees . The Company has no Employees who are “leased employees” (as that term is defined in Section 414(n) of the Code) and has no liability, contingent or otherwise, for any federal, state or local workers’ compensation contribution, with respect to any Employees who are leased employees.
(h)      Employment Matters .
(i)      Section 4.10(h)(i) of the Disclosure Schedule sets forth a true and complete listing of the Current Employees and the Current Consultants, as of the Agreement Date, including each such person’s name, job title or function and job location, as well as a true, correct and complete listing of his or her current salary or wage payable by the Company, and for each such Current Employee or such Current Consultant, the amount of all material incentive compensation paid or payable to such person for the current calendar year, and each such Current Employee’s or such Current Consultant’s current status (as to leave or disability status and full time or part time, exempt or nonexempt and temporary or permanent status and as to classification as an employee, consultant or independent contractor). Other than as fully reflected or specifically reserved against in accordance with GAAP in the Financial Statements (or as otherwise expressly permitted or required pursuant to this Agreement), neither the Company nor any Seller has paid or promised to pay any bonuses, commissions or incentives to any Employee or Consultant. The Company has delivered to Buyer a true and complete copy of the employee handbook for the Company, if any, and all other employment policies, if any, currently applicable to any Current Employee or Current Consultant.
(ii)      To the Company’s Knowledge, no officer, Current Consultant or Current Employee at the level of manager or higher has disclosed any plans to terminate his, her or their employment or other relationship with the Company.
(iii)      The Company has a USCIS Form I-9 that is validly and properly completed in accordance with applicable Law for each Employee with respect to whom such form is required by applicable Law. The Company has complied with all Department of Homeland Security, DOL and State Department regulations governing the employment of foreign national workers. The Company has complied with all Laws related to H-1B workers, including the payment of wages and the maintenance of public access files related to the filing of ETA-9035 Labor Condition Applications.
(iv)      Except as set forth in Section 4.10(h)(iv) of the Disclosure Schedule:
(A)      since the Reference Date, (x) the Company has paid or made provision for payment of all salaries and wages, which are payable by the Company to any Employees, accrued through the Closing Date and is in material compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, collective bargaining, immigration, wages, hours and benefits, non-discrimination in employment, workers’ compensation, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Equal Employment Opportunity Act of 1972, ERISA, the Equal Pay Act, the National Labor Relations Act, the Fair Labor Standards Act, the Americans with Disabilities Act of 1990, the Vietnam Era Veterans Reemployment Act, the Family and Medical Leave Act, Occupational Safety and Health Act of 1970 and any and all similar applicable state and local Laws; and (y) the Company has not been engaged in any unfair employment practice, as defined in the National Labor Relations Act or other applicable Law;
(B)      since the Reference Date, the Company has not received a written notice, citation, complaint or charge asserting any violation or liability under the federal Occupational Safety and Health Act of 1970 or any similar applicable Law regulating employee health and safety;
(C)      (u) none of the Current Employees is represented by any labor union or other labor representative with respect to his or her employment with the Company; (v) there are no labor, collective bargaining agreements or similar arrangements binding on the Company with respect to any Current Employees; (w) since the Reference Date, no petition has been filed nor has any proceeding been instituted by any Employee or group of Employees with the National Labor Relations Board or similar Governmental Authority seeking recognition of a collective bargaining agreement; (x) to the Company’s Knowledge, there are no Persons attempting to represent or organize or purporting to represent for bargaining purposes any of the Current Employees; (y) since the Reference Date, there has not occurred or, to the Company’s Knowledge, has not been threatened any strikes, slowdowns, picketing, work stoppages or concerted refusals to work or other similar labor activities with respect to Employees; and (z) no grievance or arbitration or other proceeding arising out of or under any collective bargaining agreement relating to the Company is pending or, to the Company’s Knowledge, threatened;
(D)      since the Reference Date, the Company has not received notice of any charge or complaint pending before the Equal Employment Opportunity Commission or similar Governmental Authority alleging unlawful discrimination in employment practices, or before the National Labor Relations Board or similar Governmental Authority alleging any unfair labor practice, by the Company, nor, to the Knowledge of the Company, has any such charge been threatened;
(E)      all Current Employees of the Company are employed on an at-will basis and their employment can be terminated at any time for any reason without any amounts being owed to such individual other than with respect to wages, compensation and benefits accrued before such termination; and (y) the Company’s relationships with all individuals who act as Consultants to the Company can be terminated at any time for any reason without notice or any amounts being owed to such individual other than with respect to compensation or payments accrued before such termination;
(F)      since the Reference Date, the Company has not effectuated: (x) a “plant closing” (as defined in the WARN Act, or any similar Law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company; or (y) a “mass layoff” (as defined in the WARN Act, or any similar Law) affecting any site of employment or facility of the Company; and
(G)      any individual performing services for the Company who has been classified as an independent contractor, or as an employee of some other entity whose services are leased to the Company, has been correctly classified and is in fact not a common law employee of the Company or any Subsidiary.
(i)      Effect of Transaction . Except for the payment of the consideration under Article II , neither the execution and delivery of the Transaction Agreements nor the consummation of the Transactions shall result in (i) any payment becoming due to any Employee, (ii) the provision of any benefits or other rights to any Employee, (iii) the increase, acceleration or provision of any payments, benefits or other rights to any Employee, whether or not any such payment, right or benefit would constitute a “parachute payment” within the meaning of Section 280G of the Code, (iv) require any contributions or payments to fund any obligations under any Company Plan, or (v) the forgiveness in whole or in part of any outstanding loans made by the Company to any Employee or Consultant. Each amount set forth in Section 4.10(i) of the Disclosure Schedule which is an “excess parachute payment” within the meaning of Section 280G of the Code is identified as such.
(j)      Compliance with Section 409A of the Code . To the extent that any Company Plan is a Nonqualified Deferred Compensation Plan, such Company Plan is in documentary and operational compliance with, in all material respects, Section 409A of the Code and all applicable guidance issued by the IRS thereunder (or could be made compliant without applicable penalties in accordance with such guidance). No payment pursuant to any Company Plan or other arrangement to any “service provider” (as such term is defined in Section 409A of the Code and the United States Treasury Regulations and IRS guidance thereunder) to the Company would subject any person to tax pursuant to Section 409A(a)(1) of the Code, whether pursuant to the Transactions or otherwise. There is no Contract or arrangement to which the Company, or to the Knowledge of the Company, any Company Affiliate is a party or by which it is bound to compensate any of its current or former employees, independent contractors or directors for additional income or excise taxes paid pursuant to Sections 409A or 4999 of the Code.
(k)      Plans Outside the United States . No Company Plan is subject to the laws of any jurisdiction other than the United States of America.
(l)      Plan Termination . Each Company Plan can be amended, terminated or otherwise discontinued in accordance with its terms, without material Liability to the Company, Buyer or any of their Affiliates (other than ordinary administrative expenses typically incurred in a termination event), and each asset held under any Company Plan may be liquidated or terminated without the imposition of any material redemption fee, surrender charge or comparable Liability. Neither the Company nor any of its Affiliates has announced its intention to modify or amend any Company Plan or adopt any arrangement or program which, once established, would come within the meaning of a Company Plan.
4.11      Environmental Matters . The Company is, and at all times has been, in material compliance with all applicable Environmental Laws. There is no Action relating to or arising under Environmental Laws that is pending or, to the Knowledge of the Company, threatened against or affecting the Company or any real property or premises currently or formerly owned, operated or leased by the Company. The Company has not received any notice of, or entered into, or assumed by Contract or operation of Law, any obligation, liability, order, settlement, judgment, injunction or decree relating to or arising under Environmental Laws. To the Knowledge of the Company, there are no facts, circumstances or conditions existing with respect to the Company or any real property or premises currently or formerly owned, operated or leased by the Company or any property or facility to or at which the Company transported or arranged for the disposal or treatment of Hazardous Materials that could reasonably be expected to result in the Company incurring any Environmental Liability. The Company has not stored, treated, disposed of, arranged for or permitted the disposal of, transported, handled or released any substance (including any Hazardous Materials) or owned, occupied or operated any Premises or property in a manner that has given or could give rise to any material Liabilities (including any Liabilities for response costs, corrective action costs, personal injury, natural resource damages, property damage or any investigative, corrective or remedial obligations) pursuant to CERCLA or any other Environmental Laws. No property or facility now or, to the Knowledge of the Company, previously owned, occupied or operated by the Company, is currently listed or proposed for listing on the National Priorities List or the Comprehensive Environmental Response, Compensation and Liability Information System, both promulgated under CERCLA, or on any analogous state or local registry list and, to the Knowledge of the Company, no off-site location at which the Company has disposed or arranged for the disposal of any waste is listed or proposed to be listed on the National Priorities List or on any analogous state or local list. The Company has delivered to Buyer a true and complete list of environmental reports, audits assessments and investigations in the Company’s possession or control which relate to the Premises and the real property in the Company’s possession or control. To the Company’s Knowledge, there have been no Releases at any real property and there are no above-ground, underground, storage tanks, oil/water separators, sumps, septic systems, or polychlorinated biphenyls (PCBs) or any PCB-containing equipment located on any real property.
4.12      Contracts .
(a)      Specified Material Contracts . Except as set forth in Section 4.12(a) of the Disclosure Schedule, the Company is not a party to, does not have any obligations, rights or benefits under and none of its assets or properties are bound by any:
(i)      Contracts that purport to limit, curtail or restrict the ability of the Company or its Affiliates to conduct business in any geographic area or line of business or restrict the Persons with whom the Company or any of its future Subsidiaries or Affiliates may do business;
(ii)      Contracts: (x) with any Employee and any offer letters for employment or consulting with the Company, that (A) provide for anticipated annual compensation or other payments in excess of $50,000 for any individual (other than employment offers terminable at will with no severance or acceleration liability), including any Contracts with individuals providing for any commission-based compensation in excess of such amount, (B) provide for the payment of non-qualified deferred compensation subject to Section 409A of the Code, or (C) provide for potential severance payments or other severance benefits; and (y) with any Consultant and any offer letters to enter into consulting agreements with the Company, that provide for anticipated annual payments in excess of $50,000 for any individual, including any Contracts with individuals providing for any commission-based payments in excess of such amount;
(iii)      Contracts with any labor union or other labor representative of Employees (including any collective bargaining agreement);
(iv)      Contracts with any present or former officer, director or stockholder of the Company, or any Affiliate of such officer, director or stockholder (other than Company Plans, but specifically including any employment agreements that are not terminable at will without severance or acceleration liability to the extent not included in subsection (ii) above), including, but not limited to, any agreement providing for furnishing of services by, rental of assets from or to, or otherwise requiring payments to, any such officer, director, stockholder or Affiliate, in each case, other than advances or reimbursements for travel and entertainment expenses consistent with Company policy and practice;
(v)      Contracts under which the Company has advanced or loaned any money to any of the Employees or Affiliates of the Company where there is still an outstanding amount due to the Company under such Contract, other than advances or reimbursements for travel and entertainment expenses consistent with Company policy and past practice;
(vi)      Contracts granting any power of attorney with respect to the affairs of the Company or otherwise conferring agency or other power or authority to bind the Company other than to officers and attorneys in the Ordinary Course of Business;
(vii)      Partnership or joint venture agreements;
(viii)      Contracts for the acquisition, sale or lease of properties or assets other than in the Ordinary Course of Business;
(ix)      Contracts with a Governmental Authority;
(x)      Loan or credit agreements, indentures, notes or other Contracts evidencing indebtedness for borrowed money (contingent or otherwise) by the Company, or any Contracts pursuant to which indebtedness for borrowed money (contingent or otherwise) is guaranteed by the Company, or any guarantees of the foregoing by third parties for the Company’s benefit;
(xi)      Mortgages, pledges, security agreements, deeds of trust or other Contracts granting a Lien other than Permitted Lien on any material property or assets of the Company;
(xii)      Voting agreements or registration rights agreements relating to Company Capital Stock to which the Company is a party;
(xiii)      Lease or rental Contracts relating to personal property;
(xiv)      Contracts providing for indemnification by the Company other than (x) customary indemnities against breach of the obligations contained in such Contract that were entered into in the Ordinary Course of Business and (y) customary indemnities against infringement of Intellectual Property Rights contained in non-exclusive licenses entered into in the Ordinary Course of Business;
(xv)      Any Contract with any supplier or provider of goods or services that are incorporated into, or related to the development of, any Product and Service involving consideration in excess of $25,000 in the current or either of the two (2) previous fiscal years (other than purchase orders for goods entered into in the Ordinary Course of Business);
(xvi)      (x) Any Contracts to provide services to any Person involving consideration in excess of $25,000 in the current or either of the two (2) previous fiscal years, or (y) perform any service or sell or lease any product which grants the other party or any third party “most favored nation” status, “most favored customer” pricing, preferred pricing, exclusive sales, distribution, marketing or other exclusive rights, or rights of first refusal or rights of first negotiation;
(xvii)      Contracts related to the manufacturing, transport, transfer, distribution or storage of any Product and Service involving consideration in excess of $25,000 in the current or either of the two (2) previous fiscal years;
(xviii)      Contracts relating to capital expenditures and involving obligations after the Agreement Date in excess of $25,000 and not cancelable without penalty;
(xix)      Contracts relating to the disposition or acquisition of material assets or any ownership interest in any entity;
(xx)      Contracts with any Person, including any financial advisor, broker, finder, investment banker or other Person, providing advisory services to the Company in connection with the Transactions;
(xxi)      Contracts (other than as set forth above) that are material to the Company’s Products and Services or business; and
(xxii)      Contracts to enter into or negotiate the entering into of any of the foregoing.
(b)      Documentation . The Company has delivered to Buyer (a) true and complete copies of each written Material Contract and (b) a summary of each oral Material Contract, together with any and all amendments, supplements and “side letters” thereto.
(c)      Status of Material Contracts . Each of the Contracts required to be listed in Section 4.12(a) of the Disclosure Schedule, each of the Real Property Leases and each of the material IP Contracts (collectively, the “ Material Contracts ”) is valid and binding on the Company and in full force and effect and is enforceable in accordance with its terms by the Company. The Company is not in material breach or default under any Material Contract, nor does any condition exist that, with notice or lapse of time or both, would constitute a breach or default in any respect thereunder by the Company or that would result in material liability to the Company. To the Knowledge of the Company, (i) no other party to any Material Contract is in default thereunder and (ii) no condition exists that with notice or lapse of time or both would constitute a default in any material respect by any such other party thereunder. The Company has not received notice of any termination or cancellation of any Material Contract and to the Company’s Knowledge, no other party to a Material Contract has plans to terminate or cancel such Material Contract. The Company has not and, to the Knowledge of the Company, no other party to any Material Contract has repudiated any material provision of any Material Contract. The Company is not disputing and, to the Knowledge of the Company, no other party to such Material Contract is disputing, any material provision of any Material Contract. None of the parties to any Material Contract is renegotiating any material amounts paid or payable to or by the Company under such Material Contract or any other material term or provision thereof.
4.13      Assets: Title, Sufficiency, Condition . The Company has good, valid and sufficient title to or sole and exclusive leasehold interest in or adequate right to use all of its assets whether real or personal, tangible or intangible, including those that are used in the conduct of its business, located on its Premises or reflected in the Interim Balance Sheet as being owned by the Company or acquired after the date thereof (other than inventory disposed of in the Ordinary Course of Business since the date of the Interim Balance Sheet) (the “ Assets ”), free and clear of all Liens except Permitted Liens. The Assets constitute, in all material respects, all of the assets, properties and rights of every type and description that are used in and necessary for the conduct of the Company’s Business as Currently Conducted or Proposed. All of the material fixtures and other material improvements to the Leased Real Property and all of the tangible personal property other than the inventory (a) are in all material respects adequate and suitable for their present uses, (b) in good working order, operating condition and state of repair (ordinary wear and tear excepted) and (c) have been maintained in all respects in accordance with normal industry practice.
4.14      Real Property .
(a)      Section 4.14(a) of the Disclosure Schedule (a) sets forth a list of the addresses of all real property leased, subleased or licensed by or for which a right to use or occupy has been granted to the Company (the “ Leased Real Property ”), and (b) identifies, with respect to each Leased Real Property, each lease, sublease, license or other Contract under which such Leased Real Property is occupied or used, including the date of and legal name of each of the parties to such lease, sublease, license or other Contract and each amendment, modification, supplement or restatement thereto (the “ Real Property Leases ”).
(b)      The Company does not own, and has never owned, any real property.
(c)      There are no written or oral leases, subleases, licenses, concessions, occupancy agreements or other Contracts granting to any other Person the right to use or occupancy of any of the Leased Real Property and there is no Person (other than the Company) in possession of any of the Leased Real Property. With respect to each Real Property Lease that is a sublease, to the Company’s Knowledge, the representations and warranties in this Section 4.14(c) and Section 4.12(c) are true and correct with respect to the underlying lease.
(d)      The Company has delivered to Buyer true, accurate and complete copies of the Real Property Leases, in each case as amended or otherwise modified and in effect, together with any extension notices and other material correspondence, lease summaries, notices or memoranda of lease, estoppel certificates and subordination, non-disturbance and attornment agreements related thereto and no Real Property Lease has been modified in any material respect, except to the extent that such modifications are disclosed by the copies delivered to Buyer prior to Closing. With respect to each of the Real Property Leases, (i) the Company has a valid and enforceable leasehold interest in each parcel or tract of real property leased by it, free and clear of all Liens (including liens arising out of any attachment, judgement or execution) affecting the Leased Real Property or the estate or interest created by the Real Property Leases except for the Permitted Liens; (ii) there are no existing defaults thereunder by the Company or any other party to the Real Property Leases; (iii) no event has occurred which (with notice, lapse of time or both) would constitute a breach or default thereunder by the Company or any other party to the Real Property Leases, or that could permit the termination, modification, or acceleration of rent thereunder; (iv) there are no pending disputes, actions or proceedings that were brought by the Company against a lessor under a Real Property Lease alleging that such lessor is in default or has committed a breach under such Real Property Lease; (v) the Company has not received any notice from any Governmental Authority of a violation of any governmental requirements (including Environmental Laws) with respect to any of the Leased Real Property and to the Company’s Knowledge, the Leased Real Property is not in violation of any material requirements of same; and (vi) the Company has not used, generated, stored, released, discharged, transported, handled, or disposed of any hazardous materials on, in or in connection with any parcel of Leased Real Property except as expressly permitted pursuant to the terms of the Real Property Leases.
(e)      No eminent domain, condemnation or zoning, building code or other moratorium Action is pending or, to the Company’s Knowledge, threatened, that would preclude or materially impair the use of any Leased Real Property. None of the Company’s current uses of the Leased Real Property violates in any material respect any restrictive covenant or zoning ordinance that affects any of the Leased Real Property. There have been no special assessments filed, or, to the Company’s Knowledge, proposed against the Leased Real Property or any portion thereof. None of the Leased Real Property has been damaged or destroyed by fire or other casualty.
(f)      All Premises are supplied with utilities and other services necessary for the operation of such Premises as the same are currently operated or currently proposed to be operated, all of which utilities and other services are provided via public roads or via irrevocable appurtenant easements benefitting the parcel of Leased Real Property on which such Premises is located, in each case, to the extent necessary for the conduct of the Company’s business.
4.15      Intellectual Property; Technology; Privacy and Security; Information Systems; Disaster Recovery .
(a)      Company Intellectual Property Rights and Company Technology .
(i)      The Company owns or has the right to use all Company Technology and all Intellectual Property Rights therein for all purposes necessary to the Company’s Business as Currently Conducted or Proposed. Except for (x) the Technology and Intellectual Property Rights licensed to the Company pursuant to Inbound IP Contracts, (y) Shrink Wrap Licenses, and (z) open source software licenses with respect to Public Software disclosed on Section 4.15(f) of the Disclosure Schedule, none of the Company Technology or Company Intellectual Property Rights is owned by any third party. The Company exclusively owns all Company Technology that are owned or purported to be owned by the Company, including Proprietary Software, and all Company Intellectual Property Rights that are owned or purported to be owned by the Company, free and clear of all Liens other than with respect to the Permitted Liens.
(ii)      Section 4.15(a)(ii) of the Disclosure Schedule contains a list of Proprietary Software. Except as disclosed by Section 4.15(a)(ii) of the Disclosure Schedule: (A) the Company has used commercially reasonable efforts to maintain and protect all Proprietary Software (including all source code and system specifications) with appropriate proprietary notices, confidentiality and non-disclosure agreements and such other measures as are reasonably necessary to protect the Intellectual Property Rights contained therein or relating thereto, and none of the source code of any Proprietary Software has been published, disclosed or delivered to any Person by the Company (other than those subcontractors listed on Section 4.15(a)(ii) of the Disclosure Schedule) or by any employee, consultant, contractor or agent of the Company; (B) 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 Proprietary Software; (C) the Company has complete and exclusive right, title and interest in and to all Proprietary Software; (D) the Company has developed the Proprietary Software through its own efforts and for its own account without the aid or use of any consultants, agents, independent contractors or Persons (other than Persons that are Employees); (E) the Proprietary Software includes the current source code, system documentation, statements of principles of operation and schematics, as well as any pertinent commentary, explanation, program (including compilers), workbenches, tools and higher level (or “proprietary”) language actually created, owned and used by the Company for the development, maintenance, and implementation thereof; and (F) there are no Contracts in effect with respect to the marketing, distribution, or licensing of the Proprietary Software by any other Person.
(b)      Infringement . Neither (i) the operation of the Company’s Business as Currently Conducted or Proposed, nor (ii) any of the Products and Services, nor (iii) any Company Technology that is owned by the Company, nor (iv) the Company’s use of Technology licensed to the Company pursuant to the Nonexclusive Agreement, dated April 30, 2018, by and between The Board of Trustees of the Leland Stanford Junior University and the Company (the “ Stanford License ”), has infringed upon, diluted, misappropriated or violated, or will infringe upon, dilute, misappropriate or violate, any Intellectual Property Rights of any Person. The Company has not (x) received any written charge, complaint, claim, demand, or notice alleging infringement, dilution, misappropriation or violation of the Intellectual Property Rights of any Person (including any demand to refrain from using or to license any Intellectual Property Rights of any Person in connection with the conduct of the Company’s business) or (y) agreed to, and has no contractual obligation to, indemnify any Person for or against any interference, infringement, dilution, misappropriation or violation with respect to any Intellectual Property Rights except pursuant to the applicable Outbound IP Contracts. To the Company’s Knowledge, no Person has infringed upon, diluted, misappropriated or violated any Company Intellectual Property Rights that are owned by the Company at any time since the Reference Date. There are no pending or, to the Company’s Knowledge, threatened claims against the Company or any facts or circumstances supporting a claim challenging the Company’s ownership of the Company Intellectual Property Rights that are owned by the Company or alleging that any of the Company Intellectual Property Rights that are owned by the Company are invalid or unenforceable.
(c)      Scheduled IP . Section 4.15(c) of the Disclosure Schedule identifies all patents, patent applications, registered trademarks and registered copyrights, applications for trademark and copyright registrations, domain names, registered design rights and other forms of registered Intellectual Property Rights and applications therefor owned by or exclusively licensed to the Company (collectively, the “ Company Registrations ”). All current Company Registrations have been duly maintained (including the payment of fees) and have not expired, cancelled or abandoned. Section 4.15(c) of the Disclosure Schedule also identifies each trade name, each unregistered trademark, service mark, or trade dress owned or exclusively licensed by the Company that, in each case, is material to the Business of the Company.
(d)      IP Contracts . Section 4.15(d) of the Disclosure Schedule identifies under separate headings each Contract under which the Company uses or licenses Company Technology or Company Intellectual Property Rights that are material to the Company’s Business as Currently Conducted or Proposed and that any Person besides the Company owns, including Software other than Proprietary Software that is licensed to or used by the Company or any of its Affiliates and is related to Company’s business (other than Shrink Wrap Licenses and Public Software) (collectively “ Inbound IP Contracts ”) or under which the Company has granted any Person any right or interest in Company Intellectual Property Rights that are owned by the Company including any right to use or access any item of the Company Technology that is owned by the Company, excluding non-disclosure agreements between the Company and third parties for the purpose of exchanging confidential information and agreements with employees or subcontractors of the Company (the “ Outbound IP Contracts ”, and together with the Inbound IP Contracts, the “ IP Contracts ”). None of the Inbound IP Contracts are subject to any transfer, assignment, change of control, or site limitation. Except as provided in the Inbound IP Contracts and Shrink Wrap Licenses, the Company does not owe any royalties or other payments or otherwise have any liability to any Person for the use of any Intellectual Property Rights or Technology. The Company has paid all fees, royalties and other payments applicable to the past and current use or exploitation of Intellectual Property Rights provided for by the Inbound IP Contracts and Shrink Wrap Licenses, and no fees, royalties or other payments provided by the Inbound IP Contracts and Shrink Wrap Licenses are due or otherwise required to be paid by the Company or any of its Affiliates within thirty (30) days following the Closing Date or will otherwise become immediately due (whether or not such payments are contingent upon notice by the Company or the licensor to the other regarding the Transactions) solely as a result of, or attributable to, the Transactions contemplated herein.
(e)      Confidentiality and Invention Assignments . The Company has maintained commercially reasonable practices designed to ensure the protection of the confidentiality of the Company’s confidential information and trade secrets and has required any Employee, Consultant or third party with access, or to whom it has disclosed its confidential information, to execute contracts requiring them to maintain the confidentiality of such information and use such information only in accordance with such contracts. All Employees and Consultants of the Company who (i) in the normal course of their duties are involved in the creation of any Company Technology that is incorporated in any Product and Service of the Company or (ii) have in fact created Company Technology that is incorporated in any Product and Service of the Company, have executed contracts that irrevocably assign to the Company (to the extent permitted by applicable Laws) on a worldwide royalty-free basis all of such Persons’ respective rights, including Intellectual Property Rights relating to such Product and Service. To the Knowledge of the Company, no Employee or Consultant is in violation of any term of any such agreement, including any patent disclosure agreement or other employment contract or any other contract or agreement relating to the relationship of any such Employee or Consultant with the Company. All authors of any works of authorship in the Company Technology that is owned by the Company have waived their moral rights and have agreed to a covenant not to assert their moral rights, in each case, to the extent permitted by applicable Laws or such authors prepared such works in jurisdictions that do not recognize moral rights.
(f)      Open Source Software . Except as disclosed on Section 4.15(f) of the Disclosure Schedule, none of the Company Technology that is owned by the Company, Proprietary Software, or any Product or Service of the Company (including any software, middleware, firmware) constitutes, contains, or is dependent upon any Public Software. The software disclosed on Section 4.15(f) of the Disclosure Schedule has never been provided, delivered or distributed to any Person other than those Employees and Consultants of the Company working on the development of Company’s software, firmware or middleware for the benefit of the Company and has never been delivered or distributed in any form (object code, executable code or source code form) to any Person, including delivery via electronic transmission, by physical delivery on tangible media (either as stand-alone software or as a part of any other software), loan, delivery or transmission as part of the transfer of hardware or components, or any other form of delivery or distribution, temporary or permanent. None of the Company Technology that is owned by the Company, Proprietary Software, nor any Product and Service of the Company is subject to any IP Contract or other contractual obligation that would require the Company to publicly divulge any source code or trade secret that is part of the Company Technology.
(g)      Privacy and Data Security .
(i)      Since the Reference Date, the use and dissemination by the Company of any Personal Data is in compliance in all material respects with the Company’s privacy policies and terms of use, all applicable Information Privacy and Security Laws and all other Personal Data Obligations. No Personal Data is stored or otherwise maintained outside the United States by the Company or any third party. The Company has not engaged in cross-border processing of Personal Data. True and complete copies of all privacy policies that have been used by the Company since the Reference Date have been provided to Buyer. The Company has consistently posted a privacy policy in a clear and conspicuous location on all websites and any mobile applications owned or operated by the Company.
(ii)      The Company does not Collect or Use Personal Data from any Person in any manner other than as described in the Contracts and privacy policies delivered to Buyer.
(iii)      The Company maintains policies and procedures regarding data security and privacy and maintains administrative, technical and physical safeguards that are commercially reasonable and, in any event, in compliance with all applicable Information Privacy and Security Laws and all Contracts to which the Company is bound. Since the Reference Date, the Company has complied in all material respects with the terms of all Contracts to which the Company is a party relating to data privacy, security or breach notification (including provisions that impose conditions or restrictions on the collection, use, disclosure, transmission, destruction, maintenance, storage, or safeguarding of Personal Data).
(iv)      At any time since the Reference Date, there have been no security breaches relating to, or violations of any security policy or Information Privacy and Security Law regarding, or any unauthorized access, disclosure, or use of, any data or information used by the Company, including Personal Data. No written notice has been provided to the Company by a third party vendor or any other person of any security breach relating to Personal Data. Since the Reference Date, the Company has not experienced a loss or unauthorized disclosure, use, or breach of privacy or security of any Personal Data in the custody or control of the Company that would have required notice to any third Person (including any Governmental Authority or parties to any Contract) under any applicable Law. No Person (including any Governmental Authority) has commenced any Action relating to the Company’s information privacy or data security practices, or to the Knowledge of the Company, threatened any such Action or made any complaint, investigation, or inquiry relating to such practices.
(v)      The Company does not (x) have or solicit any customers in the European Economic Area, or (y) knowingly process, transmit, or store any Personal Data of any Persons located in the European Economic Area.
(vi)      The Company has taken all required steps to limit access to Personal Data to: (x) those Company personnel and third-party vendors providing services to or on behalf of the Company who have a need to know such Personal Data in the execution of their duties to the Company; and (y) such other Persons permitted to access such Personal Data in accordance with the privacy policies and terms of use, all applicable Information Privacy and Security Laws and all Contracts to which the Company is bound.
(vii)      The Company maintains a written technical information security program that contains commercially reasonable administrative, technical and physical safeguards (including encryption) compliant in all material respects with applicable Information Privacy and Security Laws (the “ Security Program ”). The Company’s Security Program is designed to: (v) protect the integrity and confidentiality of Personal Data; (w) protect against reasonably anticipated threats or hazards to the security of Personal Data; (x) protect against the unauthorized access, disclosure or use of Personal Data; (y) address computer and network security; and (z) provide for the secure destruction and disposal of Personal Data. The Security Program has been updated as required by all applicable Information Privacy and Security Laws. All third-party vendors or persons with access to Personal Data have entered into contracts or written agreements with the Company requiring that such vendors or persons maintain a substantially similar security program to the extent required under applicable Information Privacy and Security Laws.
(h)      Effect of Transactions on Company Technology Rights or Data Privacy . The Transactions (including the Stock Purchase and the Merger) shall not adversely affect the Company’s ownership of any Company Technology that is owned by the Company or the Company’s legal right and ability to continue using the Company Technology in the operation of the Company’s Business on or after the Closing to the same extent as the Company Technology is used in the operation of the Business prior to the Closing. The Transactions (including any transfer of Personal Data resulting from the Transactions) (i) comply with all Personal Data Obligations of the Company, and (ii) comply (and the disclosure to and transfer to the Buyer of such Personal Data at the Closing, and the use by Buyer of such Personal Data at and after the Closing in the same manner as such Personal Data is used by the Company prior to the Closing, will comply) with all applicable Information Privacy and Security Laws (including any such Laws and regulations in the jurisdictions where the Personal Data is collected).
(i)      Information Systems . The Company owns, leases or licenses all Information Systems that are used in the Business of the Company. In the last twelve (12) months there have been no material failures, breakdowns, outages or unavailability of such Information Systems and the DR Plans were not activated other than for testing purposes. On and immediately after the Closing, the Information Systems shall be in the possession, custody or control of the Company, along with all tools, documentation and other materials relating thereto, as existing immediately prior to the Closing.
(j)      Disaster Recovery . The Company has delivered to Buyer a true and complete copy of the DR Plans. To the Knowledge of the Company, the DR Plans are consistent with industry standards and applicable Laws. The DR Plans are designed to ensure, at a minimum, the ability of the Company to resume operations and performance of services promptly and ensure redundancy of all data and information material to the operation of the Company that the Company is required to maintain pursuant to any Contract, internal policy or applicable Law.
4.16      Insurance . Section 4.16 of the Disclosure Schedule sets forth a list of all policies of property, general liability, directors and officers, fiduciary, employment, title, workers’ compensation, environmental, product liability, cyber liability and other forms of insurance maintained by the Company and all pending outstanding claims against such insurance policies. The Company has delivered to Buyer complete and correct copies of all such policies, together with all endorsements, riders and amendments thereto. There are no disputes with the insurers of any such policies or any claims pending under such policies as to which coverage has been reserved, questioned, denied or disputed by the insurers of such policies. Each such policy is in full force and effect, all premiums that are due and payable under all such policies have been paid and the Company is otherwise in compliance in all material respects with the terms of such policies. The Company has not failed to give proper notice of any claim under any such policy in a valid and timely fashion. The Company has not received any notice of non-renewal, cancellation or termination of any insurance policy in effect on the Agreement Date or at any time since the Reference Date.
4.17      Related Party/Affiliate Transactions . There are no Liabilities of the Company to any Related Party other than ordinary course, Employee- and director-related compensation and reimbursement Liabilities. No Related Party has any interest in any property (real, personal or mixed, tangible or intangible) used by the Company in the conduct of its business. The Company is not subject to any ongoing transactions pursuant to which the Company purchases any services, products, or Technology from, or sells or furnishes any services, products or Technology to, any Related Party. All transactions pursuant to which any Related Party has purchased any services, products, or Technology from, or sold or furnished any services, products or technology to, the Company (each a “ Related Party Transaction ”) have been on an arms-length basis on terms no less favorable to the Company than would be available from an unaffiliated party.
4.18      Suppliers . Section 4.18 of the Disclosure Schedule sets forth true and complete lists of the top ten suppliers of the Company (measured in terms of total expenses) attributable to each such Person (a) during the year ended December 31, 2018, and (b) during the five-month period ended May 31, 2019 (each Person identified on at least one of such lists, a “ Top Supplier ”), showing the total purchases by the Company from each such Top Supplier during such period. Since the Balance Sheet Date, no Top Supplier has (i) ceased or materially reduced its sales or provision of services to the Company or changed the pricing or other terms of the business it does with the Company, or (ii) to the Knowledge of the Company threatened to cease or materially reduce such sales or provision of services, other than in the Ordinary Course of Business. No Top Supplier has pending or to the Company’s Knowledge, has any basis to threaten, any Action against the Company.
4.19      Certain Business Practices . Neither the Company nor any Employee or agent, acting on behalf of the Company, has (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity, (b) made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, (c) consummated any transaction, made any payment, entered into any Contract or arrangement or taken any other action in violation of Section 1128B(b) of the Social Security Act, as amended or (d) made any other unlawful payment of a type similar to those described above in this Section 4.19 .
4.20      Brokers and Other Advisors . No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses, in connection with the Transactions or any prior merger, acquisition or divestiture transaction based upon arrangements made by or on behalf of the Company or any of its Affiliates. Notwithstanding anything in this Agreement to the contrary, there are no fees or expenses related to the Transactions payable by the Company to any third party other than the Company Transaction and Bonus Expenses.
4.21      No Other Representations or Warranties . Except for the representations and warranties contained in this Article IV (including the related portions of the Disclosure Schedule), the Company has not made and does not make any other express or implied representation or warranty, either written or oral, with respect to the Company or its Business in connection with the transactions contemplated by this Agreement.
ARTICLE V     

