Biolife Solutions Inc 10-K for FY2024
Biolife Solutions Inc (BLFS)
10-K
2025-03-03
For: 2024-12-31
View Original
Added on
April 09, 2026
About this 10-K
Biolife Solutions Inc filed this 10-K on March 3, 2025, covering the fiscal year ended December 31, 2024 (FY2024).
Headline figures
Fiscal year ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $82.25M
- up 8.4% from $75.86M a year earlier
- Net loss
- $20.18M
- compared with a net loss of $68M a year earlier
- Diluted EPS
- -$0.44
- compared with -$1.55 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
For the year ended December 31 , 2024
For the transition period from to
Commission File Number 001-36362
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||
(Address of registrant’s principal executive offices, Zip Code)
(425 ) 402-1400
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of exchange on which registered | ||||||
The | ||||||||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No o
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ☑
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 o
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 (S232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such said files). Yes ☑ No o
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.
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. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ☑
As of the registrant’s most recently completed second fiscal quarter, the aggregate market value of common equity (based on closing price on June 28, 2024 of $21.43 per share) held by non-affiliates was approximately $784 million.
As of February 24, 2025, 47.0 million shares of the registrant’s common stock were outstanding.
Table of Contents
| Page No. | ||||||||
References throughout this Form 10-K to “BioLife Solutions, Inc.”, “BioLife”, “we”, “us”, “our”, or the “Company” refer to BioLife Solutions, Inc. and its subsidiaries, taken as a whole, unless the context otherwise indicates.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Form 10-K” or “Annual Report”) contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this Annual Report, other than statements of historical facts, including, without limitation, statements regarding our strategy, future operations, future operating expenses, future financial position, future revenue, projected costs, prospects, plans, intentions, expectations, goals and objectives may be forward‑looking statements. The forward-looking statements in this Annual Report do not constitute guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “contemplate,” “estimate,” “project,” “forecast,” “would,” “may,” “should,” “will,” “could,” “can,” “potential,” “possible,” “proposed,” “plan,” “develop,” “opportunity,” “intend,” “initiative,” “target,” “maintain,” “continue,” “strive,” “progress,” “aim,” or similar expressions.
The forward-looking statements in this Annual Report include, but are not limited to, statements about:
•the development, production and commercialization of our products and our ability to maintain reliable, high-quality products;
•our ability to compete effectively against current technologies and develop and market products that are competitive in the continually changing technological landscape;
•the ability of our customers to integrate our products into their bioproduction workflow process for cell and gene therapies;
•our ability to successfully increase our customer’s product yield and efficacy;
•the determination that our products are not subject to FDA or other regulatory approvals and the possibility that we could be subject to regulatory approvals in the future;
•the potential utility of and market for our products and services;
•our ability to implement our business strategy and anticipated business and operations (including with respect to acquired businesses);
•our future financial and operational performance;
•our ability to protect our proprietary position and the validity and enforceability of our patents and trade secrets;
•our anticipated future growth strategy;
•the expected benefits and other statements relating to our divestitures and acquisitions, capital requirements, intellectual property, suppliers, joint venture partners, future financial and operating results;
•our ability to protect our information systems and networks and the proprietary and confidential information in our possession;
•the impact of adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally, including but not limited to, disruption in our supply chain, inflation in pricing for key materials or labor, the imposition of trade tariffs or other adverse changes resulting from epidemics, pandemics, and outbreaks of contagious diseases, natural disasters, economic or political instability, terrorist attacks and wars, including the ongoing war in Ukraine and the Israel-Hamas war, or other adverse widespread developments;
•interest rates and interest rate fluctuations and their potential impact on the general economy and our profitability;
•potential adverse impacts of climate change and increasingly stringent environmental laws, rules and regulations, and customer expectations and other environmental liabilities;
•legislative, regulatory and tax law and/or policy developments;
•declines in revenue relative to historical levels that we are unable to offset;
•our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirements and cash paid for income taxes and liquidity; and
•the availability and terms of any capital financing agreements.
We intend that such forward-looking statements be subject to the safe harbors for such statements. These forward-looking statements are based on the current beliefs and expectations of our management and speak only as of the date of this Annual Report or, in the case of documents referred to or incorporated by reference, the date of those documents. You should not place undue reliance on these forward-looking statements, which are subject to significant known and unknown risks, uncertainties and other factors, which are in some cases, beyond our control and which could materially affect results. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. Factors that might cause actual results and our current expectations and projections to differ materially include, among other things, those discussed under the section titled “Risk Factors,” as well as those discussed elsewhere in the Annual Report.
We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events, except as may be required by law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
SUMMARY RISK FACTORS
Our business is subject to numerous risks and uncertainties, including those described in Part I, Item 1A Risk Factors in this Annual Report. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:
•If our products or the products of our competitors do not perform as expected or the reliability of the technology on which our products are based is questioned, we could experience lost revenue, delayed or reduced market acceptance of our products, increased costs, and damage to our reputation.
•We operate in a highly competitive industry and if we cannot compete effectively, our business, financial condition and operating results could be materially and adversely affected.
•Despite our increasingly diversified customer base, we depend on a limited number of customers and products in a limited number of market sectors. If we lose any of these large customers or if there are disruptions in the sales of these products, our net product revenue and operating results could decline significantly.
•We expect our operating results to fluctuate significantly from period to period.
•If intangible assets and goodwill become impaired, we may have to take significant charges against earnings.
•We depend on outside suppliers for all our manufacturing supplies, parts and components.
•Our success will depend on our ability to attract and retain key personnel.
•Our business may be subject to product liability claims or product recalls, which could be expensive and could result in a diversion of management’s attention.
•Difficulties in manufacturing could have an adverse effect upon our expenses and our product revenues.
•While we are not currently subject to FDA or other regulatory approvals, if our products become subject to regulatory requirements, the manufacture and sale of our products may be delayed or prevented, or we may become subject to increased expenses.
•We and our customers are subject to various international governmental regulations. Compliance with or changes in such regulations may cause us to incur significant expenses, and if we fail to maintain satisfactory compliance with certain regulations, we may be forced to recall products and cease their manufacture and distribution, and we could be subject to civil or criminal penalties.
•Healthcare reform measures could adversely affect our business and financial results.
•Insurance coverage is increasingly difficult to obtain or maintain.
•We are and may become the subject of various claims, litigation or investigations which could have a material adverse effect on our business, financial condition, or results of operations or the price of our common stock.
•Our business and operations could be negatively affected by securities litigation or stockholder activism, which could impact the trading price and volatility of our common stock and may constrain capital deployment opportunities and adversely impact our ability to expand our business.
•Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies.
•Our proprietary rights may not adequately protect our technologies and products.
•Expiration of our patents may subject us to increased competition and reduce our opportunity to generate product revenue.
•We may not be able to protect our intellectual property rights throughout the world.
•We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, and we may be unable to protect our rights to, or use of, our technology.
•Even if we are granted a patent, in certain circumstances we may be unable protect our rights to, or use of, our technology.
•We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.
•Our inability to protect our information systems and networks and the proprietary and confidential information in our possession from continually evolving cybersecurity risks or other technological risks, including as a result of breaches of our associated third parties' information technology systems, could materially adversely impact our business, financial condition and results of operations, in addition to our reputation and relationships with our employees, customers, suppliers and business partners.
•Our stock price and volume may be volatile, and purchasers of our securities could incur substantial losses.
•A significant percentage of our outstanding common stock is held by one stockholder, and this stockholder therefore has significant influence on us and our corporate actions.
•We have not paid dividends on our common stock in the past and do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.
•Certain provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
•Our Amended and Restated Bylaws designate the Court of Chancery of the State of Delaware and U.S. federal district courts as the exclusive forums for certain types of actions and proceedings that may be initiated by our stockholders, which limits our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, or other employees.
•We have identified material weaknesses in our internal control over financial reporting, and if our remediation of such material weaknesses is not effective, or if we are unable to develop and maintain an effective system of internal control over financial reporting or disclosure controls and procedures, we may not be able to accurately and timely report financial results or prevent fraud, and our ability to meet our reporting obligations and the trading price of our common stock could be negatively affected.
•Our ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments is limited by provisions of the Internal Revenue Code, and it is possible that certain transactions or a combination of certain transactions may result in material additional limitations on our ability to use our net operating loss and tax credit carryforwards.
•Public health crises have adversely affected, and could in the future adversely affect, our business, financial condition. results of operations and cash flows.
•Natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events could disrupt the supply, delivery or demand of products, which could negatively affect our operations and performance.
•Global climate change and related legal and regulatory developments could negatively affect our business, financial condition and results of operations.
•Tariffs and other trade policies could have a substantial impact on our business.
PART I
ITEM 1. BUSINESS
The following discussion of our business contains forward-looking statements that involve risks and uncertainties (see the section entitled “Forward-Looking Statements” herein). Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those factors set forth under “Risk Factors” and elsewhere in this Form 10-K.
Overview
We are a life sciences company that develops, manufactures, and markets bioproduction products and services which are designed to improve quality and de-risk biologic manufacturing, distribution, and transportation in the cell and gene therapy ("CGT") industry. Our products are used in basic and applied research and commercial manufacturing of biologic-based therapies. Customers use our products to maintain the health and function of biologic material during sourcing, manufacturing, and distribution.
We currently operate as one bioproduction products and services business which supports several steps in the biologic material manufacturing and delivery process. We have a diversified portfolio of tools and services that focuses on biopreservation, cell processing, cold chain management tools, and thawing of biologic materials. We have in-house expertise in cryobiology and the broader CGT workflow, and continue to evaluate opportunities to maximize the value of our product platforms for our extensive customer base through organic growth innovations, partnerships, and acquisitions.
Our products
Our bioproduction products and services are comprised of two revenue lines that contain four main offerings:
•Cell processing
◦Biopreservation media
◦Human platelet lysate media (“hPL”), cryogenic vials, and automated cell-processing fill machines
•Evo and ThawSTAR devices
◦Cloud-connected “smart” shipping containers
◦Automated thawing devices
On April 17, 2024, the Company sold all of the issued and outstanding shares of common stock of Global Cooling, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Global Cooling”), to GCI Holdings Company, LLC, an Ohio limited liability company (“GCI Holdings”) pursuant to a Stock Purchase Agreement, dated April 17, 2024 (the “Global Cooling Purchase Agreement”), by and between the Company and GCI Holdings (the “Global Cooling Divestiture”). Upon the execution of the Global Cooling Purchase Agreement, the Global Cooling business is presented in the accompanying Consolidated Financial Statements as a discontinued operation for all periods presented.
On November 12, 2024, the Company entered into a Stock Purchase Agreement (the “SciSafe Purchase Agreement”), by and among the Company, Subzero Purchaser Corp., a Delaware corporation (“SciSafe Buyer”), SciSafe, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of the Company (“Seller”), and SciSafe, Inc., a New Jersey corporation and an indirect wholly owned subsidiary of the Company (“SciSafe”), for the sale by Seller of all of the issued and outstanding shares of common stock (the “SciSafe Shares”) of SciSafe to SciSafe Buyer. Upon the execution of the SciSafe Purchase Agreement, the SciSafe business is presented in the accompanying Consolidated Financial Statements as a discontinued operation for all periods presented.
On November 14, 2024, the Company entered into a Stock Purchase Agreement (the “CBS Purchase Agreement”), by and among the Company, Standex International Corporation, a Delaware corporation (“CBS Buyer”), and Arctic Solutions, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (doing business as Custom Biogenic Systems, or “CBS”), for the sale by the Company of all of the issued and outstanding shares of common stock (the “CBS Shares”) of CBS to CBS Buyer (the “CBS Transaction”). Upon the execution of the CBS Purchase Agreement, the CBS business is presented in the accompanying Consolidated Financial Statements as a discontinued operation for all periods presented.
The Company is presenting Global Cooling, SciSafe, and CBS within this Annual Report as discontinued operations for all periods presented within the Consolidated Balance Sheets and Consolidated Statements of Operations. The Consolidated
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Statements Of Comprehensive Loss, Consolidated Statements of Shareholders' Equity, and Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. All amounts, percentages, and disclosures for all periods presented in this Annual Report reflect only the continuing operations of the Company unless otherwise noted. See Note 3: Discontinued operations within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report for further details regarding the divestitures described above.
Cell processing
Biopreservation media
Our proprietary biopreservation media products, HypoThermosol® FRS and CryoStor® Freeze Media, are formulated to mitigate preservation-induced, delayed-onset cell damage and death which result when cells and tissues are subjected to reduced temperatures. Our technology can provide our CGT customers with significant shelf-life extension of biologic source material and final cell products, and can also greatly improve post-preservation cell and tissue viability and function. Our biopreservation media are serum-free, protein-free, fully defined, and manufactured under current Good Manufacturing Practices ("cGMP"). We strive to source wherever possible the highest available grade, Multi-compendial raw materials. Our US FDA Type II Master File applicable to our biopreservation products has been cross referenced over 750 times by our customers, and we believe our cell processing products are utilized in several hundred active clinical trials worldwide.
Stability (i.e. shelf-life) and functional recovery are crucial aspects of academic research and clinical practice in the biopreservation of biologic-based source material, intermediate derivatives, and isolated/derived/expanded cellular products and therapies. Limited stability is especially critical in the CGT field, where harvested cells and tissues will lose viability over time if not maintained appropriately at normothermic body temperature (37ºC) or stored in a hypothermic or cryogenic state in an effective preservation medium.
Chilling (hypothermia) is used to reduce metabolism and delay degradation of harvested cells and tissues. However, subjecting biologic material to hypothermic or cryogenic environments and subsequently rewarming them may also induce damaging molecular stress and structural changes. Although cooling successfully reduces metabolism (i.e., lowers demand for energy), various levels of cellular damage and death occur when using suboptimal methods. Biopreservation media can mitigate the damage from exposure to hypothermic or cryogenic temperatures and subsequent rewarming.
Traditional biopreservation media range from simple “balanced salt” (electrolyte) formulations to complex mixtures of electrolytes, energy substrates such as sugars, osmotic buffering agents, and antibiotics. The resulting limited stability from the use of these traditional biopreservation media formulations is a significant shortcoming that our optimized proprietary products address with great success.
Our scientific research activities over the last 20+ years enabled a detailed understanding of the molecular basis for the hypothermic and cryogenic (low-temperature induced) damage/destruction of cells through apoptosis and necrosis. This research led directly to the development of our HypoThermosol FRS and CryoStor technologies. Our proprietary biopreservation media products are specifically formulated to:
•Minimize cell and tissue swelling
•Reduce free radical levels upon formation
•Maintain appropriate low temperature ionic balances
•Provide regenerative, high-energy substrates to stimulate recovery upon warming
•Avoid the creation of an acidic state (acidosis)
•Inhibit the onset of apoptosis and necrosis
A key feature of our biopreservation media products is their “fully-defined” profile. All of our cGMP products are serum-free, protein-free and are formulated and filled using aseptic processing. We strive to use USP/Multi-compendial grade or the highest quality available synthetic components. All of these features benefit prospective customers by facilitating the qualification process required to incorporate our products into their regulatory filings.
Competing biopreservation media products are often formulated with isotonic media cocktails, animal serum, and potentially a single sugar or human protein. A key differentiator of our proprietary HypoThermosol FRS and CryoStor formulations is the engineered optimization of the key ionic component concentrations for low-temperature environments. This is in contrast to media optimized for normothermic body temperature (around 37°C), as found in culture media or saline-based isotonic formulas. While competing cryopreservation freeze media is often comprised of a single permeating
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cryoprotectant such as dimethyl sulfoxide (“DMSO”), our CryoStor formulations incorporate multiple permeating and non-permeating cryoprotectant agents, which allows for multiple mechanisms of protection and reduces the dependence on a single cryoprotectant. We believe that our products offer significant advantages over in-house ("home brew") formulations or commercial “generic” biopreservation media. These advantages include time savings, more consistent and higher quality of components, more rigorous quality control release testing, cost effectiveness, and improved preservation efficacy.
The results of independent testing demonstrate that our biopreservation media products significantly extend shelf-life and improve cell and tissue post-thaw viability and function. Our products have demonstrated improved biopreservation outcomes, including greatly extended shelf-life and post-thaw viability and yield across a broad array of cell and tissue types.
Human platelet lysate media, cryogenic vials and automated cell-processing fill machines
Our bioproduction products portfolio includes human platelet lysates for cell expansion, which reduces risk and improves downstream performance over fetal bovine serum, human serum, and other chemically defined media, CellSeal® closed system vials that are purpose-built rigid containers used in CGT that can be filled manually or with high throughput systems, CryoCase™ cryo-compatible transparent rigid containers designed for closed-system fill and retrieval, and automated cell processing machines that bring multiple processes traditionally performed by manual techniques under a higher level of control to protect therapies from loss or contamination.
Evo and Thaw devices
Cloud connected “smart” shipping containers
We are a leading developer and supplier of next generation cold chain management tools for cell and gene therapies. Our cloud-connected shipping containers and evo.is cloud app allows biologic products to be traced and tracked in real time. Our evo platform consists of rentable cloud-connected shippers that include technologies enabling tracking software to provide customizable, real-time information on geolocation, payload temperature, ambient temperature, tilt of shipper, humidity, altitude, and alerts when a shipper has been opened. The evo Dry Vapor Shipper (“DVS”) is specifically marketed for use with cell and gene therapies. The evo DVS has several design improvements over traditional competing shipping containers, providing benefits such as extended thermal performance, reduced liquid nitrogen recharge time, improved payload extractors, and the ability to maintain temperature for longer periods if the shipper is tilted on its side.
We partner with couriers with established logistic channels and distribution centers. This strategy greatly reduces the time and resource requirements associated with establishing our own logistics services, such as acquiring and maintaining fleets of delivery vehicles and building specialized facilities around the world. Partnerships with multiple white glove couriers allow us to scale our sales and marketing efforts by leveraging couriers' existing channel relationships, as well as the ongoing efforts of their sales and service teams. Courier partners provide promotional efforts by marketing our evo platform to their existing cell and gene therapy customers as a cost-effective and innovative solution.
Automated thawing devices
The ThawSTAR® line includes thawing products that control the temperature and timing of the thawing process of biologic material. Our customizable, automated, water-free thawing products use algorithmic programmed heating plates to consistently bring biologic material from a frozen state to a liquid state in a controlled and consistent manner, helping reduce damage during the temperature transition while delivering critical process consistency across cell batches. Use of ThawSTAR products can also reduce risk of contamination versus using a traditional water bath.
Our market opportunity
The CGT market has been rapidly expanding, treating diseases once thought incurable. According to the Alliance for Regenerative Medicine (“ARM”), “2025 State of the Industry Briefing” there were over 1,900 ongoing clinical trials utilizing regenerative medicine at year-end 2024 in addition to nine FDA approved CGT therapies, with continued growth in CGT development companies throughout 2024. ARM also reported there was approximately $15.2 billion invested in the regenerative medicine market in 2024, with an expectation of continued regulatory approvals for cell and gene therapies during 2025.
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The technologies developed within the CGT market change the ways physicians treat patients. The manufacturing, distribution and the delivery process of these therapies is significantly different from many other types of treatments. We believe we are well positioned to address many of the unique manufacturing challenges in the process of delivering cell and gene therapies.
The bioproduction process
Our various products and services currently integrate into several steps in our customers’ bioproduction workflow process for cell and gene therapies. See the diagram below for an illustration of this process and our product roles. We offer products that integrate into the critical steps of preservation, thawing, and transportable storage under controlled conditions.
Complementary products portfolio
Expanding Participation in Customers’ Workflow
Our strategy
We are focused on the development, production, and commercialization of differentiated, best-in-class products and services that facilitate the manufacturing and delivery of cell and gene therapies and biologic materials. Our products are designed to increase our customers’ product yield and efficacy. We are committed to supporting our customers with strong customer service and applications expertise.
We leverage our numerous relationships with leading cell and gene therapy companies that use our offering of bioproduction products and services to cross-sell other parts of the portfolio. Over the last several years, we have built a strong reputation as a trusted supplier of critical tools used in cell and gene therapy and biopharma manufacturing. We believe that our relationships and reputation could enable us to drive further incremental revenue growth through the sale of additional products and services to a captive customer base. Our products are designed to increase our customers’ product
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yield and functionality while reducing their risk, and we are committed to supporting our customers with strong service in addition to scientific and technical expertise in the applications of our products.
Business Operations
Research and development
Our research and development activities are focused on evaluating new, potentially disruptive technologies which may add value throughout the cell and gene therapy manufacturing and delivery workflow. We routinely assess and analyze the strengths and weaknesses of competitive and adjacent products, and are engaged in business development discussions on an ongoing basis. We strive to continue to anticipate customer needs in providing enabling technologies in the CGT space.
Sales and marketing
We market and sell our products through direct sales and third-party distribution. We have expanded our global commercial organization over time to continue building relationships within the broader CGT market.
We have experienced field-based sales employees who market our growing product portfolio on a direct basis. Our technical applications engineers and customer care support teams have extensive experience providing support both prior and subsequent to the sale of products.
Our products are also marketed and distributed by STEMCELL Technologies, VWR, and other regional distributors under non-exclusive agreements. In 2024, 2023, and 2022, sales to third-party distributors accounted for 35%, 44%, and 42% of our revenue, respectively.
The following table represents the Company’s total revenue by geographic area (based on the location of the customer):
| Years Ended December 31, | |||||||||||||||||
Revenue by customers’ geographic locations(1) | 2024 | 2023 | 2022 | ||||||||||||||
| United States | 75 | % | 82 | % | 82 | % | |||||||||||
| Europe, Middle East, Africa (EMEA) | 19 | % | 12 | % | 12 | % | |||||||||||
| Other | 6 | % | 6 | % | 6 | % | |||||||||||
| Total revenue | 100 | % | 100 | % | 100 | % | |||||||||||
(1) As of the year ended December 31, 2023, the Company updated its methodology for determining the country of origin for its sales. Sales are now recorded by shipping country rather than billing country. The Company updated the methodology retrospectively, adjusting the prior year presentation for all regions presented.
Manufacturing
Cell processing – We maintain and operate two independent cGMP clean room production suites for manufacturing sterile biopreservation media products in Bothell, Washington. Our quality management system (“QMS”) in Bothell is certified to the ISO 13485:2016 standard. Our QMS takes guidance from applicable sections of 21 CFR Part 820 – Quality System Regulation for Good Manufacturing Practice of medical devices, 21 CFR Parts 210 and 211 – cGMP for Finished Pharmaceuticals, FDA Guidance – Sterile Drug Products, Volume 4, EU Guidelines Annex 1 – Manufacture of Sterile Medicinal Products, ISO 13408 – Aseptic Processing of Healthcare Products, and ISO 14644 – Clean Rooms and Associated Controlled Environments.
We also maintain and operate one cGMP clean room production suite for manufacturing hPL media in Indianapolis, Indiana. Our quality management system (“QMS”) in Indianapolis is certified to the ISO 9001:2015 standard. Our QMS takes guidance from applicable sections of 21 CFR Part 820 – Quality System Regulation for Good Manufacturing Practice of medical devices, 21 CFR Parts 210 and 211 – cGMP for Finished Pharmaceuticals, Volume 4, EU Guidelines Annex 2 – Manufacture of Biological active substances and Medicinal Products for Human Use and ISO 14644 – Clean Rooms and Associated Controlled Environments.
We seek to manage single-source supplier risk by regularly assessing the quality and capacity of our suppliers, implementing supply and quality agreements where appropriate, and actively managing lead times and inventory levels of
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sourced components. Pursuant to our supply agreements, we are required to notify customers of any changes to our raw materials. For certain components without a secondary supplier, we estimate that it would take up to six months to find and qualify a second source. Order quantities and lead times for externally sourced components are based on our forecasts, which are derived from historical demand and anticipated future demand. Lead times for components may vary depending on the size of the order, specific supplier requirements, and current market demand for the materials and parts.
We practice continuous improvement based on routine internal audits through our own monitoring of process outputs, external feedback, and audits performed by our partners and customers. In addition, we maintain a business continuity management system that focuses on key areas such as contingency planning, safety stocks and off-site storage of raw materials and finished goods to ensure continuous supply of our products.
Thaw systems – Our ThawSTAR automated, water-free thawing products are produced by a CMO based in the United States. We believe this CMO has the skills, experience and capacity needed to meet our quality standards and demand expectations for the product line. We estimate that it would take up to six months to find and qualify an alternative CMO. To date, we have not experienced significant difficulties in obtaining our automated thaw products from our CMO.
Monitored shipping – Production of our evo cold chain management hardware products is performed by external CMOs and by personnel in our Bruce Township, Michigan facility. Our QMS in Bruce Township is certified to the ISO 9001:2015 standard.
Product regulatory status
Our products are not subject to any specific United States Food and Drug Administration (“FDA”) or other international marketing regulations for drugs, devices, or biologics. We are not required to sponsor formal prospective, controlled clinical trials in order to establish safety and efficacy. However, to support our current and prospective clinical customers, we manufacture and release our products in compliance with cGMP and other relevant quality standards.
To assist customers with their regulatory applications, we maintain Type II Master Files at the FDA for CryoStor, HypoThermosol FRS, BloodStor 27, Stemulate, nLiven PR, T-Liven PR, CellSeal Closed System Cryogenic Vials, CryoCase cryo-compatible transparent rigid containers, and our Cell Thawing Media products, which provide the FDA with information regarding our manufacturing facility and process, our quality system, stability and safety, and any additional testing that has been performed. Customers engaged in clinical and commercial applications may notify the FDA of their intention to use our products in their product development and manufacturing process by requesting a cross-reference to our master files.
Intellectual property
The following table lists our granted and pending patents. We have also obtained certain trademarks and tradenames for our products to distinguish our genuine products from our competitors’ products and we maintain certain details about our processes, products, and strategies as trade secrets. While we believe that the protection of patents and trademarks is important to our business, we also rely on a combination of trade secrets, nondisclosure and confidentiality agreements, scientific expertise, and continuing technological innovation to maintain our competitive position. Despite these precautions, it may be possible for unauthorized third parties to copy certain aspects of our products and/or to obtain and use information that we regard as proprietary (see “Item 1A. Risk Factors” of this Annual Report for additional details). The laws of some foreign countries in which we sell our products do not protect our proprietary rights to the same extent as do the laws of the United States.
| Issued Patents | Patents Applied For | Registered Trademarks | |||||||||||||||
| Cell processing | 57 | 32 | 41 | ||||||||||||||
| Evo and thaw | 40 | 79 | 11 | ||||||||||||||
| Total | 97 | 111 | 52 | ||||||||||||||
Competition
Our bioproduction products and services compete on the basis of value proposition, performance, quality, cost effectiveness, and application suitability with numerous established technologies. Additional products using new
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technologies that may be competitive with our products may also be introduced. Many of the companies selling or developing competitive products have greater financial and human resources, R&D, manufacturing, and marketing experience than we do. They may undertake their own development of products that are substantially similar to or compete with our products, and they may succeed in developing products that are more effective or less costly than any that we may develop. These competitors may also prove to be more successful in their production, marketing and commercialization activities. We cannot be certain that the research, development, and commercialization efforts of our competitors will not render any of our existing or potential products obsolete.
Human capital
We view our team members as the key to our success. As of December 31, 2024, we had 159 full-time team members and no part-time team members. Our Company culture encourages strong team collaboration and an emphasis on participation in challenging tasks that expand our team's skill sets. We believe in an open-door policy at all levels of the organization and establish Company-wide quarterly townhall meetings to foster a collaborative, connected environment in which anyone can contribute to our success. Our human capital strategy revolves around retaining top talent and maintaining high engagement across our Company. We consider relations with our team members to be good and welcome feedback from all levels of the Company on how to make improvements in our business processes and Company culture.
Team Member Engagement
We value a high level of engagement from our team members. We endeavor to foster a culture of mutual respect and ensure that team members feel valued. We compete for local talent with companies that are both in our market and within proximity to our primary office locations, as well as for our remote workforce within our industry and across other industries. We offer a hybrid work model that enables our team members to work remotely and on-location as their responsibilities allow, and we support team events to build internal collaboration and engagement. We support our team members’ participation in Company social events to build community engagement and foster a sense of responsibility to the communities in which we work.
Compensation and Benefits
We view our compensation and benefits practices as critical to our recruitment, retention, and engagement efforts. We prioritize competitive health benefits for our team members and employ a pay-for-performance compensation model, paying at or above market rates for our positions. We also offer incentive programs for certain employees focused on incentivizing and retaining talent that include stock grants and bonus incentives and provide a generous paid time off program including additional holidays granted throughout the year.
Training and Development
We have a strong belief in promotion from within our Company and provide training and development opportunities to support our talented professionals in their career growth. We offer internal training, peer-to-peer learning opportunities, and mentorship of our team members.
Health and Safety
We provide a safe and healthy work environment that encourages team members to speak up and identify potential safety hazards. We conduct employee ergonomics assessments specifically in our manufacturing processes to limit and eliminate potential injuries from repetitive movements. We provide training for specific safety requirements and modify processes as needed to assure that our team members’ health and safety is a part of every aspect of our business. We provide appropriate personal protective equipment and training for the use of that equipment for safe use.
Corporate history
We were incorporated in Delaware in 1987 under the name Trans Time Medical Products, Inc. In 2002, the Company, then known as Cryomedical Sciences, Inc. was engaged in manufacturing and marketing cryosurgical products. The entity was merged with our wholly owned subsidiary, BioLife Solutions, Inc., which was engaged as a developer and marketer of biopreservation media products for cells and tissues. Following the merger, we changed our name to BioLife Solutions, Inc.
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Principal offices; available information
Our principal executive offices are located at 3303 Monte Villa Parkway, Suite 310, Bothell, Washington 98021 and the telephone number is (425) 402-1400. We maintain a website at www.biolifesolutions.com. The information contained on or accessible through our website is not part of this Annual Report on Form 10-K and is not incorporated in any manner into this Annual Report. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), are available free of charge on our website as soon as reasonably practicable after we electronically file such reports with, or furnish those reports to, the Securities and Exchange Commission (the “SEC”). The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
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ITEM 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report, before deciding to invest in our common stock. If any of the following risks materialize, our business, financial condition, results of operation and prospects will likely be materially and adversely affected. In that event, the market price of our common stock could decline and you could lose all or part of your investment.
Risks related to our business and operations
If our products or the products of our competitors do not perform as expected or the reliability of the technology on which our products are based is questioned, we could experience lost revenue, delayed or reduced market acceptance of our products, increased costs, and damage to our reputation.
Our success depends on the market’s confidence that we can provide reliable, high-quality products to our customers. We believe that customers in our target markets are likely to be particularly sensitive to product defects and errors. Our reputation and the public image of our products and technologies may be impaired if our products or similar products of our competitors fail to perform as expected. In the future, if our products experience, or are perceived to experience, a material defect or error, this could result in loss or delay of revenues, delayed or reduced market acceptance, damage to our reputation, diversion of development resources, legal claims, increased insurance costs or increased service and warranty costs, any of which could harm our business, financial condition or results of operations. Such defects or errors could also narrow the scope of the use of our products, which could hinder our success in the market. Even after any underlying concerns or problems are resolved, any lingering concerns in our target market regarding our technology or any manufacturing defects or performance errors in our products could continue to result in lost revenue, delayed or reduced market acceptance, damage to our reputation, increased service and warranty costs and claims against us.
We operate in a highly competitive industry and if we cannot compete effectively, our business, financial condition and operating results could be materially and adversely affected.
The life sciences industry is highly competitive and subject to rapid technological change. We anticipate that we will continue to face increased competition as existing companies may choose to develop new or improved products and as new companies enter the market with new technologies, any of which could compete with our products or even render our products obsolete. While there are technological and marketing barriers to entry, we cannot guarantee that these barriers will be sufficient to defend our market share against current and future competitors.
Many of our competitors are significantly larger than us and have greater financial, technical, research, marketing, sales, distribution and other resources than us and may have longer operating histories. These companies may develop technologies that are superior alternatives to our products or may be more effective at commercializing and marketing their technologies. There may also be other companies which are currently developing competitive products and services, or which may in the future develop technologies and products that are comparable, superior or less costly than our own. We may need to improve our existing technologies or develop new technologies for our products to remain competitive. Our future success depends on our ability to compete effectively against current technologies, as well as to respond effectively to technological advances by developing and marketing products that are competitive in the continually changing technological landscape. Our competitors may succeed in developing or marketing technologies and products that are more effective or commercially attractive than any that are being developed or marketed by us, or may succeed in obtaining regulatory approval, or introducing or commercializing any such products, prior to us. Such developments could have a material adverse effect on our business, financial condition and results of operations. Also, even if we can compete successfully, we may not continue do so in a profitable manner.
Despite our increasingly diversified customer base, we depend on a limited number of customers and products in a limited number of market sectors. If we lose any of these large customers or if there are disruptions in the sales of these products, our net product revenue and operating results could decline significantly.
During the years ended December 31, 2024, 2023, and 2022, we derived approximately 28%, 25%, and 32% of our revenue from two customers, respectively. In the years ended December 31, 2024, 2023, and 2022, we derived approximately 73%, 73%, and 77% of our revenue from CryoStor products, respectively. Our principal customers may vary from period to period and such customers may not continue to purchase products from us at current levels or at all. Further, the inability of some of our customers to consummate anticipated purchases of our products due to changes in end-
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user demand, and other unpredictable factors that may affect customer ordering patterns could lead to significant reductions in net product revenue which could harm our business.
We expect our operating results to fluctuate significantly from period to period.
Our revenue, operating margins and other operating results have varied significantly in the past and may continue to fluctuate from period to period in the future due to a variety of factors, many of which are beyond our control. Factors relating to our business that may contribute to these fluctuations include, but are not limited to, changes in the timing and terms of product orders and service contracts by our customers as a result of our customer concentration or otherwise, changes in the demand for the mix of products and services that we offer, the timing and market acceptance of our new product and service introductions, delays or problems in the planned introduction of new products or services, or in the performance of any such products following delivery to customers or the quality of such services, new products, services or technological innovations by our competitors, and potential supply chain issues, which can, among other things, render our products and services less competitive due to the rapid technological changes in the markets in which we provide products and services, impact our ability to reduce our costs in response to decreased demand for our products and services, impact our ability to accurately estimate customer demand, including the accuracy of demand forecasts used by us, create disruptions in our manufacturing process or in the supply of components to us, and lead to write-offs for excess or obsolete inventory, competitive pricing pressures, and increased investment into our infrastructure to support our growth, including capital equipment, research and development, as well as selling and marketing initiatives to support continuous product and services innovation, technological capability enhancements and sales efforts, among other factors described elsewhere in this Annual Report. If our quarterly operating results fail to meet expectations of investors or research analysts, the price of our common stock may decline.
If intangible assets and goodwill become impaired, we may have to take significant charges against earnings.
As of December 31, 2024 the net carrying value of our goodwill and other intangible assets totaled $221.9 million. We periodically review our goodwill and the estimated useful lives of our identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value, or for intangible assets, a revised useful life. These events and circumstances include significant changes in the business climate, legal factors, operating performance indicators, advances in technology and competition. Any reduction or impairment of value of intangible assets and goodwill will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future periods.
We depend on outside suppliers for all our manufacturing supplies, parts and components.
We rely on outside suppliers, including several single-source suppliers, for all our manufacturing supplies, parts and components. Our ability to negotiate favorable terms with those suppliers may be limited, and if those suppliers experience operational, financial, quality, or regulatory difficulties, or if those suppliers and/or their facilities refuse to supply us or cease operations temporarily or permanently, or if those suppliers take unreasonable business positions, we could be forced to cease product manufacturing until the suppliers resume operations, until alternative suppliers could be identified and qualified, or permanently if the suppliers do not resume operations and no alternative suppliers could be identified and qualified. We cannot assure you that, in the future, our current or alternative sources for manufacturing supplies will be able to meet all our demands on a timely basis. Unavailability of necessary components could require us to re-engineer our products to accommodate available substitutions, which could increase costs to us and/or have a material adverse effect on manufacturing schedules, products performance and market acceptance. We might not be able to find a sufficient alternative supplier in a reasonable amount of time, or on commercially reasonable terms, if at all. If we fail to obtain an alternative supplier for the components of our products, our operations could be disrupted.
In addition, an uncorrected defect or supplier’s variation in a component or raw material, either unknown to us or incompatible with our manufacturing process, could harm our ability to manufacture products.
Our success will depend on our ability to attract and retain key personnel.
Our success in implementing our business strategy depends largely on the skills, experience and performance of key members of our executive management team and others in key management positions. The continuing service of our executive management team and other key management positions, together with our ability to attract and retain such management personnel, is critical to our ability to implement our business strategy. There is substantial competition to
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attract such key management personnel and the loss of one or more of these individuals could have a material adverse effect on our business and operating results.
In addition, a critical factor to our business is our ability to attract and retain essential engineering, scientific, sales and management personnel. Our future success depends to a significant degree upon the continued services of key scientific and technical personnel. We are continually at risk of losing such personnel or being unable to hire additional engineering, scientific, sales and management personnel. If we fail to attract and retain such personnel, our sales efforts will be hindered and we will not be able to achieve our growth objectives.
Our business may be subject to product liability claims or product recalls, which could be expensive and could result in a diversion of management’s attention.
Our business exposes us to potential product liability risks that are inherent in designing, manufacturing, and marketing our products. In particular, we are a supplier of bioproduction products to the cell and gene therapy industry. Our products are used in basic and applied research, and commercial manufacturing of biologic-based therapies and must meet stringent requirements. Products and services as sophisticated as ours could contain undetected errors or defects, especially when first introduced or when new equipment or versions are released. Customers use our products to maintain the health and function of biologic material during sourcing, manufacturing, storage, and distribution of cells and tissues, and component failures, manufacturing flaws, design defects or inadequate disclosure of product-related risks with respect to these or other products we manufacture or sell could result in an unsafe condition or injury.
As a result, we face an inherent risk of damage to our reputation if one or more of our products are, or are alleged to be, defective. We may be exposed to risks from product liability and warranty claims in the event that our products actually or allegedly fail to perform as expected or the use of our products results, or is alleged to result, in bodily injury and/or property damage. The outcome of litigation, particularly any class-action lawsuits, is difficult to quantify. Plaintiffs often seek recovery of very large or indeterminate amounts, including punitive damages. The magnitude of the potential losses relating to these lawsuits may remain unknown for substantial periods of time and the cost to defend against any such litigation, whether or not we are found liable, may be significant. Accordingly, we could experience product liability losses in the future and incur significant costs to defend these claims. While we maintain product liability insurance coverage, which we deem to be adequate based on historical experience, we cannot assure you that coverage will be available for such risks in the future or that, if available, it would prove sufficient to cover potential claims or that the present amount of insurance can be maintained in force at an acceptable cost to us.
In addition, if any of our products are, or are alleged to be, defective, we may voluntarily participate, or be required by applicable regulators, to participate in a recall of that product if the defect or the alleged defect relates to safety. We cannot assure you that we will be successful in initiating appropriate market recall or market withdrawal efforts that may be required in the future or that these efforts will have the intended effect of preventing product malfunctions and the accompanying product liability that may result. In the event of a recall, we may experience lost sales and be exposed to individual or class-action litigation claims and reputational risk. Product liability, warranty and recall costs may have a material adverse effect on our business, financial condition and results of operations.
Difficulties in manufacturing could have an adverse effect upon our expenses and our product revenues.
We currently manufacture all of our biopreservation media products and other related components. We currently outsource the manufacturing of certain thaw products, and certain cold chain products. Manufacturing our products is difficult and complex. To support our current and prospective clinical customers, we and our outsources manufacturers comply with, and intend to continue to comply with, cGMP in the manufacture of our products. Our ability to adequately manufacture and supply our products in a timely matter is dependent on the uninterrupted and efficient operation of our facilities and those of third parties manufacturing certain of our products or producing raw materials and supplies upon which we rely in our manufacturing. Manufacturing our products may be impacted by:
•availability or contamination of raw materials and components used in the manufacturing process, particularly those for which we have no other source or supplier;
•the ongoing capacity of our facilities and those of our outside manufacturers;
•our and our outside manufacturers’ ability to comply with existing and new regulatory requirements, including cGMP;
•inclement weather and natural disasters;
•changes in forecasts of future demand for product components;
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•potential facility contamination by microorganisms or viruses;
•updating of manufacturing specifications;
•product quality success rates and yields;
•labor strikes; and
•global viruses, pandemics and epidemics.
If efficient manufacturing and supply of our products is interrupted, we may experience delayed shipments or supply constraints. If we are at any time unable to provide an uninterrupted supply of our products to customers, our customers may be unable to supply their end-products incorporating our products to their patients and other customers, which could materially and adversely affect our product revenue and results of operations. In addition, if we are unable to procure a component from one of our outside manufacturers, we may be required to enter into arrangements with one or more alternative manufacturing companies, which may cause delays in producing components or result in significant increase in expenses.
While we are not currently subject to FDA or other regulatory approvals, if our products become subject to regulatory requirements, the manufacture and sale of our products may be delayed or prevented, or we may become subject to increased expenses.
While none of our products are subject to FDA regulation, we comply with cGMP requirements and other relevant quality standards to support our current and prospective clinical customers. However, we cannot assure you that our products will not be subject to FDA regulation in the future, and we may develop products in the future that subject us to regulation by the FDA and similar foreign regulatory agencies. The regulations enforced by the FDA and similar foreign regulatory agencies govern a wide variety of product-related activities, including the research, development, testing, manufacture, quality control, approval, clearance, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing, post-approval monitoring and reporting, pricing, and export and import of pharmaceutical products. If we or any of our customers, suppliers or distributors fail to comply with applicable regulatory requirements, we may face, among other things, warning letters; adverse publicity affecting both us and our customers; investigations or notices of non-compliance, fines, injunctions, and civil penalties; import or export restrictions; partial suspensions or total shutdown of production facilities or the imposition of operating restrictions; increased difficulty in obtaining required FDA clearances or approvals or foreign equivalents; seizures or recalls of our products or those of our customers; or the inability to sell our products and services. Any such FDA or other foreign regulatory agency actions could disrupt our business and operations, lead to significant remedial costs and have a material adverse impact on our financial position and results of operations.
We and our customers are subject to various international governmental regulations. Compliance with or changes in such regulations may cause us to incur significant expenses, and if we fail to maintain satisfactory compliance with certain regulations, we may be forced to recall products and cease their manufacture and distribution, and we could be subject to civil or criminal penalties.
We and our customers are subject to various significant international, federal, state and local regulations, including but not limited to regulations in the areas of health and safety, employment, labor and immigration, import/export controls, trade restrictions and anti-competition. In addition, as an international organization, we are subject to data privacy and security laws, regulations, and customer-imposed controls in numerous jurisdictions as a result of having access to and processing confidential, personal, or sensitive data in the course of our business. The EU’s General Data Protection Regulation, or GDPR, which became effective in May 2018, applies to our activities related to products and services that we offer to EU customers and workers. The GDPR established new requirements regarding the handling of personal data and includes significant penalties for non-compliance. Other governmental authorities around the world have passed or are considering similar types of legislative and regulatory proposals concerning data protection. Each of these privacy, security and data protection laws and regulations could impose significant limitations and increase our cost of providing our products and services where we process end user personal data and could harm our results of operations and expose us to significant fines, penalties and other damages. We must also comply with complex foreign and U.S. laws and regulations, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and other local laws prohibiting corrupt payments to governmental officials, anti-competition regulations and sanctions imposed by the U.S. Office of Foreign Assets Control and other similar laws and regulations. Violations of these laws and regulations could result in fines and penalties, criminal sanctions, restrictions on our business conduct and on our ability to offer our products in one or more countries, and could also materially affect our brand, our ability to attract and retain employees, our international operations, our business and our operating results. Although we have implemented policies and procedures designed to ensure compliance with these laws and regulations, there can be no assurance that our employees, contractors, or agents will not violate our policies. These regulations are complex, change frequently and have tended to become more stringent over time. We may be required to incur significant expenses to comply with these regulations or to remedy any violations of these regulations.
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Any failure by us to comply with applicable government regulations could also result in the cessation of our operations or portions of our operations, product recalls or impositions of fines and restrictions on our ability to carry on or expand our operations.
Healthcare reform measures could adversely affect our business and financial results.
In response to perceived increases in healthcare costs in recent years, the efforts of governmental and third-party payors to contain or reduce the costs of healthcare and, more generally, to reform the U.S. healthcare system may adversely affect the business and financial condition of pharmaceutical and biotechnology companies, including ours. Specifically, in both the United States and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably, including by limiting the prices we are able to charge for our products, the amounts of reimbursement available for our products or the acceptance and availability of our products. Efforts by governments and other third-party payors to contain or reduce the costs of healthcare through various means may limit our commercial opportunities and adversely affect our operating results and result in a decrease in the price of our common stock or limit our ability to raise capital. We anticipate additional uncertainty as debates about healthcare and public health continue.
Insurance coverage is increasingly difficult to obtain or maintain.
While we currently maintain product liability insurance, directors’ and officers’ liability insurance, general liability insurance, and other types of insurance, first- and third-party insurance is increasingly more difficult to obtain and maintain and has become more costly and narrower in scope, and we may be required to assume more risk in the future. We cannot predict the magnitude of potential liabilities and claims that may be made against us which could exceed the limits of these policies. Additionally, our insurance coverage may not protect us against all liability because our policies typically have various exceptions to the claims covered and also require us to assume some costs of the claim even though a portion of the claim may be covered. If we are subject to third-party claims or suffer a loss or damage in excess of our insurance coverage, we may be required to share that risk in excess of our insurance limits. A partially or completely uninsured claim, if successful and of significant magnitude, could have a material adverse effect on our business, financial condition and results of operations. Furthermore, any first- or third-party claims made on our insurance policies may impact our future ability to obtain or maintain product liability insurance coverage at reasonable costs, if at all.
We are and may become the subject of various claims, litigation or investigations which could have a material adverse effect on our business, financial condition, or results of operations or the price of our common stock.