 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers as of the Agreement Date and as of the Closing Date as follows:
5.1      Organization . Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Merger Sub (a) is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware, (b) is a disregarded entity for federal income Tax purposes and (c) will not elect to be treated as anything other than a disregarded entity for federal income Tax purposes as of immediately following the Effective Time. Since the date of its incorporation, Merger Sub has not engaged in any activities other than in connection with or as contemplated by this Agreement.
5.2      Authority; Non-Contravention .
(a)      Each of Buyer and Merger Sub has all requisite corporate power and corporate authority to execute and deliver the Transaction Agreements to which it is a party and to perform its obligations thereunder and to consummate the Transactions (including the Stock Purchase and the Merger). The execution, delivery and performance by each of Buyer and Merger Sub of the Transaction Agreements to which it is a party and the consummation by Buyer and Merger Sub of the Transactions (including the Stock Purchase and the Merger) have been duly authorized and approved by Buyer’s board of directors and the sole member of Merger Sub and no other corporate action on the part of Buyer or Merger Sub is necessary to authorize the execution, delivery and performance by each of Buyer and Merger Sub of the Transaction Agreements to which it is a party and the consummation by it of the Transactions (including the Stock Purchase and the Merger). This Agreement has been and, when delivered at the Closing, the other Transaction Agreements to which each of Buyer and Merger Sub is a party shall be, duly executed and delivered by Buyer and Merger Sub. Assuming due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, this Agreement constitutes and the other Transaction Agreements to which each of Buyer and Merger Sub is a party shall, when delivered at the Closing, constitute, the legal, valid and binding obligations of Buyer and Merger Sub, enforceable against Buyer and Merger Sub in accordance with their respective terms, except to the extent that their enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
(b)      Neither the execution and delivery of the Transaction Agreements to which each of Buyer and Merger Sub is a party, nor the consummation by Buyer and Merger Sub of the Transactions (including the Stock Purchase and the Merger), nor compliance by Buyer and Merger Sub with any of the terms or provisions thereof, shall (i) violate any provision of the Charter Documents of Buyer and Merger Sub or (ii) assuming that the consents and approvals referred to in Section 5.3 are obtained and the filings referred to in Section 5.3 are made, (x) violate any Law applicable to Buyer and Merger Sub or any of their respective properties or assets, or (y) constitute a default under (with or without notice or lapse of time, or both), result in the termination of or cancellation under, or result in the creation of any Lien upon any of the respective properties or assets of Buyer and Merger Sub under, any of the terms, conditions or provisions of any material Contract to which Buyer and Merger Sub is a party, except for such violations, losses, defaults, terminations, cancellations, accelerations or Liens as, individually or in the aggregate, would not reasonably be expected to prevent or materially delay or materially impair the ability of Buyer and Merger Sub to consummate the Transactions (a “ Buyer Material Adverse Effect ”).
5.3      Governmental Approvals . No consent, approval or authorization of, or registration, qualification or filing with, any Governmental Authority is required for the valid execution, delivery and performance of this Agreement or the other Transaction Agreements by Buyer and Merger Sub of this Agreement or the consummation by Buyer and Merger Sub of the transactions contemplated hereby, except for (a) a filing with the New York Stock Exchange in respect of the shares of Buyer’s Common Stock issuable pursuant to this Agreement, (b) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL and (c) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal or state securities laws.
5.4      SEC Documents .
(a)      Buyer has filed all reports required to be filed by it with the SEC since January 1, 2018, and Buyer has made available to the Sellers (including through the SEC’s EDGAR database) true, correct and complete copies of all such reports (collectively, “ Buyer’s SEC Documents ”). As of their respective dates, each of the Buyer’s SEC Documents complied in all material respects with the applicable requirements of the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), and none of the Buyer’s SEC Documents, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
(b)      Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Buyer’s SEC Documents was prepared in accordance with GAAP throughout the periods indicated (except as may be indicated in the notes thereto and except that financial statements included with interim reports do not contain all notes to such financial statements) and each fairly presented in all material respects the consolidated financial position, results of operations and changes in stockholders’ equity and cash flows of Buyer and its consolidated subsidiaries as at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal year-end adjustments which are not expected, individually or in the aggregate, to be material).
5.5      Shares of Common Stock . The shares of Buyer’s Common Stock to be issued and delivered to the Sellers in accordance with this Agreement, when so issued and delivered, will be (a) duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Charter Documents of Buyer or any agreement to which Buyer is a party, and (b) based in part upon the statements of the Sellers in Article III , issued pursuant to available and valid exemptions from the registration and qualification provisions of applicable federal and state securities laws.
5.6      Absence of Certain Changes or Events . Since the Balance Sheet Date, there have not been any events, changes, occurrences or circumstances that, individually or in the aggregate, have had or could reasonably be expected to have a Buyer Material Adverse Effect.
5.7      Availability of Funds . On the Closing Date, Buyer will have sufficient cash or other sources of immediately available funds to enable Buyer to consummate on a timely basis the Transactions (including the Stock Purchase and the Merger). Buyer understands and acknowledges that under the terms of this Agreement, Buyer’s obligation to consummate the Transactions is not in any way contingent upon or otherwise subject to Buyer’s consummation of any financing arrangements, Buyer’s obtaining of any financing or the availability, grant, provision or extension of any financing to Buyer.
5.8      No Reliance . Buyer and Merger Sub expressly agree and acknowledge that except for the representations and warranties contained in Article III and Article IV (including the related portions of the Disclosure Schedule), as applicable, neither the Sellers nor the Company have made or are making any express or implied representation or warranty, either written or oral, on behalf of such Sellers or with respect to the Company. There is and has been no reliance by Buyer, Merger Sub or any of their respective affiliates, officers, directors, employees, accountants, consultants, legal counsel, investment bankers, advisors, representatives or authorized agents on any such representation or warranty with respect to the Company, the Company Subsidiaries or their respective businesses or with respect to any other information provided, or made available, to Buyer, Merger Sub or their respective Representatives or affiliates in connection with the Transactions, including the accuracy or completeness thereof.
ARTICLE VI     

 CERTAIN AGREEMENTS OF THE PARTIES
6.1      Conduct of the Business . Except as expressly permitted by this Agreement, or with the prior written consent of Buyer, in its sole discretion or as required by applicable Law, from the Agreement Date until the Closing or the earlier termination of this Agreement pursuant to Article VIII (Termination), the Sellers shall cause the Company to (a) conduct its business in the Ordinary Course of Business and in compliance with all applicable Laws, (b) use commercially reasonable efforts to maintain and preserve intact its present business organization and the goodwill of those having business relationships with it (including by using commercially reasonable efforts to maintain the value of its assets and technology and preserve its relationships with Employees, suppliers, strategic partners, licensors, licensees, regulators, landlords and others having business relationships with the Company) and retain the services of its present officers, directors and Employees and (c) maintain in full force and effect all insurance policies described in Section 4.16 . Without limiting the generality of the foregoing, until the Closing, the Sellers shall cause the Company not to:
(a)      issue, sell, grant, dispose of, amend any term of, grant registration rights with respect to, pledge or otherwise encumber any shares of its capital stock or other equity interests, or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares of its capital stock or other equity interests, or any rights, warrants, options, calls, commitments or any other agreements of any character to purchase or acquire any shares of its capital stock or other equity interests or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for, any shares of its capital stock or other equity interests; provided , however , that the Company may (i) issue shares of Company Common Stock upon the conversion of outstanding shares of Company Preferred Stock or the exercise of Company Options that are outstanding on the Agreement Date and in accordance with the terms thereof and (ii) accelerate the vesting of any Company Options;
(b)      other than as contemplated by the terms of this Agreement, amend (including by reducing an exercise price or extending a term) or waive any of its rights under, or accelerate the vesting under, any provision of the Company Option Plan or any agreement evidencing any outstanding stock option, warrant or other right to acquire capital stock of the Company or any restricted stock purchase agreement or any similar or related contract;
(c)      redeem, purchase or otherwise acquire or cancel any of its outstanding shares of capital stock or equity interests, or any rights, warrants, options, calls, commitments or any other agreements of any character to acquire any shares of its capital stock or equity interests;
(d)      declare, set aside funds for the payment of or pay any dividend on, or make any other distribution (whether in cash, stock or property) in respect of, any shares of its capital stock or other equity interests or make any payments to the Sellers in their capacity as stockholders of the Company;
(e)      split, combine, subdivide, reclassify or take any similar action with respect to any shares of the Company’s capital stock;
(f)      form any Subsidiary;
(g)      incur, guarantee, issue, sell, repurchase, prepay or assume any (i) Company Debt, or issue or sell any options, warrants, calls or other rights to acquire any debt securities of the Company; (ii) obligations of the Company issued or assumed as the deferred purchase price of property; (iii) conditional sale obligations of the Company; (iv) obligations of the Company under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities arising in the Ordinary Course of Business); (v) obligations of the Company for the reimbursement of any obligor on any letter of credit; or (vi) obligations of the type referred to in clauses (i) through (vi) of other Persons for the payment of which the Company is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations;
(h)      sell, transfer, lease, mortgage, encumber or otherwise dispose of or subject to any Lien (including pursuant to a sale-leaseback transaction or an asset securitization transaction), any of its properties or assets;
(i)      make any capital expenditures in excess of $50,000 in the aggregate;
(j)      acquire or agree to acquire in any manner (whether by merger or consolidation, the purchase of an equity interest in or a material portion of the assets of or otherwise) any business or any corporation, partnership, association or other business organization or division thereof other than the acquisition of inventory and equipment in the Ordinary Course of Business;
(k)      make any investment (by contribution to capital, property transfers, purchase of securities or otherwise) in, or loan or advance funds to any Person (other than travel and similar advances to its Employees in the Ordinary Course of Business in an aggregate amount at any one time of not more than $2,500);
(l)      with respect to Contracts, (i) enter into, adopt, terminate, modify, renew or amend (including by accelerating material rights or benefits under) any Material Contract (or any Contract that would constitute a Material Contract if in effect on the Agreement Date) other than in the Ordinary Course of Business, (ii) enter into or extend the term or scope of any Contract that purports to restrict the Company, or any current or future Subsidiary of the Company, from engaging in any line of business or in any geographic area, (iii) enter into any Contract that could be breached by, or require the consent of any third party in order to continue in full force following consummation of the Transactions, or (iv) release any Person from, or modify or waive any material provision of, any confidentiality or non-disclosure agreement;
(m)      (i) hire or terminate any employees, except for the termination of any employee for cause, (ii) increase the annual level of compensation payable or to become payable by the Company to any of its directors or Current Employees, (iii) grant any bonus, benefit or other direct or indirect compensation to any director, Current Employee or Current Consultant other than in the Ordinary Course of Business, except as required by the terms of this Agreement, (iv) increase the coverage or benefits available under or otherwise modify or amend or terminate any (or create any new) Company Plan, except as required by the terms of this Agreement, applicable Law or by the terms of any Company Plan, (v) enter into any employment, deferred compensation, severance, consulting, non-competition or similar agreement to which the Company is a party (or amend any such agreement in any material respect) or enter into any agreement involving a Current Employee or Current Consultant, except, in each case, as required by the terms of this Agreement, applicable Law from time to time in effect or by the terms of any Company Plan or (vi) enter into any Related Party Transaction;
(n)      make, change or revoke any material election concerning Taxes or Tax Returns, file any amended Tax Return or any Tax Return inconsistent with past practice, enter into any closing agreement or Contract with any Taxing Authority with respect to Taxes, settle any Tax claim or assessment (other than by paying Taxes in the Ordinary Course of Business), surrender any right to claim a refund of Taxes, request any Tax ruling or agree to an extension or waiver of the statute of limitations with respect to the assessment or determination of Taxes;
(o)      make any changes in financial or tax accounting methods, principles or practices (or change an annual accounting period), except as required by applicable Law;
(p)      amend the Company Charter Documents;
(q)      adopt a plan or agreement for or carry out any complete or partial liquidation, dissolution, restructuring, recapitalization, merger, consolidation or other reorganization other than as required by the provisions of the Transaction Agreements;
(r)      pay, repurchase, prepay, discharge, settle or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) in excess of $10,000 in any one instance or $25,000 in the aggregate, other than the payment, discharge, settlement or satisfaction in accordance with the terms of the Liabilities reflected in the Balance Sheet;
(s)      initiate, settle, agree to settle, waive or compromise any Action;
(t)      accelerate, beyond the normal collection cycle, collection of accounts receivable or delay beyond normal payment terms payment of any accounts payable;
(u)      accelerate or defer the construction of any premises;
(v)      accelerate or defer the purchase of fixtures, equipment, leasehold improvements, or other capital expenditures;
(w)      grant or agree to grant any license to any of the Company’s Intellectual Property Rights;
(x)      hire, appoint or, except as required by the terms of this Agreement, terminate any director or officer of the Company;
(y)      enter into any lease (either as lessor or lessee) or other form of use or occupancy agreement for the use or occupancy of any real property or amend, in any respect, or terminate any of the Real Property Leases; or
(z)      agree to take any of the foregoing actions.
Nothing contained in this Agreement shall give Buyer or Merger Sub, directly or indirectly, rights to control any operations of the Company prior to the Closing.
6.2      Actions Required to Consummate Transactions . Subject to the terms and conditions of this Agreement, from the Agreement Date until the Closing Date or the earlier termination of this Agreement pursuant to Article VIII (Termination), each of the Parties shall use (and shall cause its Affiliates to use) commercially reasonable efforts to promptly (a) take, or cause to be taken, all actions and do, or cause to be done, all things, necessary, proper or advisable to cause the conditions to closing of the other Parties hereunder to be satisfied and to consummate and make effective the Transactions (including the Stock Purchase and the Merger), in each case, as expeditiously as practicable, and (b) obtain all approvals, consents, registrations, Permits, authorizations and other confirmations from any Governmental Authority or third party necessary, proper or advisable to consummate the Transactions (including the Stock Purchase and the Merger).
6.3      Governmental Authorities . Each of the Parties shall use its commercially reasonable efforts to (a) cooperate with each other in connection with any investigation or other inquiry by or before a Governmental Authority relating to the Transactions (including the Stock Purchase and the Merger), including any proceeding initiated by a private party and (b) keep the other Parties informed in all material respects and on a reasonably timely basis of any material communication received by such Party from, or given by such Party to, any Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the Transactions. In furtherance and not in limitation of the covenants of the Parties contained in this Section 6.3 , each of the Parties shall use its commercially reasonable efforts to resolve such objections, if any, as may be asserted by a Governmental Authority or other Person with respect to the Transactions (including the Stock Purchase and the Merger).
6.4      Public Announcements . Unless otherwise required by (a) applicable Law, (b) stock exchange requirements, or (c) any disclosure made in connection with the enforcement of any right or remedy relating to this Agreement or the transactions contemplated hereunder, no Party to this Agreement other than Buyer shall at any time make any public announcement or disclosure in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Parties (which consent shall not be unreasonably withheld or delayed); provided , that, in each case, any party to this Agreement shall be permitted to disclose the terms of this Agreement (including the Base Purchase Price or the Total Purchase Price) to its Affiliates and its and their respective managers, partners, stockholders, equityholders, attorneys, accountants, tax advisors, financial advisors, consultants, agents, employees, potential financing sources or investors or other representatives (so long as such Person is directed to maintain the confidentiality of such information).
6.5      Access to Information .
(a)      Access . Subject to the requirements of applicable Law, the Sellers shall, and shall cause the Company to, afford to Buyer and Buyer’s Representatives, from time to time prior to the earlier of (i) the Closing or (ii) the termination of the Agreement pursuant to Section 8.1 , access during normal business hours upon reasonable advance notice to (x) all of the Company’s Premises, books, reports, Contracts, assets, filings with and applications to Governmental Authorities, records and correspondence (in each case, whether in physical or electronic form) and (y) to the Representatives of the Company as Buyer may reasonably request and the Company shall furnish promptly to Buyer all information and documents concerning its business, financial condition and operations, properties and personnel related to the consummation of the Transactions or the ownership or operation of the Company’s business as Buyer may reasonably request and Buyer shall be allowed to make copies of such information and documents.
(b)      Updated Financials . Promptly, but in no event later than fifteen (15) calendar days after the end of each month from the Agreement Date until the Closing Date, the Sellers shall cause the Company to provide Buyer with a copy of the true and correct unaudited balance sheets and related statements of income and cash flows of the Company as of and for the period ended the most-recent month-end prepared using the Company’s books and records and in accordance with GAAP consistently applied, together with a copy of the standard monthly reporting package provided to the Company’s management.
6.6      Confidentiality . The Sellers acknowledge that the success of the Company after the Closing Date depends upon the preservation of the confidentiality of the Confidential Information (as hereinafter defined), that the preservation of the confidentiality of the Confidential Information is an essential premise of the bargain between the Parties and Buyer would be unwilling to enter into this Agreement in the absence of this Section 6.6 . Accordingly, the Sellers, shall, and shall use their commercially reasonable efforts to cause their Affiliates and their respective Representatives to, keep confidential all confidential documents and information involving or relating to the Company or its business (the “ Confidential Information ”), unless (a) compelled to disclose such Confidential Information by Law so long as, to the extent permitted by Law, reasonable prior notice of such disclosure is given to Buyer and the Company and a reasonable opportunity is afforded Buyer and the Company to contest the same or (b) disclosed in an Action brought by a Party in pursuit of its rights or in the exercise of its remedies hereunder; provided , that, in each case, any party to this Agreement shall be permitted to disclose the terms of this Agreement (including the Base Purchase Price or the Total Purchase Price) to its Affiliates and its and their respective managers, partners, stockholders, equityholders, attorneys, accountants, tax advisors, financial advisors, consultants, agents, employees, potential financing sources or investors or other representatives (so long as such Person is directed to maintain the confidentiality of such information). “ Confidential Information ” does not include any document or information which is as of the Closing Date or becomes following the Closing Date generally available to the public other than as a result of a disclosure in violation of this Section 6.6 by the receiving party or its Representatives. The provisions of this Section 6.6 shall survive for three (3) years following the Closing Date; provided , however , that, with respect to trade secrets of the Company existing as of the Agreement Date, the provisions of this Section 6.6 shall survive until entry of such trade secrets into the public domain through no fault of any Seller.
6.7      Notification of Certain Matters . The Sellers shall provide prompt written notice to Buyer upon becoming aware (a) that any representation or warranty made by any Seller in this Agreement was untrue when made or subsequently has become untrue, (b) of any failure by any Seller to comply with or satisfy any of its covenants or agreements hereunder, (c) of the occurrence or nonoccurrence of any event that could reasonably be expected to cause any condition precedent to any obligation of Buyer to consummate the Transactions (including the Stock Purchase and the Merger) not to be satisfied at or prior to the Closing Date, (d) of any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Transactions (including the Stock Purchase and the Merger), to the extent such consent is not already contemplated by this Agreement or the Disclosure Schedule, (e) of any notice or other communication from any Governmental Authority in connection with the Transactions (including the Stock Purchase and the Merger), (f) of the commencement or threat of commencement of any Action regarding the Transactions (including the Stock Purchase and the Merger) or otherwise relating to the Company or its business, or (g) of any other material development affecting the assets, Liabilities, business, financial condition or operations of the Company; provided , however , that neither the delivery of any notice pursuant to this Section 6.7 nor obtaining any information or knowledge in any investigation pursuant to Section 6.5 or otherwise shall (i) cure any breach of, or non-compliance with, any representation or warranty requiring disclosure of such matter, or any breach of any other provision of this Agreement, (ii) amend or supplement any scheduled disclosure made by the Sellers in Article III or Article IV or (iii) limit the remedies available to the Party receiving, or entitled to receive, such notice.
6.8      Tax Matters .
(a)      Seller Prepared Tax Returns . The Sellers shall cause the Company, at the Company’s expense, to prepare or cause to be prepared and file or cause to be filed all Tax Returns for the Company for all taxable periods ending on or before the Closing Date and which are due on or before the Closing Date and to pay or cause to be paid all Taxes shown as due on such Tax Returns. All Tax Returns referred to in the first sentence of this Section 6.8(a) shall be prepared in accordance with the past practices of the Company, to the extent permitted by applicable Law, and shall be subject to Section 6.1(n) if applicable. The Sellers shall cause the Company to submit any such Tax Return for Buyer’s review and comment and to incorporate Buyer’s comments with respect to such Tax Return (unless unreasonable), and Buyer shall reasonably assist in causing any such Tax Return to be filed, as necessary.
(b)      Buyer Prepared Tax Returns .
(i)      Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns of the Company (x) for taxable periods that end after the Closing Date, including all Tax Returns for all complete taxable periods including but not ending on the Closing Date (collectively, the “ Straddle Periods ”), and (y) for taxable periods ending on or before the Closing Date and which are due after the Closing Date. All Tax Returns referred to in the first sentence of this Section 6.8(b)(i) shall, to the extent relating to the Pre-Closing Tax Period, be prepared in accordance with the past practices of the Company, to the extent permitted by applicable Law. Buyer shall cause the Company to pay all Taxes shown as due on such Tax Returns. Buyer shall permit Sellers’ Representative a reasonable period of time to review and comment, prior to filing, on each Tax Return for a Straddle Period or that is described in clause (y) of the first sentence of this Section 6.8(b)(i) . With respect to each Tax Return for a Straddle Period, Buyer shall consider in good faith any changes to such Tax Returns that are reasonably requested by Sellers’ Representative with respect to Taxes for which the Sellers would bear liability pursuant to this Agreement. With respect to any Tax Return described in clause (y) of the first sentence of this Section 6.8(b)(i) , Buyer shall incorporate Sellers’ Representative’s comments with respect to such Tax Return (unless unreasonable) with respect to Taxes for which the Sellers would bear liability.
(ii)      In the case of any Straddle Period, the amount of Taxes allocable to the portion of the Straddle Period ending on the Closing Date shall be determined as follows: (x) in the case of real or personal property Taxes, the product of the amount of such Taxes for the entire period multiplied by a fraction, the numerator of which is the number of calendar days in the Straddle Period ending on and including the Closing Date and the denominator of which is the number of calendar days in the entire relevant Straddle Period; and (y) in the case of Taxes not described in clause (x) above (such as franchise Taxes, Taxes that are based upon or related to income or receipts, or imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible)), the amount of any such Taxes shall be determined as if such taxable period ended as of the close of business on the Closing Date.
(c)      Tax Contests .
(i)      After the Closing, each of Buyer, on the one hand, and Sellers’ Representative, on the other hand, shall promptly notify the other Party in writing upon receipt from a Taxing Authority of any written notice of any pending or threatened audit, examination, claim, dispute or controversy relating to Taxes (a “ Tax Claim ”) with respect to the Company for a Pre-Closing Tax Period or any Losses for which such other Party (or any of its Affiliates) could be liable pursuant to this Agreement; provided , however , the failure to give such notice shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party has been prejudiced as a result of such failure.
(ii)      With respect to any Tax Claim relating to Taxes or Tax Returns within the scope of Section 6.8(a) , the Sellers may elect, through Sellers’ Representative, solely at the Sellers’ own cost and expense, to control all proceedings in connection with such Tax Claim (including selection of counsel); provided , however , that (x) Sellers’ Representative (on behalf of the Sellers) shall keep Buyer informed of all material developments regarding such Tax Claim and shall not settle such Tax Claim without the written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed, and (y) Buyer and its counsel (at Buyer’s expense) may participate in (but not control the conduct of) the defense of such Tax Claim.
(iii)      With respect to any Tax Claim relating to Taxes or Tax Returns within the scope of Section 6.8(b)(i) , or within the scope of Section 6.8(a) which Sellers’ Representative does not elect to control pursuant to Section 6.8(c)(ii) , Buyer shall, solely at Buyer’s own cost and expense, control all proceedings in connection with such Tax Claim (including selection of counsel); provided , however , that to the extent that any such Tax Claim could reasonably be expected to result in the Sellers being liable for any amounts hereunder, (x) Buyer shall keep Sellers’ Representative informed of all material developments regarding such Tax Claim, (y) Sellers’ Representative and its counsel (at the Sellers’ expense) may participate in (but not control the conduct of) the defense of such Tax Claim, and (z) Buyer shall not settle such Tax Claim without the written consent of Sellers’ Representative, which consent shall not be unreasonably withheld, conditioned or delayed.
(iv)      Any dispute, controversy or claim between Buyer and Sellers’ Representative with respect to the defense of any Tax Claim, as described in this Section 6.8(c)(iv) , shall be resolved pursuant to Section 6.8(i) .
(d)      Certification . Buyer and Sellers’ Representative agree, upon request from the other Party, to use their commercially reasonable efforts to obtain any certificate or other document from any Taxing Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the contemplated Transactions).
(e)      Tax Sharing Agreements . The Sellers shall cause the Company to terminate all Tax Sharing Agreements with respect to the Company as of the Closing Date and shall ensure that such agreements are of no further force or effect on and after the Closing Date and that there shall be no further liabilities or obligations imposed on any of the Company under any such agreements.
(f)      Cooperation . Following the Closing Date, Buyer and Sellers’ Representative shall, as reasonably requested by any Party: (i) assist any other Party in preparing and filing any Tax Returns relating to the Company that such other Party is responsible for preparing and filing; (ii) cooperate in preparing for any Tax audit of, or dispute with any Taxing Authority regarding and any judicial or administrative proceeding relating to, liability for Taxes, in the preparation or conduct of litigation or investigation of claims and in connection with the preparation of financial statements or other documents to be filed with any Taxing Authority, in each case with respect to the Company; (iii) make available to the other Parties and to any Taxing Authority as reasonably requested all information, records and documents relating to Taxes relating to the Company (at the cost and expense of the requesting Party); (iv) provide timely notice to the other Parties in writing of any pending or threatened Tax audits or assessments relating to the Company for taxable periods for which any such other Party is responsible; and (v) furnish the other Parties with copies of all correspondence received from any Taxing Authority in connection with any Tax audit or information request with respect to any taxable periods (or portion thereof) for which any such other Party is responsible. For the avoidance of doubt, the cooperation noted in this Section 6.8(f) shall include signing any Tax Returns, amended Tax Returns, claims or other documents with respect to any audit, litigation or other proceedings with respect to Taxes, the retention and (upon the other Party’s reasonable request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.
(g)      Amended Tax Returns . Buyer shall not cause or permit the Company or any Affiliate of Buyer to file inconsistent with past practice or amend any Tax Return of or with respect to the Company that relates to Taxes that are subject to indemnification by the Sellers and shall not file any Tax election with respect to the Company with effect to any Pre-Closing Tax Period (including any election under Section 338 or 336 of the Code) hereunder without the prior written consent of Sellers’ Representative (which consent shall not be unreasonably withheld, conditioned or delayed); provided , however , that no such consent shall be required for the filing of any Tax Return or an amendment of any Tax Return of the Company that is required by applicable Tax Law. For the avoidance of doubt, in no event shall an election under Section 338 or 336 of the Code be made with respect to the Transactions.
(h)      Transfer Taxes . The Sellers shall be solely liable for any real property transfer or gains tax, stamp tax, stock transfer tax, or other similar Tax imposed as a result of or in connection with the Transactions (collectively, the “ Transfer Taxes ”), and any penalties or interest with respect to the Transfer Taxes. The Parties shall cooperate in filing all necessary Tax Returns and other documentation with respect to the Transfer Taxes.
(i)      Dispute Resolution for Taxes . With respect to any dispute, controversy or claim relating to Taxes between Buyer and the Sellers (for any Tax for which an indemnity claim may exist under this Agreement), Buyer and the Sellers shall cooperate in good faith to resolve such dispute, controversy or claim between them for a period of thirty (30) days from the date written notice of such dispute, controversy or claim is received by Buyer or Sellers’ Representative, as the case may be; but if the applicable Parties are unable to resolve such dispute, controversy or claim, the Parties shall submit the dispute, controversy or claim for resolution, which resolution shall be final, conclusive and binding on the Parties, to a mutually agreed upon national accounting firm or a mutually agreed upon tax lawyer who is a partner in a law firm, that, in each case, is: (i) familiar with transactions or operations of the sort at issue; and (ii) independent with respect to each Party. Notwithstanding anything in this Agreement to the contrary, the fees and expenses of the mutually agreed upon firm or person, as described in the preceding sentence, relating to any dispute as to the amount of Taxes owed shall be paid by Buyer, on the one hand, and the Sellers, on the other hand, in proportion to each Party’s respective liability for the portion of Taxes in dispute, as determined by such mutually agreed upon firm or person.
(j)      Tax Treatment . Buyer, Merger Sub and the Company shall use their respective commercially reasonable efforts to cause the Stock Purchase and the Merger, considered together as a single integrated transaction for U.S. federal income Tax purposes, to qualify, and agree not to, and not to permit or cause any Affiliate or any Subsidiary to, take any actions or cause any action to be taken which would reasonably be expected to prevent the Stock Purchase and the Merger, considered together as a single integrated transaction for U.S. federal income Tax purposes, from qualifying, as a “reorganization” under Section 368(a) of the Code.
(k)      This Agreement is intended to constitute, and the parties hereto hereby adopt this Agreement as, a “plan of reorganization” within the meaning Treasury Regulation Sections 1.368-2(g) and 1.368-3(a). Buyer, Merger Sub and the Company shall treat and shall not take any tax reporting position inconsistent with the treatment of the Stock Purchase and the Merger, considered together as a single integrated transaction for U.S. federal income Tax purposes, as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal, state and other relevant Tax purposes, unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code.
6.9      Non-Competition, Non-Solicitation and Non-Hire Covenants .
(a)      During the Restrictive Term, each Seller set forth on Schedule 6.9 shall not, and shall cause its Affiliates not to, directly or indirectly, (i) acquire, finance, own any interest in, manage, control, participate in, consult with, render services for, operate or in any manner engage in a Competitive Business, (ii) for the purpose of conducting or engaging in a Competitive Business, call upon, solicit, advise or otherwise do, or attempt to do, business with any clients, suppliers, customers, accounts of the Company, Merger Sub or Buyer or any other material business relation of the Company, Merger Sub or Buyer, or (iii) otherwise take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier or other business relation of the Company, Merger Sub or Buyer from maintaining the same business relationships with such Person after the Closing Date as it maintained with such Person prior to the Closing Date; provided , however , that no Seller nor any of its respective Affiliates shall be prohibited from owning up to two percent (2%) of the outstanding stock of any Person that is publicly traded on a national securities exchange or in the over-the-counter market so long as such Seller or any of its Affiliates has no active participation in the business or management of such Person.
(b)      During the Restrictive Term, each Seller set forth on Schedule 6.9 shall not, and shall cause its Affiliates not to, directly or indirectly, induce or attempt to induce any officer, employee, representative or agent of the Company, Merger Sub or Buyer engaged in the Business to leave the employ of the Company, Merger Sub or Buyer (provided, that this clause shall not prohibit any Person from making general employment solicitations such as through advertisements in publicly available media so long as such advertisements are not specifically targeted at employees of the Company, Merger Sub or Buyer).
(c)      Each Seller acknowledges and agrees that the length of the covenants set forth in this Section 6.9 are reasonable and narrowly drawn to impose no greater restraint than is necessary to protect the goodwill of Buyer and, after giving effect to the consummation of the transaction, the Company with respect to the Business.
(d)      Buyer and each Seller intend that the covenants of this Section 6.9 shall be deemed to be a series of separate covenants, one for each month of the time periods covered by such covenants.
(e)      Each Seller agrees that in the event a court of competent jurisdiction declares, by way of a final and non-appealable order, that there has been a breach by such Seller of this Section 6.9 , the term of any covenant so breached shall be automatically tolled as a result of, and extended for, the period of time of the violation.
6.10      Release . Each Seller does hereby unconditionally, irrevocably and absolutely release and discharge the Company, together with its directors, officers, employees, agents, advisors, consultants, attorneys, owners, insurers, shareholders, affiliates, successors and/or assigns (collectively, with the Company as well as the other Buyer Indemnified Persons (defined below), the “ Released Parties ”), from any and all Liabilities, Actions, Losses and expenses (including attorneys’ fees) of any nature whatsoever, whether in law and/or in equity, known or unknown, suspected or unsuspected, to the extent related to the Company or any ownership interest in the Company, up to and including the Closing Date, including such Seller’s employment with the Company, and any and all claims (other than for accrued compensation since the Company’s last payroll in the Ordinary Course of Business, any accrued vacation in accordance with the Company’s policy in the Ordinary Course of Business, and any pending expense reimbursements in accordance with the Company’s policy in the Ordinary Course of Business) related to salary, bonuses, commissions, stock, stock options, other ownership interest in the Company, vacation pay, fringe benefits and expense reimbursements under any federal, state or local law. This release shall include but not be limited to a release of claims arising under any state or federal statute or common law regulating or affecting employment in any way, regardless of applicability to such Seller or any Released Party, including Title VII of the Civil Rights Act of 1964, 42 U.S.C. §1981, the Age Discrimination in Employment Act, the Americans with Disabilities Act, Sections 503 and 504 of the Rehabilitation Act of 1973, the Employee Retirement Income Security Act, the Equal Pay Act, the Family and Medical Leave Act, the Occupational Safety and Health Act, the Workers’ Adjustment and Retraining Notification Act, as amended, the Fair Labor Standards Act, the Workers’ Adjustment and Retraining Notification Act, as amended, the Fair Labor Standards Act, and any other federal, state or local statute, code or ordinance, common law, contract law, or tort. This release shall also include but not be limited to a release of claims arising with respect to any Liability for any Taxes (a) of such Seller, (b) in respect of such Seller’s Shares (whether Taxes of the Company, such Seller or otherwise), including as to the issuance of such Shares to such Seller or the vesting of such Shares, and (c) in respect of the transactions contemplated by this Agreement to the extent applicable to Seller (including delivery of shares of Buyer’s Common Stock and cash to such Seller in payment for such Seller’s Shares). This Section 6.10 is intended to constitute a general release of all of such Seller’s presently existing claims to the extent relating to the Company or any ownership interest in the Company against each of the Released Parties, to the maximum extent permitted by law. Notwithstanding any provision of this Section 6.10 to the contrary, this release does not include any claim for worker’s compensation or unemployment insurance benefits, or any claim based on fraud or intentional misrepresentation or omission with intent to deceive, and does not release or affect any claim that cannot be released by an agreement voluntarily entered into between private parties.
6.11      Employment Related Agreements . Each Seller acknowledges that each of the Continuing Employees has executed and delivered to Buyer an employment agreement or offer letter and a non-compete agreement where a Continuing Employee is not a Seller substantially in the form(s) attached hereto as Exhibit C , which agreements shall become binding and effective as of the Closing Date (collectively, the “ Employment Agreements ”).
6.12      Employee Matters and Company Plans .
(a)      Continuing Employees . Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall be deemed to give rise to any obligation by Buyer to retain any Current Employee, any group of Current Employees of the Company or any Company Plan following the Closing Date. Continuing Employees who become eligible to participate in any welfare benefit plan or pension plan (intended to qualify under Section 401(a) of the Code) of Buyer (each a “ Buyer Plan ”) shall receive credit for purposes of eligibility and vesting for years of service with the Company prior to the Closing to the extent that such service was recognized under the corresponding Company Plan prior to the Closing; provided that such service shall not be recognized if and to the extent that it would result in the duplication of benefits or is not possible or practical under a Buyer Plan.
(b)      Company Plans . The Sellers shall cause the Company to cease contributions to and terminate all of the Company Plans listed on Section 4.10(a) of the Disclosure Schedule (but specifically excluding those Company Plans incorporated by reference therein), effective immediately prior to Closing. Any such cessation or termination shall be undertaken (i) in accordance with the governing documents and Contracts for the Company Plans (including through plan amendment) and (ii) in conformance with applicable Laws.
(c)      No Limitation . This Section 6.12(c) is not intended to amend any benefit plans or arrangements of Buyer or any of its Subsidiaries, to limit the ability of Buyer or any of its Subsidiaries to amend, modify or terminate any of such benefit plans or arrangements or to confer third-party beneficiary rights on any Person (including any Continuing Employee or any beneficiary or dependent thereof).
6.13      No Negotiations, Etc . The Sellers shall not, and shall cause the Company and their respective Representatives not to, directly or indirectly solicit, initiate, or enter into any discussions or negotiations or continue in any way any discussions or negotiations with any Person or group of Persons regarding any Competing Transaction. The Sellers shall promptly but not later than forty-eight (48) hours following the occurrence of the relevant event notify Buyer orally and in writing if any inquiries, proposals, or requests for information concerning a Competing Transaction are received by the Company, the Sellers or any of their respective Representatives. The written notice shall include the identity of the Person making such inquiry, proposal, or request and the terms and conditions thereof as well as a copy of such inquiry proposal or request. For purposes of this Agreement, “ Competing Transaction ” means a transaction or a series of related transactions (other than the Transactions) involving (a) any sale of stock or other equity interests in the Company, (b) a merger, consolidation, share exchange, business combination, or other similar transaction involving the Company, (c) any sale, lease, exchange, license (other than in the Ordinary Course of Business), mortgage, pledge, transfer, or other disposition of the assets of the Company (other than disposition of inventory in the Ordinary Course of Business), or (d) any other transaction or series of transactions which could reasonably preclude the consummation of the Transactions.
6.14      Termination of the Company Option Plan and Investor Rights Arrangements . The Sellers shall cause the Company to take (or cause to be taken) all actions necessary or appropriate to terminate, effective as of the Closing, (a) the Company Option Plan (as well as all Company Options) and (b) the investor rights arrangements with respect to shares of Company Capital Stock, as listed on Schedule 6.14 (the “ Company Investor Rights Arrangements ”).
6.15      Registration of Shares . Buyer agrees to register for public resale (a) the Upfront Stock Consideration Shares, (b) the shares of Buyer’s Common Stock issuable on the Indemnification Hold-Back Payment Date as contemplated by Section 2.1(b)(iv) , and (c) the shares of Buyer’s Common Stock issuable upon achievement of any Milestone as contemplated by Section 2.1(b)(v) , in each case on a Form S‑3ASR (assuming Buyer remains eligible for the use of such form, otherwise on a Form S-3) pursuant to, and subject to the limitations (including volume resale limitations) set forth in, the registration rights agreement substantially in the form attached hereto as Exhibit D (the “ Registration Rights Agreement ”).