We are and may become subject to various claims, including “whistleblower” complaints, litigation or investigations, including commercial disputes and employee claims, and from time to time may be involved in governmental or regulatory investigations or similar matters. Some of these claims may relate to the activities of businesses that we have acquired, even though these activities may have occurred prior to our acquisition of such businesses. Any claims asserted against us or our management, regardless of merit or eventual outcome, could harm our reputation, distract our management and have an adverse impact on our relationship with our existing or prospective clients, distribution partners and other third-parties and could lead to additional related claims. Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws. Any judgments or settlements in any pending litigation or future claims, litigation or investigation could have a material adverse effect on our business, financial condition, or results of operations or the price of our common stock.
Our business and operations could be negatively affected by securities litigation or stockholder activism, which could impact the trading price and volatility of our common stock and may constrain capital deployment opportunities and adversely impact our ability to expand our business.
Our business and operations could be negatively affected if we become subject to any securities litigation or from continued stockholder activism, which could cause us to incur significant expenses, hinder the execution of our business and growth strategy, constrain our capital deployment opportunities, and impact the price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Stockholder activism, which can take many forms or arise in a variety of situations, has been increasing recently. Volatility in the price of our common stock, our cash balance, our financial performance or other reasons may cause us to become the target of securities litigation or continue to be the target of stockholder activism.
Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert management’s and our board of director’s attention and resources from our business. Additionally, such securities litigation
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and stockholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses related to any securities litigation and activist stockholder matters. Further, the price of our common stock could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism. In addition, stockholder activism may constrain our capital deployment opportunities and may limit the types of investments that are available to us.
Risks related to our acquisition strategy
Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies.
From time to time, potential acquisition opportunities may become available to us, and we may periodically engage in discussions or negotiations relating to potential acquisitions, including acquisitions that may be material in size or scope to our business. As a part of our growth strategy, we have made, and may continue to make, selected acquisitions of other companies and technologies and continue to evaluate expansion through acquisitions of other companies or technologies, which may carry numerous risks and operational, financial, and managerial challenges, including, but not limited to, the following, any of which could adversely affect our business, financial condition, or results of operations:
•difficulties in integrating new operations, technologies, products, and personnel;
•problems maintaining uniform procedures, controls, and policies with respect to our financial accounting systems;
•lack of synergies or the inability to realize expected synergies and cost-savings;
•difficulties in managing geographically dispersed operations, including risks associated with entering foreign markets in which we have no or limited prior experience;
•underperformance of any acquired technology, product, or business relative to our expectations and the price we paid;
•negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges;
•the potential loss of key strategic partners of acquired companies;
•claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction;
•the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash;
•diversion of management’s attention and company resources from existing operations of the business;
•inconsistencies in standards, controls, procedures, and policies;
•cash expenses and non-cash accounting charges incurred in connection with acquisitions, including unanticipated costs associated with the amortization of intangible assets;
•the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies;
•assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities, including product liability, that are difficult to identify or accurately quantify; and
•risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
Additionally, the successful integration of acquired businesses requires significant efforts and expense across all operational areas, including sales and marketing, research and development, manufacturing, finance, legal, and information technologies. Acquisitions and strategic investments and alliances may require us to integrate and collaborate with a different company culture, management team, business model, business infrastructure and sales and distribution methodology, and assimilate and retain geographically dispersed, decentralized operations and personnel. Depending on the size and complexity of an acquisition, our successful integration of the entity depends on a variety of factors, including introducing new or modified products and meeting revenue targets as expected, the retention of key employees and key customers, increased exposure to certain governmental regulations and compliance requirements and increased costs and use of resources. The integration of acquired businesses is also likely to result in our systems and internal controls becoming increasingly complex and more difficult to manage. Any difficulties in the assimilation of acquired businesses into our control system could harm our operating results or cause us to fail to meet our financial reporting obligations. We are unable to guarantee the success of any acquisitions that we complete and such acquisitions may not be, or remain,
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profitable. Our failure to successfully address the foregoing integration risks may prevent us from achieving the anticipated benefits from any acquisition in a reasonable time frame, or at all.
Even if we are able to successfully integrate acquired businesses, we may not be able to realize the revenue and other synergies and growth that we anticipated from the acquisition in the time frame that we expected, and the costs of achieving these benefits may be higher than what we expected. As a result, the acquisition and integration of acquired businesses may not contribute to our earnings as expected and we may not achieve the other anticipated strategic and financial benefits of such transactions.
Risks related to our intellectual property and cyber security
Our proprietary rights may not adequately protect our technologies and products.
Our technology is critical to the implementation of our business plan, and we are dependent on our patent rights and other intellectual property rights to maintain our competitive position. Our policy is to seek to protect our proprietary position and our commercial success will depend on our ability to obtain patents and/or regulatory exclusivity and maintain adequate protection for our technologies and products in the United States and other countries. We will be able to protect our proprietary rights from unauthorized use by third-parties only to the extent that our proprietary technologies and products are covered by valid and enforceable patents or are effectively maintained as trade secrets.
We intend to apply for additional patents covering both our technologies and products, as we deem appropriate. We may, however, fail to apply for patents on important technologies or products in a timely fashion, if at all. Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products and technologies. In addition, the patent positions of life science industry companies are highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. As a result, the validity and enforceability of our patents cannot be predicted with certainty. In addition, we cannot guarantee that:
•we were the first to make the inventions covered by each of our issued patents and pending patent applications;
•we were the first to file patent applications for these inventions;
•others will not independently develop similar or alternative technologies or duplicate any of our technologies;
•any of our pending patent applications will result in issued patents;
•any of our patents will be valid or enforceable;
•any patents issued to us will provide us with any competitive advantages, or will not be challenged by third parties; and
•we will develop additional proprietary technologies that are patentable, or the patents of others will not have an adverse effect on our business.
The actual protection afforded by a patent varies on a product-by-product basis, from country to country and depends on many factors, including the type of patent, the scope of its coverage, the availability of regulatory related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patents. Our ability to maintain and solidify our proprietary position for our products will depend on our success in obtaining effective claims and enforcing those claims once granted. Our issued patents and those that may be issued in the future, or those licensed to us, may be challenged, invalidated, unenforceable or circumvented, and the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages against competitors with similar products. We also rely on trade secrets to protect some of our technology, especially where it is believed that patent protection is inappropriate or unobtainable. However, trade secrets are difficult to maintain. While we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors. Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and uncertain. In addition, non-U.S. courts are sometimes less willing than U.S. courts to protect trade secrets. If our competitors independently develop equivalent knowledge, methods, and know-how, we would not be able to assert our trade secrets against them and our business could be harmed.
Expiration of our patents may subject us to increased competition and reduce our opportunity to generate product revenue.
The patents for our products have varying expiration dates and, when these patents expire, we may be subject to increased competition and we may not be able to recover our development costs. In some of the larger economic territories, such as
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the United States and Europe, patent term extension/restoration may be available. We cannot, however, be certain that an extension will be granted or, if granted, what the applicable time or the scope of patent protection afforded during any extended period will be. If we are unable to obtain patent term extension/restoration or some other exclusivity, we could be subject to increased competition and our opportunity to establish or maintain product revenue could be substantially reduced or eliminated. Furthermore, we may not have sufficient time to recover our development costs prior to the expiration of our U.S. and non-U.S. patents.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting, and defending patents on all our products in every jurisdiction would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products. These products may compete with our products and may not be covered by any patent claims or other intellectual property rights.
The laws of some non-U.S. countries do not protect intellectual property rights to the same extent as the laws of the United States, and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the infringement of our patents. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.
We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, and we may be unable to protect our rights to, or use of, our technology.
Our success will depend to a significant degree on our ability to secure and protect intellectual property rights and enforce patent and trademark protections relating to our technology. While we believe that the protection of patents and trademarks is important to our business, we also rely on a combination of copyright, trade secret, nondisclosure and confidentiality agreements, know-how and continuing technological innovation to maintain our competitive position. From time to time, litigation may be advisable to protect our intellectual property position. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. If we choose to go to court to stop someone else from using the inventions claimed in our patents or our licensed patents, that individual or company has the right to ask the court to rule that these patents are invalid and/or should not be enforced against that third party. These lawsuits are expensive and would consume time and other resources even if we were successful in stopping the infringement of these patents. In addition, there is a risk that the court will decide that these patents are invalid or unenforceable and that we do not have the right to stop the other party from using the inventions. There is also the risk that, even if the validity or enforceability of these patents is upheld, the court will refuse to stop the other party on the grounds that such other party’s activities do not infringe our rights. Any adverse outcome in litigation relating to the validity of our patents, or any failure to pursue litigation or otherwise to protect our patent position, could materially harm our business and financial condition. In addition, confidentiality agreements with our employees, consultants, customers, and key vendors may not prevent the unauthorized disclosure or use of our technology. It is possible that these agreements will be breached or that they will not be enforceable in every instance, and that we will not have adequate remedies for any such breach.
If a third party asserts that we infringed its patents or other proprietary rights, we could face a number of risks that could seriously harm our results of operations, financial condition and competitive position, including:
•patent infringement and other intellectual property claims, which would be costly and time consuming to defend, whether or not the claims have merit, and which could delay a product and divert management’s attention from our business;
•substantial damages for past infringement, which we may have to pay if a court determines that our product or technologies infringe a competitor’s patent or other proprietary rights;
•a court prohibiting us from selling or licensing our technologies unless the third party licenses its patents or other proprietary rights to us on commercially reasonable terms, which it is not required to do; and
•if a license is available from a third party, we may have to pay substantial royalties or lump-sum payments or grant cross licenses to our patents or other proprietary rights to obtain that license.
We cannot predict the extent to which we might be required to seek licenses or alter our products or services so that they no longer infringe the rights of others. We also cannot guarantee that licenses will be available or the terms of any licenses we
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may be required to obtain will be reasonable. Similarly, changing our products, services or processes to avoid infringing the rights of others may be costly or impractical and could detract from the value of our products and services. If a judgment of infringement were obtained against us, we could be required to pay substantial damages and a court could issue an order preventing us from selling one or more of our products or offering certain of our services. Further, the cost and diversion of management attention brought about by such litigation could be substantial, even if we were to prevail. Any of these events could result in significant expense to us and may materially harm our business and our prospects.
Even if we are granted a patent, in certain circumstances we may be unable protect our rights to, or use of, our technology.
The biotechnology industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods of use either do not infringe the patent claims of the relevant patent, and/or that the patent claims are invalid, and/or that the patent is unenforceable, and we may not be able to do this. Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.
U.S. patent laws as well as the laws of some foreign jurisdictions provide for provisional rights in published patent applications beginning on the date of publication, including the right to obtain reasonable royalties, if a patent subsequently issues and certain other conditions are met.
Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our issued patents or our pending applications, or that we were the first to invent the technology.
Patent applications filed by third parties that cover technology similar to ours may have priority over our patent applications and could further require us to obtain rights to issued patents covering such technologies. If another party files a U.S. patent application on an invention similar to ours, we may elect to participate in or be drawn into an interference proceeding declared by the U.S. Patent and Trademark Office to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our U.S. patent position with respect to such inventions. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations. We cannot predict whether third parties will assert these claims against us, or whether those claims will harm our business. If we are forced to defend against these claims, whether they are with or without any merit and whether they are resolved in favor of or against us, we may face costly litigation and diversion of management’s attention and resources. As a result of these disputes, we may have to develop costly non-infringing technology, or enter into licensing agreements. These agreements, if necessary, may be unavailable on terms acceptable to us, if at all, which could seriously harm our business or financial condition.
We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.
We employ individuals who previously worked with other companies, including our competitors or potential competitors. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information, including trade secrets or other proprietary information, of former employers or other third parties. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents. Litigation may be necessary to defend against these claims. We may not be successful in defending these claims, and even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees. Any litigation or the threat thereof may adversely affect our ability to hire employees and we may lose valuable intellectual property rights if we fail in defending any such claims. A loss of key personnel or their work product could diminish or prevent our ability to commercialize our products, which could have an adverse effect on our business, results of operations and financial condition.
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Our inability to protect our information systems and networks and the proprietary and confidential information in our possession from continually evolving cybersecurity risks or other technological risks, including as a result of breaches of our associated third parties' information technology systems, could materially adversely impact our business, financial condition and results of operations, in addition to our reputation and relationships with our employees, customers, suppliers and business partners.
In conducting our business, we collect, process, transmit and store sensitive, proprietary and confidential information about our employees, customers, vendors, and other parties, including business and personal information, which may be entitled to protection under a number of regulatory regimes. This information may, include, but is not limited to, account access credentials, credit and debit card numbers, bank account numbers, social security numbers, driver’s license numbers, names and addresses and other types of sensitive business or personal information. Some of this information is also processed and stored by our third-party service providers to whom we outsource certain functions and other agents, including our customers, which we refer to collectively as our associated third parties.
Although we take the security of our network systems and information seriously, there can be no assurance that the security measures we and our associated third parties employ will effectively prevent unauthorized persons from obtaining unauthorized access to our systems and information due to the evolving nature and intensity of cyberattacks and threats to data security, in light of new and sophisticated tools and methods used by criminals and cyberterrorists to penetrate and compromise systems, including computer viruses, malware, ransomware, phishing, misrepresentation, social engineering and forgery, which make it increasingly challenging to anticipate, harder to detect, and more difficult to adequately mitigate these risks. Additionally, threats to our systems and our associated third parties’ systems can derive and have derived from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure, including as a result of natural disasters, power failures or other events beyond our control. While we have cyber security insurance, we may incur significant costs in the event of a successful cyber incident against us or in responding to and recovering from a cyber incident that are not covered by, or exceed the limits of, such insurance. Additionally, the cost and operational consequences of implementing, maintaining and enhancing further data or system protection measures could increase significantly to overcome increasingly intense, complex and sophisticated global cyber threats.
The frequency, intensity, and sophistication of cyberattacks and data security incidents has significantly increased in recent years and is constant. We are continually subject to cyberattacks and the risk of data security incidents, some of which have been successful. Such incidents include malicious third party attempts to identify and exploit system vulnerabilities and/or penetrate or bypass our security measures in order to gain unauthorized access to our networks and systems or those of our associated third parties. Such access has led and could lead in the future to the compromise of sensitive, business, personal or confidential information or instructions to transfer funds by us or customers to unauthorized recipients. In the third quarter during the year ended December 31, 2022, we experienced an immaterial security breach that successfully redirected payments from our customers to unauthorized bank accounts. As a result, we proactively employ multiple methods at different layers of our systems to defend our systems against intrusion and attack and to protect the data we collect. These measures have been breached in the past, and we cannot be certain that they will be successful and sufficient to counter current and emerging technology threats that are designed to breach our systems in order to gain access to confidential information. Further, while we select our associated third parties carefully, and we seek to ensure that our customers adequately protect their systems and data, we do not control their actions and are not able to oversee their processes. Any problems experienced by our associated third parties, including those resulting from breakdowns or other disruptions in the services provided by such parties or cyber-attacks and security breaches, could adversely affect our ability to conduct our business and our financial condition.
The protection and security of our network systems and our own information, as well as information relating to our employees, customers, suppliers, business partners and others, is vitally important to us. Any failure of us or our associated third parties to maintain the security of our network systems and the proprietary, confidential, and personal data in our possession, including via the penetration of our network security and the misappropriation of proprietary, confidential and personal information, could result in costly investigations and remediation, business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also result in deterioration in our employees’, customers’, suppliers’ and business partners’ confidence in us and other competitive disadvantages, and thus could have a material adverse effect on our business, financial condition and results of operations.
Risks related to our common stock
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Our stock price and volume may be volatile, and purchasers of our securities could incur substantial losses.
The trading price and volume of our common stock, traded on the NASDAQ Capital Market, or NASDAQ, has been highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control. In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of companies. These market fluctuations may also materially and adversely affect the market price of our common stock. For example, in the year ended December 31, 2024, the highest intra-day sale price of our common stock on NASDAQ was $28.88 per share and the lowest intra-day sale price of our common stock on NASDAQ was $14.50 per share. Our highest trading day volume was 1,692,900 shares traded and the lowest trading day volume was 106,600 shares traded. We may continue to incur substantial increases or decreases in our stock price and volume in the foreseeable future.
Our stock price and trading volume and the market prices and trading volume of many publicly traded companies, including companies in the life sciences industry, have been, and can be expected to be, highly volatile. The future market price and trading volume of our common stock could be significantly impacted by numerous factors, including, but not limited to:
•Future sales of our common stock or other capital raising events by us;
•Sales of our common stock by existing shareholders;
•Changes in our capital structure, including stock splits or reverse stock splits;
•Changes in our product offerings and business structure through acquisitions or divestitures, and public perception of our announced acquisitions and divestitures;
•Announcements of technological innovations for new commercial products by our present or potential competitors;
•Developments concerning proprietary rights;
•Adverse results in our field or with clinical tests of our products in customer applications;
•Adverse litigation;
•Unfavorable legislation or regulatory decisions;
•Public concerns regarding our products;
•Variations in quarterly operating results;
•General trends in the health care and biotechnology industries;
•Global viruses, epidemics, and pandemics; and
•Other factors outside of our control, including significant market fluctuations.
In addition, sales of a substantial number of shares of our common stock or other securities in the public markets (including an issuance by us of additional securities in a public offering or private placement), or the perception that these sales may occur, could cause the market price of our common stock or other securities to decline and could materially impair our ability to raise capital through the sale of additional securities. The sale of a large number of shares of our common stock or other securities also might make it more difficult for us to sell equity or equity-related securities in the future at a time and at the prices that we deem appropriate.
A significant percentage of our outstanding common stock is held by one stockholder, and this stockholder therefore has significant influence on us and our corporate actions.
As of December 31, 2024, based on our review of public filings and our records, one of our existing stockholders, Casdin Capital, LLC owned 8,707,165 shares of our common stock, representing 18.6% of the issued and outstanding shares of common stock. Accordingly, this stockholder has had, and will continue to have, significant influence in determining the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all our assets, election of directors and other significant corporate actions. In addition, without the consent of this stockholder where a stockholder vote may be necessary, we could be prevented from entering into transactions that could be beneficial to us.
We have not paid dividends on our common stock in the past and do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.
We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors (the "Board"), subject to compliance with covenants in current and future agreements governing our indebtedness, and will depend on our results
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of operations, financial condition, capital requirements, contractual arrangements and other factors that our Board deems relevant. Our current policy is to retain all funds and earnings for use in the operation and expansion of our business.
Certain provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Certain provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws may have the effect of delaying or preventing a change of control or changes in our management, including, among other things, provisions that:
•authorize our Board to issue, without further action by the stockholders, shares of preferred stock and to determine the price and other terms, including preferences and voting rights;
•restrict the ability of our stockholders to call a special meeting of stockholders except upon written request of the holders of 35% of the outstanding shares entitled to vote thereat;
•establish advance notice procedural mechanics and disclosure requirements applicable to stockholder nominations of directors and submissions of proposals regarding other business at stockholder meetings; and
•provide that any vacancies on our Board resulting from death, resignation, disqualification, removal or other cause or in increase in the authorized number of directors may be filled only by a majority of directors then in office, even though less than a quorum, or by the sole remaining director.
As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the Board has approved the transaction. Our Board could rely on Delaware law to prevent or delay an acquisition of us. These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board, which is responsible for appointing the members of our management.
Our Amended and Restated Bylaws designate the Court of Chancery of the State of Delaware and U.S. federal district courts as the exclusive forums for certain types of actions and proceedings that may be initiated by our stockholders, which limits our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, or other employees.
Our Amended and Restated Bylaws provide that, with certain limited exceptions, any:
•derivative action, suit or proceeding brought on our behalf;
•action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees to us or our stockholders;
•civil action to interpret, apply or enforce any provision of the General Corporation Law of the State of Delaware;
•civil action to interpret, apply, enforce or determine the validity of the provisions of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws; or
•action asserting a claim governed by the internal affairs doctrine;
will be exclusively brought in the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks jurisdiction, the sole and exclusive forum for such action shall be another state or federal court located within the State of Delaware).
Furthermore, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act.
The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation or similar governing documents has been challenged in legal proceedings, and it is possible that a court could find the choice of forum provisions contained in our bylaws to be inapplicable or unenforceable, including with respect to claims arising under the U.S. federal securities laws.
This exclusive forum provision may limit the ability of a stockholder to commence litigation in a forum that the stockholder prefers, or may require a stockholder to incur additional costs in order to commence litigation in Delaware or
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U.S. federal district court, each of which may discourage such lawsuits against us or our directors or officers. Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could negatively affect our business, results of operations, and financial condition.
Risks related to accounting matters
We have identified material weaknesses in our internal control over financial reporting, and if our remediation of such material weaknesses is not effective, or if we are unable to develop and maintain an effective system of internal control over financial reporting or disclosure controls and procedures, we may not be able to accurately and timely report financial results or prevent fraud, and our ability to meet our reporting obligations and the trading price of our common stock could be negatively affected.
As described in Item 9A — Controls and Procedures and elsewhere in this Form 10-K, Management identified material weaknesses in our internal control over financial reporting for the fiscal years ended December 31, 2024 and 2023. Effective internal control over financial reporting is necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. We regularly review and update our system of internal control over financial reporting, disclosure controls and procedures, and corporate governance policies. In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting. Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Accordingly, a material weakness increases the risk that the financial information we report contains material errors.
In the course of making our assessment of the effectiveness of internal control over financial reporting as of December 31, 2024, we identified one material weakness. The material weakness identified was in relation to not maintaining effective internal controls to verify that key inputs for our stock-based awards were entered correctly into the equity system early in 2024, which was attributable to an outdated internal policy with unclear guidance regarding appropriate inputs.
In the course of making our assessment of the effectiveness of internal control over financial reporting as of December 31, 2023, we identified several material weaknesses. Material weaknesses were identified in relation to (i) ineffective control environment attributed to the acquisition of six private companies in 2019 – 2021 without the proper internal control infrastructure in place, insufficient resources with the appropriate level of internal controls training, knowledge, and expertise to meet our financial reporting requirements and provide adequate oversight over the performance of internal controls, and turnover in the first half of 2023 in key positions, resulting in a delay in establishing control activities to effectively mitigate the risks; (ii) internal control procedures over certain financial statement areas; and (iii) change management controls over certain key financial systems.
The aforementioned material weaknesses did not result in any identified material misstatements to our financial statements, and there were only immaterial changes to previously released financial results.
To address our material weaknesses, we have developed and begun to implement the remediation plans described in Item 9A — Controls and Procedures in this Form 10-K. However, elements of our remediation plans can only be accomplished over time and we can offer no assurance that these initiatives will ultimately have the intended effects. Any failure to establish and maintain effective internal control over financial reporting and disclosure controls and procedures could adversely impact our ability to report our financial results on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations or may lose confidence in our reported financial information. Likewise, if our financial statements are not filed on a timely basis as required by the SEC and The NASDAQ Stock Market LLC, we could face severe consequences from those authorities. In either case, it could result in a material adverse effect on our business or have a negative effect on the trading price of our common stock. Further, if we fail to remedy these deficiencies (or any other future deficiencies) or maintain the adequacy of our internal control over financial reporting and disclosure controls and procedures, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation. We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of our financial statements will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or disclosure controls and procedures.