ARTICLE VII     

 CONDITIONS TO CLOSING
7.1      Conditions to Obligations of Buyer and Merger Sub . The obligations of Buyer and Merger Sub to effect the Transactions (including the Stock Purchase and the Merger) are subject to the satisfaction (or waiver by Buyer) at or prior to the Closing of the following conditions:
(a)      Representations and Warranties . Each of the representations and warranties of the Sellers and the Company contained in Article III and Article IV that is qualified by “materiality”, “Company Material Adverse Effect” or a similar qualifier shall be true and correct in all respects, and each of such representations and warranties that is not so qualified shall be true and correct in all material respects, in each case, at and as of the Closing Date, except for representations and warranties made as a of a specified date, the accuracy of which will be determined only as of the specified date; provided , however , that the Company Fundamental Representations and the Seller Fundamental Representations shall be true and correct in all respects at and as of the Closing Date.
(b)      Performance of Obligations of Sellers . The Sellers shall have performed in all material respects all covenants, agreements and obligations required to be performed by them under this Agreement at or prior to the Closing; provided that, with respect to any such covenants, agreements or obligations which are subject to “materiality,” “Company Material Adverse Effect” or similar materiality qualifications, the Sellers shall have performed such covenants, agreements and obligations in all respects.
(c)      No Litigation . No Action shall have been instituted, commenced or threatened and no Action shall remain pending that seeks to or could reasonably be expected to (i) restrain, prevent, enjoin, prohibit or make illegal the Transactions, (ii) cause any of the Transactions to be rescinded following the Closing Date, (iii) impose limitations on the ability of the Surviving Entity to effectively conduct its business following the Closing Date or (iv) compel Buyer, Sellers or the Company to dispose of any portion of the Company’s business or assets.
(d)      No Material Adverse Effect . Since the Interim Balance Sheet Date, no Company Material Adverse Effect shall have occurred.
(e)      No Injunctions or Restraints . No Order shall be in effect (i) enjoining, restraining, preventing or prohibiting consummation of the Transactions, (ii) causing any of the Transactions to be rescinded following the Closing Date, (iii) imposing limitations on the ability of the Company to effectively conduct its business following the Closing Date or (iv) compelling Buyer or the Company to dispose of any portion of the Company’s business or assets.
(f)      Governmental Consents . All filings with and consents of any Governmental Authority required to be made or obtained in connection with the transactions contemplated by this Agreement shall have been made or obtained and shall be in full force and effect and any waiting period under any applicable antitrust or competition law, regulation or other Law shall have expired or been terminated.
(g)      Delivery of Closing Certificates . Buyer shall have received:
(i)      Closing Certificate . A certificate dated as of the Closing Date, signed by the Chief Executive Officer or the Chief Financial Officer of the Company certifying that the conditions precedent set forth in Section 7.1(a) , Section 7.1(b) , Section 7.1(c) , Section 7.1(d) , Section 7.1(e) and Section 7.1(f) have been met;
(ii)      Allocation Schedule Certificate . A certificate dated as of the Closing Date, signed by the Chief Executive Officer or the Chief Financial Officer of the Company certifying that the Allocation Schedule is true and correct in all respects;
(iii)      Good Standing Certificates . Certificates of good standing with respect to the Company issued by the Company’s jurisdiction of organization and the jurisdiction of the Company’s principal place of business, dated not more than five (5) Business Days prior to the Closing Date; and
(iv)      FIRPTA Certificate . A certificate dated as of the Closing Date, signed by the Chief Executive Officer or Chief Financial Officer of the Company conforming to the requirements of Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3).
(h)      Employment Agreements . The Employment Agreements described in Section 6.11 shall have been executed and delivered to Buyer at or prior to the execution of this Agreement and no such Employment Agreement shall have been amended, terminated, cancelled or repudiated.
(i)      Resignation of Officers and Directors . Buyer shall have received resignations, in form and substance reasonably satisfactory to Buyer, effective as of the Closing, from each officer and director of the Company, other than those continuing officers and directors specified to the Sellers by Buyer in writing at least two (2) Business Days prior to the Closing Date.
(j)      Delivery of Financial Statements . Buyer shall have received the Financial Statements, including (x) the audited balance sheet and related audited statements of income, cash flows and stockholders’ equity as of and for the fiscal year ended December 31, 2018, (y) the unaudited balance sheet and related unaudited statements of income, cash flows and stockholders’ equity as of and for the three-month period ended March 31, 2019, and (z) the unaudited balance sheet and related unaudited statements of income, cash flows and stockholders’ equity as of and for the five-month period ended May 31, 2019.
(k)      Release of Liens . Buyer shall have received payoff letters, in form and substance reasonably satisfactory to Buyer, from each lender to the Company evidencing the aggregate amount of Company Debt outstanding and owing to such lender as of the Closing Date and an agreement that, if such aggregate amount is paid to such lender on the Closing Date, such indebtedness shall be repaid in full and that all related Liens shall be released forthwith. In addition, Buyer shall have received evidence, in a form satisfactory to Buyer, that any outstanding Liens of the Company (other than Permitted Liens), any related UCC filings (other than those related to Permitted Liens) and any related filings with the USPTO Assignment Division have been terminated.
(l)      Transaction Expenses . Buyer shall have received written statements from the Company’s outside legal counsel and any financial advisor, accountant or other Person who provided services to the Company (other than Employees who provided such services only in their capacities as such), or who is otherwise entitled to any compensation from the Company, in connection with services provided with respect to this Agreement or any of the Transactions, setting forth the total amount of unpaid Company Transaction and Bonus Expenses that remain payable to such Person with respect to services rendered through the Closing Date.
(m)      Third Party Consents . (i) The Sellers shall have delivered to Buyer the consent of Janssen Research & Development, LLC with respect to the consummation of the Transactions contemplated by this Agreement in a form that is reasonably acceptable to Buyer, and (ii) that certain Amendment No. 1 to the Stanford License, effective July 5, 2019, attached hereto as Exhibit E , shall remain in full force and effect (including with respect to the thirty (30) day effective period set forth in Section 1.3 thereof), and for the avoidance of doubt, shall not have been amended, terminated, cancelled or repudiated.
(n)      280G Stockholder Approval or Disapproval . With respect to any payments and/or benefits that may constitute “parachute payments” under Section 280G of the Code with respect to any Employees, the Company shall have submitted such parachute payments to the Sellers for approval and the Sellers shall have (i) approved, pursuant to the method provided for in the regulations promulgated under Section 280G of the Code, any such “parachute payments” or (ii) shall have voted upon and disapproved such “parachute payments,” and, as a consequence, such “parachute payments” shall not be paid or provided for in accordance with applicable Law.
(o)      No Company Options, Investor Rights Arrangements or Plans . The Company shall have provided Buyer with evidence reasonably satisfactory to Buyer as to the termination of (i) the Company Option Plan, (ii) all outstanding Company Options (including any Company Options that are not a Vested Company Option and are unexpired, unexercised and outstanding immediately prior to the Closing), (iii) all Company Investor Rights Arrangements and (iv) all Company Plans listed on Section 4.10(a) of the Disclosure Schedule (but specifically excluding those Company Plans incorporated by reference therein).
(p)      Assignment of Shares . Buyer shall have received evidence, in a form acceptable to Buyer, that (i) all Shares have been assigned to Buyer and (ii) all Company Options have been cancelled, in each case in the Company’s online stock ledger system administered by Carta, Inc.
(q)      Registration Rights Agreement . The Registration Rights Agreement shall have been executed and delivered by each Seller to Buyer.
(r)      Option Cancellation and Joinder Agreements . Buyer shall have received duly executed Option Cancellation and Joinder Agreements, each in the form attached hereto as Exhibit F (each, an “ Option Cancellation and Joinder Agreement ”), from Company Optionholders holding Company Options to acquire at least 85% of the Company Capital Stock issuable immediately prior to the Closing upon exercise of all Company Options.
7.2      Conditions to Obligation of the Sellers . The obligation of the Sellers to effect the Transactions is subject to the satisfaction (or waiver, if permissible under applicable Law) prior to the Closing of the following conditions:
(a)      Representations and Warranties . Each of the representations and warranties of Buyer contained in Article V that is qualified by “materiality”, “Buyer Material Adverse Effect” or a similar qualifier shall be true and correct in all respects, and each of such representations and warranties that is not so qualified shall be true and correct in all material respects, in each case, at and as of the Closing Date, except for representations and warranties made as a of a specified date, the accuracy of which will be determined only as of the specified date.
(b)      Performance of Obligations of Buyer . Buyer shall have performed in all material respects all covenants, agreements and obligations required to be performed by Buyer under this Agreement prior to the Closing.
(c)      Delivery of Closing Certificate . The Sellers shall have received a certificate dated as of the Closing Date signed by Chief Executive Officer or Chief Financial Officer of Buyer and the certifying that the conditions precedent set forth in Section 7.2(a) and Section 7.2(b) have been met.
(d)      Registration Rights Agreement . The Registration Rights Agreement shall have been executed and delivered by Buyer to each Seller.
ARTICLE VIII     

 TERMINATION
8.1      Termination . This Agreement may be terminated and the Transactions abandoned at any time prior to the Closing:
(a)      By the mutual written consent of the Sellers and Buyer;
(b)      By either the Sellers or Buyer, upon written notice to the other Party(ies), if the Transactions shall not have been consummated on or before the date which is sixty (60) days after the Agreement Date, which date may be extended from time to time by mutual written consent of Buyer and the Sellers (such date, as it may be so extended from time to time, the “ Outside Date ”); provided , however , that the right to terminate this Agreement under this Section 8.1(b) shall not be available to a Party whose failure to perform any of its obligations under this Agreement has been a principal cause of or directly resulted in the failure of the Transactions to occur on or before the Outside Date;
(c)      By the Sellers or Buyer, if any final and non-appealable Order or any Law has the effect of enjoining, restraining, preventing, prohibiting or making illegal the consummation of the Transactions;
(d)      By Buyer, if any of the representations or warranties of the Sellers or the Company, as applicable, set forth in Article III or Article IV shall not be true and correct or if the Sellers have failed to perform any covenant or agreement on the part of the Sellers set forth in this Agreement (including an obligation to consummate the Closing) and, in the case of the representations and warranties, measured on the Agreement Date or as of any subsequent date (as if made on such date), such that the condition to Closing set forth in either Section 7.1(a) or Section 7.1(b) would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, are not cured on or prior to the earlier of (i) ten (10) days after written notice thereof is delivered to the Sellers and (ii) the Outside Date; provided that this provision shall not be available to Buyer if Buyer is then in breach of this Agreement;
(e)      By the Sellers, if any of the representations or warranties of Buyer set forth in Article V shall not be true and correct or if Buyer has failed to perform any covenant or agreement on the part of Buyer set forth in this Agreement (including an obligation to consummate the Closing) such that the conditions to Closing set forth in either Section 7.2(a) or Section 7.2(b) would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, are not cured on or prior to the earlier of (i) ten (10) days after written notice thereof is delivered to Buyer and (ii) the Outside Date; provided that this provision shall not be available to the Sellers if any Seller is then in breach of this Agreement; and
(f)      By Buyer, upon written notice to the Sellers, if since the Interim Balance Sheet Date the Company has experienced a Company Material Adverse Effect.
8.2      Effect of Termination . In the event this Agreement is terminated pursuant to Section 8.1 , this Agreement shall become null and void other than the provisions of this Article VIII , Section 6.4 (Public Announcement), Section 6.6 (Confidentiality), Section 10.14 (Governing Law) and Section 10.15 (Exclusive Jurisdiction; Venue; Service of Process) and any provision hereof that forms the basis for a claim of breach of this Agreement prior to the termination of this Agreement, all of which shall survive termination of this Agreement and remain in full force and effect, without further liability on the part of the Parties or any of their respective directors, officers or Affiliates, except that nothing shall relieve any Party from liability related to claims sounding in contract, tort or otherwise related to a willful breach of this Agreement prior to the termination of this Agreement.
ARTICLE IX     