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Further, in the future, if we cannot conclude that we have effective internal control over financial reporting or disclosure controls and procedures, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price. Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The NASDAQ Stock Market LLC or other regulatory authorities.
Our ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments is limited by provisions of the Internal Revenue Code, and it is possible that certain transactions or a combination of certain transactions may result in material additional limitations on our ability to use our net operating loss and tax credit carryforwards.
Section 382 and 383 of the Internal Revenue Code of 1986, as amended, contain rules that limit the ability of a company that undergoes an ownership change, which is generally any change in ownership of more than 50% of its stock over a three-year period, to utilize its net operating loss and tax credit carryforwards and certain built-in losses recognized in years after the ownership change. These rules generally operate by focusing on ownership changes involving stockholders owning directly or indirectly 5% or more of the stock of a company and any change in ownership arising from a new issuance of stock by us. Generally, if an ownership change occurs, the yearly taxable income limitation on the use of net operating loss and tax credit carryforwards and certain built-in losses is equal to the product of the applicable long-term, tax-exempt rate and the value of our stock immediately before the ownership change. We may be unable to offset our taxable income with losses, or our tax liability with credits, before such losses and credits expire and therefore would incur larger federal income tax liability.
Risks related to disruptive events
Public health crises have adversely affected, and could in the future adversely affect, our business, financial condition. results of operations and cash flows.
We are subject to risks associated with public heath crises, including those related to pandemics and epidemics. The occurrence of such public health risks could materially affect our business, financial condition, results of operations and cash flows, including due to negative impacts to the global economy, disruptions to global supply chains and workforce participation, and volatility and disruption of financial markets. For example, the COVID-19 pandemic created significant volatility, uncertainty, and economic disruption, which had an adverse effect on our business operations, results of operations, cash flows and financial condition.
In particular, the financial or operational impacts as a result of public health crises have included, and may in the future include:
•The temporary closure of our manufacturing facilities and/or those of our outside manufacturers;
•Unavailability of supplies and other components for our products;
•Costs associated with protecting the health of our employees and adhering to any guidance or orders of various governmental authorities, such masking, testing, and social distancing requirements;
•Risks associated with remote work, including increased cybersecurity risk;
•Widespread staffing shortages;
•Outbreaks of disease in our facilities or those of our third-party service providers, which could require us or them to temporarily shut down business operations or cause a disruption to, or shortage in, our or their workforce;
•Significant volatility or reductions in demand for our products;
•Delays in shipments of our products, which could harm our customer relations and adversely impact our competitive position and sales;
•Restrictions on the ability of our personnel to access customers;
•Challenges to our capacity to manufacture, sell and support the use of our products; and
•Volatility in credit or financial markets.
The extent to which public health crises, including health pandemics and epidemics and other outbreaks, impact our business operations, financial performance and results of operations remains uncertain and will depend on many factors outside our control, including the timing, extent, trajectory and duration of the public health crisis, the emergence of new variants, the development, availability, distribution and effectiveness of vaccines and treatments, and the imposition of
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protective public safety measures. Additional future impacts on us may include material adverse effects on our manufacturing, supply chain and distribution channels, our ability to execute our strategic plans, and our profitability. The potential effects of public health crises may also impact and potentially heighten many of our other risk factors discussed in this “Risk Factors” section.
Natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events could disrupt the supply, delivery or demand of products, which could negatively affect our operations and performance.
We are subject to the risk of disruption by earthquakes, floods and other natural disasters, fire, power shortages, geopolitical unrest, war, terrorist attacks and other hostile acts and other events beyond our control and the control of the third parties on which we depend. Any of these catastrophic events, whether in the United States or abroad, may have a strong negative impact on the global economy, our employees, facilities, partners, suppliers, distributors or customers, and could decrease demand for our products, create delays and inefficiencies in our supply chain and make it difficult or impossible for us to deliver products to our customers. A catastrophic event that results in the destruction or disruption of our data centers or our critical business or information technology systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected.
Global climate change and related legal and regulatory developments could negatively affect our business, financial condition and results of operations.
Climate change presents risks to us and to our customers, with the risks expected to increase over time. Our products and services are subject to and affected by environmental regulation by federal, state, and local authorities in the United States and regulatory authorities with jurisdiction over our international operations. Future regulations or voluntary actions on our part in response to climate change could result in costly changes to our facilities to reduce carbon emissions and could increase energy costs as a result of switching to less carbon-intensive, but more expensive, sources of energy to operate our facilities and to transport and ship products and samples. There can be no assurance that climate change or environmental regulation and response will not have a negative competitive impact on our ability to provide our products or that economic returns will match the investments that we are making in the development of new products and services. We will likely face increasing complexity related to product design, the use of regulated materials, energy consumption and efficiency, and the reuse, recycling, or disposal of products and their components at end-of-use or useful life. There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty regarding future incentives for energy-efficiency and costs of compliance, which may impact the demand for our products and services, our costs associated with providing our products and services, and our results of operations and financial condition. In addition, the potential physical impacts of climate change on our operations are highly uncertain and would be particular to the geographic circumstances in areas in which we operate. These may include changes in global weather patterns, which could include local changes in rainfall and storm patterns and intensities, water shortages, changing sea levels, and changing temperature averages or extremes. These impacts may also adversely affect our properties, our business, financial condition and results of operations.
Tariffs and other trade policies could have a substantial impact on our business.
Our business is dependent upon the availability of supplies for our products. U.S. relations with the rest of the world remains uncertain with respect to taxes, trade policies and tariffs, especially under an increasingly volatile political landscape within the U.S. and abroad. Changes in U.S. administrative policy may lead to significant increases in tariffs for imported goods among other possible changes. There have been significant tariffs imposed on imported goods within the U.S. and there are currently indications that future tariffs are likely to be imposed. The imposition of such tariffs may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States. Similarly, interest rates may continue to rise and create further uncertainty and volatility in the market which would negatively impact our business, financial condition and results of operations. In addition, the potential exists that other countries may impose retaliatory tariffs, which could adversely affect our sales to those countries.
These political and economic changes could have a material effect on global economic conditions and the stability of financial markets and could significantly reduce global trade. In addition to potential increases on tariffs, wars or conflicts could affect our ability to obtain raw materials. Ongoing and future conflicts and other geopolitical events may result in sanctions or other export controls imposed by the U.S. or United Nations.
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As we increase sales in international markets, any such international instability and reduction in global trade could negatively impact our expansion plans and international sales. Such risks may also affect our customers’ budgets and their policies which may adversely affect our sales revenue.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
The Audit Committee oversees cybersecurity risks and incidents, ensuring compliance with disclosure requirements and cooperation with law enforcement. Senior management regularly updates the committee on cyber risks and any material incidents.
ITEM 2. PROPERTIES
Our material office and manufacturing leases are detailed below:
| Location | Square Feet | Principal Use | Lease Expiration | |||||||||||||||||
| Bothell, WA | 75,168 | Corporate headquarters, manufacturing, research and development, marketing, and administrative offices | July 2031 | |||||||||||||||||
| Woodinville, WA | 13,578 | Warehouse | January 2030 | |||||||||||||||||
| Albuquerque, NM | 2,940 | Research and development and administrative offices | April 2027 | |||||||||||||||||
| Indianapolis, IN | 11,415 | Manufacturing, research and development, and administrative offices | December 2026 | |||||||||||||||||
We consider the facilities to be in a condition suitable for their current uses. Due to the increasing requirements of customers or regulatory agencies, we may need to acquire additional space or upgrade and enhance existing space. We believe that adequate facilities will be available upon the conclusion of our leases.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market information for common stock
Our common stock is traded on the NASDAQ Stock Market under the trading symbol “BLFS.”
Stockholders and dividends
As of February 24, 2025, there were approximately 221 holders of record of our common stock. We have never paid cash dividends on our common stock and do not anticipate that any cash dividends will be paid in the foreseeable future. We anticipate that we will retain all earnings, if any, to support our operations. Any future determination as to the payment of dividends will be at the sole discretion of our Board and will depend on our financial condition, results of operations, capital requirements and other factors our Board deems relevant.
Performance graph
The following information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A under the Exchange Act, or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.
The following graph shows the cumulative total stockholder return on our common stock with the cumulative total return of the S&P Small Cap 600 Index and our peer group, assuming an initial investment of $100 on December 31, 2019 and the reinvestment of all dividends.
Issuer repurchases of equity securities
Not applicable.
ITEM 6. RESERVED
Reserved.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company Overview
We are a life sciences company that develops, manufactures, and markets bioproduction products and services which are designed to improve quality and de-risk biologic manufacturing, distribution, and transportation in the cell and gene therapy industry. Our products are used in basic and applied research and commercial manufacturing of biologic-based therapies. Customers use our products to maintain the health and function of biologic material during sourcing, manufacturing, and distribution.
Our current portfolio of bioproduction products and services are comprised of two revenue lines that contain four main offerings: (i) cell processing (including biopreservation media for the preservation of cells and tissues, human platelet lysate media for the supplementation of cell expansion, cryogenic vials and automated fill machines that provide high-quality, efficient, and precise mixes of solutions) and (ii) Evo and ThawSTAR devices (including “smart”, cloud connected devices for transporting biologic payloads and automated thawing systems).
On April 17, 2024, the Company sold all of the issued and outstanding shares of common stock of Global Cooling to GCI Holdings pursuant to the Global Cooling Purchase Agreement. Upon the execution of the Global Cooling Purchase Agreement, the Global Cooling business is presented in the accompanying Consolidated Financial Statements as a discontinued operation for all periods presented. See Note 3: Discontinued operations within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report for further details regarding the divestiture.
On November 12, 2024, the Company entered into the SciSafe Purchase Agreement with the Sci Safe Buyer for the sale by Seller of all of the issued and outstanding SciSafe Shares to SciSafe Buyer. Upon the execution of the SciSafe Purchase Agreement, the SciSafe business is presented in the accompanying Consolidated Financial Statements as a discontinued operation for all periods presented. See Note 3: Discontinued operations within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report for further details regarding the divestiture.
On November 14, 2024, the Company entered into the CBS Purchase Agreement with CBS Buyer and CBS for the sale by the Company of all of the issued and outstanding CBS Shares to CBS Buyer. Upon the execution of the CBS Purchase Agreement, the CBS business is presented in the accompanying Consolidated Financial Statements as a discontinued operation for all periods presented. See Note 3: Discontinued operations within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report for further details regarding the divestiture.
We currently operate as one bioproduction products and services business which supports several steps in the biologic material manufacturing and delivery process. We have a diversified portfolio of tools and services that focuses on biopreservation, cell processing, and thawing of biologic materials. We have in-house expertise in cryobiology and the broader CGT workflow, and continue to evaluate opportunities to maximize the value of our product platforms for our extensive customer base through organic growth innovations, partnerships, and acquisitions.
Segment reporting
Management views the Company's operations and makes decisions regarding how to allocate resources as one reportable segment and one reporting unit. For additional information on the Company's segment considerations, Note 16: Segment, customer, and geographic information within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
Critical accounting policies and estimates
We have identified the policies and estimates below as being critical to our business operations and the understanding of our results of operations. These policies require management’s most difficult, subjective, or complex judgements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The impact of any associated risks related to these policies on our business operations are discussed throughout “Management’s Discussion and Analysis of Financial Condition,” including in the “Results of Operations” section, where such policies affect our reported and expected financial results. Although we believe that our estimates, assumptions, and judgements are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.
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Revenue recognition
To determine revenue recognition for contractual arrangements that we determine are within the scope of Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contracts with Customers, we perform the following five steps: (i) identify each contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to our performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the relevant performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price, taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 90 days.
The Company primarily recognizes product revenues, service revenues, and rental revenues. Product revenues are generated from the sale of biopreservation media and ThawSTAR products. We recognize product revenue, including shipping and handling charges billed to customers, when we transfer control of our products to our customers. Shipping and handling costs are classified as part of cost of product revenue in the Consolidated Statement of Operations.
Service revenues are generated from various customer service agreements to provide warranty and other engineering services. We recognize service revenues over time as services are performed or ratably over the contract term. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method or the most likely amount method, depending on the facts and circumstances relative to the contract. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component or variable consideration as of and during the years ended December 31, 2024, 2023, and 2022.
The Company also generates revenue from the leasing of our evo cold chain systems to customers pursuant to rental arrangements entered into with the customer. Revenue from these arrangements is not within the scope of FASB ASC Topic 606 as it is within the scope of FASB ASC Topic 842, Leases. All customers leasing shippers currently do so under rental arrangements for durations of one year or less, with each unit having the option to continue its rental arrangement on a month-to-month basis until returned to the Company beyond the initial rental period. We account for these rental transactions as operating leases and record rental revenue on a straight-line basis over the rental term.
Intangible assets and goodwill
Intangible assets
Intangible assets with a definite life are amortized over their estimated useful lives using the straight-line method and the amortization expense is recorded within intangible asset amortization in the Consolidated Statements of Operations. If the estimate of a definite-lived intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Definite-lived intangible assets and their related estimated useful lives are reviewed at least annually to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable.
Indefinite-lived intangibles are carried at the initially recorded fair value less any recognized impairment. Indefinite-lived intangibles are tested annually for impairment. Impairment assessments are conducted more frequently if certain conditions exist, including a change in the competitive landscape, any internal decisions to pursue new or different technology strategies, a loss of a significant customer, or a significant change in the marketplace, including changes in the prices paid for the Company’s products or changes in the size of the market for the Company’s products. If impairment indicators are present, the Company determines whether the underlying intangible asset is recoverable through estimated future
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undiscounted cash flows. If the asset is not found to be recoverable, it is written down to the estimated fair value of the asset based on the sum of the future discounted cash flows expected to result from the use and disposition of the asset.
Goodwill
We test goodwill for impairment on an annual basis, and between annual tests if events and circumstances indicate it is more likely than not that the fair value of our goodwill is less than its carrying value. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic and market conditions, including a decline in the Company’s market capitalization, a significant adverse change in legal factors, business climate or operational performance of the business, and an adverse action or assessment by a regulator. Goodwill is tested for impairment in the fourth quarter of each year, or more frequently as warranted by events or changes in circumstances mentioned above. Accounting guidance also permits an optional qualitative assessment for goodwill to determine whether it is more likely than not that the carrying value of a reporting unit exceeds its fair value. If, after this qualitative assessment, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then no further quantitative testing would be necessary. A quantitative assessment is performed if the qualitative assessment results in a more likely than not determination or if a qualitative assessment is not performed. The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value. The Company operates as one reporting unit as of the goodwill impairment measurement date in the fourth quarter of 2024.
Contingent consideration
We estimate the acquisition date fair value of the acquisition-related contingent consideration using various valuation approaches, including option pricing models and Monte Carlo simulations, as well as significant unobservable inputs, reflecting the Company’s assessment of the assumptions market participants would use to value these liabilities. The fair value of the contingent consideration is remeasured each reporting period, with any change in the value recorded in our Consolidated Statements of Operations as change in fair value of contingent consideration.
During the year ended December 31, 2023, all contingent consideration liabilities were written off upon assessment of the probability we would achieve certain revenue targets for earnouts. For additional details on the factors considered in the write-off, see Note 4: Fair value measurement within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
Stock-based compensation
We measure and record compensation expense using the applicable accounting guidance for share-based payments related to stock options, time-based restricted stock, market-based restricted stock awards and performance-based awards granted to our directors and employees. The fair value of market-based restricted stock awards is estimated at the date of grant using the Monte Carlo Simulation model. The Monte Carlo Simulation valuation model incorporates assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. In valuing our market-based stock awards, significant judgment is required in determining the expected volatility of our common stock. Expected volatility for our market-based restricted stock awards is based on the historical volatility of our own stock and the stock of companies within our defined peer group. Further, our expected volatility may change in the future, which could substantially change the grant-date fair value of future awards and, ultimately, the expense we record. The fair value of restricted stock, including performance awards, without a market condition is estimated using the current market price of our common stock on the date of grant.
We expense stock-based compensation for stock options, restricted stock awards, and performance awards over the requisite service period. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with a market condition, we expense over the vesting period regardless of the value that the award recipients will ultimately receive.
Provision for income taxes
The assessment regarding whether a valuation allowance is required considers both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. In making this assessment, significant weight is given to evidence that can be objectively verified. In its evaluation, the Company considered its cumulative loss and its forecasted losses in the near-term as significant negative evidence. Based upon a review of the four
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sources of income identified within ASC 740, Accounting for Income Taxes, the Company determined that the Company’s recorded deferred tax liabilities as of December 31, 2024 would be a sufficient source of taxable income to realize all of its deferred tax assets except for a portion of its net operating loss carryforwards. As a result, a full valuation allowance on its deferred tax assets was recorded as of December 31, 2024. The Company will continue to assess the realizability of its assets going forward and will adjust the valuation allowance as needed.
The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities. The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which loss carryforward is available.
The Company applies judgment in the determination of the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. As of December 31, 2024, the Company has an unrecognized tax benefit of $1.2 million related to tax attributes being carried forward. The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which loss carryforward is available.
As of December 31, 2024, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $165.2 million, which is available to reduce future taxable income. Approximately $38.7 million of NOL will expire from 2025 through 2037, and approximately $126.5 million of NOL will be carried forward indefinitely. The NOL carryforwards are subject to an annual limitation in the event of certain cumulative changes in the ownership interest. This limits the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. Subsequent ownership changes may further affect the limitation in future years.
Recent accounting standards update
See Note 1: Organization and significant accounting policies – Recent accounting pronouncements, within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report for more information.
Results of operations
The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying Consolidated Financial Statements and the related footnotes thereto.
Revenue
Revenue for years ended December 31, 2024, 2023, and 2022 were comprised of the following:
| Year Ended December 31, | 2024 vs. 2023 | 2023 vs. 2022 | |||||||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | 2024 | 2023 | 2022 | $ Change | % Change | $ Change | % Change | ||||||||||||||||||||||||||||||||||
| Product revenue | |||||||||||||||||||||||||||||||||||||||||
| Cell processing | $ | 73,446 | $ | 65,772 | $ | 68,509 | $ | 7,674 | 12 | % | $ | (2,737) | (4 | %) | |||||||||||||||||||||||||||
| Evo and thaw | 2,582 | 3,196 | 3,434 | (614) | (19 | %) | (238) | (7 | %) | ||||||||||||||||||||||||||||||||
| Service revenue | |||||||||||||||||||||||||||||||||||||||||
| Evo and thaw | 160 | 349 | 73 | (189) | (54 | %) | 276 | 378 | % | ||||||||||||||||||||||||||||||||
| Rental revenue | |||||||||||||||||||||||||||||||||||||||||
| Evo and thaw | 6,066 | 6,538 | 4,223 | (472) | (7 | %) | 2,315 | 55 | % | ||||||||||||||||||||||||||||||||
| Total revenue | $ | 82,254 | $ | 75,855 | $ | 76,239 | $ | 6,399 | 8 | % | $ | (384) | (1 | %) | |||||||||||||||||||||||||||
Product revenue
Total product revenue was $76.0 million for the year ended December 31, 2024, representing an increase of $7.1 million, or 10%, compared with the year ended December 31, 2023. The increase in product revenue was primarily driven by the $7.7 million, or 12%, increase in cell processing products from an increase in customer demand when compared to the prior year. During the third and fourth quarters of 2023, we experienced a decrease in our revenues from our customers destocking inventory levels in addition to decreases in broader biotech funding that we did not experience during the year
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ended December 31, 2024. The increase in product revenue for the year ended December 31, 2024 was partially offset by a decrease of $0.6 million, or 19% in product revenues from our Evo and thaw product line when compared with the year ended December 31, 2023. The decrease was primarily driven by lower volumes of consumable products sold from our evo product line.
Total product revenue was $69.0 million for the year ended December 31, 2023, representing a decrease of $2.7 million, or 4%, compared with the year ended December 31, 2022. The decrease in product revenue was primarily driven by the $2.7 million, or 4%, decrease in cell processing products due to the decrease in broader biotech funding that impacted this revenue stream during the second half of 2023.
Service revenue
Service revenues, which are primarily generated from various customer service agreements to provide warranty and other engineering services, were an immaterial portion of our total revenues earned in the years ended December 31, 2024, 2023, and 2022.
Rental revenue
Rental revenue was $6.1 million for the year ended December 31, 2024, representing a decrease of $0.5 million, or 7%, compared with the year ended December 31, 2023. The decrease in rental revenue can be attributed to a decrease in fleet size from our largest customer of evo products during the current year.
Rental revenue was $6.5 million for the year ended December 31, 2023, representing an increase of $2.3 million, or 55%, compared with the year ended December 31, 2022. The increase in rental revenue can be attributed to commercial expansions from our largest customers.
Costs and operating expenses
Total costs and operating expenses for years ended December 31, 2024, 2023, and 2022 were comprised of the following:
| Year Ended December 31, | 2024 vs. 2023 | 2023 vs. 2022 | |||||||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | 2024 | 2023 | 2022 | $ Change | % Change | $ Change | % Change | ||||||||||||||||||||||||||||||||||
| Cost of product, rental, and service revenue | $ | 28,583 | $ | 29,922 | $ | 29,328 | $ | (1,339) | (4 | %) | $ | 594 | 2 | % | |||||||||||||||||||||||||||
| General and administrative | 40,541 | 43,264 | 33,255 | (2,723) | (6 | %) | 10,009 | 30 | % | ||||||||||||||||||||||||||||||||
| Sales and marketing | 9,610 | 12,709 | 11,672 | (3,099) | (24 | %) | 1,037 | 9 | % | ||||||||||||||||||||||||||||||||
| Research and development | 7,912 | 12,073 | 8,671 | (4,161) | (34 | %) | 3,402 | 39 | % | ||||||||||||||||||||||||||||||||
| Intangible asset amortization | 2,737 | 3,520 | 3,990 | (783) | (22 | %) | (470) | (12 | %) | ||||||||||||||||||||||||||||||||
| Change in fair value of contingent consideration | — | (2,193) | (4,754) | 2,193 | 100 | % | 2,561 | 54 | % | ||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 89,383 | $ | 99,295 | $ | 82,162 | $ | (9,912) | (10 | %) | $ | 17,133 | 21 | % | |||||||||||||||||||||||||||
Cost of product, rental, and service revenue
In the year ended December 31, 2024, cost of product, rental, and service revenue decreased $1.3 million, or 4%, from the year ended December 31, 2023. This decrease can be attributed to a $1.6 million decrease in supply expenses, a more favorable product mix, and increased operational efficiencies. The decrease in cost of product, rental, and service revenue was offset by a $0.2 million increase in shipping expenses compared to the year ended December 31, 2023.
Cost of product, rental, and service revenue as a percentage of revenue, inclusive of intangible asset amortization, was 38% and 43% for the years ended December 31, 2024 and 2023, respectively. The decrease in cost of product, rental, and service revenues inclusive of intangible asset amortization as a percentage of revenue can be attributed to a more favorable product mix in our biopreservation media product line and a decrease in supply expenses.