 SURVIVAL AND INDEMNIFICATION
9.1      Survival . All representations and warranties of the Parties contained in this Agreement or any other Transaction Agreement or in any certificate or schedule delivered hereunder or thereunder shall survive the Closing until the date that is twelve (12) months after the Closing Date (the “ General Survival Date ”); provided , however , that, (a) the Company Intermediate Representations shall survive until the expiration of the Milestone Period, (b) the Fundamental Representations shall survive until the later of six (6) years after the Closing Date and ninety (90) days after the expiration of the applicable statute of limitations and (c) all of the covenants, agreements and obligations of the Parties contained in this Agreement or any other document, certificate, schedule or instrument delivered or executed in connection herewith that is intended to survive the Closing shall survive the Closing and continue in full force and effect until fully performed (the General Survival Date or the last day of any of the periods specified in clauses (a), (b) and (c) of this Section 9.1 , each alternatively referred to herein as the “ Survival Date ”). Notwithstanding the foregoing, if a claim or notice with respect to recovery under the indemnification provisions hereof is given in accordance with the terms hereof prior to the applicable Survival Date, the claim and any representations and warranties or covenants underlying such claim, shall continue until such claim is finally resolved pursuant to the terms of this Article IX . Notwithstanding anything in this Agreement to the contrary, claims for intentional fraud and willful misconduct shall survive indefinitely.
9.2      Indemnification .
(a)      Indemnification by Holders and Buyer .
(i)      Subject to the terms, conditions and limitations of this Article IX , from and after the Agreement Date, each Seller and Participating Optionholder, and with respect to any recoveries against the Indemnity Hold-Back Amount or the Milestone Amounts, each other Holder, severally in accordance with such Holder’s Pro Rata Share and not jointly, shall indemnify and hold harmless each Buyer Indemnified Person from and against any Loss which such Buyer Indemnified Person may suffer, sustain or become subject to, as a result of or based upon or arising out of (and whether or not involving a Third Party Claim):
(A)      any breach of, or misrepresentation or inaccuracy in, any of the representations or warranties made by the Company in Article IV of this Agreement (other than the Company Intermediate Representations or the Company Fundamental Representations), including in any certificate delivered by or on behalf of the Company pursuant hereto;
(B)      any breach of, or misrepresentation or inaccuracy in, any of the representations or warranties made by the Company in any of the Company Intermediate Representations, including in any certificate delivered by or on behalf of the Company pursuant hereto; and
(C)      any breach of or failure to perform any covenant or agreement provided for in this Agreement to be performed by the Holders or the Company prior to the Closing (it being understood that no Holder shall be liable under this Section 9.1(a)(i) for any Losses arising out of a breach of, or failure to perform, any of the covenants or agreements in this Agreement specific to any other Holder).
(ii)      Subject to the terms, conditions and limitations of this Article IX , from and after the Agreement Date, each Seller and Participating Optionholder, and with respect to any recoveries against the Indemnity Hold-Back Amount or the Milestone Amounts, each other Holder, severally in accordance with such Holder’s Pro Rata Share and not jointly, shall indemnify and hold harmless each Buyer Indemnified Person from and against any Loss which such Buyer Indemnified Person may suffer, sustain or become subject to, as a result of or based upon or arising out of (and whether or not involving a Third Party Claim):
(A)      any breach of, or misrepresentation or inaccuracy in, any of the representations or warranties made by the Company in any of the Company Fundamental Representations, including in any certificate delivered by or on behalf of the Company pursuant hereto;
(B)      any errors or omission in the calculations delivered to Buyer pursuant to Section 2.9 ;
(C)      any inaccuracy in the Allocation Schedule;
(D)      any breach of or failure to perform any covenant or agreement of the Sellers’ Representative provided for in this Agreement;
(E)      any intentional fraud or willful misconduct committed by any of the Holders or the Company, including any director, officer or Employee of the Company, in connection with this Agreement (which each Holder acknowledging and agreeing that such Holder has reviewed each of the Company’s representations in Article IV of this Agreement as well as any corresponding information in the Disclosure Schedule for the purpose of determining, from such Holder’s perspective, the accuracy and completeness of such representations);
(F)      any Action brought by a Company Optionholder (or any other Person claiming rights by, through or associated with such Company Optionholder) that seeks to challenge (i) the adequacy of the consideration received by such Company Optionholder pursuant to this Agreement or (ii) the cancellation for no consideration of any Company Option that is not a Vested Company Option; and
(G)      any nonpayment by the Closing Date’s end of any Taxes of the Company for any Pre-Closing Tax Period (taking into account estimated payments of, and any other amounts creditable against, such Taxes), but only to the extent such Taxes (x) were not included in the computation of the Closing Net Working Capital or otherwise in the calculation of the Final Purchase Price as finally determined and (y) do not result from any action of Buyer on the Closing Date following the Closing.
(iii)      Subject to the terms, conditions and limitations of this Article IX , from and after the Agreement Date, each Seller shall indemnify and hold harmless each Buyer Indemnified Person from and against any Loss which such Buyer Indemnified Person may suffer, sustain or become subject to, as a result of or based upon or arising out of (and whether or not involving a Third Party Claim):
(A)      any breach of, or misrepresentation or inaccuracy in, any of the representations or warranties made by such Seller in Article III of this Agreement or any other Transaction Agreement, including in any certificate delivered by or on behalf of such Seller; and
(B)      any breach of or failure to perform any covenant or agreement to be performed by such Seller at or following the Closing provided for in this Agreement or any other Transaction Agreement.
(iv)      Subject to the terms, conditions and limitations of this Article IX , Buyer shall indemnify and hold harmless each Holder Indemnified Person from and against any Loss which such Holder Indemnified Person may suffer, sustain or become subject to, as a result of or based upon or arising out of (and whether or not involving a Third Party Claim):
(A)      any breach of, or misrepresentation or inaccuracy in any of the representations or warranties made by Buyer in this Agreement or in any other Transaction Agreement to which it is a party;
(B)      any breach of or failure to perform any covenant or agreement of Buyer provided for in this Agreement or any other Transaction Agreement; and
(A)      any Taxes of such Seller imposed on any Buyer Indemnified Person following the Closing.
(b)      Limitations on Claims . Notwithstanding the foregoing:
(i)      With respect to any claim seeking recovery of any Loss under Section 9.2(a)(i) above (other than with respect to any claims arising from any intentional fraud or willful misconduct):
(A)      no Holder will have any liability for any such Loss until the aggregate amount of all such Losses exceeds an amount equal to $375,000.00 (the “ Deductible ”) (in which case the Buyer Indemnified Persons shall only be entitled to seek compensation for all Losses in excess of the Deductible); and
(B)      the Holders will not have any Liability for any such Loss to the extent that the aggregate amount of all such Losses for which Holders have liability exceeds (x) the Indemnification Cap, in the case of Losses recoverable under Section 9.2(a)(i)(A) and Section 9.2(a)(i)(C) , or (y) the Indemnification Cap as Supplemented (i.e., recourse to the Indemnification Hold-Back Amount and half of the aggregate potential of the Milestone Amounts through exercise of the Offset Right), in the case of Losses recoverable under Section 9.2(a)(i)(B) .
(ii)      No Buyer Indemnified Person shall be entitled to recover any Losses under this Article IX to the extent the amount of such Losses has actually been recovered by such Buyer Indemnified Person from a Person other than another Party to this Agreement, and each Buyer Indemnified Person shall, to the extent applicable, use commercially reasonable efforts to seek indemnification or other redress pursuant to the terms of any Contract to which the Company or Buyer is a party and by which such Person has the right to seek indemnification from any third party.
(iii)      The Buyer Indemnified Persons shall not be entitled to indemnification with respect to any Losses as a result of or based upon or arising from any claim or Liability to the extent such claim or Liability is taken into account in determining the amount of any adjustment to the Upfront Purchase Price in accordance with Section 2.11 .
(iv)      If any Indemnifying Party makes any indemnification payment pursuant to this Article IX or otherwise by reason of the transactions contemplated hereby under any theory of recovery, such Indemnifying Party shall be subrogated, to the extent of such payment and to the extent permitted by applicable Law, to any rights and remedies of the Indemnified Person to recoup such amounts from third parties with respect to the matters giving rise to indemnification hereunder. Notwithstanding anything in this Agreement to the contrary, however, no Holder shall be subrogated to any rights or remedies, or otherwise make any claim against the Company or any other Buyer Indemnified Person (regardless of the facts or the kind of Loss at issue), and each Seller and Participating Optionholder (by virtue of the execution and delivery of an Option Cancellation and Joinder Agreement) expressly waives any right of subrogation, contribution, advancement, indemnification or other claim against the Company or any other Buyer Indemnified Person with respect to any indemnification obligation or any other liability to which such Seller or Participating Optionholder may become subject under or in connection with this Agreement.
(v)      The maximum amount of Losses for which a Seller or Participating Optionholder shall be liable pursuant to this Agreement shall be the amount of the Total Purchase Price actually received by such Seller or Participating Optionholder (with shares of Buyer’s Common Stock deemed, for this purpose, to have a value (x) for the Upfront Stock Consideration Shares equal to the Trailing Average Share Price calculated as of the Determination Date, (y) for the shares of Buyer’s Common Stock issuable on the Indemnification Hold-Back Payment Date as contemplated by Section 2.1(b)(iv) equal to the Trailing Average Share Price calculated as of the Determination Date and (z) for any shares of Buyer’s Common Stock issued upon a Milestone Date the Trailing Average Share Price calculated as of such Milestone Date); provided , however , that such limit shall not apply to any Seller or Participating Optionholder in the instance of any intentional fraud or willful misconduct of such Seller or Participating Optionholder or any Person affiliated with any Seller or Participating Optionholder who has served as an officer, director, employee or consultant of the Company.
(c)      Calculation of Losses . Solely for the purposes of calculating the amount of Losses pursuant to this Article IX (and not for determining the existence of a breach of any representation or warranty), the representations and warranties of the Sellers and the Company in this Agreement that are qualified by materiality or Company Material Adverse Effect shall be deemed to be made without such materiality or Company Material Adverse Effect qualifiers; provided , however , that this Section 9.2(c) shall not apply to the term “Material Contract.”
9.3      Offset Right .
(a)      Offset Right . Without limiting any other remedies of the Buyer Indemnified Persons, from and after the Closing Date, and subject to the limitations set forth in this Article IX , the Buyer Indemnified Persons shall be entitled to recover (the “ Offset Right ”), first against the Indemnification Hold-Back Amount (to the extent any amount remains at the time the Buyer Indemnified Persons seek to exercise the Offset Right), and second against the shares of Buyer’s Common Stock issuable and cash payable upon achievement of the Milestones pursuant to Sections 2.1(b)(v) and 2.2(a)(iv) , respectively, the amount of any Losses as to which the Holders are obligated to indemnify and hold the Buyer Indemnified Persons harmless from under Section 9.2(a) .
(b)      Exercise of Offset Right . To exercise the Offset Right, Buyer shall (on behalf of Buyer or any other Buyer Indemnified Persons at issue), prior to the Indemnification Hold-Back Payment Date (in order to exercise the Offset Right with respect to the Indemnification Hold-Back Amount) or, as to any shares of Buyer’s Common Stock or cash at issue, the date on which such shares of Buyer’s Common Stock become issuable or such cash becomes payable pursuant to Sections 2.1(b)(v) and 2.2(a)(iv) , respectively (in order to exercise the Offset Right with respect to such shares issuable or such cash payable upon achievement of the Milestone at issue), deliver to Sellers’ Representative at the notice address set forth in Section 10.2 (as the same may be amended from time to time as provided therein and including all Persons to be copied on any notice to Sellers’ Representative), a certificate signed by Buyer (an “ Offset Certificate ”): (i) stating in good faith that one or more of the Buyer Indemnified Persons has suffered, sustained or become subject to Losses which are entitled to be recovered pursuant to the Offset Right (the “ Stated Damages ”); and (ii) specifying to the extent practicable in reasonable detail the individual items of Stated Damages and the nature of the breach or other circumstance to which each such item is related. Upon the timely delivery of an Offset Certificate stating a bona fide claim for Stated Damages, any distribution of the Indemnification Hold-Back Amount and, as applicable, any issuance of shares of Buyer’s Common Stock or payment of cash pursuant to Sections 2.1(b)(iv) , 2.1(b)(v) , 2.2(a)(iii) and 2.2(a)(iv) , as applicable, shall be stayed to the extent of the Stated Damages (subject to the limitations set forth in this Article IX ).
(c)      Perfection of Offset Right . After the expiration of a period of thirty (30) days following the time of delivery of an Offset Certificate to Sellers’ Representative, the Offset Right shall be deemed perfected as to the applicable Stated Damages and the Indemnification Hold-Back Amount and, as applicable, the number shares of Buyer’s Common Stock issuable or cash payable pursuant to Sections 2.1(b)(iv) , 2.1(b)(v) , 2.2(a)(iii) and 2.2(a)(iv) , as applicable, shall be reduced by an equal amount unless, prior to the expiration of such thirty (30) day period, Sellers’ Representative objects in a written statement delivered to Buyer to the claims made in the Offset Certificate, setting forth in reasonable detail the objections to the claim for Stated Damages.
(d)      Objection to Offset Right . If Sellers’ Representative shall timely object in writing to an exercise of the Offset Right by Buyer, Sellers’ Representative and Buyer shall attempt in good faith to agree upon the rights of the respective Parties with respect to each of such claims within thirty (30) days after such objection. If Sellers’ Representative and Buyer should so agree on a claim, a memorandum setting forth such agreement shall be prepared and signed by such Parties, which shall include a statement of the amount of resulting reduction in the Indemnification Hold-Back Amount and, as applicable, the number of shares of Buyer’s Common Stock issuable and cash payable pursuant to Sections 2.1(b)(iv) , 2.1(b)(v) , 2.2(a)(iii) and 2.2(a)(iv) , as applicable.
(e)      Settlement of Offset Right . If no agreement can be reached after good faith negotiation between Sellers’ Representative and Buyer pursuant to Section 9.3(d) , either Buyer or Sellers’ Representative may initiate an Action in accordance with Sections 10.14 and 10.15 to resolve such dispute. The decision of any such court as to the validity and amount of any claim in such Offset Certificate shall be binding and conclusive upon the Parties.
(f)      Application of Offset Right .  Any reduction in the Indemnification Hold-Back Amount and, as applicable, the number of shares of Buyer’s Common Stock issuable and cash payable pursuant to Sections 2.1(b)(iv) , 2.1(b)(v) , 2.2(a)(iii) and 2.2(a)(iv) , as applicable, pursuant to the Offset Right in this Section 9.3 shall be made with equal priority among the Holders and in accordance with each Holder’s Pro Rata Share (but taking into account any non pro rata claims made in respect of any specific Holder pursuant to Section 9.2(a) , including pursuant to Section 9.2(a)(iii) ).  
9.4      Claims for Indemnification; Resolution of Conflicts .
(a)      Third-Party Claims .
(i)      In the event that any Action is instituted, or that any Third Party Claim is asserted, the Indemnified Person seeking indemnification for any related Loss (including a Buyer Indemnified Person seeking indemnification for any related loss through an Offset Right) shall notify the Indemnifying Party of any such Action or claim promptly after receiving notice thereof (each, a “ Third Party Indemnification Claim Notice ”); provided , however , that no delay on the part of the Indemnified Person in giving any such notice shall relieve an Indemnifying Party of any indemnification obligations unless, and only to the extent that, such Indemnifying Party is actually and materially prejudiced by such delay and then only to the extent of such prejudice. Subject to the provisions of this Section 9.4(a)(i) , and assuming the Indemnified Person does not have the right to elect or does not choose to elect in its Third Party Indemnification Claim Notice to assume the defense of the Third Party Claim in accordance with Section 9.4(a)(v) , the Indemnifying Party shall be entitled at its own expense to conduct and control the defense of such Third Party Claim on behalf of the Indemnified Person through counsel chosen by the Indemnifying Party and reasonably acceptable to the Indemnified Person if the Indemnifying Party notifies the Indemnified Person in writing within thirty (30) days (or sooner, if the nature of the Third Party Claim so requires) of its intent to do so and confirms that the Indemnifying Party shall be obligated to indemnify the Indemnified Person against all resulting Losses in accordance with (and subject to the limitations of) this Agreement. If the Indemnifying Party does not elect within thirty (30) days (or sooner, if the nature of the Third Party Claim so requires) to defend any Third Party Claim, the Indemnified Person may defend such Third Party Claim as described below in Section 9.4(a)(v) .
(ii)      If the Indemnifying Party elects to defend any Third Party Claim:
(A)      the Indemnifying Party shall use its commercially reasonable efforts to defend such Third Party Claim;
(B)      the Indemnified Person, prior to the period in which the Indemnifying Party assumes the defense of such matter, may take such reasonable actions to preserve any and all rights with respect to such matter, without such actions being construed as a waiver of the Indemnified Person’s rights to defense and indemnification pursuant to this Agreement and without such actions being determinative of the amount of any indemnifiable Losses, except to the extent the Indemnifying Party’s ability to defend such action is actually and materially prejudiced by such actions; and
(C)      the Indemnified Person may participate in the defense of such Third Party Claim with separate counsel at its own expense or, if so requested by the Indemnifying Party or, if in the reasonable opinion of counsel to the Indemnified Person, a conflict or potential conflict exists between the Indemnified Person and the Indemnifying Party that would make such separate representation advisable, at the reasonable expense of the Indemnifying Party.
(iii)      In connection with this Section 9.4(a)(iii) , the Parties agree to:
(A)      cooperate with each other in connection with the defense, negotiation or settlement of any such Third Party Claim;
(B)      make available witnesses in a timely manner to provide testimony through declarations, affidavits, depositions, or at hearing or trial and to work with each other in preparation for such events consistent with deadlines dictated by the particular Third Party Claim;
(C)      preserve all documents and things required by litigation hold orders pending with respect to particular Third Party Claims; and
(D)      provide such documents and things to each other, consistent with deadlines dictated by a particular matter, as required by legal procedure or court order, or if reasonably requested by another Party hereto;
provided that such cooperation referenced in clauses (A) through (D) shall not be required if it would reasonably be expected to result in a waiver of any attorney-client, work product or other privilege, and provided further that the Parties shall use commercially reasonable efforts to avoid production of confidential information (consistent with Law), and to cause all communications among Employees, counsel and others representing any party to a Third Party Claim to be made so as to preserve any applicable attorney-client or work-product privileges.
(iv)      Except as permitted in this Section 9.4(a)(iv) , the Indemnifying Party shall not, without the written consent of the Indemnified Person(s) (such consent not to be unreasonably conditioned, withheld or delayed), settle or compromise any Third Party Claim or permit a default or consent to entry of any judgment (each a “ Settlement ”); provided , however , that an Indemnified Person’s written consent shall not be required if (x) the claimant provides such Indemnified Person an unqualified release from all liability in respect of the Third Party Claim, (y) such Settlement does not impose any additional liabilities or obligations on the Indemnified Person and (z) with respect to any non-monetary provision of such Settlement, such provisions could not have, or be reasonably expected to have, any adverse effect on the business, assets, financial condition or results of operations of the Indemnified Person and its Subsidiaries, if any. Any Settlement or compromise that does not comply with the preceding sentence shall not be determinative of the amount of Losses with respect to any related claims for indemnification pursuant to this Article IX . The costs incurred by Sellers’ Representative pursuant to participating in the defense of any Third Party Claims shall constitute Sellers’ Representative Expenses.
(v)      Notwithstanding anything in this Agreement to the contrary, if (w) a Third Party Claim seeks relief other than the payment of monetary damages, (x) the subject matter of a Third Party Claim relates to the ongoing business of the Indemnified Person, which Third Party Claim, if decided against the Indemnified Person, could materially and adversely affect the ongoing business of the Indemnified Person, (y) the claim for indemnification relates to or arises in connection with any criminal proceeding, action or indictment, or (z) the Indemnified Person reasonably concludes that the amount of the Third Party Claim and associated defense costs shall exceed the limits on the Indemnifying Party’s obligations under Section 9.2(b) or the Indemnifying Party’s financial resources available to defend against the Third Party Claim, then, in each such case, the Indemnified Person alone shall be entitled to defend such Third Party Claim. If the Indemnified Person elects to exercise such right to defend such Third Party Claim, then the Indemnified Person shall notify the Indemnifying Party of such election within thirty (30) days of the later of (A) receiving the applicable Third Party Indemnification Claim Notice or (B) the occurrence of the event giving rise to the Indemnified Person’s right to make such election pursuant to clause (w), (x), (y) or (z) of this Section 9.4(a)(v) . In such event, the Indemnified Person shall instead have the right to be represented by counsel of its choice (of which it shall notify the Indemnifying Party) at the Indemnifying Party’s reasonable expense and to defend such Third Party Claim. If the Indemnified Person elects to defend any such Third Party Claim, then (1) the Indemnified Person shall use its commercially reasonable efforts to defend such Third Party Claim, conduct such defense in a good faith and reasonably diligent manner, keep the Indemnifying Party reasonably informed of the status of such defense, and use commercially reasonable efforts to cooperate with the Indemnifying Party with respect to such defense during the course of such defense, (2) the Indemnifying Party may participate, at its own expense, in the defense of such Third Party Claim and (3) the Indemnified Person shall not, without the written consent of the Indemnifying Party (such consent not to be unreasonably withheld, conditioned or delay), enter into any Settlement of such Third Party Claim. If the Indemnified Person does not elect to defend such Third Party Claim, then the Indemnifying Party shall then have the right to defend such Third Party Claim as described above in Section 9.4(a)(i) .
(vi)      Notwithstanding the foregoing, any Third Party Claims in respect of Taxes shall be governed by Section 6.8(c) rather than this Section 9.4(a) . To the extent that the provisions of this Section 9.4(a) conflict with the provisions of Section 6.8(c) or Section 6.8(i) , Section 6.8(c) or Section 6.8(i) shall control, as applicable.
(b)      Notification of Other Indemnification Claims . In order for a Buyer Indemnified Person to be entitled to any indemnification for claims other than as contemplated or covered by the Offset Right (although, for the avoidance of doubt, a claim tendered pursuant to the Offset Right shall suffice for all purposes even if not covered, or fully covered, by the Offset Right), such Buyer Indemnified Person shall, promptly upon the discovery of the matter giving rise to any Losses, notify Sellers’ Representative in writing of such Losses specifying in reasonable detail the nature of such Losses and the amounts of liability estimated to accrue therefrom (a “ Non-Offset Notice ”). The failure to so notify Sellers’ Representative shall not relieve any Holder from any liability that such Holder may have to Buyer, except to the extent that any such Holder is materially prejudiced as a result of such failure. Thereafter, Buyer shall keep Sellers’ Representative reasonably updated with respect to the status of the Losses at issue and the defense thereof. Sellers’ Representative may object to a claim for indemnification set forth in a Non-Offset Notice by delivering a notice to the Buyer Indemnified Person seeking indemnification within thirty (30) days of the delivery of the Non-Offset Notice, setting forth in reasonable detail the objections to the claim. If Sellers’ Representative either notifies the applicable Indemnified Person that it does not object or does not object in writing by the end of such thirty (30)-day period, such failure to so object shall be an irrevocable acknowledgment that the Buyer Indemnified Person is entitled to the full amount of the claims set forth in such Non-Offset Notice, and Sellers’ Representative (as well as the Holders) shall take all necessary actions under this Agreement to effect payment in respect thereof. If Sellers’ Representative shall timely object in writing to a Non-Offset Notice, Sellers’ Representative and Buyer shall attempt in good faith to agree upon the rights of the respective Parties with respect to such claim within thirty (30) days after such objection. If Sellers’ Representative and Buyer should so agree on a claim, a memorandum setting forth such agreement shall be prepared and signed by Sellers’ Representative and Buyer. If no agreement can be reached after good faith negotiation between Sellers’ Representative and Buyer, either Buyer (or any Buyer Indemnified Person) or Sellers’ Representative may initiate an Action in accordance with Sections 10.14 and 10.15 to resolve such dispute. The decision of any such court as to the validity and amount of any claim in such Non-Offset Notice shall be binding and conclusive upon the Parties.
(c)      Claims Unaffected by Investigation . The right of an Indemnified Person to indemnification or to assert or recover on any claim hereunder shall not be affected by any investigation conducted with respect to, or any knowledge acquired or capable of being acquired, at any time, whether before or after the execution and delivery of this Agreement or the Closing, with respect to the accuracy of or compliance with any of the representations, warranties, covenants, or agreements set forth in this Agreement. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or agreement, shall not affect the right to indemnification or other remedy based on such representation, warranty, covenant or agreement.
(d)      Surviving Entity . The Parties acknowledge and agree that if the Surviving Entity suffers, incurs or otherwise becomes subject to any Losses as a result of or in connection with any misrepresentation or inaccuracy in or breach of any representation, warranty, covenant or agreement, then (without limiting any of the rights of the Surviving Entity as an Indemnified Person) Buyer shall also be deemed, by virtue of its ownership of the stock of the Surviving Entity, to have incurred Losses as a result of and in connection with such misrepresentation, inaccuracy or breach.
(e)      Exclusive Remedy . Subject to Section 10.9 and Section 6.8 , without limiting the provisions of Section 2.11 , except for claims involving intentional fraud and willful misconduct against a Holder, the Parties acknowledge and agree that the remedies provided for in this Article IX shall be the Parties’ sole and exclusive remedy with respect to any and all claims for any breach, inaccuracy, misrepresentation or nonperformance, as applicable, of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement.
(f)      Indemnification Adjusts Merger Consideration for Tax Purposes . Each Party shall, including retroactively, treat indemnification payments under this Agreement as well as exercises of the Offset Right as adjustments to the consideration paid in the Transactions for Tax purposes to the extent permitted under applicable Law.
(g)      No Subrogation . By virtue of executing this Agreement or the execution of an Option Cancellation and Joinder Agreement, each Seller and Participating Optionholder (on behalf of itself and each Person affiliated with such Seller or Participating Optionholder who has served as an officer, director, employee or consultant of the Company) agrees not to make any claim for indemnification against any Buyer Indemnified Person based on the fact that such Seller or Participating Optionholder (or any Person affiliated with such Seller or Participating Optionholder who has served as an officer, director, employee or consultant of the Company) was a controlling person, director, Employee or agent of the Company (whether such claim is for Losses of any kind or otherwise and whether such claim is pursuant to Law, a Charter Document, a Contract or otherwise) with respect to any claim brought by a Buyer Indemnified Person against any Seller or Participating Optionholder (or any Person affiliated with such Seller or Participating Optionholder who has served as an officer, director, employee or consultant of the Company) under or relating to this Agreement or any other Transaction Agreement or the Transactions. With respect to any claim brought by a Buyer Indemnified Person against any Seller or Participating Optionholder (or any Person affiliated with such Seller or Participating Optionholder who has served as an officer, director, employee or consultant of the Company) under or relating to this Agreement, any Transaction Agreement or the Transactions, each Seller or Participating Optionholder (on behalf of itself and each Person affiliated with such Seller or Participating Optionholder who has served as an officer, director, employee or consultant of the Company) expressly waives any right of subrogation, contribution, advancement, indemnification or other claim against the Company with respect to any indemnification obligation or any other liability to which such Seller or Participating Optionholder (or any Person affiliated with such Seller or Participating Optionholder who has served as an officer, director, employee or consultant of the Company) may become subject under or in connection with this Agreement.
(h)      Specific Element of Consideration . The indemnification obligations of the Holders in this Article IX are, without limitation, (i) a specific element of the consideration that induced Buyer to enter into this Agreement and to perform its obligations as contemplated hereby and (ii) intended to be fully enforceable on the terms provided in this Article IX .
9.5      Sellers’ Representative .
(a)      Appointment . By virtue of executing this Agreement or the execution of an Option Cancellation and Joinder Agreement, each Seller and Participating Optionholder hereby irrevocably nominates, constitutes and appoints Fortis Advisors LLC, a Delaware limited liability company, as the “ Sellers’ Representative ” hereunder and each Seller and Participating Optionholder’s exclusive agent and attorney-in-fact, with full power of substitution, to act in the name, place and stead of the Sellers and Participating Optionholders for purposes of executing any documents and taking any actions that Sellers’ Representative may, in its sole discretion, determine to be necessary, desirable or appropriate in connection with any claim for indemnification, compensation or reimbursement under this Article IX . Fortis Advisors LLC hereby accepts its appointment as Sellers’ Representative.
(b)      Authority . The Sellers and Participating Optionholders grant to Sellers’ Representative full authority to execute, deliver, acknowledge, certify and file on behalf of each such Seller and Participating Optionholder (in the name of any or all of the Sellers and Participating Optionholders or otherwise) any and all documents that Sellers’ Representative may, in its sole discretion, determine to be necessary, desirable or appropriate, in such forms and containing such provisions as Sellers’ Representative may, in its sole discretion, determine to be appropriate, in performing its duties as contemplated by this Section 9.5(b) and the Sellers’ Representative Engagement Agreement. The Sellers’ Representative shall have no obligation to act on behalf of the Sellers and Participating Optionholders, except as expressly provided herein and in the Sellers’ Representative Engagement Agreement, and for purposes of clarity, there are no obligations of the Sellers’ Representative in any ancillary agreement, schedule, exhibit or the Disclosure Schedule. Notwithstanding anything in any Transaction Agreement to the contrary: (i) each Indemnified Person shall be entitled to deal exclusively with Sellers’ Representative on all matters relating to any claim for indemnification, compensation, reimbursement or set off (including Offset Rights) pursuant to Article IX ; and (ii) the Buyer, each Buyer Indemnified Person, and each Holder shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of any Seller or Participating Optionholder by Sellers’ Representative and on any other action taken or purported to be taken on behalf of any Seller or Participating Optionholder by Sellers’ Representative as fully binding upon such Seller or Participating Optionholder and their successors as if expressly confirmed and ratified in writing and all defenses which may be available to any Seller or Participating Optionholder to contest, negate or disaffirm the action of the Sellers’ Representative taken in good faith under this Agreement or the Sellers’ Representative Engagement Agreement are waived. A decision, act, consent or instruction of Sellers’ Representative, including an amendment, extension or waiver of this Agreement (or any provision hereof) pursuant to Section 10.4 or Section 10.5 shall constitute a decision of the Sellers and Participating Optionholders and shall be final, binding and conclusive upon the Sellers and Participating Optionholders. Buyer and the Surviving Entity may rely upon any such decision, act, consent or instruction of Sellers’ Representative as being the decision, act, consent or instruction of the Sellers and Participating Optionholders. Buyer and the Surviving Entity are hereby relieved from any liability to any Person for any acts done by them in accordance with such decision, act, consent or instruction of Sellers’ Representative.
(c)      Power of Attorney . The Sellers and Participating Optionholders recognize and intend that the power of attorney and the immunities and rights to indemnification granted to Sellers’ Representative Group: (i) are coupled with an interest and are irrevocable; (ii) may be delegated by Sellers’ Representative; (iii) shall survive the death, dissolution or incapacity, as applicable, of each of the Sellers and Participating Optionholders and be binding on any successor thereto; and (iv) shall survive the assignment of the whole or any part of any Seller or Participating Optionholder’s interest in the Indemnification Hold-Back Amount.
(d)      Replacement . If Sellers’ Representative is dissolved, resigns or is otherwise unable to fulfill its responsibilities hereunder, the Sellers and Participating Optionholders shall (by consent of those Persons entitled, or who were entitled, to at least a majority of the Indemnification Hold-Back Amount), within ten (10) days after such dissolution, resignation or inability, appoint a successor to Sellers’ Representative reasonably satisfactory to Buyer. Any such successor shall succeed Sellers’ Representative as Sellers’ Representative hereunder. If for any reason there is no Sellers’ Representative at any time, all references herein to Sellers’ Representative shall be deemed to refer to the Sellers and Participating Optionholders who may take action by the written consent of Persons entitled to at least a majority of any further distributions hereunder. The immunities and rights to indemnification shall survive the resignation or removal of the Sellers’ Representative or any member of the Advisory Group and the Closing and/or any termination of this Agreement.
(e)      Indemnification; Sellers’ Representative Expenses . Certain Holders have entered into an engagement agreement (the “ Sellers’ Representative Engagement Agreement ”) with the Sellers’ Representative to provide direction to the Sellers’ Representative in connection with its services under this Agreement and the Sellers’ Representative Engagement Agreement (such Holders, including their individual representatives, collectively hereinafter referred to as the “ Advisory Group ”). Sellers’ Representative and its members, managers, directors, officers, contractors, agents and employees nor any member of the Advisory Group (collectively, the “ Sellers’ Representative Group ”) shall not be liable to the Holders for any action taken or omitted to be taken by it as Sellers’ Representative except in the case of willful misconduct or gross negligence. The Holders shall severally, but not jointly, indemnify Sellers’ Representative Group and hold Sellers’ Representative Group harmless from and against all Sellers’ Representative Expenses. Such Sellers’ Representative Expenses may be recovered first, from the Expense Fund, second, from any distribution of the Milestone Amounts or Indemnification Hold-Back Amount otherwise distributable to the Holders at the time of distribution (but, for the avoidance of doubt, following any exercise by Buyer of the Offset Right with respect to such Milestone Amounts or the Indemnification Hold-Back Amount), and third, directly from the Holders. The Sellers’ Representative acknowledge that the Sellers’ Representative shall not be required to expend or risk its own funds or otherwise incur any Sellers’ Representative liability in the exercise or performance of any of its powers, rights, duties or privileges or pursuant to this Agreement or the transactions contemplated hereby. Furthermore, the Sellers’ Representative shall not be required to take any action unless the Sellers’ Representative has been provided with funds, security or indemnities which, in its determination, are sufficient to protect the Sellers’ Representative against the costs, expenses and liabilities which may be incurred by the Sellers’ Representative in performing such actions. The Sellers’ Representative shall be entitled to: (i) rely upon the Allocation Schedule, (ii) rely upon any signature believed by it to be genuine, and (iii) reasonably assume that a signatory has proper authorization to sign on behalf of the applicable Holder or other party.
(f)      Upon the Closing, Buyer shall wire to the Sellers’ Representative $100,000 (the “ Expense Fund Amount ”). The Expense Fund Amount shall be held by the Sellers’ Representative in a segregated client account and shall be used (i) for the purposes of paying directly or reimbursing the Sellers’ Representative for any Sellers’ Representative Expense Fund Amount incurred pursuant to this Agreement or the Sellers’ Representative Engagement Agreement, or (ii) as otherwise determined by the Advisory Group (the “ Expense Fund ”). The Sellers’ Representative is not providing any investment supervision, recommendations or advice and shall have no responsibility or liability for any loss of principal of the Expense Fund other than as a result of its gross negligence or willful misconduct. The Sellers’ Representative is not acting as a withholding agent or in any similar capacity in connection with the Expense Fund and has no tax reporting or income distribution obligations. The Holders will not receive any interest on the Expense Fund and assign to the Sellers’ Representative any such interest. Subject to Advisory Group approval, the Sellers’ Representative may contribute funds to the Expense Fund from any consideration otherwise distributable to the Holders. As soon as reasonably determined by the Sellers’ Representative that the Expense Fund is no longer required to be withheld, the Sellers’ Representative shall distribute the remaining Expense Fund (if any) to the Buyer for further distribution to the Holders.
ARTICLE X     

 GENERAL PROVISIONS
10.1      Interpretation . The following rules shall apply to the interpretation and construction of the terms and provisions of this Agreement and the other Transaction Agreements:
(a)      Provisions .
(i)      When a reference is made in this Agreement or another Transaction Agreement to an “Article,” “Section,” “Exhibit” or “Schedule,” such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.
(ii)      The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(iii)      Whenever the words “include,” “includes,” or “including” are used in this Agreement or any other Transaction Agreement, such words shall be deemed to be followed by the words “without limitation.”
(iv)      The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement unless otherwise expressly indicated in the accompanying text.
(v)      The use of “or” is not intended to be exclusive unless otherwise expressly indicated in the accompanying text.
(vi)      The defined terms contained in this Agreement or any of the other Transaction Agreements are applicable to the singular as well as the plural forms of such terms. Reference to the masculine gender shall be deemed to also refer to the feminine gender and vice versa .
(vii)      A reference to documents, instruments or agreements also refers to all addenda, exhibits or schedules thereto.
(viii)      Any reference to a provision or part of a Law shall include a reference to that provision or part as it may be renumbered or amended from time to time and any successor provision or part or any renumbering or amendment thereof unless otherwise indicated herein.
(ix)      References to “deliver,” “furnish,” “provided” or “made available” means that such documents or information referenced are contained, as of a date which is at least two (2) Business Days prior to the Agreement Date, in the Company’s “Due Diligence (Jumanji)” electronic data room hosted by Carta, Inc.
(x)      When calculating the period of time before which, within which or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.
(b)      No Presumption . The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall be used to favor or disfavor any Party by virtue of the authorship of any provision of this Agreement.
10.2      Notices . All notices, waivers, consents and other communications to any Party hereunder shall be in writing and shall be deemed given (a) when personally delivered, (b) when receipt is electronically confirmed, if sent by facsimile or email of a .pdf document, (c) one (1) Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with proof of receipt or (d) three (3) Business Days after being sent by registered or certified mail, return receipt requested and postage prepaid, in each case to the Parties at the address, or if applicable, facsimile number or email address following such Party’s name below or such other address, facsimile number or email address as such Party may subsequently designate to the other Parties by notice in accordance with this Section 10.2 , provided that notices to the Sellers’ Representative shall be delivered solely by facsimile or email:
If to Buyer or Merger Sub, to:
Invitae Corporation
1400 16th Street
San Francisco, CA 94103
Attention: Tom Brida, General Counsel
Email:
with copies (which shall not constitute notice) to:
Pillsbury Winthrop Shaw Pittman LLP
12255 El Camino Real, Suite 300
San Diego, California 92130
Attention: Mike Hird
Email: mike.hird@pillsburylaw.com
If to the Company (prior to the Closing) to :
Jungla Inc.
329 Oyster Point Blvd, 3 rd Floor
South San Francisco, CA 94080
Attention: Carlos Araya, CEO
Email:

with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
140 Scott Drive
Menlo Park, California 94025
Attention: Benjamin Potter
Email: benjamin.potter@lw.com

If to the Sellers (prior to the Closing) , to the address set forth for the Sellers on the signature pages hereto.
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
140 Scott Drive
Menlo Park, California 94025
Attention: Benjamin Potter
Email: benjamin.potter@lw.com

If to Sellers’ Representative (following the Closing), to:
Fortis Advisors LLC
Attention: Notice Department
Email: notices@fortisrep.com
Facsimile: (858) 408-1843

10.3      Assignment and Succession . Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by any of the Parties without the written consent of the other Parties, except that Buyer or Merger Sub may, without the prior consent of any other Party, collaterally assign this Agreement to any lender; provided that no such assignment shall relieve the assigning Party of any of its obligations hereunder. Any assignment of this Agreement or any of the rights, interests or obligations hereunder not permitted under this Section 10.3 shall be null and void ab initio . Subject to the foregoing terms of this Section 10.3 , this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
10.4      Amendment or Supplement . Subject to the requirements of applicable Law, this Agreement may be amended at any time by execution of an instrument in writing identifying itself as an amendment signed, when amended prior to the Closing, by Buyer, Merger Sub and the Sellers and, when amended on or after the Closing, by Buyer, Merger Sub and Sellers’ Representative. For purposes of this Section 10.4 , the Sellers agree that any amendment of this Agreement consented to by Sellers’ Representative shall be binding on and enforceable against them, whether or not they have signed this Agreement or such amendment.
10.5      Waivers . No waiver of any provision of this Agreement shall be valid and binding unless it is in writing and signed by the Party against whom the waiver is to be effective. No failure on the part of any Party in exercising any right, privilege or remedy hereunder and no delay on the part of any Party in executing any right, privilege or remedy under this Agreement, shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right hereunder. No notice to or demand on a Party made hereunder shall operate as a waiver of any right of the Party giving such notice or making such demand to take further action without notice or demand as permitted hereunder.
10.6      Entire Agreement . This Agreement, including the Schedules and Exhibits hereto and the other documents referred to herein which form a part hereof, and the Transaction Agreements contain the entire understanding of the Parties with respect to the subject matter contained herein and therein. This Agreement supersedes all prior and contemporaneous, agreements, arrangements, contracts, discussions, negotiations, undertakings and understandings (whether written or oral) between the Parties with respect to such subject matter (other than the Transaction Agreements).
10.7      No Third-Party Beneficiaries . Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the Parties) any right, benefit or remedy of any nature whatsoever under this Agreement, except that after the Closing, Buyer Indemnified Persons shall be third party beneficiaries for purposes of enforcing the rights granted to such Buyer Indemnified Persons. For the avoidance of doubt, no consent of any Indemnified Person shall be necessary to amend any provision of this Agreement.
10.8      Remedies Cumulative . Except as otherwise provided in this Agreement, all rights and remedies of each of the Parties shall be cumulative and the exercise of any one or more rights or remedies shall not preclude the exercise of any other right or remedy available hereunder or under applicable Law.
10.9      Specific Performance . The Parties agree that each of the Parties would be irreparably harmed 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 the other Parties could not be compensated adequately by monetary damages alone. Accordingly, the Parties agree that, in addition to any other remedy to which such Party may be entitled to at Law or in equity, each Party shall be entitled to temporary, preliminary and/or permanent injunctive relief or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement (including the right to compel the other Parties to cause the Transactions to be consummated on the terms and subject to conditions set forth in this Agreement) without having to prove irreparable harm or that monetary damages would be inadequate. The Parties expressly waive any requirement under any Law that the other Parties obtain any bond or give any other undertaking in connection with any action seeking injunctive relief or specific performance of any of the provisions of this Agreement. Each of the Parties further agrees that in the event of any action for specific performance relating to this Agreement or the Transactions, such Party shall not assert and hereby waives the defense that a remedy at Law would be adequate or that specific performance is not an appropriate remedy for any reason in Law or equity.
10.10      Severability . If a court of competent jurisdiction finds that any term or provision of the Agreement is invalid, illegal or unenforceable under any Law or public policy, the remaining provisions of the Agreement shall remain in full force and effect if the economic and legal substance of this Agreement and the Transactions shall not be affected in any manner materially adverse to any Party. Any such term or provision found to be illegal, invalid or unenforceable only in part or in degree shall remain in full force and effect to the extent not invalid, illegal or unenforceable. Upon the determination that any term or provision is invalid, illegal or unenforceable, the Parties intend that such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent possible under applicable Law and compatible with the consummation of the Transactions as originally intended.
10.11      Costs and Expenses . Except as otherwise specified herein, whether or not the Transactions are consummated, each Party shall pay all costs and expenses it has incurred in connection with this Agreement and the Transactions.
10.12      Time of Essence . The Parties acknowledge that the Outside Date specified in Section 8.1(b) is essential and therefore agree that no Party wishing to terminate this Agreement in accordance with Section 8.1(b) shall be required to extend the Outside Date to allow any other Party to satisfy any condition or perform any obligation under this Agreement.
10.13      Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed an original copy of this Agreement and all of which, when taken together, shall constitute one instrument. The exchange of copies of this Agreement and manually executed signature pages by transmission by facsimile or by email of a .pdf of a handwritten original signature or signatures to the other Parties shall constitute effective execution and delivery of this Agreement and may be used in lieu of the original Agreement for all purposes. The signature of a Party transmitted by facsimile or other electronic means shall be deemed to be an original signature for any purpose.
10.14      Governing Law . This Agreement and all claims or causes of action (whether sounding in contract or tort) arising under or related to this Agreement, shall be governed by and construed in accordance with, the Laws of the State of California, without regard to any rule or principle that might refer the governance or construction of this Agreement to the Laws of another jurisdiction.
10.15      Exclusive Jurisdiction; Venue; Service of Process . In any action or proceeding between any of the Parties arising under or related to this Agreement, the other Transaction Agreements or the Transactions, each of the Parties (a) knowingly, voluntarily, irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state or federal courts located in the City and County of San Francisco, California, (b) agrees that all claims in respect of any such action or proceeding shall be heard and determined exclusively in accordance with clause (a) of this Section 10.15 , (c) waives any objection to the laying of venue of any such action or proceeding in such courts, including any objection that any such action or proceeding has been brought in an inconvenient forum or that the court does not have jurisdiction over any Party and (d) agrees that service of process upon such Party in any such action or proceeding shall be effective if such process is given as a notice in accordance with Section 10.2 . The Parties agree that any Party may commence a proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.
10.16      Consent to Representation .
(a)      Each of the Parties acknowledges and agrees that Latham & Watkins LLP (the “ Firm ”) has acted as counsel to the Company in connection with the negotiation of this Agreement and consummation of the transactions contemplated hereby.
(b)      If the Sellers’ Representative so desires, acting on behalf of the Holders and without the need for any consent or waiver by Company, Buyer, or the Surviving Entity, the Firm shall be permitted to represent the Holders after the Closing in connection with any dispute under this Agreement or any other Transaction Agreement.
(c)      The provisions of this Section 10.16 are intended to be for the benefit of the Holders and shall only be enforceable by the Sellers’ Representative.
* * *
[ Signature page follows ]

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have caused this Stock Purchase and Merger Agreement to be duly executed under seal and delivered as of the date first above written.
SELLER :

By: /s/ Carlos Araya __________________
Name: Carlos Araya
Address:
Email: 

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have caused this Stock Purchase and Merger Agreement to be duly executed under seal and delivered as of the date first above written.
SELLER :

By: /s/ Alexandre Colavin ______________
Name: Alexandre Colavin
Address:
Email: 

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have caused this Stock Purchase and Merger Agreement to be duly executed under seal and delivered as of the date first above written.
SELLER :

AH BIO FUND I, L.P.
For itself and as nominee for
AH Bio Fund I-B, L.P.