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Cost of product, rental, and service revenue as a percentage of revenue, inclusive of intangible asset amortization, was 38% for the year ended December 31, 2022. The increase in cost of product, rental, and service revenues inclusive of intangible asset amortization as a percentage of revenue for the year ended December 31, 2023 compared with the year ended December 31, 2022 can be attributed to unfavorable inventory adjustments of $1.8 million, partially offset by a decrease in material expenses from decreased revenues.
General and administrative
During the years ended December 31, 2024, 2023, and 2022, general and administrative (“G&A”) expense consisted primarily of personnel-related expenses, stock-based compensation, professional fees, such as accounting and consulting fees, and corporate insurance.
In the year ended December 31, 2024, G&A expenses decreased by $2.7 million, or 6%, compared with the year ended December 31, 2023. The decrease is primarily driven by a decrease of $1.4 million in severance expenses related to the departure of the former CEO in the prior year in addition to a decrease of $3.8 million in consulting expenses. The decreases in G&A expenses for the year ended December 31, 2024 were offset by a $1.6 million increase in bonus expenses and a $0.5 million increase in insurance expenses compared with the year ended December 31, 2023.
G&A expenses increased $10.0 million, or 30%, during the year ended December 31, 2023 compared with the year ended December 31, 2022. The increase was driven by higher costs related to the expansion of our corporate infrastructure, including an increased headcount resulting in a $1.2 million increase in salary expenses and a $1.9 million increase in stock compensation expenses. The departure of the former CEO during 2023 also increased severance expenses by $1.4 million. Finally, we also experienced increases in professional fees related to potential merger activities of $3.6 million and increases in accounting fees of $0.6 million.
Sales and marketing
During the years ended December 31, 2024, 2023, and 2022, sales and marketing expense (“S&M”) consisted primarily of personnel-related costs, consulting, trade shows, advertising, and travel expenses.
S&M expense decreased $3.1 million in the year ended December 31, 2024, or 24%, compared with the year ended December 31, 2023. The decrease is primarily due to decreases in personnel expenses, including stock-based compensation expenses of $1.8 million and $0.8 million in salaries from reduced headcount, and a $0.3 million decrease in consulting expenses.
S&M expense increased $1.0 million, or 9%, in the year ended December 31, 2023, compared with the year ended December 31, 2022. The increase is primarily due to an increase in personnel expenses, including stock-based compensation expenses, of $1.2 million.
Research and development
During the years ended December 31, 2024, 2023, and 2022, research and development (“R&D”) expense consisted primarily of personnel-related costs, consulting, research supplies, and milestone expenses related to third party research agreements.
R&D expense decreased $4.2 million in the year ended December 31, 2024, or 34%, compared with the year ended December 31, 2023. The decrease is primarily due to decreases in personnel expenses, including stock-based compensation expenses, of $2.4 million, a decrease of $0.9 million in salaries, and a decrease of $0.6 million in severance costs from reduced headcount compared to the prior fiscal year.
R&D expenses increased $3.4 million in the year ended December 31, 2023, or 39%, compared with the year ended December 31, 2022. The increase is primarily due to an increase in personnel expenses, including stock-based
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compensation expenses, of $2.2 million, increases in severance costs of $0.6 million, and a $0.4 million increase in research milestone payments in relation to our equity investment in iVexSol.
Intangible asset amortization expense
Amortization expense consists of charges related to the amortization of intangible assets associated with the acquisitions of Sexton, SAVSU Technologies, Inc. (“SAVSU”), and Astero in which we acquired definite-lived intangible assets.
Change in fair value of contingent consideration
Change in fair value of contingent consideration consists of changes in estimated fair value of our potential earnouts related to previous acquisitions. The benefit recognized in the year ended December 31, 2023 related primarily to changes in our estimated probability of achieving earnout targets set forth within the purchase agreements. The related liability was written off during the year ended December 31, 2023 due to target revenues not being met or probable to achieve in future periods.
Other income and expenses
Total other income and expenses for the years ended December 31, 2024, 2023, and 2022 were comprised of the following:
| Year Ended December 31, | 2024 vs. 2023 | 2023 vs. 2022 | |||||||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | 2024 | 2023 | 2022 | $ Change | % Change | $ Change | % Change | ||||||||||||||||||||||||||||||||||
| Interest expense, net | (719) | (1,449) | (284) | 730 | 50 | % | (1,165) | (410) | % | ||||||||||||||||||||||||||||||||
| Other income | 497 | 1,303 | 662 | (806) | (62 | %) | 641 | 97 | % | ||||||||||||||||||||||||||||||||
| Change in fair value of investments | (4,074) | — | 697 | (4,074) | NM | (697) | (100) | % | |||||||||||||||||||||||||||||||||
| Gain on settlement of Global Cooling escrow | — | 5,115 | — | (5,115) | (100 | %) | 5,115 | 100 | % | ||||||||||||||||||||||||||||||||
| Total other (expense) income, net | $ | (4,296) | $ | 4,969 | $ | 1,075 | $ | (9,265) | (186) | % | $ | 3,894 | 362 | % | |||||||||||||||||||||||||||
Interest expense, net.
Interest expense incurred in the year ended December 31, 2024 related primarily to the Term Loan (as defined in Note 13: Long-term debt within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report), financed insurance premiums, and indirect tax liabilities. We also earn interest on cash held in our money market account and on our available-for-sale security investments. Decreases in interest expense, net during the year ended December 31, 2024 is attributed to the increases in interest income from our available-for-sale securities compared to the year ended December 31, 2023.
Change in fair value of investments.
Reflects fair value adjustments to our investment in iVexSol (as defined in Note 5: Investments within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report). As of June 30, 2024, we determined that the fair value of its equity interest was less than its carrying amount, and no longer recoverable, triggering an impairment charge of $4.1 million, which represented the entirety of the value of the investment.
Gain on settlement of Global Cooling escrow.
Reflects the non-cash gain associated with our post-closing adjustments for indemnifications and negotiated terms in connection with our acquisition of Global Cooling in 2023, and subsequent release and cancellation of these shares of our common stock from the third-party escrow account established in connection with that transaction. For additional information, see Note 12 within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
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Income Tax Benefit
Income tax benefit for the years ended December 31, 2024, 2023, and 2022 was as follows:
| Year Ended December 31, | 2024 vs. 2023 | 2023 vs. 2022 | |||||||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | 2024 | 2023 | 2022 | $ Change | % Change | $ Change | % Change | ||||||||||||||||||||||||||||||||||
| Income tax benefit | $ | 38 | $ | 24 | $ | 5,236 | $ | 14 | 58 | % | $ | (5,212) | (100 | %) | |||||||||||||||||||||||||||
| Effective tax rate | — | % | — | % | 108 | % | |||||||||||||||||||||||||||||||||||
The income tax benefit recognized in the year ended December 31, 2024 primarily related to losses generated in 2024. Our effective tax rate for 2024 was lower than the U.S. statutory rate of 21% primarily due to the change in our valuation allowance.
Liquidity and capital resources
We believe our cash, cash equivalents, cash generated from operations, available-for-sale securities, and credit lines will satisfy, for at least the foreseeable future, our liquidity requirements, both globally and domestically, including the following: working capital needs, capital expenditures, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations.
Significant cash and non-cash expenses related to divestitures
On April 17, 2024, we consummated the Global Cooling Divestiture. In connection with the closing of the transaction, we provided $6.7 million in cash funding to effectuate the transaction and paid $0.6 million to the brokers, attorneys, and other external parties. In addition, we recognized $6.1 million in cash expenditures from operations during the third quarter of 2024 to meet certain post-closing requirements, costs to sell Global Cooling, the assumption of certain liabilities and debt, and severance expenses related to the Reduction in Force ("RIF") implemented on the business of Global Cooling, which reduced our workforce by 47 employees. For additional information on the details of this transaction, the RIF and its related costs, see Note 3: Discontinued operations within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
On November 12, 2024, we consummated the SciSafe Divestiture. In connection with the closing of this transaction, we received net proceeds of $71.3 million. We also incurred additional expenses related to this transaction, including $0.5 million to the brokers, attorneys, and other external parties for legal and other transaction services, and incurred $0.4 million in severance costs. We also paid the former stockholders of SciSafe approximately $3.3 million in cash to waive all rights with respect to certain potential earn-out payments and recognized $4.0 million in stock compensation expense in connection with the acceleration of unvested shares for all of our former employees that remained with SciSafe upon the closing of this transaction. For additional information on the divestiture of SciSafe, see Note 3: Discontinued operations within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
On November 14, 2024, we consummated the CBS Divestiture. In connection with the closing of the transaction, we received net proceeds of $3.4 million. We also incurred additional expenses related to the transaction, including $0.1 million to the brokers, attorneys, and other external parties for legal and other transaction services. We also recognized $2.0 million in stock compensation expense in connection with the acceleration of unvested shares for all former employees that remained with CBS upon the closing of this transaction. For additional information on the divestiture of CBS, see Note 3: Discontinued operations within the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
Change in cash, cash equivalents, and available-for-sale securities
On December 31, 2024, we had $109.2 million in cash, cash equivalents, and available-for-sale securities, compared to $44.7 million as of December 31, 2023, as follows:
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| Year Ended December 31, | 2024 vs. 2023 | ||||||||||||||||||||||
| (In thousands, except percentages) | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||
| Cash and cash equivalents | $ | 95,386 | $ | 27,896 | $ | 67,490 | 242 | % | |||||||||||||||
| Available-for-sale securities | 13,826 | 16,836 | (3,010) | (18) | % | ||||||||||||||||||
| Maturities in less than one year | 9,198 | 16,288 | (7,090) | (44) | % | ||||||||||||||||||
| Maturities in greater than one year | 4,628 | 548 | $ | 4,080 | 745 | % | |||||||||||||||||
| Total cash, cash equivalents, and available-for-sale securities | $ | 109,212 | $ | 44,732 | $ | 64,480 | 144 | % | |||||||||||||||
The increase in cash and cash equivalents of $67.5 million as of December 31, 2024 as compared with the year ended December 31, 2023 is primarily due to the proceeds received from the disposals of SciSafe and CBS, which were $71.3 million and $3.4 million, respectively. This increase was partially offset by cash used in financing activities of $6.8 million.
Our available-for-sale securities consist of U.S. government securities, corporate debt securities, and other debt securities. Management classifies investments at the time of purchase and reevaluates such classification at each balance sheet date. The decrease in available-for-sale securities of $3.0 million primarily resulted from the sale of $3.5 million in available-for-sale security investments.
On October 19, 2023, we entered into a Securities Purchase Agreement with Casdin Partners Master Fund, L.P. ("Casdin") whereby we sold, and Casdin purchased, 927,165 shares of our common stock at a share price of $11.19 per share for an aggregate purchase price of $10.4 million.
Cash flows
We have elected to present the Consolidated Statements of Cash Flows on a consolidated basis rather than a continuing operations basis with effect to the divestitures of Global Cooling, SciSafe, and CBS. The discussions regarding changes in cash activity in this section are therefore reflective of consolidated results inclusive of operating results of the divested entities.
| Year Ended December 31, | 2024 vs. 2023 | 2023 vs. 2022 | |||||||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | 2024 | 2023 | 2022 | $ Change | % Change | $ Change | % Change | ||||||||||||||||||||||||||||||||||
| Operating activities | $ | 8,431 | $ | (12,498) | $ | (8,488) | $ | 20,929 | 167 | % | $ | (4,010) | (47 | %) | |||||||||||||||||||||||||||
| Investing activities | 58,300 | 17,837 | (58,117) | 40,463 | 227 | % | 75,954 | 131 | % | ||||||||||||||||||||||||||||||||
| Financing activities | (6,783) | 10,591 | 16,316 | (17,374) | (164) | % | (5,725) | (35) | % | ||||||||||||||||||||||||||||||||
| Net increase in cash and cash equivalents | $ | 59,948 | $ | 15,930 | $ | (50,289) | $ | 44,018 | 276 | % | $ | 66,219 | 132 | % | |||||||||||||||||||||||||||
Operating activities
In the year ended December 31, 2024, our operating activities provided cash of $8.4 million, reflecting non-cash charges totaling $28.6 million primarily related to stock-based compensation, gain recognized on disposals of subsidiaries, depreciation, amortization, and changes in fair value of investments. Significant changes in operating assets and liabilities include an increase of accounts receivable of $2.9 million, an increase of prepaid expenses of $2.4 million, and a decrease in accrued expenses of $6.5 million.
In the year ended December 31, 2023, our operating activities used cash of $12.5 million reflecting a net loss of $68.0 million and non-cash charges totaling $55.5 million primarily related to stock-based compensation, impairment of assets, depreciation, amortization, changes in fair value of contingent consideration, gain on settlement of Global Cooling escrow, and non-cash lease charges. Significant changes in operating assets and liabilities include a decrease of accounts receivable of $15.3 million, an increase in inventory of $8.6 million, and a decrease in accounts payable of $8.4 million.
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Investing activities
Our investing activities provided $58.3 million of cash in the year ended December 31, 2024. We had $73.4 million in proceeds from the divestitures of SciSafe and CBS, offset by cash payments of $13.0 million for the divestiture of Global Cooling. We additionally incurred $5.3 million in capital expenditures and purchases of assets held for rent to maintain and expand the Company's operations.
In the year ended December 31, 2023, investing activities provided $17.8 million of cash. We had $29.1 million in net proceeds of available-for-sale securities to fund capital projects and operations. Capital expenditures and purchases of assets held for rent to maintain and expand the Company's operations used $11.2 million.
Financing activities
In the year ended December 31, 2024, cash used by financing activities was $6.8 million. The use of cash in financing activities was primarily related to $9.0 million in payments on our Term Loan, equipment loans, and financed insurance premiums. This was offset by proceeds from financed insurance premiums of $2.1 million.
In the year ended December 31, 2023, cash provided by financing activities was $10.6 million. The increase in cash provided by financing activities compared to the prior year was primarily due to a private placement of $10.4 million and proceeds from financed insurance premiums of $2.6 million, offset by payments on financed insurance premiums of $2.4 million.
Contractual obligations
Our cash flows from operations are dependent on a number of factors, including fluctuations in our operating results, accounts receivable collections, inventory management, and the timing of tax and other payments. As a result, the impact of contractual obligations on our liquidity and capital resources in future periods should be analyzed in conjunction with such factors. Despite these uncertainties, we believe that our balances of cash, cash equivalents, and available-for-sale securities in addition to our cash flows from operations are adequate to meet our liquidity requirements in the foreseeable future.
The following summarizes certain of our contractual obligations as of December 31, 2024 and the effect such obligations are expected to have on our cash flows in the next fiscal year:
Long-term debt, including interest
These amounts represent expected cash payments, including principal and interest. Debt obligations are described in Note 13: Long-term debt of the Consolidated Financial Statements in Part II, Item 8 of this Annual Report. As of December 31, 2024, our total obligations were $15.9 million, of which $10.9 million was short-term.
Lease obligations
We have various operating and financing lease agreements for office space, warehouses, manufacturing, research equipment, machinery, and production locations as well as vehicles and other equipment. Lease obligations are described in Note 7: Leases of the Consolidated Financial Statements in Part II, Item 8 of this Annual Report. As of December 31, 2024, our total obligations were $14.2 million, of which $1.5 million was short-term.
Purchase obligations
Purchase obligations are defined as agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable pricing provisions and the approximate timing of the transactions. As of December 31, 2024, our total obligations were $3.7 million, of which $3.1 million was short-term.
Sales Tax
We are in the process of evaluating a state sales tax liability analysis for states in which we have economic nexus, and collecting exemption documentation from our customers. It is probable that we will be subject to sales tax liabilities plus
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interest and penalties relating to historical activity in certain states. We have estimated a contingent liability for sales tax which is recorded in the Consolidated Balance Sheet. The liability includes significant judgments and estimates that may change in the future, and the liability may exceed our current estimate. We may be subject to examination by the relevant state tax authorities and we can provide no assurances that outcomes from these examinations will not have a significant effect on our operating results, financial condition, and cash flows.
Capital requirements
Our future capital requirements will depend on many factors, including the following:
•the expansion of our cell and gene therapy business
•the ability to sustain product revenue and profits of our cell and gene therapy products and services;
•the degree to which we implement additional automated production equipment throughout our facilities;
•our ability to acquire additional cell and gene therapy products and services;
•the scope of and progress made in our research and development activities; and
•the success of any proposed financing efforts.
Absent acquisitions of additional products, product candidates, or intellectual property, we believe our current cash, cash equivalents, and available-for-sale securities balances, in addition to our cash flows from operations, are adequate to meet our cash needs for the foreseeable future. We expect to incur continued spending related to our other existing product lines and expansion of our commercial capabilities for the foreseeable future. Our future capital requirements may include, but are not limited to, purchases of property and equipment, the acquisition of additional cell and gene therapy products and technologies, and continued investment in our intellectual property portfolio.
We actively evaluate various strategic transactions on an ongoing basis, including acquiring complementary products, technologies or businesses that would complement our existing portfolio. We continue to seek to acquire such potential assets that may offer us the best opportunity to create value for our shareholders. In order to acquire such assets, we may need to seek additional financing to fund these investments. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of any such acquisition-related financing needs or lower demand for our products, we may seek to sell common or preferred equity or convertible debt securities, enter into a credit facility or another form of third-party funding, or seek other debt funding. The sale of equity and convertible debt securities may result in dilution to our stockholders, and those securities may have rights senior to those of our common shares. If we raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or other debt could contain covenants that would restrict our operations. Any other third-party funding arrangement could require us to relinquish valuable rights. We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available on reasonable terms, if at all.
Risks and uncertainties
The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgment about the outcome of future events. The global business environment continues to be impacted by cost pressure, the overall effects of economic uncertainty on customers' purchasing patterns, increasing tariffs on U.S. imports, high interest rates, and other factors. It is not possible to accurately predict the future impact of such events and circumstances. Actual results could differ from our estimates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign currency exchange risk
The Company's sales are primarily denominated in the U.S. dollar. Accordingly, our sales are not generally impacted by foreign currency rate changes. Any transactions denominated in a foreign currency, which were immaterial during the year ended December 31, 2024, incur gains or losses from the remeasurement and settlement of the balances and are reported in the Other income line item on the Consolidated Statements of Operations. Fluctuations in foreign currency exchange rates have not had a material impact on our results of operations for the periods presented.
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Interest rate risk
Our exposure to market risk for changes in interest rates relates primarily to our investments in available-for-sale securities and our long-term debt. We invest our excess cash in investment grade short to intermediate-term fixed income securities. These securities may have their fair market value adversely affected due to a rise in interest rates, and we may suffer losses if forced to sell securities that have declined in market value due to changes in interest rates. Our long-term debt primarily bears interest at a fixed rate, with a variable component subject to an interest rate ceiling. Fluctuations in interest rates therefore do not materially impact our Consolidated Financial Statements from long-term debt. For additional information about our available-for-sale securities and long-term debt, see Notes 5: Investments and 13: Long-term debt to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
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ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Page No. | |||||
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
BioLife Solutions, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of BioLife Solutions, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 3, 2025 expressed an adverse opinion.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Consolidated Financial Statements - Impact of Internal Control over Financial Reporting
As described in Management’s Report on Internal Control Over Financial Reporting, a material weakness was identified as of December 31, 2024. The prevention, detection, and correction of material misstatements of the consolidated financial statements, is dependent, in part, on management (i) designing and maintaining an effective control environment, including maintaining sufficient resources within the accounting and financial reporting department to review complex financial reporting transactions; and updating and distributing accounting policies and procedures across the organization (ii) designing and implementing effective information and communication process to identify and assess the source of and controls necessary to ensure the reliability of information used in financial reporting and that communicates relevant information about roles and responsibilities for internal control over financial reporting and (iii) designing and implementing effective process-level control activities and general information technology controls related to financial reporting processes.
We identified the impact on our audit of the material weaknesses related to the control environment, risk management, and control activities that existed during part of the year and the current year material weakness that existed as of the end of the year, as a critical audit matter.
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The principal consideration for our determination that the impact on our audit of the material weaknesses is a critical audit matter is that especially challenging auditor judgment was required in designing audit procedures and evaluating audit evidence due to the ineffective system of internal control over financial reporting, which affected substantially all consolidated financial statement account balances and disclosures for some or all of the audit period.
Our audit procedures related to the material weaknesses included the following, among others:
•We determined the nature and extent of audit procedures that are responsive to the identified material weaknesses and evaluated the evidence obtained from the procedures performed.
•We lowered the threshold used for investigating differences noted for recorded amounts.
•We selected larger sample sizes for tests of details.
•We substantively tested the accuracy and completeness of system-generated reports used in the audit and more extensively tested these reports.
•We increased the extent of supervision over the execution of audit procedures
/s/ GRANT THORNTON LLP
We have served as the Company's auditor since 2022.
March 3, 2025
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BioLife Solutions, Inc.
Consolidated Balance Sheets
| December 31, | |||||||||||
| (In thousands, except per share and share data) | 2024 | 2023 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Available-for-sale securities, current portion | |||||||||||
Accounts receivable, trade, net of allowance for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Current assets, discontinued operations | |||||||||||
| Total current assets | |||||||||||
| Assets held for rent, net | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Long-term deposits and other assets | |||||||||||
| Available-for-sale securities, long term | |||||||||||
| Equity Investments | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Long-term assets, discontinued operations | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Sales taxes payable | |||||||||||
| Lease liabilities, operating, current portion | |||||||||||
| Debt, current portion | |||||||||||
| Current liabilities, discontinued operations | |||||||||||
| Total current liabilities | |||||||||||
| Lease liabilities, operating, long-term | |||||||||||
| Debt, long-term | |||||||||||
| Deferred tax liabilities | |||||||||||
| Long-term liabilities, discontinued operations | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 12) | |||||||||||
| Shareholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
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Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss, net of taxes | ( | ||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements
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BioLife Solutions, Inc.
Consolidated Statements of Operations
50
| Years Ended December 31 | |||||||||||||||||
| (In thousands, except per share and share data) | 2024 | 2023 | 2022 | ||||||||||||||
| Product revenue | $ | $ | $ | ||||||||||||||
| Service revenue | |||||||||||||||||
| Rental revenue | |||||||||||||||||
| Total product, service, and rental revenue | |||||||||||||||||
| Costs and operating expenses: | |||||||||||||||||
| Cost of product revenue (exclusive of intangible assets amortization) | |||||||||||||||||
| Cost of service revenue (exclusive of intangible assets amortization) | |||||||||||||||||
| Cost of rental revenue (exclusive of intangible assets amortization) | |||||||||||||||||
| General and administrative | |||||||||||||||||
| Sales and marketing | |||||||||||||||||
| Research and development | |||||||||||||||||
| Intangible asset amortization | |||||||||||||||||
| Change in fair value of contingent consideration | ( | ( | |||||||||||||||
| Total operating expenses | |||||||||||||||||
| Operating loss | ( | ( | ( | ||||||||||||||
| Other (expense) income: | |||||||||||||||||
| Interest expense, net | ( | ( | ( | ||||||||||||||
| Other income | |||||||||||||||||
| Change in fair value of investments | ( | ||||||||||||||||
| Gain on settlement of Global Cooling escrow | |||||||||||||||||
| Total other (expense) income, net | ( | ||||||||||||||||
| (Loss) income from continuing operations before income tax benefit | ( | ( | ( | ||||||||||||||
| Income tax benefit | |||||||||||||||||
| (Loss) income from continuing operations | ( | ( | |||||||||||||||
| Discontinued operations: | |||||||||||||||||
| Loss from discontinued operations before income tax expense | ( | ( | ( | ||||||||||||||
| Income tax expense | ( | ( | ( | ||||||||||||||
| Loss from discontinued operations | ( | ( | ( | ||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
| Loss per share - Basic: | |||||||||||||||||
| Continuing operations | $ | ( | $ | ( | $ | ||||||||||||
| Discontinued operations | $ | ( | $ | ( | $ | ( | |||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
| Loss per share - Diluted: | |||||||||||||||||
| Continuing operations | $ | ( | $ | ( | $ | ||||||||||||
| Discontinued operations | $ | ( | $ | ( | $ | ( | |||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
| Weighted average shares used to compute net loss per share attributable to common shareholders: | |||||||||||||||||
| Basic | |||||||||||||||||
| Diluted | |||||||||||||||||
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The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements
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BioLife Solutions, Inc.
Consolidated Statements Of Comprehensive Loss
| Years Ended December 31 | |||||||||||||||||
| (In thousands) | 2024 | 2023 | 2022 | ||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
| Other comprehensive (loss) income - foreign currency translation adjustment, net of tax | ( | ||||||||||||||||
| Unrealized (loss) gain on available-for-sale securities, net of tax | ( | ( | |||||||||||||||
| Comprehensive loss | $ | ( | $ | ( | $ | ( | |||||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements
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BioLife Solutions, Inc.
Consolidated Statements of Shareholders’ Equity
| (In thousands, except share data) | Series A Preferred Stock Shares | Series A Preferred Stock Amount | Common Stock Shares | Common Stock Amount | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $( | $( | $ | |||||||||||||||||||||||||||||||||||||||||
| Stock issued as consideration for SciSafe earnout | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Fees incurred for registration filings | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock issued – on vested RSAs | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Stock issued as consideration for SciSafe earnout | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Fees incurred for registration filings | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock issued – on vested RSA units | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Settlement of Global Cooling escrow | — | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Common stock shares issued | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Stock option exercises | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock issued – on vested RSA units | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $( | $ | |||||||||||||||||||||||||||||||||||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements
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BioLife Solutions, Inc.
Consolidated Statements of Cash Flows
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2024 | 2023 | 2022 | ||||||||||||||
| Cash flows from operating activities | |||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||||||||||||||||
| Impairment of intangible assets | |||||||||||||||||
| Impairment of long-lived assets | |||||||||||||||||
| Gain on settlement of Global Cooling escrow | ( | ||||||||||||||||
| Depreciation | |||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||
| Amortization of loan costs | |||||||||||||||||
| Stock-based compensation | |||||||||||||||||
| Non-cash lease expense | |||||||||||||||||
| Deferred income tax benefit | ( | ( | ( | ||||||||||||||
| Change in fair value of contingent consideration | ( | ( | |||||||||||||||
| Change in fair value of investments | ( | ||||||||||||||||
| Accretion of investments | ( | ( | ( | ||||||||||||||
| Loss on disposal of assets held for rent, net | |||||||||||||||||
| Loss on disposal of property and equipment, net | |||||||||||||||||
| Net gain on disposal of subsidiaries | ( | ||||||||||||||||
| Other | |||||||||||||||||
| Change in operating assets and liabilities | |||||||||||||||||
| Accounts receivable, trade, net | ( | ( | |||||||||||||||
| Inventories | ( | ( | |||||||||||||||
| Prepaid expenses and other current assets | ( | ||||||||||||||||
| Accounts payable | ( | ||||||||||||||||
| Accrued expenses and other current liabilities | |||||||||||||||||
| Sales taxes payable | ( | ||||||||||||||||
| Warranty liability | ( | ( | ( | ||||||||||||||
| Other | ( | ( | |||||||||||||||
| Net cash provided by (used in) operating activities | ( | ( | |||||||||||||||
| Cash flows from investing activities | |||||||||||||||||
| Purchases of property and equipment | ( | ( | ( | ||||||||||||||
| Purchases of assets held for rent | ( | ( | ( | ||||||||||||||
| Proceeds from sale of available-for-sale securities | |||||||||||||||||
| Maturities of available-for-sale securities | |||||||||||||||||
| Investment in available-for-sale securities | ( | ( | ( | ||||||||||||||
| Purchases of intangible assets | ( | ||||||||||||||||
| Proceeds from sale of SciSafe and CBS | |||||||||||||||||
| Payments on divestiture of Global Cooling | ( | ||||||||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||||||||
| Cash flows from financing activities | |||||||||||||||||
| Proceeds from term loan | |||||||||||||||||
| Payments on term loan | ( | ( | ( | ||||||||||||||
| Payments on equipment loans | ( | ( | ( | ||||||||||||||
| Issuance of common stock | |||||||||||||||||
| Fees paid related to issuance of common stock | ( | ||||||||||||||||
| Proceeds from exercise of common stock options | |||||||||||||||||
| Proceeds from financed insurance premium | |||||||||||||||||
| Payments on financed insurance premium | ( | ( | ( | ||||||||||||||
| Other | ( | ( | |||||||||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||||||||
| Net increase in cash and cash equivalents | ( | ||||||||||||||||
| Cash and cash equivalents – beginning of period | |||||||||||||||||
| Effects of currency translation on cash and cash equivalents | ( | ||||||||||||||||
| Cash and cash equivalents – end of period | $ | $ | $ | ||||||||||||||
| Non-cash investing and financing activities | |||||||||||||||||
| Assets acquired under operating leases | $ | $ | $ | ||||||||||||||
| Assets acquired under finance leases | $ | $ | $ | ||||||||||||||
| Purchase of property and equipment not yet paid | $ | $ | $ | ||||||||||||||
| Unrealized (gain) loss on available-for-sale securities | $ | ( | $ | ( | $ | ||||||||||||
| Unrealized gain on currency translation | $ | $ | ( | $ | |||||||||||||
| Cashless issuance of SciSafe earnout shares | $ | $ | $ | ||||||||||||||
| Returned shares from settlement of Global Cooling escrow | $ | $ | ( | $ | |||||||||||||
| Cash interest paid | $ | $ | $ | ||||||||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and significant accounting policies
Business
BioLife Solutions, Inc. (“BioLife”, “us”, “we”, “our”, or the “Company”) is a developer, manufacturer, and supplier of a portfolio of bioproduction products and services including proprietary biopreservation media, automated thawing devices, and cloud-connected shipping containers. Our CryoStor freeze media and HypoThermosol hypothermic storage media are optimized to preserve cells in the regenerative medicine market. These novel biopreservation media products are serum-free and protein-free, fully defined, and are formulated to reduce preservation-induced cell damage and death. Our Sexton cell processing product line includes human platelet lysates (“hPL”) for cell expansion, reducing risk and improving downstream performance over fetal bovine serum, human serum, and other chemically defined media, CellSeal cryogenic vials that are purpose-built rigid containers used in cell and gene therapy (“CGT”) that can be filled manually or with high throughput systems, and automated cell processing machines that bring multiple processes traditionally performed by manual techniques under a higher level of control to protect therapies from loss or contamination. Our ThawSTAR product line is comprised of a family of automated thawing devices for frozen cell and gene therapies packaged in cryovials and cryobags. These products help administer temperature-sensitive biologic therapies to patients by standardizing the thawing process and reducing the risks of contamination and overheating, which are inherent with the use of traditional water baths. Our evo® shipping containers provide cloud-connected passive storage and transport containers for temperature-sensitive biologics and pharmaceuticals.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Estimates and assumptions by management affect the Company’s allowance for credit losses, the net realizable value of inventory, sales tax liabilities, valuation of market based stock awards, valuations related to investments and transaction activities, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets, estimated fair values of intangible assets and goodwill, amortization methods and periods, certain accrued expenses, share-based compensation, and the provision for income taxes.
The Company regularly assesses these estimates; however, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.
Basis of presentation and consolidation
The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The Company is presenting Global Cooling, SciSafe, and CBS as discontinued operations for all periods presented within the Consolidated Balance Sheets and Consolidated Statements of Operations. The Consolidated Statements Of Comprehensive Loss, Consolidated Statements of Shareholders' Equity, and Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. All amounts, percentages, and disclosures for all periods presented reflect only the continuing operations of the Company unless otherwise noted. See Note 3: Discontinued operations for additional details about the divestitures.
All long-lived assets are maintained in the United States of America.
Segment reporting
The Company views its operations and makes decisions regarding how to allocate resources and manages its business as one reportable segment and one reporting unit. The Company’s Chief Executive Officer, who is the chief operating
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decision maker ("CODM"), reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.
Revenue recognition
To determine revenue recognition for contractual arrangements that we determine are within the scope of Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contracts with Customers, we perform the following five steps: (i) identify each contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to our performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the relevant performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the observable and estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price, taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 90 days. During the year ended December 31, 2024, the Company recognized approximately $39 thousand of revenue that was included in the deferred revenue balance at the beginning of the year.
The Company primarily recognizes product revenues, service revenues, and rental revenues. Product revenues are generated from the sale of biopreservation media, hPL media, evo ModPaks, and ThawSTAR products. We recognize product revenue, including shipping and handling charges billed to customers, at a point in time when we transfer control of our products to our customers, which is upon shipment for substantially all transactions. Shipping and handling costs are classified as part of cost of product revenue in the Consolidated Statements of Operations.
Service revenues are generated from various customer service agreements to provide warranty and other engineering services. We recognize service revenues over time as services are performed or ratably over the contract term. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method or the most likely amount method, depending on the facts and circumstances relative to the contract. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of and during the year ended December 31, 2024.
The Company generates revenue from the leasing of our evo cold chain systems to customers pursuant to rental arrangements entered into with the customer. Revenue from these arrangements is not within the scope of FASB ASC Topic 606 as it is within the scope of FASB ASC Topic 842, Leases. All customers leasing shippers currently do so under rental arrangements for durations of one year or less, with each unit having the option to continue its rental arrangement on a month-to-month basis until returned to the Company beyond the initial rental period. We account for these rental transactions as operating leases and record rental revenue on a straight-line basis over the rental term.
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Total bioproduction products and services revenue for the years ended December 31, 2024, 2023, and 2022 were comprised of the following:
| Years Ended December 31, | |||||||||||||||||
| (In thousands, except percentages) | 2024 | 2023 | 2022 | ||||||||||||||
| Product revenue | |||||||||||||||||
| Cell processing | $ | $ | $ | ||||||||||||||
| Evo and thaw | |||||||||||||||||
| Service revenue | |||||||||||||||||
| Evo and thaw | |||||||||||||||||
| Rental revenue | |||||||||||||||||
| Evo and thaw | |||||||||||||||||
| Total revenue | $ | $ | $ | ||||||||||||||
There was no estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting periods as of December 31, 2024. The Company elected not to disclose the value of the remaining unsatisfied performance obligation with a duration of one year or less as permitted by the practical expedient in ASU 2014-09, Revenue from Contracts with Customers.
For additional information on the Company's revenues by geographic region, product line, and other customer concentration information, see Note 16: Segment, customer, and geographic information.
Risks and uncertainties
The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgment about the outcome of future events. The global business environment continues to be impacted by cost pressure, the overall effects of economic uncertainty on customers' purchasing patterns, high interest rates, and other factors. It is not possible to accurately predict the future impact of such events and circumstances. Actual results could differ from our estimates.
(Loss) earnings per share from continuing operations
Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock during the reporting period. Diluted earnings per share is calculated using the weighted average number of shares of common stock plus the potentially dilutive effect of common equivalent shares outstanding determined under both the two-class method and the treasury stock method, whichever is more dilutive. In periods when we have a net loss, common stock equivalents are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.
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The following table presents computations of basic and diluted earnings per share:
| Year Ended December 31, | |||||||||||||||||
| (In thousands, except share and earnings per share data) | 2024 | 2023 | 2022 | ||||||||||||||
| Basic and diluted (loss) income from continuing operations per common share | |||||||||||||||||
| Numerator: | |||||||||||||||||
| (Loss) income from continuing operations | $ | ( | $ | ( | $ | ||||||||||||
| Denominator: | |||||||||||||||||
| Weighted-average common shares issued and outstanding - Basic | |||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||
| Weighted-average common shares issued and outstanding - Diluted | |||||||||||||||||
| Net (loss) income per share from continuing operations attributable to common shareholders | |||||||||||||||||
| Basic | $ | ( | $ | ( | $ | ||||||||||||
| Diluted | $ | ( | $ | ( | $ | ||||||||||||
| Anti-dilutive shares | |||||||||||||||||
Cash and cash equivalents
Cash equivalents consist primarily of interest-bearing money market accounts. We consider all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents. We maintain cash balances that may exceed federally insured limits. We do not believe that this results in any significant credit risk.
Available-for-sale securities
Available-for-sale securities consist of U.S. government securities, corporate debt securities, and other debt securities. Management classifies investments at the time of purchase and reevaluates such classification at each balance sheet date. Investments with maturities beyond one year may be classified as short-term based on their liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Available-for-sale securities are reported at fair value based on quoted market prices and other observable market data. Unrealized gains and losses are reported as a component of other comprehensive (loss) income, net of any related tax effect. Realized gains and losses and other-than-temporary impairments on investments are included in other income.
Inventories
Inventories relate to the Company’s cell and gene therapy products. The Company values biopreservation media inventory at cost or, if lower, net realizable value, using the specific identification method. The Company values thaw inventory at cost or, if lower, net realizable value, using the average costing method. All other inventory is valued at cost or, if lower, net realizable value, using the first-in, first-out method. The Company reviews its inventories at least quarterly and records a provision for inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected revenue volume to cost of product revenue. The Company bases its estimates on expected product revenue volume, production capacity and expiration dates of raw materials, work in process, and finished products. A change in the estimated timing or amount of demand for the Company’s products could result in additional provisions for excess inventory quantities on hand. Any significant unanticipated changes in demand or unexpected quality failures could have a significant impact on the value of inventory and reported operating results. During the year ended December 31, 2023, we assessed write-downs of approximately $3.4 million and recorded within the line item Inventories in the Company's Consolidated Balance Sheet. For additional information, see Note 6: Inventories. Work-in-process and finished products inventories consist of material, labor, outside testing costs and manufacturing overhead.
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Accounts receivable
Accounts receivable consist of short-term amounts due from our customers (generally 30 to 90 days) and are stated at the amount we expect to collect. We establish an allowance for credit losses based on our assessment of the collectability of specific customer accounts. Accounts considered uncollectible are charged against the established allowance.
Accounts receivable are stated at principal amount, do not bear interest, and are generally unsecured. Accounts considered uncollectible are charged against the established allowance.
Equity investments
We periodically invest in securities of private companies to promote business and strategic objectives. These investments are measured and recorded as follows:
Non-marketable equity securities are equity securities without a readily determinable fair value. As of December 31, 2024 and December 31, 2023, our investment in Series E Preferred Stock in PanTHERA CryoSolutions, Inc. (“PanTHERA”) was valued at $1.0 1.0 million in Class E Preferred Shares in PanTHERA CryoSolutions, Inc. In conjunction with this investment, the Company executed a development and license agreement with PanTHERA under which the Company will make milestone development payments up to $2.0 million in the event that certain milestones are met in exchange for exclusive, perpetual, worldwide marketing and distribution rights to the technology for use in cell and gene therapy applications. As of December 31, 2024, the Company has paid $1.9 million in milestone development payments, with $0.9 million paid during the current year in accordance with the agreement. The Preferred Stock investments in PanTHERA are carried at cost minus impairment, if any, plus or minus changes resulting from observable process changes in orderly transactions for identical or similar investments of the same issuer. As of December 31, 2024, management believes there are no indications of impairment or changes in fair value for the investment in PanTHERA.
Property and equipment
Property and equipment are stated at cost and are depreciated using the straight-line method over estimated useful lives of to ten years . Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the assets or the remaining lease term of the respective assets. Gains or losses on disposals of property and equipment are recorded within income from operations. Costs of repairs and maintenance are included as part of operating expenses unless they are incurred in relation to major improvements to existing property and equipment, at which time they are capitalized.
Assets held for rent
Assets held for rent are carried at cost less accumulated depreciation. These assets consist of evo shippers and related components in production, shippers complete, ready to be deployed, and placed in service upon a customer order, shippers in the process of being assembled, and components available to build shippers. Shippers are depreciated over a useful life of three years when in use by customers.
Our customers rent assets per a rental agreement. Each agreement provides for fixed monthly rent. Rental revenue and fees are recognized over the rental term on a straight-line basis. We retain the ownership of the assets rented. At the end of the rental agreement, the customer returns the asset to the Company.
Assets held for rent are reviewed for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. Carrying values are reviewed for recoverability at the asset grouping level to determine if the
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facts and circumstances suggest that a potential impairment may have occurred. If the sum of the expected future cash flows (undiscounted and before interest) from the use of the assets is less than the net book value of the asset, an impairment could exist and the amount of the impairment loss, if any, will generally be measured as the difference between the net book value of the assets and their estimated fair values. There were no
Long-Lived Assets
The Company reviews long-lived assets, including property and equipment, leased assets, and definite life intangible assets for impairment whenever events and changes in circumstances indicate that the carrying value of an asset may not be recoverable. In order to determine if assets have been impaired, assets are grouped and tested at the lowest level for which identifiable independent cash flows are available ("asset group"). An impairment loss is recognized when the sum of the projected undiscounted cash flows is less than the carrying value of the asset group. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group. Fair value can be determined using a market approach, income approach or cost approach.
Lease accounting
We determine if an arrangement is a lease at inception. Where an arrangement is a lease, we determine if it is an operating lease or a financing lease. At lease commencement, we record a lease liability and corresponding right-of-use (“ROU”) asset. Lease liabilities represent the present value of our future lease payments over the expected lease term which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of our lease liability is determined using our incremental collateralized borrowing rate at lease inception. ROU assets represent our right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability for leases with an initial term greater than twelve months. Over the lease term we use the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized in a manner that results in straight-line expense recognition. The Company has elected the practical expedient and does not separate lease components from non-lease components for its leases.
We elected to apply the practical expedient for short-term leases and accordingly do not apply lease recognition requirements for short-term leases with a duration less than twelve months. Instead, we recognize payments related to these arrangements in the Consolidated Statement of Operations as lease costs on a straight-line basis over the lease term.
Warranty
Our standard warranty terms typically cover one year from the date of delivery. We accrue for standard warranty costs based on historical trends in warranty charges. The accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost over the period.
Income taxes
We account for income taxes using an asset and liability method which generally requires recognition of deferred tax assets and liabilities for the expected future tax effects of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are recognized for the future tax effects of differences between tax bases of assets and liabilities, and financial reporting amounts, based upon enacted tax laws and statutory rates applicable to the periods in which the differences are expected to affect taxable income. We evaluate the likelihood of realization of deferred tax assets and provide an allowance where, in management’s opinion, it is more likely than not that the asset will not be realized. Our policy for interest and penalties is to recognize interest and penalties as a component of the provision for income taxes in the Consolidated Statement of Operations.
We determine any uncertain tax positions based on a determination of whether and how much of a tax benefit taken in the Company’s tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities.
Judgment is applied in the determination of the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. As of December 31, 2024, the Company has an unrecognized tax benefit of $1.2 million related to tax attributes being carried forward. The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which loss carryforward is available.
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Sales Taxes Payable
Advertising
Advertising costs are expensed as incurred and totaled $0.9 million, $0.8 million, and $0.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Research and development
Research and development costs are expensed as incurred.
Stock-based compensation
We measure and record compensation expense using the applicable accounting guidance for share-based payments related to stock options, time-based restricted stock, market-based restricted stock awards, and performance-based restricted stock awards granted to our directors and employees. The fair value of stock options, including performance awards, without a market-based condition is determined by using the Black-Scholes option-pricing model. The fair value of restricted stock awards with a market condition is estimated at the date of grant using the Monte Carlo Simulation model. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. The fair value of restricted stock, including performance awards, without a market condition is estimated using the current market price of our common stock on the date of grant.
We expense stock-based compensation for stock options, restricted stock awards, and performance awards over the requisite service period. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with a market condition, we expense the grant date fair value over the vesting period regardless of the value that the award recipients ultimately receive.
We have, from time to time, modified the terms of restricted stock awards awarded to employees. We account for the incremental increase in the fair value over the original award on the date of the modification as an expense for vested awards or over the remaining service (vesting) period for unvested awards. The incremental compensation cost is the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before the modification.
Goodwill
Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. Goodwill is not amortized but is tested for impairment at least annually. The Company reviews goodwill for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate that the fair value of a reporting unit may be less than its carrying amount (a triggering event). The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test described in FASB ASC Topic 350, Intangibles – Goodwill and Other. The more likely than not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative goodwill impairment test is unnecessary and goodwill is considered to be unimpaired. However, if based on the qualitative assessment the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed with performing the quantitative goodwill impairment test. In performing the quantitative goodwill impairment test, the Company determines the fair value of its reporting unit and compares it to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the
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net assets assigned to that unit, goodwill is not impaired. If the carrying value of the reporting unit exceeds its fair value, the Company records an impairment loss equal to the difference. The Company operates as one reporting unit as of the goodwill impairment measurement date in the fourth quarter of 2024. As of the testing date and the period after that date through the issuance date of our financial statements, the Company has observed no indicators of potential goodwill impairment at any point during the period based on its required assessment.
Intangible assets
Intangible assets with a definite life are amortized over their estimated useful lives using the straight-line method and the amortization expense is recorded within intangible asset amortization in the Consolidated Statements of Operations. If the estimate of a definite-lived intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Definite-lived intangible assets and their related estimated useful lives are reviewed at least annually to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable.
Recent accounting pronouncements
Recently adopted accounting pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. We adopted this standard effective January 1, 2024 using a retrospective method. For additional information, refer to Note 16: Segment, customer, and geographic information.
Recently issued accounting pronouncements not yet adopted
In November 2024, FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses, which requires disclosure of disaggregated information about specific categories underlying certain income statement expense line items in the footnotes to the financial statements for both annual and interim periods. This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements.
In March 2024, the FASB issued ASU 2024-02, Codification Improvements to amend a variety of topics in the accounting codification by removing references to various FASB concepts statements. This accounting standard is effective for fiscal years beginning after December 15, 2024, and early adoption is permitted. ASU 2024-02 can be applied retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied or prospectively to all new transactions recognized on or after the date that the entity first applies the amendments. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires additional disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information increasing transparency of income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This ASU is effective for public companies with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements.