By: AH Equity Partners Bio I, L.L.C.
Its General Partner

By: /s/ Ben Horowitz __________________ 
 Name: Ben Horowitz
Title: Managing Member
Email: 

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have caused this Stock Purchase and Merger Agreement to be duly executed under seal and delivered as of the date first above written.

THE SELLERS :	SOSV Accelerator Pool LP by its General	
Partner SOSV Investments LLC

By: /s/ Sean O’Sullivan _________________
Name: Sean O’Sullivan
Title: Managing Director
Address:
Email:

SOSV III LP by SOSV III GP LP, acting by its
General Partner SOSV III GP Limited

By: /s/ Sean O’Sullivan _________________
Name: Sean O’Sullivan
Title: Managing Partner
Address:
Email:

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have caused this Stock Purchase and Merger Agreement to be duly executed under seal and delivered as of the date first above written.
COMPANY :
JUNGLA, INC.
By: /s/ Carlos Araya ______________________
Name: Carlos Araya
Title: Chairman & CEO

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have caused this Stock Purchase and Merger Agreement to be duly executed under seal and delivered as of the date first above written.
THE SELLERS’ REPRESENTATIVE (solely with respect to the provisions expressly applicable to the Sellers’ Representative as set forth in the Stock Purchase and Merger Agreement):
FORTIS ADVISORS LLC

By: /s/ Richard Fink ____________________
Name: Richard Fink
Its: Managing Director

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have caused this Stock Purchase and Merger Agreement to be duly executed under seal and delivered as of the date first above written.

BUYER :	INVITAE CORPORATION	
By: /s/ Shelly D. Guyer __________________
Name: Shelly D. Guyer
Title: Chief Financial Officer

MERGER SUB :	JUMANJI, LLC	
By: /s/ Tom Brida ______________________
Name: Tom Brida
Title: President

3

Exhibit 10.1

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN
(As Amended and Restated by the Board of Directors on June 11, 2019)

Table of Contents
SECTION 1. ESTABLISHMENT AND PURPOSE.     1
SECTION 2. DEFINITIONS.     1
(a) “Affiliate”     1
(b) “Award”     1
(c) “Award Agreement”     1
(d) “Board of Directors” or “Board”     1
(e) “Cash-Based Award”     1
(f) “Change in Control”     1
(g) “Code”     3
(h) “Committee”     3
(i) “Company”     3
(j) “Consultant”     3
(k) “Employee”     3
(l) “Exchange Act”     3
(m) “Exercise Price”     3
(n) “Fair Market Value”     3
(o) “ISO”     4
(p) “Nonstatutory Option” or “NSO”     4
(q) “Option”     4
(r) “Outside Director”     4
(s) “Parent”     4
(t) “Participant”     4
(u) “Performance Based Award”     4
(v) “Plan”     4
(w) “Purchase Price”     4
(x) “Restricted Share”     4
(y) “SAR”     4
(z) “Service”     4
(aa) “Share”     5
(bb) “Stock”     5

i

(cc) “Stock Unit”     5
(dd) “Subsidiary”     5
(ee) “Total and Permanent Disability”     5
SECTION 3. ADMINISTRATION.     5
(a) Committee Composition     5
(b) Committee for Non-Officer Grants     5
(c) Committee Procedures     5
(d) Committee Responsibilities     6
SECTION 4. ELIGIBILITY.     7
(a) General Rule     7
(b) Ten-Percent Stockholders     7
(c) Attribution Rules     7
(d) Outstanding Stock     7
SECTION 5. STOCK SUBJECT TO PLAN.     7
(a) Basic Limitation     7
(b) Award Limitation     8
(c) Additional Shares     8
(d) Substitution and Assumption of Awards     8
SECTION 6. RESTRICTED SHARES.     9
(a) Restricted Share Award Agreement     9
(b) Payment for Awards     9
(c) Vesting     9
(d) Voting and Dividend Rights     9
(e) Restrictions on Transfer of Shares     9
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.     9
(a) Stock Option Award Agreement     9
(b) Number of Shares     10
(c) Exercise Price     10
(d) Withholding Taxes     10
(e) Exercisability and Term     10

ii

(f) Exercise of Options     10
(g) Effect of Change in Control     10
(h) No Rights as a Stockholder     11
(i) Modification, Extension and Renewal of Options     11
(j) Restrictions on Transfer of Shares     11
(k) Buyout Provisions     11
SECTION 8. PAYMENT FOR SHARES.     11
(a) General Rule     11
(b) Surrender of Stock     11
(c) Services Rendered     11
(d) Cashless Exercise     11
(e) Exercise/Pledge     12
(f) Net Exercise     12
(g) Promissory Note     12
(h) Other Forms of Payment     12
(i) Limitations under Applicable Law     12
SECTION 9. STOCK APPRECIATION RIGHTS.     12
(a) SAR Award Agreement     12
(b) Number of Shares     12
(c) Exercise Price     12
(d) Exercisability and Term     13
(e) Effect of Change in Control     13
(f) Exercise of SARs     13
(g) Modification or Assumption of SARs     13
(h) Buyout Provisions     13
SECTION 10. STOCK UNITS.     13
(a) Stock Unit Award Agreement     13
(b) Payment for Awards     14
(c) Vesting Conditions     14
(d) Voting and Dividend Rights     14
(e) Form and Time of Settlement of Stock Units     14

iii

(f) Death of Participant     14
(g) Creditors’ Rights     14
SECTION 11. CASH-BASED AWARDS     15
SECTION 12. ADJUSTMENT OF SHARES.     15
(a) Adjustments     15
(b) Dissolution or Liquidation     15
(c) Reorganizations     15
(d) Reservation of Rights     16
SECTION 13. DEFERRAL OF AWARDS.     16
(a) Committee Powers     16
(b) General Rules     17
SECTION 14. AWARDS UNDER OTHER PLANS.     17
SECTION 15. INDUCEMENT AWARDS POOL.     17
(a) Inducement Share Reserve     17
(b) Inducement Award Rules     18
SECTION 16. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.     18
(a) Effective Date     18
(b) Elections to Receive NSOs, SARs, Restricted Shares or Stock Units     18
(c) Number and Terms of NSOs, SARs, Restricted Shares or Stock Units     18
SECTION 17. LEGAL AND REGULATORY REQUIREMENTS.     18
SECTION 18. TAXES.     19
(a) Withholding Taxes     19
(b) Share Withholding     19
(c) Section 409A     19
SECTION 19. TRANSFERABILITY.     19
SECTION 20. PERFORMANCE BASED AWARDS.     19
SECTION 21. NO EMPLOYMENT RIGHTS.     21
SECTION 22. DURATION AND AMENDMENTS.     21

iv

(a) Term of the Plan     21
(b) Right to Amend the Plan     21
(c) Effect of Termination     21
SECTION 23. EXECUTION.     22

v

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN

SECTION 1.	ESTABLISHMENT AND PURPOSE.	
The Plan was adopted by the Board of Directors on January 8, 2015 and became effective immediately prior to the closing of the initial offering of Stock to the public pursuant to a registration statement filed by the Company with the Securities and Exchange Commission (the “Effective Date”) and has since been amended and restated on June 11, 2019. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory stock options), stock appreciation rights or cash-based awards.

1

		
SECTION 2.	DEFINITIONS.	
(a)      “Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.
(b)      “Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit or a Cash-Based Award under the Plan.
(c)      “Award Agreement” shall mean the agreement between the Company and the recipient of an Award which contains the terms, conditions and restrictions pertaining to such Award.

2

(d)      “Board of Directors” or “Board” shall mean the Board of Directors of the Company, as constituted from time to time.
(e)      “Cash-Based Award” shall mean an Award that entitles the Participant to receive a cash-denominated payment.
(f)      “Change in Control” shall mean the occurrence of any of the following events:

(i)	A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who either:	

(A)	Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or	

(B)	Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”);	
provided, however, that for this purpose, the “original directors” and “continuing directors” shall not include any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

(ii)	Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or	

(iii)	The consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or	

(iv)	The sale, transfer or other disposition of all or substantially all of the Company’s assets.	
For purposes of subsection (e)(i) above, the term “look-back” date shall mean the later of (1) the Effective Date or (2) the date 24 months prior to the date of the event that may constitute a Change in Control.
For purposes of subsection (e)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock.
Any other provision of this Section 2(e) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial or secondary public offering of securities or debt of the Company to the public.
(g)      “Code” shall mean the Internal Revenue Code of 1986, as amended.
(h)      “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof.
(i)      “Company” shall mean Invitae Corporation, a Delaware corporation.
(j)      “Consultant” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.
(k)      “Employee” shall mean any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.
(l)      “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(m)      “Exercise Price” shall mean, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.
(n)      “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows:

(i)	If the Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the Pink Quote system;	

(ii)	If the Stock was traded on any established stock exchange (such as the New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Global Select Market) or national market system on the date in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable exchange or system; and	

(iii)	If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.	
In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.
(o)      “ISO” shall mean an employee incentive stock option described in Section 422 of the Code.
(p)      “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.
(q)      “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.
(r)      “Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary.
(s)      “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.
(t)      “Participant” shall mean a person who holds an Award.
(u)      “Performance Based Award” shall mean any Restricted Share Award, Stock Unit Award or Cash-Based Award granted to a Participant pursuant to the terms set forth in Section 20.
(v)      “Plan” shall mean this 2015 Stock Incentive Plan of Invitae Corporation, as amended from time to time.
(w)      “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.
(x)      “Restricted Share” shall mean a Share awarded under the Plan.
(y)      “SAR” shall mean a stock appreciation right granted under the Plan.
(z)      “Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating three months after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Company determines which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan.
(aa)      “Share” shall mean one share of Stock, as adjusted in accordance with Section 12 (if applicable).
(bb)      “Stock” shall mean the Common Stock of the Company.
(cc)      “Stock Unit” shall mean a bookkeeping entry representing the Company’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Stock Unit Award Agreement.
(dd)      “Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
(ee)      “Total and Permanent Disability” shall mean any permanent and total disability as defined by Section 22(e)(3) of the Code.

SECTION 3.	ADMINISTRATION.	
(a)      Committee Composition . The Plan shall be administered by a Committee appointed by the Board, or by the Board acting as the Committee. The Committee shall consist of two or more directors of the Company. In addition, to the extent required by the Board, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code.
(b)      Committee for Non-Officer Grants . The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award.
(c)      Committee Procedures . The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee.
(d)      Committee Responsibilities . Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

(i)	To interpret the Plan and to apply its provisions;	

(ii)	To adopt, amend or rescind rules, procedures and forms relating to the Plan;	

(iii)	To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws;	

(iv)	To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;	

(v)	To determine when Awards are to be granted under the Plan;	

(vi)	To select the Participants to whom Awards are to be granted;	

(vii)	To determine the type of Award and number of Shares or amount of cash to be made subject to each Award;	

(viii)	To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;	

(ix)	To amend any outstanding Award Agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;	

(x)	To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;	

(xi)	To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;	

(xii)	To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;	

(xiii)	To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award Agreement;	

(xiv)	To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and	

(xv)	To take any other actions deemed necessary or advisable for the administration of the Plan.	
Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Awards under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants and all persons deriving their rights from a Participant. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan or any Award under the Plan.

SECTION 4.	ELIGIBILITY.	
(a)      General Rule . Only Employees, Consultants and Outside Directors shall be eligible for the grant of Awards. Only common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.
(b)      Ten-Percent Stockholders . An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.
(c)      Attribution Rules . For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.
(d)      Outstanding Stock . For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

SECTION 5.	STOCK SUBJECT TO PLAN.	
(a)      Basic Limitation . Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The aggregate number of Shares authorized for issuance as Awards under the Plan (other than Inducement Awards as set forth in Section 15) shall not exceed the sum of (x) 4,250,000 Shares, plus (y) the sum of the number of Shares subject to outstanding awards under the Company’s 2010 Stock Plan (the “Predecessor Plan”) on the Effective Date that are subsequently forfeited or terminated for any reason before being exercised or settled, plus the number of Shares subject to vesting restrictions under the Predecessor Plan on the Effective Date that are subsequently forfeited, plus the number of reserved Shares not issued or subject to outstanding grants under the Predecessor Plan on the Effective Date, plus (z) an annual increase on the first day of each fiscal year, for a period of not more than ten years, beginning on January 1, 2016, and ending on (and including) January 1, 2025, in an amount equal to the lesser of (i) four percent (4%) of the outstanding Shares on the last day of the immediately preceding fiscal or (ii) if the Board acts prior to the first day of the fiscal year, such lesser amount (including zero) that the Board determines for purposes of the annual increase for that fiscal year. Notwithstanding the foregoing, the number of Shares that may be delivered in the aggregate pursuant to the exercise of ISOs granted under the Plan shall not exceed 16,833,333 Shares plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section 5(c). The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 12. The number of Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.
(b)      Award Limitation . No Participant eligible for an Award may receive Options or SARs under the Plan, excluding Inducement Awards, in any calendar year that relate to an aggregate of more than 2,000,000 Shares, and no more than two times this amount in the first year of employment. In applying the foregoing limitation with respect to a Participant, if any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the maximum number of Shares with respect to which Options and SARs may be granted to the Participant. For this purpose, the repricing of an Option or SAR shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.
(c)      Additional Shares . If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any reason before being exercised or settled, or an Award is settled in cash without the delivery of Shares to the holder, then any Shares subject to the Award shall again become available for Awards under the Plan. Only the number of Shares (if any) actually issued in settlement of Awards (and not forfeited) shall reduce the number available in Section 5(a) and the balance shall again become available for Awards under the Plan. Any Shares withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall again become available for Awards under the Plan. Notwithstanding the foregoing provisions of this Section 5(c), Shares that have actually been issued shall not again become available for Awards under the Plan, except for Shares that are forfeited and do not become vested.
(d)      Substitution and Assumption of Awards . The Committee may make Awards under the Plan by assumption, substitution or replacement of stock options, stock appreciation rights, stock units or similar awards granted by another entity (including a Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate). The terms of such assumed, substituted or replaced Awards shall be as the Committee, in its discretion, determines is appropriate. Any such substitute or assumed Awards shall not count against the Share limitation set forth in Section 5(a).

SECTION 6.	RESTRICTED SHARES.	
(a)      Restricted Share Award Agreement . Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Award Agreement between the Participant and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Award Agreements entered into under the Plan need not be identical.
(b)      Payment for Awards . Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services.
(c)      Vesting . Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Award Agreement. A Restricted Share Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.
(d)      Voting and Dividend Rights . The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. A Restricted Share Award Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid.
(e)      Restrictions on Transfer of Shares . Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Share Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

SECTION 7.	TERMS AND CONDITIONS OF OPTIONS.	
(a)      Stock Option Award Agreement . Each grant of an Option under the Plan shall be evidenced by a Stock Option Award Agreement between the Participant and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Award Agreement. The Stock Option Award Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Award Agreements entered into under the Plan need not be identical.
(b)      Number of Shares . Each Stock Option Award Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 12.
(c)      Exercise Price . Each Stock Option Award Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in 4(c), and the Exercise Price of an NSO shall not be less 100% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, Options may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee in its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.
(d)      Withholding Taxes . As a condition to the exercise of an Option, the Participant shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Participant shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.
(e)      Exercisability and Term . Each Stock Option Award Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Award Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for ISOs granted to Employees described in Section 4(c)). A Stock Option Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.
(f)      Exercise of Options . Each Stock Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Participant’s estate or any person who has acquired such Option(s) directly from the Participant by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.
(g)      Effect of Change in Control . The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company.
(h)      No Rights as a Stockholder . A Participant shall have no rights as a stockholder with respect to any Shares covered by his Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 12.
(i)      Modification, Extension and Renewal of Options . Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price, or in return for the grant of a different Award for the same or a different number of Shares, without stockholder approval. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Participant, materially impair his or her rights or obligations under such Option.
(j)      Restrictions on Transfer of Shares . Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.
(k)      Buyout Provisions . The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize a Participant to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

SECTION 8.	PAYMENT FOR SHARES.	
(a)      General Rule . The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(h) below.
(b)      Surrender of Stock . To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Participant or his representative. Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. The Participant shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.
(c)      Services Rendered . At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the Award) of the value of the services rendered by the Participant and the sufficiency of the consideration to meet the requirements of Section 6(b).
(d)      Cashless Exercise . To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.
(e)      Exercise/Pledge . To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price.
(f)      Net Exercise . To the extent that a Stock Option Award Agreement so provides, by a “net exercise” arrangement pursuant to which the number of Shares issuable upon exercise of the Option shall be reduced by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate exercise price (plus tax withholdings, if applicable) and any remaining balance of the aggregate exercise price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued shall be paid by the Optionee in cash other form of payment permitted under the Stock Option Agreement.
(g)      Promissory Note . To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note.
(h)      Other Forms of Payment . To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.
(i)      Limitations under Applicable Law . Notwithstanding anything herein or in a Stock Option Award Agreement or Restricted Share Award Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

SECTION 9.	STOCK APPRECIATION RIGHTS.	
(a)      SAR Award Agreement . Each grant of a SAR under the Plan shall be evidenced by a SAR Award Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Award Agreements entered into under the Plan need not be identical.
(b)      Number of Shares . Each SAR Award Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 12.
(c)      Exercise Price . Each SAR Award Agreement shall specify the Exercise Price. The Exercise Price of a SAR shall not be less than 100% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, SARs may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Subject to the foregoing in this Section 9(c), the Exercise Price under any SAR shall be determined by the Committee in its sole discretion.
(d)      Exercisability and Term . Each SAR Award Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Award Agreement shall also specify the term of the SAR. A SAR Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.
(e)      Effect of Change in Control . The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company.
(f)      Exercise of SARs . Upon exercise of a SAR, the Participant (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price.
(g)      Modification or Assumption of SARs . Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price, or in return for the grant of a different Award for the same or a different number of Shares, without stockholder approval. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.
(h)      Buyout Provisions . The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents a SAR previously granted, or (b) authorize a Participant to elect to cash out a SAR previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

SECTION 10.	STOCK UNITS.	
(a)      Stock Unit Award Agreement . Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Award Agreement between the Participant and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Award Agreements entered into under the Plan need not be identical.
(b)      Payment for Awards . To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.
(c)      Vesting Conditions . Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Award Agreement. A Stock Unit Award Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company.
(d)      Voting and Dividend Rights . The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach.
(e)      Form and Time of Settlement of Stock Units . Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. A Stock Unit Award Agreement may provide that vested Stock Units may be settled in a lump sum or in installments. A Stock Unit Award Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date, subject to compliance with Section 409A of the Code. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 12.
(f)      Death of Participant . Any Stock Unit Award that becomes payable after the Participant’s death shall be distributed to the Participant’s beneficiary or beneficiaries. Each recipient of a Stock Unit Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, then any Stock Units Award that becomes payable after the Participant’s death shall be distributed to the Participant’s estate.
(g)      Creditors’ Rights . A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Award Agreement.

SECTION 11.	CASH-BASED AWARDS	
The Committee may, in its sole discretion, grant Cash-Based Awards to any Participant in such number or amount and upon such terms, and subject to such conditions, as the Committee shall determine at the time of grant and specify in an applicable Award Agreement. The Committee shall determine the maximum duration of the Cash-Based Award, the amount of cash which may be payable pursuant to the Cash-Based Award, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Committee shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Committee. Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash or in shares of Stock, as the Committee determines.

SECTION 12.	ADJUSTMENT OF SHARES.	
(a)      Adjustments . In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in:

(i)	The number of Shares available for future Awards under Section 5;	

(ii)	The limitations set forth in Sections 5(a) and (b) and Section 19;	

(iii)	The number of Shares covered by each outstanding Award; and	

(iv)	The Exercise Price under each outstanding Option and SAR.	
(b)      Dissolution or Liquidation . To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.
(c)      Reorganizations . In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Subject to compliance with Section 409A of the Code, such agreement shall provide for:

(i)	The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation;	

(ii)	The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;	

(iii)	The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards;	

(iv)	Immediate vesting, exercisability and settlement of outstanding Awards followed by the cancellation of such Awards upon or immediately prior to the effectiveness of such transaction; or	

(v)	Settlement of the intrinsic value of the outstanding Awards (whether or not then vested or exercisable) in cash or cash equivalents or equity (including cash or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such Awards or the underlying Shares) followed by the cancellation of such Awards (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment); in each case without the Participant’s consent. Any acceleration of payment of an amount that is subject to section 409A of the Code will be delayed, if necessary, until the earliest time that such payment would be permissible under Section 409A without triggering any additional taxes applicable under Section 409A.	
The Company will have no obligation to treat all Awards, all Awards held by a Participant, or all Awards of the same type, similarly.
(d)      Reservation of Rights . Except as provided in this Section 12, a Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Award. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. In the event of any change affecting the Shares or the Exercise Price of Shares subject to an Award, including a merger or other reorganization, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the occurrence of such event.

SECTION 13.	DEFERRAL OF AWARDS.	
(a)      Committee Powers . Subject to compliance with Section 409A of the Code, the Committee (in its sole discretion) may permit or require a Participant to:

(i)	Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books;	

(ii)	Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or	

(iii)	Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant.	
(b)      General Rules . A deferred compensation account established under this Section 13 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 13.

SECTION 14.	AWARDS UNDER OTHER PLANS.	
The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

SECTION 15.	INDUCEMENT AWARDS POOL.	
(a)      Inducement Share Reserve . An additional pool of Shares (the “Inducement Shares”) are reserved under this Plan to be used exclusively for the grant of Awards in compliance with New York Stock Exchange Rule 303A.08 (the “Inducement Awards”). The pool of Inducement Shares shall not exceed $90,000,000, with the number of Shares granted based on Fair Market Value on the vesting date of the Inducement Shares or, if so provided in the Award Agreement, the volume-weighted average trading price of a Share for up to 60 days immediately preceding such vesting date. The number of Inducement Shares shall be subject to adjustment pursuant to Section 12, as applicable. For purposes of clarity, the Inducement Shares that may be awarded are in addition to and shall not reduce the number of Shares reserved under Section 5(a) for Awards other than Inducement Awards. The Shares underlying any Inducement Awards that are forfeited, canceled, held back upon exercise of an Inducement Award or settlement of an Inducement Award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, settled without the issuance of Shares or otherwise terminated (other than by exercise) shall be added back to the number of Inducement Shares available for grant under this Section 15 based on the vesting date Fair Market Value of the Inducement Shares returning to the Plan or other vesting date valuation method set forth in the Award Agreement, but shall not affect the number of Shares available for Awards under Section 5(a).
(b)      Inducement Award Rules . Notwithstanding anything to the contrary in this Plan, an Inducement Award may be granted only to an Employee as an inducement material to the individual’s entering into employment with the Company within the meaning of New York Stock Exchange Rule 303A.08 and only if such individual has not previously been an Employee or has experienced a bona fide period of interruption of employment with the Company and its Affiliates prior to grant of the Inducement Award. In addition, notwithstanding any other provision of the Plan to the contrary, all such Inducement Awards must be granted by the Committee. No Inducement Award may be an ISO.

SECTION 16.	PAYMENT OF DIRECTOR’S FEES IN SECURITIES.	
(a)      Effective Date . No provision of this Section 16 shall be effective unless and until the Board has determined to implement such provision.
(b)      Elections to Receive NSOs, SARs, Restricted Shares or Stock Units . An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, SARs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Alternatively, the Board may mandate payment in any of such alternative forms. Such NSOs, SARs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 16 shall be filed with the Company on the prescribed form.
(c)      Number and Terms of NSOs, SARs, Restricted Shares or Stock Units . The number of NSOs, SARs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The terms of such NSOs, SARs, Restricted Shares or Stock Units shall also be determined by the Board.

SECTION 17.	LEGAL AND REGULATORY REQUIREMENTS.	
Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has not obtained from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan.

SECTION 18.	TAXES.	
(a)      Withholding Taxes . To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.
(b)      Share Withholding . The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the minimum legally required tax withholding.
(c)      Section 409A . Each Award that provides for “nonqualified deferred compensation” within the meaning of Section 409A of the Code shall be subject to such additional rules and requirements as specified by the Committee from time to time in order to comply with Section 409A. If any amount under such an Award is payable upon a “separation from service” (within the meaning of Section 409A) to a Participant who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service, or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. In addition, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

SECTION 19.	TRANSFERABILITY.	
Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 19 shall be void and unenforceable against the Company.

SECTION 20.	PERFORMANCE BASED AWARDS.	
The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals. The Committee may utilize any performance criteria selected by it in its sole discretion to establish performance goals; provided, however, that in the case of any Performance Based Award, the following conditions shall apply:

(i)	The amount potentially available under a Performance Based Award shall be subject to the attainment of pre-established, objective performance goals relating to a specified period of service including but not limited to any of the following performance criteria: (a) cash flow, (b) earnings per share, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) return on invested capital, (p) market segment shares, (q) costs, (r) expenses, (s) initiation or completion of research activities, (t) initiation or completion of development programs, (u) other milestones with respect to research activities or development programs, (v) regulatory body approval, (w) implementation or completion of critical projects, (x) commercial milestones or (z) other milestones with respect to the growth of the Company’s business or the development or commercialization of any product or service (“Qualifying Performance Criteria”), any of which may be measured either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee in the Award;	

(ii)	The Committee may appropriately adjust the method of evaluating performance under a Qualifying Performance Criteria for a performance period as follows: (i) to exclude asset write-downs, (ii) to exclude litigation or claim judgments or settlements, (iii) to exclude the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) to exclude accruals for reorganization and restructuring programs, (v) to exclude any extraordinary nonrecurring items as determined under generally accepted accounting principles and/or described in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, (vi) to exclude the dilutive effects of acquisitions or joint ventures, (vii) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a performance period following such divestiture, (viii) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends, (ix) to exclude the effects of stock based compensation and the award of bonuses under the Company’s bonus plans; and (x) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles;	

(iii)	The Committee shall establish the applicable performance goals in writing and an objective method for determining the Award earned by a Participant if the goals are attained, while the outcome is substantially uncertain, and shall determine and certify in writing, for each Participant, the extent to which the performance goals have been met prior to payment or vesting of the Award; and	

(iv)	The maximum aggregate number of Shares that may be subject to Performance Based Awards granted to a Participant in any calendar year (other than Inducement Awards) is 2,000,000 Shares, and no more than two times this amount in the first year of employment (subject to adjustment under Section 12), and the maximum aggregate amount of cash that may be payable to a Participant under Performance Based Awards granted to a Participant in any calendar year that are Cash-Based Awards is $10,000,000.	

SECTION 21.	NO EMPLOYMENT RIGHTS.	
No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee or Consultant. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

SECTION 22.	DURATION AND AMENDMENTS.	
(a)      Term of the Plan . The Plan, as set forth herein, shall come into existence on the date of its adoption by the Board of Directors; provided, however, that no Award may be granted hereunder prior to the Effective Date. The Board of Directors may suspend or terminate the Plan at any time. No ISOs may be granted after the tenth anniversary of the earlier of (i) the date the Plan is adopted by the Board of Directors, or (ii) the date the Plan is approved the stockholders of the Company.
(b)      Right to Amend the Plan . The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.
(c)      Effect of Termination . No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan.