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In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments in ASU 2023-06 update requirements in various disclosure areas, including the statement of cash flows, earnings per share, debt, and equity. The amendments in ASU 2023-06 will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. The Company has evaluated the impact of the adoption of ASU 2023-06 on its consolidated financial statements and disclosures, and has determined that the adoption of this guidance will not materially impact the Company’s current disclosures. In addition, the Company believes the adoption of ASU 2023-06 will not have a material impact on results of operations, cash flows, or financial condition.
2. Correction of immaterial errors
During the three months ended March 31, 2024, we determined that an error existed in our previously issued consolidated financial statements. Specifically, we identified that we had not properly accelerated stock compensation expense related to unvested shares of market-based awards of certain employees upon their termination during the fourth quarter of 2023. The error was evaluated under the U.S. SEC's Staff Accounting Bulletin ("SAB") Topic 1M, "Materiality," and SEC SAB Topic 1N, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements" to determine the materiality of prior period misstatements to the Company’s financial statements. We evaluated the error and concluded that it was not material to the previously issued consolidated financial statements. Although the error was not material to any period, we corrected the accompanying historical consolidated financial statements for the year ended December 31, 2023 to reflect the additional stock compensation expense incurred within each period for comparative purposes.
As noted in our Basis of presentation and consolidation, the Company is presenting Global Cooling, SciSafe, and CBS as discontinued operations for all periods presented within the Consolidated Balance Sheets and Consolidated Statements of Operations. The Consolidated Statements Of Comprehensive Loss, Consolidated Statements of Shareholders' Equity, and Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. For purposes of comparability to the Company's presented Consolidated Balance Sheet and Consolidated Statements of Operations previously filed in the Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024, the Company is presenting the impact of the adjustments on a consolidated basis rather than presenting the divested companies as discontinued operations in the below tables.
The following table represents the adjustments to our Consolidated Balance Sheet as of December 31, 2023 in accordance with ASC 250. The adjustments to our Consolidated Statement of Comprehensive Loss and Consolidated Statement of Shareholders’ Equity was limited to the adjustments outlined below.
The effect of the adjustments to our Consolidated Balance Sheet as of December 31, 2023 was as follows:
| December 31, 2023 | |||||||||||||||||
| (In thousands) | As reported | Adjustment | As corrected | ||||||||||||||
| Additional paid-in-capital | |||||||||||||||||
| Accumulated deficit | ( | ( | ( | ||||||||||||||
The effect of the adjustments to our Consolidated Statement of Operations for the year ended December 31, 2023 was as follows:
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| December 31, 2023 | |||||||||||||||||
| (In thousands, except share and earnings per share data) | As reported | Adjustment | As corrected | ||||||||||||||
| General and administrative | |||||||||||||||||
| Research and development | |||||||||||||||||
| Total operating expenses | |||||||||||||||||
| Operating loss | ( | ( | ( | ||||||||||||||
| Loss from continuing operations before income tax benefit | ( | ( | ( | ||||||||||||||
| Loss from continuing operations | ( | ( | ( | ||||||||||||||
| Net loss per basic and diluted share from continuing operations | ( | ( | ( | ||||||||||||||
The effect of the adjustments to our Consolidated Statement of Cash Flows for the year ended December 31, 2023 was as follows:
| December 31, 2023 | |||||||||||||||||
| (In thousands, except share and earnings per share data) | As reported | Adjustment | As corrected | ||||||||||||||
| Net loss | ( | ( | ( | ||||||||||||||
| Stock-based compensation | |||||||||||||||||
3. Discontinued operations
As announced in the second quarter of 2023, the Company, management, and our board of Directors (the "Board"), had determined that divesting Global Cooling and CBS (the "Freezer Business") would allow for the Company to optimize its product portfolio by focusing on its recurring higher margin revenue streams. Additionally, in November of 2024, the Company, management, and the Board determined the sale of SciSafe would further optimize the Company's product portfolio toward its proprietary high margin cell processing and other bioproduction products. The Company completed the sale of Global Cooling during the second quarter of 2024 and completed the sales of CBS and SciSafe during the fourth quarter of 2024. Accordingly, the results of these businesses are reported in the “” line in the Consolidated Statements of Operations. These changes have been applied to all periods presented.
Divestiture of Global Cooling, Inc.
On April 17, 2024, the Company sold all of the issued and outstanding shares of common stock (the "GCI Divestiture") of Global Cooling, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("Global Cooling"), to GCI Holdings, an Ohio limited liability company ("Buyer") pursuant to a Stock Purchase Agreement, dated April 17, 2024, (the "Global Cooling Purchase Agreement"), by and between the Company and GCI Holdings. The Company analyzed the quantitative and qualitative factors relevant to the sale of Global Cooling and determined that the conditions for discontinued operations presentation were met during the second quarter of 2024.
As a condition of the Global Cooling Purchase Agreement, Global Cooling was required to have $7.0 million in cash on its balance sheet, of which, $6.7 million in cash was funded by the Company, and the Company was required to repay
65
approximately $2.6 million of outstanding indebtedness of Global Cooling, and assume certain other liabilities of Global Cooling of $2.6 million. The Company recognized a loss on disposal of Global Cooling, calculated as follows:
| (In thousands) | |||||
Selling price: $ | $ | ||||
| Cash to Global Cooling funded by Company | ( | ||||
Costs to sell Global Cooling(1) | ( | ||||
| Negative selling price | ( | ||||
| Global Cooling carrying basis as of April 17, 2024, inclusive of assumed liabilities | ( | ||||
Assumed liabilities: Accounts payable(2) | |||||
Assumed liabilities: Debt(3) | |||||
| Less: Global Cooling carrying basis as of April 17, 2024 | |||||
| Less: Release of Global Cooling currency translation adjustment | ( | ||||
| Net loss on disposal | $ | ( | |||
(1) Represents the costs incurred in connection with the divestiture of Global Cooling, including fees to be paid to the broker, attorneys, and other external parties.
(2) As a closing condition, the Company assumed certain accounts payable and accrued expenses from Global Cooling, totaling $0.5 million and $2.1 million, respectively.
(3) As a closing condition, the Company repaid the balance of all obligations of Global Cooling under that certain promissory note payable by Global Cooling to a lender (the "Global Cooling Term Notes").
In connection with the Company’s entry into the Global Cooling Purchase Agreement, the Company implemented a RIF related to the business of Global Cooling, which reduced the Company’s workforce by 47 employees (representing approximately 11 % of its full-time employees as of the date of the RIF). The Company’s Board approved the RIF on March 29, 2024, and all affected employees of Global Cooling were informed by April 18, 2024, following the execution of the Global Cooling Purchase Agreement. Additionally, the Company accelerated the unvested shares granted to both the employees impacted by the RIF and Global Cooling employees that remained with Global Cooling upon the closing of the GCI Divestiture. The Company recognized the following charges in connection with the RIF and stock compensation expense acceleration:
| (In thousands) | Severance | Stock Compensation | Total | ||||||||||||||
| RIF employee costs | $ | $ | $ | ||||||||||||||
| Former Global Cooling employees | |||||||||||||||||
| Total employment related divestiture expenditures | $ | $ | $ | ||||||||||||||
As outlined in the Global Cooling Purchase Agreement, the Company is required to indemnify Global Cooling for preexisting legal contingencies. Prior to the GCI Divestiture, a lawsuit was filed by a previous customer related to Global Cooling's commercial freezer products seeking payment of up to $4.0 million for losses the customer claims to have incurred. As of December 31, 2024, the Company recorded a loss contingency under the discontinued operations of Global Cooing related to this product liability claim as outlined in the Global Cooling Purchase Agreement. During the fourth quarter of 2024, it became probable this loss would be settled within the next fiscal year. The product liability claim is subject to insurance recovery, which management believes is probable as enforceable under the Company's insurance policy, covering the entirety of the loss contingency aside from the Company's insurance deductibles. The Company estimates the legal expenses to be incurred will be immaterial.
In addition, upon the closing of this transaction, the Company and Global Cooling entered into a transition services agreement ("GCI TSA"), pursuant to which the Company agreed to provide certain transition services to Global Cooling
66
for up to 90 days following the date of the closing of this transaction. The GCI TSA has since expired pursuant to its terms on the stated expiration date. The Company has no other significant continuing involvement with Global Cooling.
Divestiture of SciSafe, Inc.
On November 12, 2024, the Company entered into a Stock Purchase Agreement (the "SciSafe Purchase Agreement"), by and among the Company, Subzero Purchaser Corp., a Delaware corporation ("SciSafe Buyer"), SciSafe, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of the Company ("SciSafe Seller"), and SciSafe, Inc., a New Jersey corporation and an indirect wholly owned subsidiary of the Company ("SciSafe"), for the sale by Sci Safe Seller of all of the issued and outstanding shares of common stock of SciSafe to SciSafe Buyer ("SciSafe Divestiture"). The Company analyzed the quantitative and qualitative factors relevant to the sale of SciSafe and determined that the conditions for discontinued operations presentation were met during the fourth quarter of 2024.
In connection with the closing of this transaction, the Company incurred $0.4 million in severance costs, paid the former stockholders of SciSafe $3.3 million in cash to waive all rights with respect to certain potential earn-out payments, and recognized $4.0 million in stock compensation expense for the acceleration of unvested shares of all the Company's former employees that remained with SciSafe upon the closing of this transaction.
The Company recognized a gain on disposal of SciSafe, calculated as follows:
| (In thousands) | |||||
| Cash proceeds received from Buyer | $ | ||||
| Cash proceeds from escrow | |||||
Costs to sell(1) | ( | ||||
| Total proceeds | |||||
| Less: SciSafe carrying basis as of November 12, 2024 | |||||
| Less: Release of SciSafe currency translation adjustment | |||||
| Net gain on disposal | $ | ||||
In accordance with ASC 350, upon the disposal of SciSafe, the Company assessed the goodwill to be allocated to the disposal group. The goodwill allocated to SciSafe was based on the relative fair value of SciSafe to the fair value of the Company as SciSafe was fully integrated into the Company's one reportable segment. The fair value of SciSafe was determined based on the enterprise value per the SciSafe Purchase Agreement. The fair value of the Company was determined by calculating the Company's market capitalization as of the disposal date plus any invested capital remaining of the Company, which included outstanding debt and financing lease liabilities, modified by an estimated market acquisition premium. Based on the calculation performed, the Company determined $11.3 million of goodwill was to be allocated to SciSafe upon its disposal. The allocated goodwill was included in the carrying basis of SciSafe presented in the above table.
In addition, upon the closing of the transaction, the Company and SciSafe entered into a transition services agreement ("SciSafe TSA"), pursuant to which the Company will provide certain transition services to SciSafe for up to six months following the closing of the transaction. The SciSafe Purchase Agreement contains customary representations, warranties, covenants and indemnities of the parties thereto, including customary covenants that prevent the Company from competing with SciSafe, soliciting its employees or interfering with its business relationships for five years after the Closing Date. The Company has no other significant continuing involvement with SciSafe upon the expiration of its SciSafe TSA in April 2025 and other related covenants.
In connection with the disposal of SciSafe, the Company remains liable and responsible for the full performance and observance of all of the provisions, covenants, and conditions in one of SciSafe's operating leases. In the case of a breach or violation of any provision of the lease by the buyer, the Company is deemed to be and shall constitute a default of the lease provisions. Simultaneously, the Company received indemnification pursuant any obligation owed by the Company under this operating lease. This indicates the Company undertakes the obligation to stand ready to perform over the term of the guarantee in the event of the specified triggering events noted above, or conditions, such as breach or default, occur. However, the non-contingent aspect of the guarantee enables the Company to recover any losses from the Buyer. As of
67
December 31, 2024, the fair value of this guarantee is zero. The outstanding minimum lease payments equal approximately $2.3 million and the lease terminates in 2031.
Divestiture of Custom Biogenics
On November 14, 2024, the Company entered into a Stock Purchase Agreement (the "CBS Purchase Agreement"), by and among the Company, Standex International Corporation, a Delaware corporation, ("CBS Buyer") and Arctic Solutions, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (doing business as Custom Biogenic Systems, or ("CBS"), for the sale by the Company of all of the issued and outstanding shares of common stock of CBS. The Company analyzed the quantitative and qualitative factors relevant to the sale of CBS and determined that the conditions for discontinued operations presentation were met during the fourth quarter of 2024.
The Company recognized $2.0 million in stock compensation expense for the acceleration of unvested shares of all the Company's former employees that remained with CBS upon the closing of this transaction.
The Company recognized a loss on disposal of CBS, calculated as follows:
| (In thousands) | |||||
| Cash proceeds received from Buyer | $ | ||||
| Cash proceeds from escrow | |||||
Net price adjustment(1) | |||||
Costs to sell(2) | ( | ||||
| Total proceeds | |||||
| Less: CBS carrying basis as of November 14, 2024 | |||||
| Net loss on disposal | $ | ( | |||
(1) As defined within the CBS Purchase Agreement, the final purchase price was subject to working capital adjustments upon the close of the disposal.
(2) Gross costs to sell incurred by the Company amounted to $1.4 million. This was offset by additional costs to sell paid on behalf of the Company by the CBS Buyer, which amounted to $1.3 million.
In accordance with ASC 350, upon the disposal of CBS, the Company assessed the goodwill to be allocated to the disposal group. The goodwill allocated to CBS was based on the relative fair value of CBS to the fair value of the Company as CBS was fully integrated into the Company's one reportable segment. The fair value of CBS was determined based on the enterprise value per the CBS Purchase Agreement. The fair value of the Company was determined by calculating the Company's market capitalization as of the disposal date plus any invested capital remaining of the Company, which included outstanding debt and financing lease liabilities, modified by an estimated market acquisition premium. Based on the calculation performed, the Company determined $1.1 million of goodwill was to be allocated to CBS upon its disposal. The allocated goodwill was included in the carrying basis of CBS presented in the above table.
In addition, upon the closing of this transaction, the Company and CBS entered into a transition service agreement (the "CBS TSA"), pursuant to which the Company will provide certain transition services to CBS following the closing of the transaction. The CBS Purchase Agreement contains customary representations, warranties, covenants and indemnities of the parties thereto, including customary covenants that prevent the Company from competing with CBS, soliciting its employees or interfering with its business relationships for two years after the closing of the CBS Transaction. The Company has no other significant continuing involvement with CBS upon the expiration of its CBS TSA and related covenants.
Summarized financial data of discontinued operations
The tables below summarize financial data of discontinued operations as of the year ended December 31, 2023 and for the years ended December 31, 2024, 2023, and 2022. Interest expenses directly associated with the debt of a disposed entity is reported in discontinued operations below.
The table below summarizes the major classes of assets and liabilities of discontinued operations, which are summarized separately in the Consolidated Balance Sheets:
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| December 31, 2023 | |||||||||||||||||||||||
| (In thousands) | Global Cooling | SciSafe | CBS | Total | |||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
| Restricted cash | |||||||||||||||||||||||
| Accounts receivable, net | |||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||
| Prepaid expenses and other current assets | |||||||||||||||||||||||
| Total current assets, discontinued operations | |||||||||||||||||||||||
| Assets held for rent, net | |||||||||||||||||||||||
| Property and equipment, net | |||||||||||||||||||||||
| Operating lease right-of-use assets, net | |||||||||||||||||||||||
| Financing lease right-of-use assets, net | |||||||||||||||||||||||
| Long-term deposits and other assets | |||||||||||||||||||||||
| Intangible assets, net | |||||||||||||||||||||||
| Goodwill | |||||||||||||||||||||||
| Total assets, discontinued operations | |||||||||||||||||||||||
| Accounts payable | |||||||||||||||||||||||
| Accrued expenses and other current liabilities | |||||||||||||||||||||||
| Sales taxes payable | |||||||||||||||||||||||
| Warranty liability | |||||||||||||||||||||||
| Lease liabilities, operating, current portion | |||||||||||||||||||||||
| Lease liabilities, financing, current portion | |||||||||||||||||||||||
| Debt, current portion | |||||||||||||||||||||||
| Total current liabilities, discontinued operations | |||||||||||||||||||||||
| Lease liabilities, operating, long-term | |||||||||||||||||||||||
| Lease liabilities, financing, long-term | |||||||||||||||||||||||
| Debt, long-term | |||||||||||||||||||||||
| Deferred tax liabilities | |||||||||||||||||||||||
| Total liabilities, discontinued operations | $ | $ | $ | $ | |||||||||||||||||||
All divested entities had no remaining balances as of December 31, 2024.
The key components of loss from discontinued operations were as follows:
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| December 31, 2024 | |||||||||||||||||||||||
| (In thousands) | Global Cooling | SciSafe | CBS | Total | |||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | ( | ( | ( | ( | |||||||||||||||||||
| Operating expenses | ( | ( | ( | ( | |||||||||||||||||||
| Intangible asset amortization | ( | ( | |||||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| (Loss) gain on disposal | ( | ( | |||||||||||||||||||||
| (Loss) income before income taxes | ( | ( | ( | ||||||||||||||||||||
| Income tax expense | ( | ( | ( | ||||||||||||||||||||
| (Loss) income from discontinued operations, net of income taxes | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| (In thousands) | Global Cooling | SciSafe | CBS | Total | |||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | ( | ( | ( | ( | |||||||||||||||||||
| Operating expenses | ( | ( | ( | ( | |||||||||||||||||||
| Intangible asset impairment charges | ( | ( | ( | ||||||||||||||||||||
| Intangible asset amortization | ( | ( | ( | ( | |||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
| Loss from discontinued operations, net of income taxes | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||
| (In thousands) | Global Cooling | SciSafe | CBS | Total | |||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | ( | ( | ( | ( | |||||||||||||||||||
| Operating expenses | ( | ( | ( | ( | |||||||||||||||||||
| Intangible asset impairment charges | ( | ( | |||||||||||||||||||||
| Intangible asset amortization | ( | ( | ( | ( | |||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
| Loss from discontinued operations, net of income taxes | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Below is a summary of incurred depreciation, amortization, interest expenses, capital expenditures, and other noncash related costs for discontinued operations:
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| December 31, 2024 | |||||||||||||||||||||||
| (In thousands) | Global Cooling | SciSafe | CBS | Total | |||||||||||||||||||
| Depreciation | $ | $ | $ | $ | |||||||||||||||||||
| Amortization | |||||||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| (In thousands) | Global Cooling | SciSafe | CBS | Total | |||||||||||||||||||
| Depreciation | $ | $ | $ | $ | |||||||||||||||||||
| Amortization | |||||||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||
| (In thousands) | Global Cooling | SciSafe | CBS | Total | |||||||||||||||||||
| Depreciation | $ | $ | $ | $ | |||||||||||||||||||
| Amortization | |||||||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
4. Fair value measurement
In accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures, (“ASC Topic 820”), the Company measures its financial instruments at fair value on a recurring basis. The carrying values of certain of our financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of their short maturities. The carrying value of our marketable debt securities, which are accounted for as available-for-sale, are classified within either Level 1 or Level 2 in the fair value hierarchy because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. The carrying values of our long-term debt, which is classified within Level 2 in the fair value hierarchy, approximates fair value as our borrowings with lenders are at interest rates that approximate market rates for comparable loans. The fair values of investments and contingent consideration classified as Level 3 were derived from management assumptions. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC Topic 820 establishes a three-tier value fair hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 – Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted prices included in Level 1 for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3 – Unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
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There were no remeasurements to fair value during the year ended December 31, 2024 of financial assets and liabilities that are not measured at fair value on a recurring basis.
The following tables set forth the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023, based on the three-tier fair value hierarchy:
(In thousands)
| As of December 31, 2024 | Level 1 | Level 2 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market accounts | $ | $ | |||||||||||||||||||||
| Available-for-sale securities: | |||||||||||||||||||||||
| U.S. government securities | |||||||||||||||||||||||
| Corporate debt securities | |||||||||||||||||||||||
| Other debt securities | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
| As of December 31, 2023 | Level 1 | Level 2 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market accounts | $ | $ | |||||||||||||||||||||
| Available-for-sale securities: | |||||||||||||||||||||||
| U.S. government securities | |||||||||||||||||||||||
| Corporate debt securities | |||||||||||||||||||||||
| Other debt securities | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
There have been no transfers of assets or liabilities between the fair value measurement levels. We had no financial assets or liabilities that utilize Level 3 inputs of measurement as of December 31, 2024 and 2023.
The following table presents the changes in fair value of contingent consideration liabilities which are measured using Level 3 inputs for the year ended December 31, 2023:
| Year Ended December 31, | |||||||||||
| (In thousands) | 2023 | ||||||||||
| Balance at beginning of period | $ | ||||||||||
| Change in fair value recognized in net loss from continuing operations | ( | ||||||||||
| Payment of contingent consideration earned | ( | ||||||||||
| Balance at end of period | $ | ||||||||||
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5. Investments
Available-for-sale securities
The Company’s portfolio of available-for-sale marketable securities consists of the following:
| December 31, 2024 | |||||||||||||||||||||||
| Amortized Cost | Gross unrealized | Estimated Fair Value | |||||||||||||||||||||
| (In thousands) | Gains | Losses | |||||||||||||||||||||
| Available-for-sale securities, current portion | |||||||||||||||||||||||
| U.S. government securities | $ | $ | $ | $ | |||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||
| Other debt securities | |||||||||||||||||||||||
| Total short-term | ( | ||||||||||||||||||||||
| Available-for-sale securities, long-term | |||||||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||
| Other debt securities | ( | ||||||||||||||||||||||
| Total available-for-sale securities | $ | $ | $ | ( | $ | ||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| Amortized Cost | Gross unrealized | Estimated Fair Value | |||||||||||||||||||||
| (In thousands) | Gains | Losses | |||||||||||||||||||||
| Available-for-sale securities, current portion | |||||||||||||||||||||||
| U.S. government securities | $ | $ | $ | $ | |||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||
| Other debt securities | |||||||||||||||||||||||
| Total short-term | ( | ||||||||||||||||||||||
| Available-for-sale securities, long-term | |||||||||||||||||||||||
| Other debt securities | |||||||||||||||||||||||
| Total available-for-sale securities | $ | $ | $ | ( | $ | ||||||||||||||||||
The following table summarizes the contractual maturities of the short-term and long-term available-for-sale investments as of December 31, 2024:
| (In thousands) | Amortized Cost | Estimated Fair Value | |||||||||
| Due in one year or less | $ | $ | |||||||||
| Due after one year through five years | |||||||||||
| Total | $ | $ | |||||||||
The following tables present information about the available-for-sale investments that had been in a continuous unrealized loss position for less than 12 months:
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| December 31, 2024 | |||||||||||||||||||||||
| Less than 12 months | Total | ||||||||||||||||||||||
| (In thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
| Corporate debt securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Other debt securities | ( | ( | |||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| Less than 12 months | Total | ||||||||||||||||||||||
| (In thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
| Corporate debt securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Other debt securities | ( | ( | |||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | |||||||||||||||||
As of December 31, 2024 and 2023, all available-for-sale securities investments presented above with unrealized losses have been in an unrealized loss position for less than 12 months.
As of December 31, 2024, none of our available-for-sale marketable securities exhibited risk of credit loss and therefore no allowance for credit losses was recorded.