SECTION 23.	EXECUTION.	
To record the amendment and restatement of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same.
INVITAE CORPORATION
By                             
Name                             
Title                             

3

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN
NOTICE OF TIME-BASED RESTRICTED STOCK UNIT AWARD

You (referred to herein as either “you” or “Participant”) have been granted the following Restricted Stock Units representing Common Stock of Invitae Corporation (the “Company”) under the Company’s 2015 Stock Incentive Plan (the “Plan”). Capitalized terms that are used herein but not defined shall have the meanings set forth in the Plan, the Restricted Stock Unit Agreement attached hereto or the Terms and Conditions Addendum attached hereto.

	
		
Name of Participant:	[Name]	
Maximum Dollar Value of Restricted Stock Units:	$[to be calculated in relative proportion to Participant’s equity ownership position in Singular Bio as of the “Agreement Date” (as defined in the Agreement and Plan of Merger and Reorganization to be entered into by an among the Company, Singular Bio and Fortis Advisors LLC) as compared with all former employees of Singular Bio, Inc. that have been employed by the Company and granted a similar Time-Based Restricted Stock Unit Award, including Participant]	
Grant Date:	[ ,] 2019	
Vesting Commencement Date:	[ ,] 2019	
Vesting Schedule:	Subject to your continuous Service as an Employee (or, if agreed to by you and the Company in writing following a period of your continuous Service as an Employee from and after the Grant Date, a non-Employee service provider of the Company (or a Subsidiary or Affiliate, in each case, including part-time to the extent agreed upon in writing by you and the Company)) of the Company (or a Subsidiary or Affiliate) from the Grant Date through the applicable 6-month, 12-month, or 18-month vesting date and the terms of the Restricted Stock Unit Agreement attached hereto and the Terms and Conditions Addendum attached hereto, the number of Restricted Stock Units that vest on each  of the 6-month anniversary of the Vesting Commencement Date, the 12-month anniversary of the Vesting Commencement Date, and the 18-month anniversary of the Vesting Commencement Date, will be equal to the quotient  of (a) $[insert 1/3 of the TOTAL dollar value of Time-Based RSUs the Participant is eligible to receive] divided  by (b) the volume-weighted average trading price of a Share on The New York Stock Exchange (or such other exchange which is then the primary exchange upon which the Company’s Common Stock is traded) for the thirty (30) days immediately preceding such vesting date (the “Company Stock Price”).	

INVITAE CORPORATION
NOTICE OF RESTRICTED STOCK UNIT AWARD
-1-

By your signature and the signature of the Company’s representative below, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan, the attached Terms and Conditions Addendum and the attached Restricted Stock Unit Agreement (the “Agreement”), all of which are made a part of this document.
By signing this document, you further agree that the Company may deliver by e-mail all documents relating to the Plan or this Award (including without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a website, it will notify you by e-mail.

		
[NAME OF PARTICIPANT]

   
Participant’s Signature

Participant’s Printed Name	INVITAE CORPORATION

By:    

Title:    	

INVITAE CORPORATION
NOTICE OF RESTRICTED STOCK UNIT AWARD
-2-

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN
TIME-BASED RESTRICTED STOCK UNIT AWARD
TERMS AND CONDITIONS ADDENDUM
The Restricted Stock Unit Award is subject to the terms and conditions set forth below. Capitalized terms that are used herein, but not defined, shall have the meanings set forth in the Notice of Time-Based Restricted Stock Unit Award, the Plan or the Restricted Stock Unit Agreement.

A.	Termination of Employment	
If your Service as an Employee is terminated by the Company other than for Cause, by you for Good Reason, or due to your death or Total and Permanent Disability while any portion of the Restricted Stock Unit Award is unvested and outstanding, the requirement that you remain in continuous Service as an Employee (or, if agreed to by you and the Company in writing following a period of your continuous Service as an Employee from and after the Grant Date, a non-Employee service provider of the Company (or a Subsidiary or Affiliate, in each case, including part-time to the extent agreed upon in writing by you and the Company) (a “ Service Provider Transition ”)) of the Company (or a Subsidiary or Affiliate) from the Grant Date through any vesting date after your termination of Service as an Employee shall be waived upon such termination and the vesting of such unvested portion shall accelerate immediately prior to such termination (with the calculation of the number of Restricted Stock Units relating to such unvested portion to be based upon such date of acceleration as the vesting date). For clarity, (i) the Company may not impose a leave of absence or part-time work schedule on you during your Service as an Employee without your prior written consent (other than in connection with investigating alleged misconduct which would qualify under the definition of “Cause” in Section B); and (ii) no leave of absence, part-time work schedule, or alternative Service arrangement (i.e., with you providing Service to the Company as an independent contractor rather than an Employee – such as a Service Provider Transition) mutually agreed upon between you and the Company shall constitute your termination by the Company without Cause or termination by you for Good Reason.
B. Defined Terms
“ Cause ” means (i) the willful and deliberate failure by you to perform your duties and responsibilities (other than as a result of incapacity due to physical or mental illness) which is not remedied within thirty (30) days after receipt of written notice from the Company’s Chief Executive Officer or General Counsel specifying such failure, (ii) willful misconduct by you that is demonstrably and materially injurious to the business or reputation of the Company, including without limitation fraud, embezzlement or misappropriation of funds that is not de minimis in nature or a willful and intentional material violation of Company confidential information obligations, agreements or policies applicable to you, or (iii) your conviction of, or plea of guilty or nolo contendere to, any felony or gross misdemeanor (excluding gross misdemeanors that are traffic offenses) punishable by imprisonment in the jurisdiction involved.
“ Good Reason ” means the occurrence of any of the following which occurs during your Service as an Employee without your express written consent: (i) a substantial diminution in your

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS ADDENDUM
-A-1-

authorities, duties or responsibilities other than as a result of disability; (ii) a material decrease in your base salary (except for a reduction due to a change of duties as a result of disability or as part of a broad cost-cutting or restructuring effort); (iii) the relocation of your principal location of work unless such relocation is (x) to a location that is within 50 miles of your then-current location and (y) in connection with a relocation of other employees or service providers within the same working team, business unit, division, laboratory or office; or (iv) the Company commits a material breach of the Restricted Stock Unit Agreement. Notwithstanding the foregoing, termination shall not be considered to be for Good Reason unless (A) with thirty (30) days after the initial existence of the applicable event or condition that is purported to give rise to a basis for termination for Good Reason, you provide written notice of the existence of such event or condition to the Company, (B) such event or condition is not cured within thirty (30) days after the date of such written notice from you to the Company, provided that the Company may notify you at any time prior to expiration of the cure period that it will not cure such event or condition, in which case the cure period shall end immediately upon such notification, and (C) you terminate Employment no later than thirty (30) days after the expiration of the applicable cure period.
C. Miscellaneous
For clarity, a determination of the time of Service termination by the Company pursuant to the Restricted Stock Unit Agreement will not be deemed a unilaterally binding determination of whether such termination is for Cause, for Good Reason or due to Total and Permanent Disability.
The Company will not interpret the terms of this Award, the Restricted Stock Unit Agreement or the Plan (e.g., as to what constitutes Cause or Good Reason) in a manner that treats you in a disproportionately adverse manner relative to the other former employees of Singular Bio, Inc. that have been employed by the Company and granted a similar Time-Based Restricted Stock Unit Award.

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS ADDENDUM
-A-2-

Exhibit 10.2

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN
TIME-BASED RESTRICTED STOCK UNIT AGREEMENT

		
The Plan and Other Agreements	The Restricted Stock Unit Award you are receiving is granted pursuant and subject in all respects to the applicable provisions of the Invitae Corporation 2015 Stock Incentive Plan (the “Plan”), which is incorporated herein by reference. Capitalized terms not defined in this Agreement have the meanings ascribed to them in the Plan.
The attached Notice of Time-Based Restricted Stock Unit Award (the “Notice”), this Agreement and the Plan constitute the entire understanding between you and the Company regarding this Award. Any prior agreements, commitments or negotiations concerning this Award are superseded. This Agreement may be amended by the Committee without your consent; however, if any such amendment would materially impair your rights or obligations under the Agreement, this Agreement may be amended only by another written agreement, signed by you and the Company.	
Payment for Restricted Stock Units	No cash payment is required for the Restricted Stock Units you receive. You are receiving the Restricted Stock Units as an inducement to accept Employment with the Company and in consideration for Service to be rendered by you as an Employee.	
Vesting	The Restricted Stock Units that you are receiving will vest in one or more installments as provided in the Notice.
Except as set forth in the Terms and Conditions Addendum attached to the Notice, no additional Restricted Stock Units will vest after your Service as an Employee has terminated for any reason.	
Forfeiture	Except as set forth in the Terms and Conditions Addendum attached to the Notice, if your Service as an Employee is terminated, then your Award expires immediately as to the number of Restricted Stock Units that have not vested before the termination date and do not vest as a result of termination.
This means that the unvested (after giving effect to any acceleration required hereunder) Restricted Stock Units will immediately be cancelled upon termination. You will receive no payment for Restricted Stock Units that are so forfeited.
The Company determines when your Service terminates for this purpose and all purposes under the Plan and its determinations are conclusive and binding on all persons.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
-1-

	
		
Leaves of Absence	For purposes of this Award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide  leave of absence, if the leave of absence was approved by the Company in writing, and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work.
If you go on a leave of absence, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.	
Nature of Restricted Stock Units	Your Restricted Stock Units are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue Shares on a future date. As a holder of Restricted Stock Units, you have no rights other than the rights of a general creditor of the Company.	
No Voting Rights or Dividends	Your Restricted Stock Units carry neither voting rights nor rights to dividends. You, or your estate or heirs, have no rights as a stockholder of the Company unless and until your Restricted Stock Units are settled by issuing Shares. No adjustments will be made for dividends or other rights if the applicable record date occurs before your Shares are issued, except as described in the Plan.	
Restricted Stock Units Nontransferable	You may not sell, transfer, assign, pledge or otherwise dispose of any Restricted Stock Units. For instance, you may not use your Restricted Stock Units as security for a loan. If you attempt to do any of these things, your Restricted Stock Units will immediately become invalid.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
-2-

	
		
Settlement of Restricted Stock Units	Each of your vested Restricted Stock Units will be settled when it vests; provided, however, that settlement of each Restricted Stock Unit will be deferred to the first permissible trading day for the Shares, if later than the applicable vesting date, but in no event later than December 31 of the calendar year in which the applicable vesting date occurs.
For purposes of this Agreement, “permissible trading day” means a day that satisfies all of the following requirements: (a) the exchange on which the Shares are traded is open for trading on that day; (b) you are permitted to sell Shares on that day without incurring liability under Section 16(b) of the Exchange Act, (c) either (i) you are not in possession of material non-public information that would make it illegal for you to sell Shares on that day under Rule 10b-5 under the Exchange Act or (ii) Rule 10b5-1 under the Exchange Act would apply to the sale; (d) you are permitted to sell Shares on that day under such written insider trading policy as may have been adopted by the Company; and (e) you are not prohibited from selling Shares on that day by a written agreement between you and the Company or a third party.
At the time of settlement, you will receive one Share for each vested Restricted Stock Unit; provided, however, that no fractional Shares will be issued or delivered pursuant to the Plan or this Agreement, and the Committee will determine whether cash will be paid in lieu of any fractional Share or whether such fractional Share and any rights thereto will be canceled, terminated or otherwise eliminated. In addition, the Shares are issued to you subject to the condition that the issuance of the Shares not violate any law or regulation.  	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
-3-

	
		
Withholding Taxes and Stock Withholding	Regardless of any action the Company and/or the Subsidiary or Affiliate employing you (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the settlement of the Restricted Stock Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items.
Prior to the settlement of your Restricted Stock Units, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer. With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when your Restricted Stock Units are settled, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Company. The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes. Finally, you shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your acquisition of Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section, and your rights to the Shares shall be forfeited if you do not comply with such obligations on or before the later of December 31 of the calendar year in which the applicable vesting date for the Restricted Stock Units occurs or 60 calendar days after the applicable settlement date.	

Restrictions on Resale	
You agree not to sell any Shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
-4-

	
		
No Retention Rights	Neither your Award nor this Agreement gives you the right to be employed or retained by the Company or any Subsidiary or Affiliate of the Company in any capacity. The Company and its Subsidiaries and Affiliates reserve the right to terminate your Service at any time, with or without cause.	
Adjustments	The number of Restricted Stock Units covered by this Award shall be subject to adjustment in the event of a stock split, a stock dividend or a similar change in Company Shares, and in other circumstances, as set forth in the Plan. The forfeiture provisions and restrictions described above will apply to all new, substitute or additional Restricted Stock Units or securities to which you are entitled by reason of this Award.	
Successors and Assigns	Except as otherwise provided in the Plan or this Agreement, every term of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, legal representatives, successors, transferees and assigns.	
Notice	Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon the earliest of personal delivery, receipt or the third full day following mailing with postage and fees prepaid, addressed to the other party hereto at: (i) if such notice is given by the Company, the address then listed in the Company’s records, (ii) if such notice is given by you, the address of the Company’s headquarters, or (iii) at such other address as a receiving party may designate by ten (10) days’ advance written notice to the other party hereto.	
Section 409A of the Code	To the extent this Agreement is subject to and not exempt from Section 409A of the Code, this Agreement is intended to comply with Section 409A and the regulations promulgated thereunder, and its provisions shall be interpreted in a manner consistent with such intent. You acknowledge and agree that changes may be made to this Agreement to avoid adverse tax consequences to you under Section 409A.	
Applicable Law and Choice of Venue	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of San Francisco County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
-5-

	
		
Miscellaneous	You understand and acknowledge that (i) the Plan is entirely discretionary, (ii) the Company and the Employer have reserved the right to amend, suspend or terminate the Plan at any time, (iii) except as expressly set forth herein, the grant of your Award does not in any way create any contractual or other right to receive additional grants of awards (or benefits in lieu of awards) at any time or in any amount and (iv) all determinations with respect to any additional grants, including (without limitation) the times when awards will be granted, the number of Shares subject to the awards, and the vesting schedule, will be at the sole discretion of the Company.
The value of this Award shall be an extraordinary item of compensation outside the scope of your employment contract, if any, and shall not be considered a part of your normal or expected compensation for purposes of calculating severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
You understand and acknowledge that participation in the Plan ceases upon termination of your Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement.
You hereby authorize and direct the Employer to disclose to the Company or any Subsidiary or Affiliate any information regarding your employment, the nature and amount of your compensation and the fact and conditions of your participation in the Plan, as the Employer deems necessary or appropriate to facilitate the administration of the Plan.
You consent to the collection, use and transfer of your personal data as described in this subsection. You understand and acknowledge that the Company, the Employer and the Company’s other Subsidiaries and Affiliates hold certain personal information regarding you for the purpose of managing and administering the Plan, including (without limitation) your name, home address, telephone number, date of birth, social insurance number or other government identification number, salary, nationality, job title, any Shares or directorships held in the Company and details of all awards or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (the “Data”). You further understand and acknowledge that the Company, its Subsidiaries and/or its Affiliates will transfer Data among themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan and that the Company and/or any Subsidiary may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan. You understand and acknowledge that the recipients of Data may be located in the United States or elsewhere, and that the laws of a recipient’s country of operation (e.g., the United States) may not have equivalent privacy protections as local laws where you reside or work. You authorize such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering your participation in the Plan, including a transfer to any broker or other third party with whom you elect to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf. You may, at any time, view the Data, require any necessary modifications of Data, make inquiries about the treatment of Data or withdraw the consents set forth in this subsection by contacting the Human Resources Department of the Company in writing.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
-6-

BY SIGNING THE ATTACHED NOTICE, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
-7-

Exhibit 10.3

[*] Indicates that certain information in this exhibit has been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN
NOTICE OF PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD
You (referred to herein as either “you” or “Participant”) have been granted the following Restricted Stock Units representing Common Stock of Invitae Corporation (the “Company”) under the Company’s 2015 Stock Incentive Plan (the “Plan”). Capitalized terms that are used herein but not defined shall have the meanings set forth in the Plan, the Restricted Stock Unit Agreement attached hereto or the Terms and Conditions Addendum attached hereto.

	
		
Name of Participant:	[Name]	
Maximum Dollar Value of Restricted Stock Units	$[to be calculated in relative proportion to Participant’s equity ownership position in Singular Bio as of the “Agreement Date” (as defined in the Agreement and Plan of Merger and Reorganization to be entered into by an among the Company, Singular Bio and Fortis Advisors LLC) as compared with all Former SB Employees (defined below), including Participant]	
Grant Date:	[ ], 2019	
Vesting Schedule:	Subject to the terms of the Restricted Stock Unit Agreement, the Restricted Stock Units subject to this Award shall vest as provided in the Terms and Conditions Addendum attached hereto.	
By your signature and the signature of the Company’s representative below, you and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan, the attached Terms and Conditions Addendum and the attached Restricted Stock Unit Agreement (the “Agreement”), all of which are made a part of this document.
By signing this document, you further agree that the Company may deliver by e-mail all documents relating to the Plan or this Award (including without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a website, it will notify you by e-mail.

	
		
[NAME OF PARTICIPANT]

Participant’s Signature

Participant’s Printed Name	INVITAE CORPORATION

By:    

Title:    	

INVITAE CORPORATION
NOTICE OF RESTRICTED STOCK UNIT AWARD
-2-

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN
PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD
TERMS AND CONDITIONS ADDENDUM
The Restricted Stock Unit Award is subject to the terms and conditions set forth below. Capitalized terms that are used herein, but not defined, shall have the meanings set forth in the Notice of Performance-Based Restricted Stock Unit Award, the Plan or the Restricted Stock Unit Agreement.

A.	Vesting of Restricted Stock Units	
Until all of the Performance Goals set forth in Section B below have been achieved or the Restricted Stock Unit Award is cancelled or otherwise ineligible for further vesting, a committee comprised of one or more of the Company’s chief executive officer, head of development, head of medical affairs and head of research and development (the “ Committee ”) shall review the status of each Performance Goal relative to achievement in accordance with the process set forth in the following sentences. Within ten (10) business days of the end of every second (2 nd ) calendar month following the Grant Date (meaning the first Committee meeting shall take place no later than September 10, 2019), the Committee shall: (a) meet to confirm whether any Performance Goal has been achieved (the “ Committee Meeting ”); (b) notify each former employee of Singular Bio, Inc. (“ Singular Bio ” or “ SB ”) that has been employed by the Company and granted a similar Performance-Based Restricted Stock Unit Award (each such person, including you, a “ Former SB Employee ”) five (5) business days prior to the Committee Meeting to allow the Former SB Employees to attend (in person or telephonically) the Committee Meeting, provided that (i) no Former SB Employee’s attendance is required for the Committee Meeting and (ii) in order to attend, any Former SB Employee who is not an Employee shall be required to execute a non-disclosure agreement in form and substance reasonably satisfactory to the Company and the Former SB Employee; (c) make a determination in good faith with respect to the achievement (or non-achievement) of each Performance Goal; and (d) provide a Notice to the Former SB Employees of such determination (and, if any Performance Goal has been determined to be achieved, the date of such Notice with respect to such Performance Goal shall be the “ Determination Date ” for such Performance Goal). In the event you disagree with the Committee’s determination about whether any Performance Goal has been achieved, you shall notify the Committee within five (5) business days of receipt of the Notice and the parties shall resolve the issue using the technical determination process set forth in Section E below; provided , however , that there shall be only one determination process in this regard (i.e., each objecting Former SB Employee must consolidate into a single process).
Provided you remain in continuous Service as an Employee or, if agreed to by you and the Company in writing following a period of your continuous Service as an Employee from and after the Grant Date, a non-Employee service provider of the Company (or a Subsidiary or Affiliate, in each case, including part-time to the extent agreed upon in writing by you and the Company) (any such transition, a “ Service Provider Transition ”) from the Grant Date through the date that is twelve (12) months from the Grant Date (or, to the extent that any Performance Goal has been achieved prior to the end of such period, through the Determination Date for such Performance Goal), the number of Restricted Stock Units that vest, if any, upon the Determination Date for a

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS ADDENDUM
A-1

Performance Goal shall be equal to the quotient of (i) the quotient of (x) $[insert the TOTAL dollar value of Performance-Based RSUs the Participant is eligible to receive - to be calculated in relative proportion to Participant’s equity ownership position in Singular Bio as of the “Agreement Date” (as defined in the Agreement and Plan of Merger and Reorganization to be entered into by an among the Company, Singular Bio and Fortis Advisors LLC) as compared with all Former SB Employees, including Participant] divided by (y) nine (9) divided by (ii) the volume-weighted average trading price of a Share on The New York Stock Exchange (or such other exchange which is then the primary exchange upon which the Company’s Common Stock is traded) for the thirty (30) days immediately preceding the applicable Determination Date (the “ Company Stock Price ”).
To the extent the Company (a) commits a material breach of the Restricted Stock Unit Agreement which is not cured by the Company within thirty (30) days after the date of Notice from you to the Company with respect thereto, (b) undergoes a Change in Control, (c) divests to a non-affiliated entity all or substantially all of the assets (which may include without limitation, technology or intellectual property rights) acquired in the Company’s acquisition of Singular Bio, or any portion thereof that would materially impair the Company’s ability to achieve the Performance Goals, (d) commercializes a product or service offering based on, or derived from, the assets (which may include without limitation, technology and/or intellectual property rights) acquired in the Company’s acquisition of Singular, which commercialization results in gross proceeds to the Company of at least $[*], or the non-cash equivalent of such amount, and/or (e) at any time prior to the date that is [*] following the Grant Date, takes any action with the specific and primary intended outcome of making the achievement of the Performance Goals less likely, then each Performance Goal that, prior to the occurrence of the applicable event set forth in subclauses (a)-(e), remains unachieved, shall be deemed satisfied for purposes of the Restricted Stock Unit Agreement as of the first date that any of such events has occurred and the number of Restricted Stock Units as calculated in the first paragraph of this Section A shall vest (with the date of deemed satisfaction being treated as the relevant Determination Date for such calculation).
Subject to any earlier cancellation as otherwise provided herein or in the Plan, and notwithstanding any provision to the contrary, the Restricted Stock Unit Award shall be cancelled on the date that is [*] following the Grant Date, and no additional Restricted Stock Units shall vest upon the satisfaction or deemed satisfaction of any Performance Goal after such day.
Except as expressly provided herein, the Company shall at all times have sole discretion with regard to all matters relating to the operation of its business; provided , however , that from the date hereof through the date set forth under the heading “Resource Allocation: Date” on Exhibit A hereto, the Company shall allocate the amount of funds set forth under the heading “Resource Allocation: Amount” on Exhibit A hereto (the “ Allocated Resources ”) to activities which are directed toward achievement of the Performance Goals (which aggregate amount, for the avoidance of doubt, shall include [*]; provided , however , that unless agreed upon in writing by the Company and you, the Company shall no longer be obligated to allocate resources to activities which are directed toward achievement of a particular Performance Goal if the Company determines, in its reasonable discretion, that achievement of such Performance Goal is either not reasonably possible or is commercially futile (i.e., because the economic benefits to be gained from such achievement do not justify the expense of achievement, it being understood that the cost of this Award and other

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS ADDENDUM
A-2

awards of like tenor to the Former SB Employees shall in no event be deemed an expense for purposes of this determination) (such a determination, a “ Non-Feasibility Determination ”); provided, further , that (a) in the event that the Company makes a Non-Feasibility Determination, the Former SB Employees, on the one hand, and the Company, on the other hand, shall (if so elected by the Former SB Employees) attempt to negotiate, for a period of thirty (30) days following the date such Non-Feasibility Determination is made, revisions to the Performance Goals, although either side may agree to any such revisions (or not) in its sole discretion and Former SB Employees holding a majority of the Restricted Stock Units then held by all Former SB Employees shall have the power to bind all Former SB Employees in this regard, and (b) if and to the extent that the parties mutually agree on such revisions to the Performance Goals, the parties shall amend this Terms and Conditions Addendum in writing to incorporate such revisions; provided, further , that if or to the extent the parties do not agree on whether proposed revisions to the Performance Goals are feasible or do not agree as to whether or not the criteria for a Non-Feasibility Determination have been satisfied, then the Former SB Employees may, in their discretion, elect to refer any such dispute to the Expert for final determination according to the procedures set forth in paragraph (E) below, which shall apply mutatis mutandis to such dispute.

B.	Performance Goals	
The Performance Goals, and the Company’s obligations with respect thereto, are set forth in Exhibit A hereto.
C. Settlement of Restricted Stock Units
To the extent Restricted Stock Units vest upon the achievement of a Performance Goal, such Restricted Stock Units will be settled in Shares as soon as practicable following the Determination Date.
D. Termination of Employment; Leaves of Absence; Alternative Service Arrangements
Notwithstanding any provisions of this Terms and Conditions Addendum to the contrary: (a) if your Service as an Employee is terminated by the Company other than for Cause, by you for Good Reason, or due to your death or Total and Permanent Disability while the Restricted Stock Unit Award is outstanding, the requirement that you remain in continuous Service as an Employee of the Company (or a Subsidiary or Affiliate) from the Grant Date through the date that is twelve (12) months from the Grant Date (or, to the extent that any Performance Goal has been achieved prior to the end of such period, through the Determination Date for such Performance Goal) shall be waived upon such termination; (b) the Company may not impose a leave of absence or part-time work schedule on you during your Service as an Employee without your prior written consent (other than in connection with investigating alleged misconduct which would qualify under the definition of “Cause” in Section F); and (c) no leave of absence, part-time work schedule, or alternative Service arrangement (i.e., with you providing Service to the Company as an independent contractor rather than an Employee – such as a Service Provider Transition) mutually agreed upon between you and the Company shall constitute your termination by the Company without Cause or termination by you for Good Reason.

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS ADDENDUM
A-3

E. Technical Determination
If the Committee and you cannot agree as to whether the requirements of a Performance Goal have been achieved, either party may notify the other party that it has invoked the technical determination process. Within fifteen (15) days of such Notice, the Company and the Former SB Employees holding a majority of Restricted Stock Units then held by all Former SB Employees shall jointly select one unaffiliated, independent academic in the field of genetics to act as expert (the “ Expert ”); provided , however , that any Expert shall be required to execute a non-disclosure agreement in form and substance reasonably satisfactory to the Company and the Former SB Employees holding a majority of Restricted Stock Units then held by all Former SB Employees. The Expert shall resolve such dispute by evaluating whether the data produced by the Company meets the requirements for the Performance Goal (or another form of analysis if jointly agreed upon by the Company and such Former SB Employees holding a majority of Restricted Stock Units then held by all Former SB Employees) and at the Company’s and the Former SB Employees’ joint expense (50:50). The parties shall deliver all necessary data or other results to the Expert within thirty (30) days after the Expert is selected. Each party shall exercise commercially reasonable efforts to assist the Expert to perform such evaluation and neither party shall take any action to hinder the performance of such evaluation. The hearing shall be held within sixty (60) days of the Expert being selected and the parties shall use commercially reasonable efforts to assist the Expert in reaching a final determination within ten (10) days thereafter. The results obtained by the Expert shall be binding on the parties for purposes of this Agreement. If the results conclude that the applicable Performance Goal is achieved, the Company will reimburse the Former SB Employees for amounts paid to the Expert. If the results conclude that the Performance Goal is not achieved, the Former SB Employees will reimburse the Company for amounts paid to the Expert. Notwithstanding any provision herein to the contrary, any Former SB Employee shall be required to execute a non-disclosure agreement in form and substance reasonably satisfactory to the Company and such Former SB Employee in order to participate in any process with the Expert or otherwise receive any confidential information with respect to any Performance Goal or any issue related thereto.
F. Defined Terms
“ Cause ” means (i) the willful and deliberate failure by you to perform your duties and responsibilities (other than as a result of incapacity due to physical or mental illness) which is not remedied within thirty (30) days after receipt of written notice from the Company’s Chief Executive Officer or General Counsel specifying such failure, (ii) willful misconduct by you that is demonstrably and materially injurious to the business or reputation of the Company, including without limitation fraud, embezzlement or misappropriation of funds that is not de minimis in nature or a willful and intentional material violation of Company confidential information obligations, agreements or policies applicable to you, or (iii) your conviction of, or plea of guilty or nolo contendere to, any felony or gross misdemeanor (excluding gross misdemeanors that are traffic offenses) punishable by imprisonment in the jurisdiction involved.
“ Good Reason ” means the occurrence of any of the following which occurs during your Service as an Employee without your express written consent: (i) a substantial diminution in your

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS ADDENDUM
A-4

authorities, duties or responsibilities other than as a result of disability; (ii) a material decrease in your base salary (except for a reduction due to a change of duties as a result of disability or as part of a broad cost-cutting or restructuring effort); (iii) the relocation of your principal location of work unless such relocation is (x) to a location that is within 50 miles of your then-current location and (y) in connection with a relocation of other employees or service providers within the same working team, business unit, division, laboratory or office; or (iv) the Company commits a material breach of the Agreement. Notwithstanding the foregoing, termination shall not be considered to be for Good Reason unless (A) with thirty (30) days after the initial existence of the applicable event or condition that is purported to give rise to a basis for termination for Good Reason, you provide written notice of the existence of such event or condition to the Company, (B) such event or condition is not cured within thirty (30) days after the date of such written notice from you to the Company, provided that the Company may notify you at any time prior to expiration of the cure period that it will not cure such event or condition, in which case the cure period shall end immediately upon such notification, and (C) you terminate Employment no later than thirty (30) days after the expiration of the applicable cure period.
“ Notice ” or “ notify ” means a communication in writing addressed to you at [ insert address or email address ] and to the Company at 1400 16th Street, San Francisco, CA 94103, Attn: General Counsel, or to another address as such party states in a Notice, and shall be deemed to have been duly given upon receipt when such receipt is on a business day during normal business hours of the recipient and otherwise on the next business day.

G.	Miscellaneous	
For clarity, a determination of the time of Service termination by the Company pursuant to the Agreement will not be deemed a unilaterally binding determination of whether such termination is for Cause, for Good Reason or due to Total and Permanent Disability.
The Company will not interpret the terms of this Award, the Agreement or the Plan (e.g., as to what constitutes Cause or Good Reason) in a manner that treats you in a disproportionately adverse manner relative to the other Former SB Employees.

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
TERMS AND CONDITIONS ADDENDUM
A-5

INVITAE CORPORATION
2015 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT

	
		
The Plan and Other Agreements	The Restricted Stock Unit Award you are receiving is granted pursuant and subject in all respects to the applicable provisions of the Invitae Corporation 2015 Stock Incentive Plan (the “Plan”), which is incorporated herein by reference. Capitalized terms not defined in this Agreement have the meanings ascribed to them in the Plan.
The attached Notice of Performance-Based Restricted Stock Unit Award (the “Notice”), this Agreement and the Plan constitute the entire understanding between you and the Company regarding this Award. Any prior agreements, commitments or negotiations concerning this Award are superseded. This Agreement may be amended by the Committee without your consent; however, if any such amendment would materially impair your rights or obligations under the Agreement, this Agreement may be amended only by another written agreement, signed by you and the Company.	
Payment for Restricted Stock Units	No cash payment is required for the Restricted Stock Units you receive. You are receiving the Restricted Stock Units as an inducement to accept Employment with the Company and in consideration for Service to be rendered by you as an Employee.	
Vesting	The Restricted Stock Units that you are receiving will vest in one or more installments as provided in the Notice.
Except as set forth in the Terms and Conditions Addendum attached to the Notice, no additional Restricted Stock Units will vest after your Service as an Employee has terminated for any reason.	
Forfeiture	Except as set forth in the Terms and Conditions Addendum attached to the Notice, if your Service as an Employee is terminated, then your Award expires immediately as to the number of Restricted Stock Units that have not vested before the termination date and do not vest as a result of termination.
This means that the unvested (after giving effect to any acceleration required hereunder) Restricted Stock Units will immediately be cancelled upon termination. You will receive no payment for Restricted Stock Units that are so forfeited.
The Company determines when your Service terminates for this purpose and all purposes under the Plan and its determinations are conclusive and binding on all persons.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
1

	
		
Leaves of Absence	For purposes of this Award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide  leave of absence, if the leave of absence was approved by the Company in writing, and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work.
If you go on a leave of absence, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule.	
Nature of Restricted Stock Units	Your Restricted Stock Units are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue Shares on a future date. As a holder of Restricted Stock Units, you have no rights other than the rights of a general creditor of the Company.	
No Voting Rights or Dividends	Your Restricted Stock Units carry neither voting rights nor rights to dividends. You, or your estate or heirs, have no rights as a stockholder of the Company unless and until your Restricted Stock Units are settled by issuing Shares. No adjustments will be made for dividends or other rights if the applicable record date occurs before your Shares are issued, except as described in the Plan.	
Restricted Stock Units Nontransferable	You may not sell, transfer, assign, pledge or otherwise dispose of any Restricted Stock Units. For instance, you may not use your Restricted Stock Units as security for a loan. If you attempt to do any of these things, your Restricted Stock Units will immediately become invalid.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
2

	
		
Settlement of Restricted Stock Units	Each of your vested Restricted Stock Units will be settled when it vests; provided , however , that settlement of each Restricted Stock Unit will be deferred to the first permissible trading day for the Shares, if later than the applicable vesting date, but in no event later than December 31 of the calendar year in which the applicable vesting date occurs.
For purposes of this Agreement, “permissible trading day” means a day that satisfies all of the following requirements: (a) the exchange on which the Shares are traded is open for trading on that day; (b) you are permitted to sell Shares on that day without incurring liability under Section 16(b) of the Exchange Act, (c) either (i) you are not in possession of material non-public information that would make it illegal for you to sell Shares on that day under Rule 10b-5 under the Exchange Act or (ii) Rule 10b5-1 under the Exchange Act would apply to the sale; (d) you are permitted to sell Shares on that day under such written insider trading policy as may have been adopted by the Company; and (e) you are not prohibited from selling Shares on that day by a written agreement between you and the Company or a third party.
At the time of settlement, you will receive one Share for each vested Restricted Stock Unit; provided , however , that no fractional Shares will be issued or delivered pursuant to the Plan or this Agreement, and the Committee will determine whether cash will be paid in lieu of any fractional Share or whether such fractional Share and any rights thereto will be canceled, terminated or otherwise eliminated. In addition, the Shares are issued to you subject to the condition that the issuance of the Shares not violate any law or regulation.  	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
3

	
		
Withholding Taxes and Stock Withholding	Regardless of any action the Company and/or the Subsidiary or Affiliate employing you (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the settlement of the Restricted Stock Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items.
Prior to the settlement of your Restricted Stock Units, you shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from your wages or other cash compensation paid to you by the Company and/or the Employer. With the Company’s consent, these arrangements may also include, if permissible under local law, (a) withholding Shares that otherwise would be issued to you when your Restricted Stock Units are settled, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum statutory withholding amount, (b) having the Company withhold taxes from the proceeds of the sale of the Shares, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization), or (c) any other arrangement approved by the Company. The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise would have been withheld in cash, will be applied as a credit against the withholding taxes. Finally, you shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of your participation in the Plan or your acquisition of Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver the Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section, and your rights to the Shares shall be forfeited if you do not comply with such obligations on or before the later of December 31 of the calendar year in which the applicable vesting date for the Restricted Stock Units occurs or 60 calendar days after the applicable settlement date.	
Restrictions on Resale	You agree not to sell any Shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
4

	
		
No Retention Rights	Neither your Award nor this Agreement gives you the right to be employed or retained by the Company or any Subsidiary or Affiliate of the Company in any capacity. The Company and its Subsidiaries and Affiliates reserve the right to terminate your Service at any time, with or without cause.	
Adjustments	The number of Restricted Stock Units covered by this Award shall be subject to adjustment in the event of a stock split, a stock dividend or a similar change in Company Shares, and in other circumstances, as set forth in the Plan. The forfeiture provisions and restrictions described above will apply to all new, substitute or additional Restricted Stock Units or securities to which you are entitled by reason of this Award.	
Successors and Assigns	Except as otherwise provided in the Plan or this Agreement, every term of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, legal representatives, successors, transferees and assigns.	
Notice	Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon the earliest of personal delivery, receipt or the third full day following mailing with postage and fees prepaid, addressed to the other party hereto at: (i) if such notice is given by the Company, the address then listed in the Company’s records, (ii) if such notice is given by you, the address of the Company’s headquarters, or (iii) at such other address as a receiving party may designate by ten (10) days’ advance written notice to the other party hereto.	
Section 409A of the Code	To the extent this Agreement is subject to and not exempt from Section 409A of the Code, this Agreement is intended to comply with Section 409A and the regulations promulgated thereunder, and its provisions shall be interpreted in a manner consistent with such intent. You acknowledge and agree that changes may be made to this Agreement to avoid adverse tax consequences to you under Section 409A.	
Applicable Law and Choice of Venue	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of San Francisco County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
5

	
		
Miscellaneous	You understand and acknowledge that (i) the Plan is entirely discretionary, (ii) the Company and the Employer have reserved the right to amend, suspend or terminate the Plan at any time, (iii) except as expressly set forth herein, the grant of your Award does not in any way create any contractual or other right to receive additional grants of awards (or benefits in lieu of awards) at any time or in any amount and (iv) all determinations with respect to any additional grants, including (without limitation) the times when awards will be granted, the number of Shares subject to the awards, and the vesting schedule, will be at the sole discretion of the Company.
The value of this Award shall be an extraordinary item of compensation outside the scope of your employment contract, if any, and shall not be considered a part of your normal or expected compensation for purposes of calculating severance, resignation, redundancy or end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
You understand and acknowledge that participation in the Plan ceases upon termination of your Service for any reason, except as may explicitly be provided otherwise in the Plan or this Agreement.
You hereby authorize and direct the Employer to disclose to the Company or any Subsidiary or Affiliate any information regarding your employment, the nature and amount of your compensation and the fact and conditions of your participation in the Plan, as the Employer deems necessary or appropriate to facilitate the administration of the Plan.
You consent to the collection, use and transfer of your personal data as described in this subsection. You understand and acknowledge that the Company, the Employer and the Company’s other Subsidiaries and Affiliates hold certain personal information regarding you for the purpose of managing and administering the Plan, including (without limitation) your name, home address, telephone number, date of birth, social insurance number or other government identification number, salary, nationality, job title, any Shares or directorships held in the Company and details of all awards or any other entitlements to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor (the “Data”). You further understand and acknowledge that the Company, its Subsidiaries and/or its Affiliates will transfer Data among themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan and that the Company and/or any Subsidiary may each further transfer Data to any third party assisting the Company in the implementation, administration and management of the Plan. You understand and acknowledge that the recipients of Data may be located in the United States or elsewhere, and that the laws of a recipient’s country of operation (e.g., the United States) may not have equivalent privacy protections as local laws where you reside or work. You authorize such recipients to receive, possess, use, retain and transfer Data, in electronic or other form, for the purpose of administering your participation in the Plan, including a transfer to any broker or other third party with whom you elect to deposit Shares acquired under the Plan of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf. You may, at any time, view the Data, require any necessary modifications of Data, make inquiries about the treatment of Data or withdraw the consents set forth in this subsection by contacting the Human Resources Department of the Company in writing.	

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
6

BY SIGNING THE ATTACHED NOTICE, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

INVITAE CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
7

Exhibit 10.4

FORM OF REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “ Agreement ”) is made and entered into as of ____________, 2019 (the “ Effective Date ”) by and among Invitae Corporation, a Delaware corporation (the “ Company ”) and certain stockholders of Singular Bio, Inc., a Delaware corporation (“ Singular ”) listed on Exhibit A hereto (each, a “ Stockholder ” and collectively, the “ Stockholders ”).

RECITALS

WHEREAS, the Company, Singular, Santa Barbara Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“ Merger Sub ”), and Fortis Advisors LLC, a Delaware limited liability company, as Holders’ Representative (as defined therein), have entered into that certain Agreement and Plan of Merger and Reorganization dated as of June 14, 2019 (the “ Merger Agreement ”), pursuant to which Merger Sub will be merged with and into Singular, and Singular shall continue as the surviving entity and wholly owned subsidiary of the Company (the “ Merger ”);
WHEREAS, in connection with the Merger and pursuant to the Merger Agreement, the Company issued to the Stockholders at the Closing (as defined in the Merger Agreement) shares of the Company’s common stock, par value $0.0001 per share, identified on Exhibit A hereto as Stock Consideration Shares (the “ Shares ”) pursuant to the Merger Agreement; and

WHEREAS, in connection with the consummation of the transactions contemplated by the Merger Agreement, the Company agreed to grant certain registration rights to the Stockholders as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1    Definitions.     For purposes of this Agreement, the following terms and variations thereof have the meanings set forth below:

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

“ Business Day " means any day, other than a Saturday, Sunday or one on which banks are authorized by law to be closed in New York, New York.

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

“ Effective Date ” has the meaning set forth in the preamble.

“ Effectiveness Period ” has the meaning set forth in Section 3.1(b).

“ Exchange Act ” means the Securities Exchange Act of 1934.

“ Grace Period ” has the meaning set forth in Section 3.2(h).

“ Holder ” (collectively, “ Holders ”) means any Stockholder and any transferee permitted under Section 2.1 of Registrable Securities, in each case to the extent holding Registrable Securities.

“ Holder Indemnitee ” has the meaning set forth in Section 4.1(a).

“ Indemnified Party ” has the meaning set forth in Section 4.1(c).

“ Indemnifying Party ” has the meaning set forth in Section 4.1(c).

“ Merger Agreement ” has the meaning set forth in the recitals.

“ Registrable Securities ” means the Shares issued to the Stockholders pursuant to the Merger Agreement and any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to such securities; provided , however , that Registrable Securities shall cease to be Registrable Securities with respect to a particular Holder when (i) such securities have been disposed of in accordance with the Registration Statement or pursuant to Rule 144; (ii) such securities may be sold pursuant to Rule 144 without any limitation as to manner-of-sale restrictions or volume limitations; or (iii) such securities cease to be outstanding.

“ Registration Expenses ” means all expenses incurred by the Company in effecting the registration pursuant to this Agreement, including all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, “blue sky” fees and expenses, and expenses of the Company’s independent registered public accounting firm in connection with any regular or special reviews or audits incident to or required by any such registration, but shall not include Selling Expenses.

“ Registration Statement ” has the meaning set forth in Section 3.1.

“ Rule 144 ” means Rule 144 under the Securities Act or any successor or other similar rule, regulation or interpretation of the SEC that may at any time permit the sale of Registrable Securities to the public without registration.

“ Rule 405 ” means Rule 405 under the Securities Act or any successor or other similar rule.

“ Rule 415 ” means Rule 415 under the Securities Act or any successor or other similar rule providing for offering securities on a continuous or delayed basis.

2

“ Rule 424 ” means Rule 424 under the Securities Act or any successor or other similar rule.

“ Shares ” has the meaning set forth in the recitals.

“ SEC ” means the Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933.

“ Selling Expenses ” means all discounts, selling commissions, fees of selling brokers, dealer managers and similar securities industry professionals and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of counsel for the Company included in Registration Expenses).

“ Transfer ” means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of (by merger, testamentary disposition, operation of law or otherwise), either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of (by merger, testamentary disposition, operation of law or otherwise) any Shares.

“ Violation ” has the meaning set forth in Section 4.1(a).

ARTICLE II
TRANSFER RESTRICTIONS

Section 2.1    General Transfer Restrictions . The right of any Stockholder to Transfer any Shares held by it is subject to the restrictions set forth below.

(a)    Each Stockholder acknowledges that the Shares have not been registered under the Securities Act and may not be Transferred except pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from registration under the Securities Act. Each Stockholder covenants that the Shares will only be disposed of pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state and foreign securities laws. In connection with any Transfer of the Shares other than a Transfer (i) pursuant to an effective registration statement, (ii) to the Company, (iii) pursuant to Rule 144, or (iv) if Holder is a venture capital or private equity fund, a customary distribution to its partners or members for no consideration, the Company may require the Stockholder to provide to the Company an opinion of counsel selected by the Stockholder and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such Transfer does not require registration under the Securities Act; provided, however, that prior to any transfer pursuant to (iv), each transferee shall

3

agree with the Company in writing to be bound by this Agreement (it being understood that the rights of the transferor under this Agreement shall likewise be deemed assigned to such transferee upon such transfer).
(b)    Each Stockholder agrees to the affixing, so long as is required by this Section 2.1, of the following legend on any certificate or book-entry position evidencing any of the Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND APPLICABLE STATE SECURITIES LAWS.
Certificates or book-entry positions evidencing the Shares shall not be required to contain such legend or any other legend (i) following any sale of such Shares pursuant to an effective registration statement (including the Registration Statement described in Section 3.1) covering the resale of the Shares, (ii) following any sale of such Shares pursuant to Rule 144 or if the Shares are transferrable by a person who is not an Affiliate of the Company or the applicable Stockholder pursuant to Rule 144 without any volume or manner of sale restrictions thereunder, (iii) if Holder is not an Affiliate of the Company, one (1) year following the Closing, provided , however , that in the case of (i), (ii) and (iii), above, the Stockholder provides the Company with customary legal representation letters reasonably acceptable to the Company or (iv) if the Stockholder provides the Company with a legal opinion reasonably acceptable to the Company to the effect that the legend is not required under applicable requirements of the Securities Act. Whenever such restrictions shall cease and terminate as to any Shares, the Holder of such securities shall be entitled to receive from the Company upon a written request in writing, without expense, new securities of like tenor not bearing the legend set forth herein, and such new securities shall be issued promptly, but in no event less than five (5) Business Days after a written request to remove such legends.

(c)    Notwithstanding anything herein to the contrary, following registration of the Shares each Stockholder agrees not to sell any shares of the Company’s common stock issued to such Stockholder, if the sales of such shares would, when combined with the sale of any other shares of the Company’s common stock by such Stockholder in any (1)-day period, exceed five percent (5%) of the average daily trading volume of the Company’s common stock on the New York Stock Exchange over the five (5) trading days preceding such date of sale; provided , however , that if the aggregate number of Shares represents less than fifty percent (50%) of the average daily trading volume of the Company’s common stock on the New York Stock Exchange over the five (5) trading days preceding the Closing (as defined in the Merger Agreement) (the “Average Volume”), such resale volume limitations shall not apply. If the aggregate number of Shares issued to a Stockholder represent more than the Average Volume, the Company may place such legends or stock transfer restrictions on the Shares as shall be appropriate for enforcing the provisions of this Section 2(c). Any waiver or release of the restrictions in this Section 2(c) granted to a particular Holder will be made available to all other Holders on a proportionate basis.

4

ARTICLE III
REGISTRATION AND PROCEDURES

Section 3.1    S-3 Registration .

(a)    In compliance with the terms of this Agreement, the Company shall prepare and file with the SEC a registration statement on Form S-3ASR covering the resale as a secondary offering to be made on a continuous basis pursuant to Rule 415 of all Registrable Securities. The registration statement (or new registration statement) required to be filed pursuant to this Section 3.1 is referred to herein as the “ Registration Statement .”

(b)    The Company shall exercise commercially reasonable efforts to prepare and file the Registration Statement with the SEC no later than five (5) Business Days after the Closing Date; provided , however , that no filing of such Registration Statement shall be required during any period in which the Company’s insider trading policy would prohibit executive officers of the Company from trading in the Company’s securities. Subject to the terms of this Agreement, the Company shall use commercially reasonable efforts to keep the Registration Statement continuously effective as promptly as practical and in compliance with the Securities Act and usable for resale of Registrable Securities covered thereby from the date of its initial effectiveness until one year following the Closing Date (such period, the “ Effectiveness Period ”); provided , however , that nothing in this Agreement shall require the Company to maintain any Registration Statement once the Shares cease to be Registrable Securities.

(c)    It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 3.1 or Section 3.2 with respect to Registrable Securities of a Holder that the Holder shall furnish to the Company such information regarding such Holder as required under Section 3.4(a).

Section 3.2    Registration Procedures; Company Obligations . The Company shall use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with Section 3.1, and in connection therewith shall have the following obligations:

(a)    No later than the first Business Day after the Registration Statement becomes effective, the Company shall file with the SEC the final prospectus included therein pursuant to Rule 424. The Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, shall comply as to form and content with the applicable requirements of the Securities Act and shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

(b)    Subject to Section 3.2(h), the Company shall prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in

5

connection with the Registration Statement as may be necessary to keep the Registration Statement effective and usable for resale of the Registrable Securities covered thereby at all times during the Effectiveness Period. The Company shall use commercially reasonable efforts to cause any post-effective amendment to the Registration Statement that is not effective upon filing to become effective as soon as practicable after such filing. No later than the first Business Day after a post-effective amendment to the Registration Statement becomes effective, the Company shall file with the SEC the final prospectus or prospectus supplement included therein pursuant to Rule 424.

(c)    The Company shall notify the Holders of the time when the Registration Statement becomes effective or an amendment or supplement to any prospectus forming a part of such Registration Statement has been filed. The Company shall furnish to the Holders, without charge, such documents, including copies of any preliminary prospectus or final prospectus contained in the Registration Statement or any amendments or supplements thereto, as such Holder may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities covered by the Registration Statement.

(d)    The Company shall use commercially reasonable efforts to register or qualify, and cooperate with the Holders of Registrable Securities covered by the Registration Statement in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or "blue sky" laws of each state and other jurisdiction of the United States as any such Holder reasonably request in writing, and do any and all other things reasonably necessary or advisable to keep such registration or qualification in effect; provided , however , that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject.

(e)    The Company shall promptly notify (which notice shall be accompanied by an instruction to suspend the use of the prospectus) the Holders when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which any prospectus included in, or relating to, the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading (provided that in no event shall such notice contain any material, non-public information), and, subject to Section 3.2(h), promptly prepare and file with the SEC a supplement to the related prospectus or amendment to such Registration Statement or any other required document so that, as thereafter delivered to the Holders, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(f)    The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension as soon as reasonably practicable and to notify the Holders of the issuance of such order and the

6

resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

(g)    The Company shall use commercially reasonable efforts to cause the Registrable Securities covered by the Registration Statement to be (1) listed on the New York Stock Exchange and (2) reflected in the stock ledger maintained by the Company’s transfer agent.

(h)    Notwithstanding anything in this Agreement to the contrary, at any time after the Registration Statement becomes effective the Company may delay the disclosure of material, non-public information concerning the Company or any of its subsidiaries if the Board of Directors of the Company has a valid business reason for determining that disclosure of such information is not in the best interests of the Company and such disclosure is not otherwise required (a “ Grace Period ”); provided , however , that the Company shall promptly (i) provide written notice to the Holders of the Grace Period (provided that in no event shall such notice contain any material, non-public information) and the date on which the Grace Period will begin, and (ii) provide written notice to the Holders of the date on which the Grace Period ends; provided , further , that no Grace Period shall exceed thirty (30) consecutive days and during the Effectiveness Period such Grace Periods shall not exceed an aggregate of sixty (60) days provided , further , the Company shall not register any securities for its own account or that of any other stockholder during such Grace Period. The provisions of Section 3.2(e) shall not be applicable during any Grace Period. Upon expiration of a Grace Period, the Company shall again be bound by the provisions of Section 3.2(e) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.

Section 3.3    Current Public Information.  During the Effectiveness Period, the Company shall use commercially reasonable efforts to (i) make and keep public information available, as those terms are defined in Rule 144, until all the Registrable Securities cease to be Registrable Securities, and so long as a Holder owns any Registrable Securities, furnish to such Holder upon request a written statement by the Company as to its satisfaction of the current public information requirements of Rule 144 and (ii) file with the SEC in a timely manner all reports and other documents required to be filed by the Company under the Securities Act and the Exchange Act.

Section 3.4    Obligations of the Holders .

(a)    Each Holder shall furnish in writing to the Company such information regarding such Holder, the Registrable Securities held by such Holder and the intended method of disposition of the Registrable Securities held by such Holder as shall be reasonably required to effect the registration of such Registrable Securities and shall execute, or shall cause to be executed, such customary documents in connection with such registration as the Company may reasonably request. In connection therewith, upon the execution of this Agreement, each Holder shall complete, execute and deliver to the Company a selling securityholder notice and questionnaire in the form attached hereto as Exhibit B . At least five (5) Business Days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Holder of any additional information the Company requires from such Holder, and such Holder shall provide such information to the

7

Company at least three (3) Business Days prior to the first anticipated filing date of the Registration Statement.

(b)    Each Holder agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement.

(c)    Upon receipt of written notice from the Company of any event of the kind described in Section 3.2(e) or Section 3.2(f) or written notice of any Grace Period, each Holder shall forthwith discontinue disposition of Registrable Securities until such Holder has received copies of a supplemented or amended prospectus or until such Holder is advised in writing by the Company that the use of the prospectus may be resumed or that the Grace Period has ended. If so directed by the Company, such Holder shall use its commercially reasonable efforts to return to the Company (at the Company's expense) all copies of the prospectus covering such Registrable Securities current at the time of receipt of such notice other than permanent file copies then in such Holder’s possession.

(d)    No Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without the prior written consent of the Company.
(e)    Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to any Registration Statement.

Section 3.5    Expenses of Registration . All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registration hereunder shall be borne by the Holders of the Registrable Securities so registered in proportion the Registrable Securities owned by such Holders.

Section 3.6    Transfer of Registration Rights . The rights contained in Section 3.1 hereof to cause the Company to register the Registrable Securities, and the other rights set forth in this Article III, may be assigned or otherwise conveyed by any Stockholder to any transferee of the Registrable Securities if the Transfer was permitted under Article II and the transferee agrees with the Company in writing to be bound by this Agreement.

ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION

Section 4.1    Indemnification . In the event any Registrable Securities are included in the Registration Statement:

(a)    The Company shall indemnify and hold harmless each Holder of Registrable Securities and such Holder’s officers, directors, employees, partners, members, agents (including brokers), representatives and Affiliates and each person, if any, who controls such Holder within

8

the meaning of the Securities Act or the Exchange Act (each, a “ Holder Indemnitee ”), against any losses, claims, damages, liabilities or expenses to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a “ Violation ”): (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference, (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and (iii) a violation or alleged violation by the Company of any rule or regulation promulgated under the Securities Act or the Exchange Act applicable to the Company and relating to action or inaction required of the Company in connection with the Registration Statement, and the Company will pay to each such Holder Indemnitee, as accrued, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, action or expense; provided , however , that the indemnification contained in this Section 4.1(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, action or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed), nor shall the Company be liable for any such loss, claim, damage, liability, action or expense to the extent that it arises out of or is based upon a Violation which occurs (A) in reliance upon and in conformity with written information furnished by a Holder, (B) in connection with any failure of such person to deliver or cause to be delivered a prospectus made available by the Company in a timely manner, (C) in connection with any offers or sales effected by or on behalf of any Holder Indemnitee in violation of Section 3.4(c) of this Agreement, or (D) as a result of offers or sales effected by or on behalf of any Holder Indemnitee by means of a freewriting prospectus (as defined in Rule 405) that was not authorized in writing by the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Holder Indemnitee, and shall survive the transfer of such securities by such Holder, and any termination of this Agreement.

(b)    Each Holder, severally and not jointly, shall indemnify and hold harmless the Company and each of its officers, directors, employees, agents, representatives and Affiliates and persons, if any, who control the Company within the meaning of the Securities Act or the Exchange Act (each, a “ Company Indemnitee ”), against any losses, claims, damages, liabilities or expenses to which any of the Company Indemnitees may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any (i) untrue statement or alleged untrue statement of a material fact regarding such Holder and provided in writing by such Holder which is contained in the Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent (and only to the extent) that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, preliminary or final prospectus, amendment or supplement thereto, in reliance upon and in conformity with written

9

information furnished by such Holder, (iii) a violation or alleged violation by a Holder of any rule or regulation promulgated under the Securities Act or the Exchange Act applicable to such Holder and relating to action or inaction required of such Holder in connection with the registration of such Holder’s Registrable Securities or (iv) in connection with any offer or sales effected by or on behalf of such Holder in violation of Section 3.4(c) of this Agreement, and each Holder will pay, as accrued, any legal or other expenses reasonably incurred by any Company Indemnitee pursuant to this Section 4.1(b), in connection with investigating or defending any such loss, claim, damage, liability, action or expense as a result of a Holder’s untrue statement or omission or violation; provided , however , that the indemnification contained in this Section 4.1(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, action or expense if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, the amount any Holder will be obligated to pay pursuant to this Section 4.1(b) and Section 4.2 will be limited to an amount equal to the gross proceeds actually received by such Holder for the sale of the Registrable Securities pursuant to the registration statement which gives rise to such obligation to indemnify and/or contribute (less the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such loss, liability, claim, damage, or expense or any substantially similar loss, liability, claim, damage, or expense arising from the sale of such Registrable Securities). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Company Indemnitee, and shall survive the transfer of such securities by such Holder, and any termination of this Agreement.

(c)    Promptly after receipt by a party to this Agreement entitled to indemnity hereunder (an “ Indemnified Party ”) under this Section 4.1 of notice of the commencement of any action (including any governmental action), such Indemnified Party will, if a claim in respect thereof is to be made against any party to this Agreement from whom indemnification may be sought under this Section 4.1 (an “ Indemnifying Party ”), deliver to the Indemnifying Party a written notice of the commencement thereof and the Indemnifying Party shall have the right to participate in, and, to the extent the Indemnifying Party so desires, jointly with any other Indemnifying Party similarly noticed, to assume the defense thereof with counsel reasonably satisfactory to the Indemnifying Party; provided , however , that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses of such counsel to be paid by the Indemnifying Party, if (i) the Indemnifying Party shall have failed to assume the defense of such claim within seven (7) days after receipt of notice of the claim and to employ counsel reasonably satisfactory to such Indemnified Party, as the case may be; or (ii) in the reasonable opinion of counsel retained by the Indemnified Party, representation of such Indemnified Party by such counsel would be inappropriate due to actual or potential differing interests (including the availability of differing legal defenses) between such Indemnified Party and any other party represented by such counsel in such proceeding. It is understood that the Indemnifying Party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate counsel at any time for all such Indemnified Parties. The Indemnified Party shall cooperate fully with the Indemnifying Party in connection with any negotiation or defense of any such action or claim by the Indemnifying Party and shall furnish to the Indemnifying Party all information reasonably available to the Indemnified Party which relates to such action or claim. The Indemnifying Party

10

shall keep the Indemnified Party reasonably apprised of the status of the defense or any settlement negotiations with respect thereto. No Indemnifying Party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided , however , that the Indemnifying Party shall not unreasonably withhold, delay or condition its consent. The failure to deliver written notice to the Indemnifying Party within a reasonable time of the commencement of any such action shall not relieve such Indemnifying Party of any liability to the Indemnified Party under this Section 4.1, except to the extent such failure to give notice has a material adverse effect on the ability of the Indemnifying Party to defend such action.

Section 4.2    Contribution .     If the indemnification provided for in Section 4.1 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the amount any Holder will be obligated to severally and not jointly contribute pursuant to this Section 4.2, together with Holder’s liability under Section 4.1(b), will be limited to an amount equal to the gross proceeds received by a Holder for the sale of the Registrable Securities pursuant to the registration statement which gives rise to such obligation to contribute and/or indemnify (less the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such loss, liability, claim, damage, or expense or any substantially similar loss, liability, claim, damage, or expense arising from the sale of such Registrable Securities). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution hereunder from any person who was not guilty of such fraudulent misrepresentation.

ARTICLE V
GENERAL PROVISIONS

Section 5.1    Entire Agreement.  This Agreement (including Exhibit A hereto) constitutes the entire understanding and agreement between the parties as to the matters covered herein and supersedes and replaces any prior understanding, agreement or statement of intent, in each case, written or oral, of any and every nature with respect thereto.
Section 5.2    Notices . Any notice or other communication required or permitted to be delivered to any party under this Agreement shall be in writing and shall be deemed properly delivered, given and received (a) upon receipt when delivered by hand, (b) upon transmission, if sent by facsimile or electronic transmission (in each case with receipt verified by electronic

11

confirmation), or (c) one (1) Business Day after being sent by courier or express delivery service. The addresses, email addresses and facsimile numbers for such notices and communications are those set forth on the signature pages hereof, or such other address, email address or facsimile number as may be designated in writing hereafter, in the same manner, by any such person.
Section 5.3    Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart and such counterparts may be delivered by the parties hereto via facsimile or electronic transmission.
Section 5.4    Amendment; Waiver . This Agreement may be amended or modified, and any provision hereof may be waived, in whole or in part, at any time pursuant to an agreement in writing executed by the Company and Holders holding a majority of the Registrable Securities at such time. Any failure by any party at any time to enforce any of the provisions of this Agreement shall not be construed a waiver of such provision or any other provisions hereof.
Section 5.5    Severability . In the event that any provision of this Agreement or the application thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.
Section 5.6 .     Governing Law; Venue . This Agreement and all claims or causes of action (whether sounding in contract or tort) arising under or related to this Agreement, shall be governed by and construed in accordance with, the Laws of the State of California, without regard to any rule or principle that might refer the governance or construction of this Agreement to the Laws of another jurisdiction. In any action or proceeding between any of the parties arising under or related to this Agreement, each of the parties (a) knowingly, voluntarily, irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state or federal courts located in the City and County of San Francisco, California, (b) agrees that all claims in respect of any such action or proceeding shall be heard and determined exclusively in accordance with clause (a) of this Section 5.6, (c) waives any objection to the laying of venue of any such action or proceeding in such courts, including any objection that any such action or proceeding has been brought in an inconvenient forum or that the court does not have jurisdiction over any party, and (d) agrees that service of process upon such party in any such action or proceeding shall be effective if such process is given as a notice in accordance with Section 5.2. The parties agree that any party may commence a proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.
Section 5.7      Specific Performance . Each party acknowledges and agrees that the other parties hereto would be irreparably harmed and would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed by such first party in accordance with their specific terms or were otherwise breached by such first party. Accordingly, each party agrees that the other parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this

12

Agreement, this being in addition to any other remedy to which such parties are entitled at law or in equity.
(Next Page is Signature Page)

13

IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.

COMPANY:
INVITAE CORPORATION
By:                          
Name:                      
 Title:                     

	
 
Address for Notice:
1400 16th Street
San Francisco, California 94103	
Attn:	
Facsimile No.:	

[Signature Page to Registration Rights Agreement]

        IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as of the date first written above.

							
 	 	 	 	 	 	 	
 	 	HOLDER:	
 	 	Name:	 	
	
 	 	By:	 	
	
 	 	 	 	Name:	 	 	
 	 	 	 	Title:	 	 	

	

 	 	Address for Notice:	 	
	
 	 	Telephone No.:	 	
	
 	 	Facsimile No.:	 	
	
 	 	Email Address:	 	 	

[Signature Page to Registration Rights Agreement]

EXHIBIT A

		
Name of Holder	Number of Shares	

 	 	

 	 	

 	 	

 	 	

 	 	

 	 	

 	 	

EXHIBIT B
INVITAE CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the Registration Statement of Invitae Corporation (the “Company”), please provide the following information regarding the Holder of the Registrable Securities and any natural persons or entities who have control over the Holder (each, a “Control Person”).
1. Please provide the name and address of the Holder and each Control Person as it should appear in the Registration Statement:

	

 	
 	
2. Except as set forth below, neither the Holder nor any Control Person holds any equity securities of the Company on behalf of another person or entity:

	

3. Except as set forth below, neither the Holder nor any Control Person beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) any securities of the Company other than the Registrable Securities. Please include number of securities owned by for each such Holder and Control Person, as applicable.

	

4. Has the Holder or any Control Person had any position, office or other material relationship, including business relationships, within the past three years with the Company or its affiliates? (Include any relationships involving the Holder, any Control Person or its respective affiliates, officers, directors, or principal equity holders (5% or more) that has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.)                     Yes     No

If yes, please indicate the nature of any such relationship:

	

5. The undersigned has reviewed the Plan of Distribution attached as Annex A hereto, and hereby confirms that the information contained therein regarding the undersigned and its plan of distribution is correct and complete.         Confirmed     Not correct/complete
6. Has the Holder or any Control Person made or is it aware of any arrangements relating to the distribution of the shares of the Company pursuant to the Registration Statement?             Yes     No
If yes, please describe the nature of such arrangements:

	

7. FINRA Matters:
(a) State whether the Holder or any Control Person is a member of FINRA.     Yes     No
 
(b) State whether (i) any associate or affiliate of the Holder or any Control Person is a member of FINRA, a controlling shareholder of a FINRA member, a person associated with a member, a direct or indirect affiliate of a member, or an underwriter or related person with respect to the proposed offering; (ii) the Holder, any Control Person or any associate or affiliate of the Holder or such Control Person owns any stock or other securities of any FINRA member not purchased in the open market; or (iii) the Holder, any Control Person or any associate or affiliate of the Holder or Control Person has made any outstanding subordinated loans to any FINRA member. If the Holder or the Control Person is a general or limited partnership, a no answer asserts that no such relationship exists for the Holder or Control Person, as well as for each of its respective general or limited partners.                 Yes     No
 
If “yes,” please identify the FINRA member and describe the Holder’s or Control Person’s relationship, including, in the case of a general or limited partner, the name of the partner:

	

(c) If the answer to Item 6(b) is yes, did the Holder or Control Person acquire the Registrable Securities in the ordinary course of business (if not, please explain)?

	

(d) If the answer to Item 6(b) is yes, did the Holder or Control Person, at the time it acquired the Registrable Securities, have any agreements, plans or understandings, directly or indirectly, with any person to distribute the Registrable Securities (if yes, please explain)?

	

If the answer to Items 6(a) and 6(b) was “no”, you need not respond to Item 6(e).
Note that in general the Company will be required to identify any registered broker-dealer as an underwriter in the Registration Statement. Note that if the Holder or any Control Person is an associate or affiliate of a broker-dealer and did not acquire the Registrable Securities in the ordinary course of business or at the time of acquisition had any arrangements or understandings, directly or indirectly, to distribute the securities, the Holder or Control Person may be required to be identified as an underwriter in the Registration Statement.
(e) State whether the Holder, any Control Person or any associate or affiliate thereof has been an underwriter, or a controlling person or member of any investment banking or brokerage firm which has been or might be an underwriter for securities of the Company or any affiliate thereof including, but not limited to, the common stock now being registered.     Yes     No
 
If “yes,” please identify the FINRA member and describe your relationship, including, in the case of a general or limited partner, the name of the partner.

	

ACKNOWLEDGEMENT
The undersigned hereby agrees to notify the Company promptly of any changes in the foregoing information which should be made as a result of any developments, including the passage of time. The undersigned also agrees to provide the Company and the Company’s counsel any and all such further information regarding the undersigned promptly upon request in connection with the preparation, filing, amending, and supplementing of the Registration Statement (or any prospectus or supplement contained therein). The undersigned hereby consents to be named as a selling stockholder in the Registration Statement and to the use of all such information in the Registration Statement.
The undersigned understands and acknowledges that the Company will rely on the information set forth herein for purposes of the preparation and filing of the Registration Statement.
The undersigned represents and warrants that all information it provides to the Company and its counsel is currently accurate and complete and will be accurate and complete at the time the Registration Statement becomes effective and at all times subsequent thereto, and agrees during the Effectiveness Period and any additional period in which the undersigned is making sales of Shares under and pursuant to the Registration Statement, and agrees during such periods to notify the Company immediately of any misstatement of a material fact in the Registration Statement, and of any omission of any material fact necessary to make the statements contained therein not misleading.
Dated:                , 2019

	

 	
Holder Name	

Signature	

Name and Title of Signatory	

PLEASE EMAIL A COPY OF THE COMPLETED AND EXECUTED QUESTIONNAIRE TO:

Julie Park
Pillsbury Winthrop Shaw Pittman LLP
julie.park@pillsburylaw.com

ANNEX A
PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:

•	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;	

•	block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;	

•	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;	

•	an exchange distribution in accordance with the rules of the applicable exchange;	

•	privately negotiated transactions;	

•	short sales effected after the date of this prospectus;	

•	through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;	

•	through the distribution of the common stock by any selling stockholder to its partners, members or stockholders;	

•	broker-dealers may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share;	

•	a combination of any such methods of sale; and	

•	any other method permitted pursuant to applicable law.	

In addition, any shares covered by this prospectus that qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus.
The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment or supplement to this prospectus amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out the short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.
The selling stockholders and any broker-dealers or agents that participate in the sale of the common stock or interests therein may be deemed to be “underwriters” within the meaning of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are deemed to be “underwriters” within the meaning of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. Underwriters and their controlling persons, dealers and agents may be entitled, under agreements entered into with us and the selling stockholder, to indemnification against and contribution toward specific civil liabilities, including liabilities under the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents or dealers, and any applicable discounts, commissions, concessions or other compensation with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

We have agreed to indemnify the selling stockholders against certain liabilities, including liabilities under the Securities Act, relating to the registration of the shares offered by this prospectus.

Exhibit 10.5

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “ Agreement ”) is made and entered into as of July 16, 2019 (the “ Effective Date ”) by and among Invitae Corporation, a Delaware corporation (the “ Company ”) and certain stockholders of Jungla Inc., a Delaware corporation (“ Jungla ”) listed on Exhibit A hereto (each, a “ Stockholder ” and collectively, the “ Stockholders ”).

RECITALS

WHEREAS, the Company, the Stockholders, Jumanji, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“ Merger Sub ”), and Fortis Advisors LLC as Sellers’ Representative (as defined therein), have entered into that certain Stock Purchase and Merger Agreement dated as of July 11, 2019 (the “ Purchase Agreement ”), pursuant to which, on the Effective Date, the Company acquired 100% of the outstanding equity securities of Jungla from the Stockholders (the “ Acquisition ”);
WHEREAS, in connection with the Acquisition and pursuant to the Purchase Agreement, the Company issued to the Stockholders at the Closing (as defined in the Purchase Agreement) shares of the Company’s common stock, par value $0.0001 per share, identified on Exhibit A hereto as Upfront Stock Consideration Shares (the “ Shares ”) pursuant to the Purchase Agreement; and

WHEREAS, in connection with the consummation of the transactions contemplated by the Purchase Agreement, the Company agreed to grant certain registration rights to the Stockholders as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1    Definitions.     For purposes of this Agreement, the following terms and variations thereof have the meanings set forth below:

“ Affiliate ” means, with respect to any person, any other person that, directly or indirectly, controls, or is controlled by, or is under common control with, such person. For this purpose: (a) “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise; and (b) “person” means any natural person, corporation, limited liability company, partnership, association, trust or other entity.

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

“ Business Day " means any day, other than a Saturday, Sunday or one on which banks are authorized by law to be closed in New York, New York.

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

“ Effective Date ” has the meaning set forth in the preamble.

“ Effectiveness Period ” has the meaning set forth in Section 3.1(b).

“ Exchange Act ” means the Securities Exchange Act of 1934.

“ Grace Period ” has the meaning set forth in Section 3.2(h).

“ Holder ” (collectively, “ Holders ”) means any Stockholder and any transferee permitted under Section 2.1 of Registrable Securities, in each case to the extent holding Registrable Securities.

“ Holder Indemnitee ” has the meaning set forth in Section 4.1(a).

“ Indemnified Party ” has the meaning set forth in Section 4.1(c).

“ Indemnifying Party ” has the meaning set forth in Section 4.1(c).

“ Purchase Agreement ” has the meaning set forth in the recitals.

“ Registrable Securities ” means the Shares issued to the Stockholders pursuant to the Purchase Agreement and any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to such securities; provided , however , that Registrable Securities shall cease to be Registrable Securities with respect to a particular Holder when (i) such securities have been disposed of in accordance with the Registration Statement or pursuant to Rule 144; (ii) such securities may be sold pursuant to Rule 144 without any limitation as to manner-of-sale restrictions or volume limitations; or (iii) such securities cease to be outstanding.

“ Registration Expenses ” means all expenses incurred by the Company in effecting the registration pursuant to this Agreement, including all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, “blue sky” fees and expenses, and expenses of the Company’s independent registered public accounting firm in connection with any regular or special reviews or audits incident to or required by any such registration, but shall not include Selling Expenses.

“ Registration Statement ” has the meaning set forth in Section 3.1.

2

“ Rule 144 ” means Rule 144 under the Securities Act or any successor or other similar rule, regulation or interpretation of the SEC that may at any time permit the sale of Registrable Securities to the public without registration.

“ Rule 405 ” means Rule 405 under the Securities Act or any successor or other similar rule.

“ Rule 415 ” means Rule 415 under the Securities Act or any successor or other similar rule providing for offering securities on a continuous or delayed basis.

“ Rule 424 ” means Rule 424 under the Securities Act or any successor or other similar rule.

“ Shares ” has the meaning set forth in the recitals.

“ SEC ” means the Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933.

“ Selling Expenses ” means all discounts, selling commissions, fees of selling brokers, dealer managers and similar securities industry professionals and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of counsel for the Company included in Registration Expenses).

“ Transfer ” means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of (by merger, testamentary disposition, operation of law or otherwise), either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of (by merger, testamentary disposition, operation of law or otherwise) any Shares.

“ Violation ” has the meaning set forth in Section 4.1(a).

ARTICLE II
TRANSFER RESTRICTIONS

Section 2.1    General Transfer Restrictions . The right of any Stockholder to Transfer any Shares held by it is subject to the restrictions set forth below.

(a)    Each Stockholder acknowledges that the Shares have not been registered under the Securities Act and may not be Transferred except pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from registration under the Securities Act. Each Stockholder covenants that the Shares will only be disposed of pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act or

3

pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state and foreign securities laws. In connection with any Transfer of the Shares other than a Transfer (i) pursuant to an effective registration statement, (ii) to the Company or (iii) pursuant to Rule 144, the Company may require the Stockholder to provide to the Company an opinion of counsel selected by the Stockholder and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such Transfer does not require registration under the Securities Act.
(b)    Each Stockholder agrees to the affixing, so long as is required by this Section 2.1, of the following legend on any certificate or book-entry position evidencing any of the Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND APPLICABLE STATE SECURITIES LAWS.
Certificates or book-entry positions evidencing the Shares shall not be required to contain such legend or any other legend (i) following any sale of such Shares pursuant to an effective registration statement (including the Registration Statement described in Section 3.1) covering the resale of the Shares, (ii) following any sale of such Shares pursuant to Rule 144 or if the Shares are transferrable by a person who is not an Affiliate of the Company or the applicable Stockholder pursuant to Rule 144 without any volume or manner of sale restrictions thereunder, (iii) if Holder is not an Affiliate of the Company, six (6) months following the Closing, provided , however , that in the case of (i), (ii) and (iii), above, the Stockholder provides the Company with customary legal representation letters reasonably acceptable to the Company or (iv) if the Stockholder provides the Company with a legal opinion reasonably acceptable to the Company to the effect that the legend is not required under applicable requirements of the Securities Act. Whenever such restrictions shall cease and terminate as to any Shares, the Holder of such securities shall be entitled to receive from the Company upon a written request in writing, without expense, new securities of like tenor not bearing the legend set forth herein.

(c)    Notwithstanding anything herein to the contrary, following registration of the Shares, each Stockholder agrees not to sell any Shares issued to such Stockholder if the sales of such shares would, when combined with the sale of any other Shares by such Stockholder in any one (1) day period, exceed five percent (5%) of the average daily trading volume of the Company’s common stock on the New York Stock Exchange over the five (5) trading days immediately preceding such date of sale; provided , however , that if the aggregate number of Shares represents less than fifty percent (50%) of the average daily trading volume of the Company’s common stock on the New York Stock Exchange over the five (5) trading days preceding the Closing Date (as defined in the Purchase Agreement) (the “ Average Volume ”), such resale volume limitations shall not apply. If the aggregate number of Shares issued to a Stockholder represents more than the Average Volume, the Company may place such legends or stock transfer restrictions on the Shares as shall be appropriate for enforcing the provisions of this Section 2(c). Any waiver or release of

4

the restrictions in this Section 2(c) granted to a particular Holder will be made available to all other Holders on a proportionate basis.

5

ARTICLE III
REGISTRATION AND PROCEDURES

Section 3.1    S-3 Registration .

(a)    In compliance with the terms of this Agreement, the Company shall prepare and file with the SEC a registration statement on Form S-3ASR covering the resale as a secondary offering to be made on a continuous basis pursuant to Rule 415 of all Registrable Securities. The registration statement (or new registration statement) required to be filed pursuant to this Section 3.1, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such registration statement other than a registration statement on Form S-4 or S-8, is referred to herein as the “ Registration Statement .”

(b)    The Company shall exercise commercially reasonable efforts to prepare and file the Registration Statement with the SEC no later than fifteen (15) Business Days after the Closing Date; provided , however , that no filing of such Registration Statement shall be required (i) during any period in which the Company’s insider trading policy would prohibit executive officers of the Company from trading in the Company’s securities (which, without limitation, is expected to be applicable hereunder from the Effective Date for a period extending at least until the date of the Company’s press release in respect of certain financial metrics for the Company from the second quarter of 2019) or (ii) prior to the Company’s filing with the SEC of required pro forma financial statements in respect of the Company’s acquisition of Singular Bio, Inc; provided , further , that the Registration Statement shall be filed by the Company with the SEC no later than September 6, 2019. Subject to the terms of this Agreement, the Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after such filing and keep the Registration Statement continuously effective as promptly as practical and in compliance with the Securities Act and usable for resale of Registrable Securities covered thereby from the date of its initial effectiveness until the earlier of (i) the date on which such Registrable Securities have been disposed of in accordance with the Registration Statement or pursuant to Rule 144 or (ii) such Registrable Securities may be sold pursuant to Rule 144 without any limitation as to manner-of-sale restrictions or volume limitations (such period, the “ Effectiveness Period ”); provided , however , that nothing in this Agreement shall require the Company to maintain any Registration Statement once the Shares cease to be Registrable Securities.

(c)    It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 3.1 or Section 3.2 with respect to Registrable Securities of a Holder that the Holder shall furnish to the Company such information regarding such Holder as required under Section 3.4(a).

Section 3.2    Registration Procedures; Company Obligations . The Company shall use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with Section 3.1, and in connection therewith shall have the following obligations:

6

(a)    No later than the first Business Day after the Registration Statement becomes effective, the Company shall file with the SEC the final prospectus included therein pursuant to Rule 424. The Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, shall comply as to form and content with the applicable requirements of the Securities Act and shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

(b)    Subject to Section 3.2(h), the Company shall prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective and usable for resale of the Registrable Securities covered thereby at all times during the Effectiveness Period. The Company shall use commercially reasonable efforts to cause any post-effective amendment to the Registration Statement that is not effective upon filing to become effective as soon as practicable after such filing. No later than the first Business Day after a post-effective amendment to the Registration Statement becomes effective, the Company shall file with the SEC the final prospectus or prospectus supplement included therein pursuant to Rule 424.

(c)    The Company shall as promptly as practicable notify the Holders of the time when the Registration Statement becomes effective or an amendment or supplement to any prospectus forming a part of such Registration Statement has been filed. The Company shall furnish to the Holders, without charge, such documents, including copies of any preliminary prospectus or final prospectus contained in the Registration Statement or any amendments or supplements thereto, as such Holder may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities covered by the Registration Statement.

(d)    The Company shall use commercially reasonable efforts to register or qualify, and cooperate with the Holders of Registrable Securities covered by the Registration Statement in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or “blue sky” laws of each state and other jurisdiction of the United States as any such Holder reasonably requests in writing, and do any and all other things reasonably necessary or advisable to keep such registration or qualification in effect; provided , however , that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject.

(e)    The Company shall promptly notify (which notice shall be accompanied by an instruction to suspend the use of the prospectus) the Holders when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which any prospectus included in, or relating to, the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading (provided that in no event shall such notice contain any material, non-public information), and, subject to Section 3.2(h), promptly prepare and file with the SEC a supplement to the related prospectus or amendment to such Registration Statement or any other required

7

document so that, as thereafter delivered to the Holders, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(f)    The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension as soon as reasonably practicable and to notify the Holders of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

(g)    The Company shall use commercially reasonable efforts to cause the Registrable Securities covered by the Registration Statement to be (1) listed on the New York Stock Exchange and (2) reflected in the stock ledger maintained by the Company’s transfer agent.

(h)    Notwithstanding anything in this Agreement to the contrary, at any time after the Registration Statement becomes effective the Company may delay the disclosure of material, non-public information concerning the Company or any of its subsidiaries if the Board of Directors of the Company has a valid business reason for determining that disclosure of such information is not in the best interests of the Company and such disclosure is not otherwise required (a “ Grace Period ”); provided , however , that the Company shall promptly (i) provide written notice to the Holders of the Grace Period (provided that in no event shall such notice contain any material, non-public information) and the date on which the Grace Period will begin, (ii) advise the Holders in writing to cease sales under the Registration Statement until the end of the Grace Period, (iii) use commercially reasonable efforts to terminate a Grace Period as promptly as possible, and (iv) provide written notice to the Holders of the date on which the Grace Period ends; provided , further , that no Grace Period shall exceed thirty (30) consecutive days and during any twelve (12) month period such Grace Periods shall not exceed an aggregate of sixty (60) days; provided , further , the Company shall not register any securities for its own account or that of any other stockholder during such Grace Period. The provisions of Section 3.2(e) shall not be applicable during any Grace Period. Upon expiration of a Grace Period, the Company shall again be bound by the provisions of Section 3.2(e) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.

Section 3.3    Current Public Information.  During the Effectiveness Period, the Company shall use commercially reasonable efforts to (i) make and keep public information available, as those terms are defined in Rule 144, until all the Registrable Securities cease to be Registrable Securities, and so long as a Holder owns any Registrable Securities, furnish to such Holder upon request a written statement by the Company as to its satisfaction of the current public information requirements of Rule 144 and (ii) file with the SEC in a timely manner all reports and other documents required to be filed by the Company under the Securities Act and the Exchange Act.

8

Section 3.4    Obligations of the Holders .

(a)    Each Holder shall furnish in writing to the Company such information regarding such Holder, the Registrable Securities held by such Holder and the intended method of disposition of the Registrable Securities held by such Holder as shall be reasonably required to effect the registration of such Registrable Securities and shall execute, or shall cause to be executed, such customary documents in connection with such registration as the Company may reasonably request. In connection therewith, upon the execution of this Agreement, each Holder shall complete, execute and deliver to the Company a selling securityholder notice and questionnaire in the form attached hereto as Exhibit B . At least five (5) Business Days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Holder of any additional information the Company requires from such Holder, and such Holder shall provide such information to the Company at least three (3) Business Days prior to the first anticipated filing date of the Registration Statement.

(b)    Each Holder agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement.

(c)    Upon receipt of written notice from the Company of any event of the kind described in Section 3.2(e) or Section 3.2(f) or written notice of any Grace Period, each Holder shall forthwith discontinue disposition of Registrable Securities until such Holder has received copies of a supplemented or amended prospectus or until such Holder is advised in writing by the Company that the use of the prospectus may be resumed or that the Grace Period has ended. If so directed by the Company, such Holder shall use its commercially reasonable efforts to return to the Company (at the Company's expense) all copies of the prospectus covering such Registrable Securities current at the time of receipt of such notice other than permanent file copies then in such Holder’s possession.

(d)    No Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without the prior written consent of the Company.
(e)    Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to any Registration Statement.

Section 3.5    Expenses of Registration . All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registration hereunder shall be borne by the Holders of the Registrable Securities so registered in proportion the Registrable Securities owned by such Holders.

Section 3.6    Transfer of Registration Rights . The rights contained in Section 3.1 hereof to cause the Company to register the Registrable Securities, and the other rights set forth in this Article III, may be assigned or otherwise conveyed by any Stockholder to any transferee of the

9

Registrable Securities if the Transfer was permitted under Article II and the transferee agrees with the Company in writing to be bound by this Agreement.

ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION

Section 4.1    Indemnification . In the event any Registrable Securities are included in the Registration Statement:

(a)    The Company shall indemnify and hold harmless each Holder of Registrable Securities and such Holder’s officers, directors, employees, partners, members, agents (including brokers), representatives and Affiliates and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (each, a “ Holder Indemnitee ”), against any losses, claims, damages, liabilities or expenses to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a “ Violation ”): (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference, (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and (iii) a violation or alleged violation by the Company or its agents of any rule or regulation promulgated under the Securities Act or the Exchange Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with the Registration Statement, and the Company will pay to each such Holder Indemnitee, as accrued, any legal or other expenses reasonably incurred by he, she or it in connection with investigating or defending any such loss, claim, damage, liability, action or expense; provided , however , that the indemnification contained in this Section 4.1(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, action or expense if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed), nor shall the Company be liable for any such loss, claim, damage, liability, action or expense to the extent that it arises out of or is based upon a Violation which occurs (A) in reliance upon and in conformity with written information furnished by a Holder, (B) in connection with any failure of such person to deliver or cause to be delivered a prospectus made available by the Company in a timely manner, (C) in connection with any offers or sales effected by or on behalf of any Holder Indemnitee in violation of Section 3.4(c) of this Agreement, or (D) as a result of offers or sales effected by or on behalf of any Holder Indemnitee by means of a freewriting prospectus (as defined in Rule 405) that was not authorized in writing by the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Holder Indemnitee, and shall survive the transfer of such securities by such Holder, and any termination of this Agreement.

(b)    Each Holder, severally and not jointly, shall indemnify and hold harmless the Company and each of its officers, directors, employees, agents, representatives and Affiliates and persons, if any, who control the Company within the meaning of the Securities Act or the

10

Exchange Act (each, a “ Company Indemnitee ”), against any losses, claims, damages, liabilities or expenses to which any of the Company Indemnitees may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any (i) untrue statement or alleged untrue statement of a material fact regarding such Holder and provided in writing by such Holder which is contained in the Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent (and only to the extent) that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, preliminary or final prospectus, amendment or supplement thereto, in reliance upon and in conformity with written information furnished by such Holder, (iii) a violation or alleged violation by a Holder of any rule or regulation promulgated under the Securities Act or the Exchange Act applicable to such Holder and relating to action or inaction required of such Holder in connection with the registration of such Holder’s Registrable Securities or (iv) in connection with any offer or sales effected by or on behalf of such Holder in violation of Section 3.4(c) of this Agreement, and each Holder will pay, as accrued, any legal or other expenses reasonably incurred by any Company Indemnitee pursuant to this Section 4.1(b), in connection with investigating or defending any such loss, claim, damage, liability, action or expense as a result of a Holder’s untrue statement or omission or violation; provided , however , that the indemnification contained in this Section 4.1(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, action or expense if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, the amount any Holder will be obligated to pay pursuant to this Section 4.1(b) and Section 4.2 will be limited to an amount equal to the gross proceeds actually received by such Holder for the sale of the Registrable Securities pursuant to the Registration Statement which gives rise to such obligation to indemnify and/or contribute (net of all expenses paid by such Holder in connection with any claim relating to this Section 4.1(b) and Section 4.2 and the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such loss, liability, claim, damage, or expense or any substantially similar loss, liability, claim, damage, or expense arising from the sale of such Registrable Securities). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Company Indemnitee, and shall survive the transfer of such securities by such Holder, and any termination of this Agreement.

(c)    Promptly after receipt by a party to this Agreement entitled to indemnity hereunder (an “ Indemnified Party ”) under this Section 4.1 of notice of the commencement of any action (including any governmental action), such Indemnified Party will, if a claim in respect thereof is to be made against any party to this Agreement from whom indemnification may be sought under this Section 4.1 (an “ Indemnifying Party ”), deliver to the Indemnifying Party a written notice of the commencement thereof and the Indemnifying Party shall have the right to participate in, and, to the extent the Indemnifying Party so desires, jointly with any other Indemnifying Party similarly noticed, to assume the defense thereof with counsel reasonably satisfactory to the Indemnifying Party; provided , however , that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate

11

counsel, with the reasonable fees and expenses of such counsel to be paid by the Indemnifying Party, if (i) the Indemnifying Party shall have failed to assume the defense of such claim within seven (7) days after receipt of notice of the claim and to employ counsel reasonably satisfactory to such Indemnified Party, as the case may be; or (ii) in the reasonable opinion of counsel retained by the Indemnified Party, representation of such Indemnified Party by such counsel would be inappropriate due to actual or potential differing interests (including the availability of differing legal defenses) between such Indemnified Party and any other party represented by such counsel in such proceeding. It is understood that the Indemnifying Party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate counsel at any time for all such Indemnified Parties. The Indemnified Party shall cooperate fully with the Indemnifying Party in connection with any negotiation or defense of any such action or claim by the Indemnifying Party and shall furnish to the Indemnifying Party all information reasonably available to the Indemnified Party which relates to such action or claim. The Indemnifying Party shall keep the Indemnified Party reasonably apprised of the status of the defense or any settlement negotiations with respect thereto. No Indemnifying Party will, except with the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such action or claim. No Indemnifying Party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided , however , that the Indemnifying Party shall not unreasonably withhold, delay or condition its consent. The failure to deliver written notice to the Indemnifying Party within a reasonable time of the commencement of any such action shall not relieve such Indemnifying Party of any liability to the Indemnified Party under this Section 4.1, except to the extent such failure to give notice has a material adverse effect on the ability of the Indemnifying Party to defend such action.

Section 4.2    Contribution .     If the indemnification provided for in Section 4.1 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the amount any Holder will be obligated to severally and not jointly contribute pursuant to this Section 4.2, together with Holder’s liability under Section 4.1(b), will be limited to an amount equal to the gross proceeds received by a Holder for the sale of the Registrable Securities pursuant to the Registration Statement which gives rise to such obligation to contribute and/or indemnify (net of all expenses paid by such Holder in connection with any claim relating to Section 4.1(b) and this Section 4.2 and the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such loss, liability, claim, damage, or expense or any

12

substantially similar loss, liability, claim, damage, or expense arising from the sale of such Registrable Securities). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution hereunder from any person who was not guilty of such fraudulent misrepresentation.

ARTICLE V
GENERAL PROVISIONS

Section 5.1    Entire Agreement.  This Agreement (including Exhibit A hereto) constitutes the entire understanding and agreement between the parties as to the matters covered herein and supersedes and replaces any prior understanding, agreement or statement of intent, in each case, written or oral, of any and every nature with respect thereto.
Section 5.2    Notices . Any notice or other communication required or permitted to be delivered to any party under this Agreement shall be in writing and shall be deemed properly delivered, given and received (a) upon receipt when delivered by hand, (b) upon transmission, if sent by facsimile or electronic transmission (in each case with receipt verified by electronic confirmation), or (c) one (1) Business Day after being sent by courier or express delivery service, specifying next day delivery, with proof of receipt. The addresses, email addresses and facsimile numbers for such notices and communications are those set forth on the signature pages hereof, or such other address, email address or facsimile numbers as may be designated in writing hereafter, in the same manner, by any such person.
Section 5.3    Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart and such counterparts may be delivered by the parties hereto via facsimile or electronic transmission.
Section 5.4    Amendment; Waiver . This Agreement may be amended or modified, and any provision hereof may be waived, in whole or in part, at any time pursuant to an agreement in writing executed by the Company and Holders holding a majority of the Registrable Securities at such time. Any failure by any party at any time to enforce any of the provisions of this Agreement shall not be construed a waiver of such provision or any other provisions hereof.
Section 5.5    Severability . In the event that any provision of this Agreement or the application thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.
Section 5.6 .     Governing Law; Venue . This Agreement and all claims or causes of action (whether sounding in contract or tort) arising under or related to this Agreement, shall be governed by and construed in accordance with, the Laws of the State of California, without regard to any rule or principle that might refer the governance or construction of this Agreement to the Laws of another jurisdiction. In any action or proceeding between any of the parties arising under or related to this

13

Agreement, each of the parties (a) knowingly, voluntarily, irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state or federal courts located in the City and County of San Francisco, California, (b) agrees that all claims in respect of any such action or proceeding shall be heard and determined exclusively in accordance with clause (a) of this Section 5.6, (c) waives any objection to the laying of venue of any such action or proceeding in such courts, including any objection that any such action or proceeding has been brought in an inconvenient forum or that the court does not have jurisdiction over any party, and (d) agrees that service of process upon such party in any such action or proceeding shall be effective if such process is given as a notice in accordance with Section 5.2. The parties agree that any party may commence a proceeding in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.
Section 5.7      Specific Performance . Each party acknowledges and agrees that the other parties hereto would be irreparably harmed and would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed by such first party in accordance with their specific terms or were otherwise breached by such first party. Accordingly, each party agrees that the other parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such parties are entitled at law or in equity.
(Next Page is Signature Page)

14

IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.

COMPANY:
INVITAE CORPORATION
By:                          
 Name: Sean E. George, Ph. D.
Title: President and Chief Executive Officer

	
 
Address for Notice:
1400 16th Street
San Francisco, California 94103	
Attn: General Counsel	
Facsimile No.:	

[Signature Page to Registration Rights Agreement]

   IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as of the date first written above.

							
 	 	 	 	 	 	 	
 	 	HOLDER:	
 	 	Name:	 	
	
 	 	By:	 	
	
 	 	 	 	Name:	 	 	
 	 	 	 	Title:	 	 	

	

 	 	Address for Notice:	 	
	
 	 	Telephone No.:	 	
	
 	 	Facsimile No.:	 	
	
 	 	Email Address:	 	 	

[Signature Page to Registration Rights Agreement]

Exhibit 31.1
PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sean E. George, certify that:
		
1.	I have reviewed this quarterly report on Form 10-Q of Invitae Corporation for the period ended June 30, 2019 ;	
		
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
		
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
		
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
		
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
		
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
		
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
		
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
		
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
		
a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
		
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

	
		
Dated: August 6, 2019	 	
 	/s/ Sean E. George, Ph.D.	
 	Sean E. George, Ph.D.	
 	Chief Executive Officer and Director	
 	(Principal Executive Officer)	

Exhibit 31.2
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER’S CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shelly D. Guyer, certify that:
		
1.	I have reviewed this quarterly report on Form 10-Q of Invitae Corporation for the period ended June 30, 2019 ;	
		
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
		
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
		
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a—15(e) and 15d—15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
		
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
		
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
		
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
		
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
		
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
		
a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
		
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

	
		
Dated: August 6, 2019	 	
 	/s/ Shelly D. Guyer	
 	Shelly D. Guyer	
 	Chief Financial Officer	
 	(Principal Financial and Accounting Officer)	

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Invitae Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

	
		
Dated: August 6, 2019	 	
 	/s/ Sean E. George, Ph.D.	
 	Sean E. George, Ph.D.	
 	Chief Executive Officer and Director	
 	(Principal Executive Officer)	

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Invitae Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

	
		
Dated: August 6, 2019	 	
 	/s/ Shelly D. Guyer	
 	Shelly D. Guyer	
 	Chief Financial Officer	
 	(Principal Financial and Accounting Officer)