Equity investments
The Company periodically invests in non-marketable equity securities of private companies without a readily determinable fair value to promote business and strategic objectives. The non-marketable equity securities are carried at cost minus impairment, if any, plus or minus changes resulting from observable process changes in orderly transactions for identical or similar investments of the same issuer. These securities included Series E Preferred Stock in PanTHERA CryoSolutions, Inc. with a fair value of $1.0
The Company also owned securities of Series A-1 and A-2 Preferred Stock in iVexSol, Inc "iVexSol". During the six months ended June 30, 2024, the Company received communications that triggered a going concern for the investment. As of June 30, 2024, the Company determined that the fair value of its equity interest was less than its carrying amount, and no longer recoverable, triggering an impairment charge of $4.1 million, which represented the entirety of the value of the investment. As of December 31, 2023, the carrying value of the iVexSol, Inc. securities was $4.1 million.
6. Inventories
Inventories consist of the following as of December 31, 2024 and 2023:
| (In thousands) | 2024 | 2023 | |||||||||
| Raw materials | $ | $ | |||||||||
| Work in progress | |||||||||||
| Finished goods | |||||||||||
| Total | $ | $ | |||||||||
During the year ended December 31, 2023, the Company recorded a $3.4 million inventory write-down for potentially unusable products. The products consisted of slow-moving inventory, product defects, and supplier defects in raw materials.
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7. Leases
We have various operating lease agreements for office space, warehouses, manufacturing, production locations, and other equipment. Our real estate leases had original lease terms of to eleven years and remaining lease terms of to seven years . We exclude options that are not reasonably certain to be exercised from our lease terms, ranging from to five years . Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms, with all other lease payments consisting of variable lease costs. For certain leases, we receive incentives from our landlords, such as rent abatements, which effectively reduce the total lease payments owed for these leases.
We did not have any financing lease arrangements as of December 31, 2024 and 2023.
The table below presents certain information related to the weighted average discount rate and weighted average remaining lease term for the Company’s leases as of December 31, 2024 and 2023:
| 2024 | 2023 | ||||||||||
| Weighted average discount rate - operating leases | % | % | |||||||||
| Weighted average remaining lease term in years - operating leases | |||||||||||
The components of lease expense for the years ended December 31, 2024, 2023, and 2022 were as follows:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2024 | 2023 | 2022 | ||||||||||||||
| Operating lease costs | $ | $ | $ | ||||||||||||||
| Short-term lease costs | |||||||||||||||||
| Total operating lease costs | |||||||||||||||||
| Variable lease costs | |||||||||||||||||
| Total lease expense | $ | $ | $ | ||||||||||||||
Maturities of our lease liabilities as of December 31, 2024 are as follows:
| (In thousands) | Operating Leases | ||||
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total lease payments | |||||
| Less: interest | ( | ||||
| Total present value of lease liabilities | $ | ||||
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8. Assets held for rent
Assets held for rent consist of the following as of December 31, 2024 and 2023:
| (In thousands) | 2024 | 2023 | |||||||||
| Shippers placed in service | $ | $ | |||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Net | |||||||||||
| Shippers and related components in production | |||||||||||
| Total | $ | $ | |||||||||
Shippers and related components in production include shippers complete and ready to be deployed and placed in service upon a customer order, shippers in the process of being assembled, and components available to build shippers. We recognized $2.1 million, $2.9 million, and $2.8 million in depreciation expense related to assets held for rent during the years ended December 31, 2024, 2023, and 2022, respectively.
9. Property and equipment
Property and equipment consist of the following as of December 31, 2024 and 2023:
| (In thousands) | 2024 | 2023 | |||||||||
| Property and equipment | |||||||||||
| Leasehold improvements | $ | $ | |||||||||
| Furniture and computer equipment | |||||||||||
| Manufacturing and other equipment | |||||||||||
| Construction in-progress | |||||||||||
| Subtotal | |||||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Depreciation expense for property and equipment was $0.7 million, $0.8 million, and $0.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.
10. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following as of December 31, 2024 and 2023:
| (In thousands) | 2024 | 2023 | |||||||||
| Accrued expenses | $ | $ | |||||||||
| Accrued taxes | |||||||||||
| Accrued compensation | |||||||||||
| Deferred revenue, current | |||||||||||
| Total accrued expenses and other current liabilities | $ | $ | |||||||||
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11. Goodwill and intangible assets
Goodwill
| (In thousands) | Goodwill | ||||
Original acquired goodwill as of December 31, 2023(1) | $ | ||||
| Less: Goodwill allocated to SciSafe in divestiture | ( | ||||
| Less: Goodwill allocated to CBS in divestiture | ( | ||||
| Balance as of December 31, 2024 | $ | ||||
(1) As discussed in Note 3: Discontinued operations, the Company allocated a portion of its goodwill to each disposed entity in accordance with ASC 350. The goodwill balance presented above as of December 31, 2023 represents the balance of the reporting unit before the effect of the divestitures. The goodwill presented in the Consolidated Balance Sheets as of December 31, 2024 and 2023 is on a continuing operations basis giving effect to the divestitures.
Intangible assets
Intangible assets, net consisted of the following as of December 31, 2024 and 2023:
| (In thousands, except weighted average useful life) | December 31, 2024 | ||||||||||||||||||||||
| Intangible assets: | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Weighted Average Useful Life (in years) | |||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | |||||||||||||||||||
| Tradenames | ( | ||||||||||||||||||||||
| Technology - acquired | ( | ||||||||||||||||||||||
| Non-compete agreements | ( | ||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| Intangible assets: | Gross Carrying Value | Accumulated Amortization(1) | Net Carrying Value | Weighted Average Useful Life (in years) | |||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | |||||||||||||||||||
| Tradenames | ( | ||||||||||||||||||||||
| Technology - acquired | ( | ||||||||||||||||||||||
| Non-compete agreements | ( | ||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | |||||||||||||||||||
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Amortization expense for finite-lived intangible assets was $2.7 million, $3.5 million, and $4.0 million for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, the Company expects to record the following amortization expense:
| (In thousands) | |||||
| For the Years Ending December 31, | Estimated Amortization Expense | ||||
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total | $ | ||||
12. Commitments and contingencies
Employment agreements
We have employment agreements with certain key employees. None of these employment agreements is for a definitive period, but rather each will continue indefinitely until terminated in accordance with its terms. The agreements provide for a base annual salary, payable in monthly (or shorter) installments. Under certain conditions and for certain of these officers, we may be required to pay additional amounts upon terminating the officer or upon the officer resigning for good reason.
Litigation
From time to time, the Company is subject to various legal proceedings that arise in the ordinary course of business, none of which are currently material to the Company’s business. The Company’s industry is characterized by frequent claims and litigation, including claims regarding intellectual property. As a result, the Company may be subject to various legal proceedings from time to time. The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. Management is not aware of any pending or threatened litigation except for as described below.
Pending litigation items
Indemnification
As permitted under Delaware law and in accordance with the Company’s bylaws, the Company is required to indemnify its officers and directors for certain errors and occurrences while the officer or director is or was serving in such capacity. The Company is also party to indemnification agreements with its directors. The Company believes the fair value of the indemnification rights and agreements is minimal. Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of December 31, 2024.
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Non-income related taxes
Companies are required to collect and remit sales tax from certain customers if the company is determined to have nexus in a particular state. Upon the determination of nexus, which varies by state, companies are additionally required to maintain detailed record of specific product and customer information within each jurisdiction in which it has established nexus to appropriately determine their sales tax liability, requiring technical knowledge of each jurisdiction’s tax case law. During the year ended December 31, 2022, the Company determined that a sales tax liability related to the periods of 2019 through 2022 is probable. The estimated liability was determined to be approximately $4.3 million and $4.4 million as of December 31, 2024 and December 31, 2023, respectively. Due to the variety of jurisdictions in which this estimated liability relates to and our ongoing assessment of sales taxes owed, we cannot predict when final liabilities will be satisfied. We will reevaluate the estimated liability and timing of satisfaction each reporting period.
Settlement of Global Cooling Escrow
On May 3, 2021, the Company acquired GCI pursuant to an Agreement and Plan of Merger, dated as of March 19, 2021 (the “GCI Merger Agreement”). Pursuant to the GCI Merger Agreement, the aggregate consideration paid to former stockholders of GCI (collectively, the “GCI Stockholders”) was 6,646,870 newly issued shares of common stock (the “GCI Merger Consideration”) were provided with the requirement that the GCI Merger Consideration otherwise payable to GCI Stockholders were subject to reduction for indemnification obligations. Approximately 9 % of the GCI Merger Consideration (the "GCI Escrow Shares") otherwise issuable to the GCI Stockholders were deposited into a segregated escrow account (the “GCI Escrow Account”) in accordance with an escrow agreement entered into in connection with the closing of the transactions contemplated by the GCI Merger Agreement (the “GCI Escrow Agreement”). Of the GCI Escrow Shares, an amount equal to 5 % of the GCI Merger Consideration were considered general escrow shares (the “General Escrow Shares”). The General Escrow Shares were eligible to be held in escrow for a period of up to 18 months after the closing of the GCI acquisition as the sole and exclusive source of payment for any indemnification claims made by the Company.
On September 28, 2022, BioLife asserted an indemnification claim pursuant to the GCI Merger Agreement. On June 5, 2023, the Company entered into a Settlement Agreement with the representatives of the GCI Stockholders, pursuant to which the parties agreed to release 65 % of the General Escrow Shares, totaling 216,024 shares, to the Company from the GCI Escrow Account. These shares were returned to the Company and subsequently cancelled. As a result of the settlement, the Company recorded a $5.1 million gain recognizing the return of the shares during the second quarter of 2023.
13. Long-term debt
Term Loan
On September 20, 2022, the Company and certain of its subsidiaries entered into the Loan and Security Agreement, dated September 20, 2022, by and among Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (“Bank”), the Company, SAVSU Technologies, Inc., a Delaware corporation (“SAVSU”), Arctic Solutions, Inc., a Delaware corporation doing business as Custom Biogenic Systems (“Arctic”), SciSafe Holdings, Inc., a Delaware corporation (“SciSafe Parent”), and Sexton Biotechnologies, Inc., a Delaware corporation (“Sexton,” and together with the Company, SAVSU, Arctic and SciSafe Parent, “Borrower”), as amended by that certain Waiver and First Amendment to Loan and Security Agreement, dated February 26, 2024, that certain Consent and Second Amendment to Loan and Security Agreement, dated April 17, 2024 (the “Second Amendment”), and that certain Consent and Third Amendment to Loan and Security Agreement, dated November 11, 2024 (the “Third Amendment”, and the foregoing collectively, the “Loan Agreement”), which provides for a term loan in an aggregate maximum principal amount of up to $60 million in the increments and upon the dates and milestones described below (the “Term Loan”). The Term Loan matures on June 1, 2026. The Loan Agreement permitted the Company to borrow up to $30 million upon the initial closing of the transactions contemplated by the Loan Agreement (the “Term Loan Closing”), and provided options to borrow (i) up to $10 million between the Term Loan Closing and June 30, 2023, (ii) up to $10 million upon the achievement of certain revenue milestones by the Company, and (iii) an additional $10 million at the discretion of the lender. The Company borrowed $20 million at the Term Loan Closing and accounts for the Term Loan at cost. As of December 31, 2023, the Company had not drawn additional funding nor had it met the revenue milestones outlined within the Loan Agreement. The Company had until December 31, 2023 to draw an additional $10 million, subject to approval from the lender, and therefore has no additional opportunities under the Loan Agreement. Payments on the borrowing were interest-only through June 2024, with additional criteria allowing for interest-only payments to continue through June 2025. The Company has begun its interest payments on the Term Loan as of June 2024. Tranches borrowed under the Loan Agreement bear interest at the Wall Street Journal plus 0.5 %. However, the
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interest rate is subject to a ceiling that restricts the interest rate for each tranche from exceeding 1.0 % above the overall rate applicable to each tranche at their respective funding dates and has a balloon payment due at the earliest of term loan maturity, repayment of the Term Loan in full, or termination of the Loan Agreement at $1 million. As of December 31, 2024, the implied interest rate of the Term Loan is 8.9 % and the implied value of the Term Loan is $15.9 million. The Loan Agreement contains customary representations and warranties as well as customary affirmative and negative covenants. As of December 31, 2024, the Company is in compliance with the covenants set forth in the Loan Agreement.
On April 17, 2024, the Company entered into the Second Amendment by and among Bank and Borrower. Pursuant to the Second Amendment and subject to the conditions set forth therein, Bank consented to the GCI Divestiture and released its security interests in the assets of Global Cooling and the shares of common stock of Global Cooling arising under the Loan Agreement. In addition, effective as of the closing of the transaction, the Second Amendment amended the Loan Agreement to remove Global Cooling as a party to the Loan Agreement and provide for a non-refundable termination fee in the amount of $500,000 payable by Borrower to Bank in the event that the Loan Agreement is terminated prior to the Term Loan Maturity Date (as defined in the Loan Agreement) for any reason. The Second Amendment also contains customary representations and warranties of Borrower and provides for a release of Bank by Borrower for any claims existing or arising through the date of the Amendment, including, without limitation, those arising out of or in any manner connected with or related to the Loan Agreement.
On November 11, 2024, the Company entered into the Third Amendment by and among Bank and Borrower. Pursuant to the Third Amendment and subject to the conditions set forth therein, Bank consented to the SciSafe Divestiture as required pursuant to the Loan Agreement. In addition, effective as of the closing of the SciSafe Divestiture, the Third Amendment amended the Loan Agreement to provide for a non-refundable termination fee in the amount of $750,000 payable by Borrower to Bank in the event that the Loan Agreement is terminated prior to the Term Loan Maturity Date for any reason. The Third Amendment also made certain other ministerial changes to the Loan Agreement, contains customary representations and warranties of Borrower and provides for a release of Bank by Borrower for any claims existing or arising through the date of the Amendment, including, without limitation, those arising out of or in any manner connected with or related to the Loan Agreement.
Long-term debt consisted of the following as of December 31, 2024 and 2023:
| December 31, | |||||||||||||||||||||||
| (In thousands) | Maturity Date | Interest Rate | 2024 | 2023 | |||||||||||||||||||
Global Cooling Term Notes(1) | Various | % | $ | $ | |||||||||||||||||||
Term Loan(2) | Jun-26 | % | |||||||||||||||||||||
| Insurance premium financing | Various | % | |||||||||||||||||||||
| Total debt, excluding unamortized debt issuance costs | |||||||||||||||||||||||
| Less: unamortized debt issuance costs | ( | ( | |||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Less: current portion of debt | ( | ( | |||||||||||||||||||||
| Total long-term debt | $ | $ | |||||||||||||||||||||
(1) The Company repaid the balance of all obligations of the Global Cooling Term Notes pursuant to the Global Cooling Purchase Agreement.
(2) As of December 31, 2024, the Term Loan was secured by substantially all assets of BioLife, SAVSU, and Sexton, other than intellectual property.
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As of December 31, 2024, the scheduled maturities of loans payable for each of the next five years and thereafter were as follows:
| (In thousands) | Amount | ||||
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total | $ | ||||
14. Stock-based compensation
Stock compensation plans
Our stock-based compensation programs are long-term retention programs that are intended to attract, retain, and provide incentives for talented employees, officers, and directors, and to align stockholder and employee interests. Compensation expense associated with equity-based awards is recognized on a straight-line basis over the requisite service period, with awards generally vesting over a 4 year period, and forfeitures recognized as incurred. We have the following stock-based compensation plans and programs:
During 2013, we adopted the 2013 Performance Incentive Plan (the “2013 Plan”), which allowed us to grant options or restricted stock awards to all employees, including executive officers, outside consultants and non-employee directors. An aggregate of 3.1 million shares of common stock was initially reserved for issuance under the 2013 Plan. In May 2017, July 2020, June 2021, and June 2022, the shareholders approved an increase in the number of shares available for issuance to 4.1 million shares, 5.0 million shares, 6.5 million shares, and 8.5 million shares, respectively. As of April 25, 2023, the 2013 Plan expired as to future awards in accordance with its terms. As of December 31, 2024, there were outstanding options to purchase 127,000 shares of the Company’s common stock and approximately 0.5 million unvested restricted stock awards outstanding under the 2013 Plan.
On July 21, 2023, our stockholders approved the 2023 Omnibus Performance Incentive Plan (the "2023 Plan"). The 2023 Plan allows us to grant equity awards to employees, directors, and outside consultants. An aggregate of 4.2 million shares of common stock were initially reserved for issuance under the 2023 Plan, plus any shares subject to awards under the 2013 Plan that were outstanding as of July 21, 2023, and which are subsequently forfeited or lapsed and not issued under the 2013 Plan. As of December 31, 2024, there were approximately 1.4 million unvested restricted stock awards outstanding under the 2023 Plan.
Issuance of shares
When options are exercised, it is the Company’s policy to issue new shares.
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Stock option activity
Service vesting-based stock options
The following is a summary of service vesting-based stock option activity for the year ended December 31, 2024 and 2023, and the status of service vesting-based stock options outstanding as of December 31, 2024 and 2023:
| 2024 | 2023 | ||||||||||||||||||||||
| Shares | Wtd. Avg. Exercise Price | Shares | Wtd. Avg. Exercise Price | ||||||||||||||||||||
| Outstanding as of beginning of year | $ | $ | |||||||||||||||||||||
| Exercised | ( | ( | |||||||||||||||||||||
| Outstanding at end of year | $ | $ | |||||||||||||||||||||
| Stock options exercisable at year end | $ | $ | |||||||||||||||||||||
We did not recognize stock compensation expense related to service-based options during the years ended December 31, 2024, 2023, and 2022. As of December 31, 2024, there was $3.0 million of aggregate intrinsic value of outstanding service vesting-based stock options, including $3.0 million of aggregate intrinsic value of exercisable service vesting-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the year and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on December 31, 2024. This amount will change based on the fair market value of the Company’s stock. Intrinsic value of service vesting-based awards exercised during the years ended December 31, 2024, 2023, and 2022 was $1.8 million, $3.9 million, and $4.1 million, respectively. There were no 1.4 years. There were no unrecognized compensation costs for service vesting-based stock options as of December 31, 2024.
The following table summarizes information about service vesting-based stock options outstanding as of December 31, 2024:
| Range of Exercise Prices | Number Outstanding at December 31, 2024 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | |||||||||||||||||
$1.00 - 1.50 | $ | |||||||||||||||||||
| $1.51 - 2.00 | ||||||||||||||||||||
| $2.51 - 8.60 | ||||||||||||||||||||
| $ | ||||||||||||||||||||
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Restricted stock
Service vesting-based restricted stock
The following is a summary of service vesting-based restricted stock activity for the years ended December 31, 2024 and 2023, and the status of unvested service vesting-based restricted stock outstanding as of December 31, 2024 and 2023:
| 2024 | 2023 | ||||||||||||||||||||||
| Shares | Wtd. Avg. Grant Date Fair Value | Shares | Wtd. Avg. Grant Date Fair Value | ||||||||||||||||||||
| Outstanding as of beginning of year | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Vested | ( | ( | |||||||||||||||||||||
| Forfeited | ( | ( | |||||||||||||||||||||
| Non-vested at year end | $ | $ | |||||||||||||||||||||
The aggregate fair value of the service vesting-based awards granted during the years ended December 31, 2024, 2023, and 2022 was $10.0 million, $25.0 million, and $34.7 million, respectively. The aggregate fair value of the service vesting-based awards that vested during the years ended December 31, 2024, 2023, and 2022 was $27.7 million, $20.5 million, and $12.6 million, respectively.
On October 19, 2023, Michael Rice, the Chief Executive Officer at that time, announced his resignation from the company. In accordance with his separation agreement, all unvested stock grants, excluding the 99,038 market-based restricted stock units awarded to him January 3, 2023 and the 70,094 market-based restricted stock units awarded to him on February 24, 2022 by the Board, were accelerated and vested as of the date of his separation. The Company recognized stock compensation expense in connection with the acceleration of his unvested stock grants of $1.7 million, representing 150,155 shares. His market-based restricted stock awards will vest once the stated market condition term for each award occurs.
We recognized stock compensation expense of $10.8 million, $15.7 million, and $13.6 million related to service vesting-based awards during the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, there was $18.0 million in unrecognized compensation costs related to service vesting-based awards. We expect to recognize those costs over 2.6 years.
Performance-based restricted stock
On March 8, 2024, the Company granted 109,512 shares of performance-based stock to an executive in the form of restricted stock. The shares granted contain performance conditions based on Company metrics related to future performance. The performance-based award was structured to vest between 0 % and 200 % of the number of restricted shares granted to the recipient based on the achievement of certain financial metrics related to future performance. The grant date fair value of this award was $17.36 per share.
During the fourth quarter of the year ended December 31, 2024, it was determined the probability of attainment of the performance condition increased to greater than 100 % of shares granted. In accordance with ASC 718, we recognized a cumulative catch up in stock compensation expense of $0.4 million to reflect the increased probability the performance-based award would vest in excess of the shares originally granted. The fair value of this award is being expensed on a straight-line basis in accordance with the estimated quantity of shares expected to vest over the requisite service period ending on December 31, 2025.
We recognized stock compensation expense of $1.2 million related to performance-based restricted stock awards for the year ended December 31, 2024. As of December 31, 2024, there was $1.5 million in unrecognized non-cash compensation costs related to performance-based restricted stock awards expected to vest. We expect to recognize those costs over 1.0 year. Non-cash compensation costs are expensed over the period for which performance was measured.
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The aggregate fair value of the performance-based awards granted during the year ended December 31, 2024 was $1.9 million. No performance-based awards vested during the year ended December 31, 2024.
Market-based restricted stock
The following is a summary of market-based restricted stock activity under our stock option plan for the years ended December 31, 2024 and 2023 and the status of market-based restricted stock outstanding as of December 31, 2024 and 2023:
| 2024 | 2023 | ||||||||||||||||||||||
| Shares | Wtd. Avg. Grant Date Fair Value | Shares | Wtd. Avg. Grant Date Fair Value | ||||||||||||||||||||
| Outstanding as of beginning of year | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Vested | ( | ( | |||||||||||||||||||||
| Non-vested at year end | $ | $ | |||||||||||||||||||||
On February 8, 2021, the Company granted 30,616 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. On January 3, 2023, the Company determined the TSR attainment was 100 % of the targeted shares, resulting in 30,616 30,616 20 of our peers. The market-based restricted stock awards were to vest as to between 0 % and 200 % of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2021 through December 31, 2022 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 68 %, 0 % dividend yield, and a risk-free interest rate of 0.1 %. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0 % dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate was based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award of $1.3 million was expensed on a straight-line basis over the grant date to the vesting date of December 31, 2022.
On February 24, 2022, the Company granted 240,428 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. On March 8, 2024, the Company’s Compensation Committee determined the TSR attainment was 125 % of the targeted shares and 300,529 shares were awarded to the executives of the Company based on our TSR during the period beginning on January 1, 2022 through December 31, 2023 as compared to the TSR of 20 of our peers. The market-based restricted stock awards were to vest as to between 0 % and 200 % of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2022 through December 31, 2023 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 63 %, 0 % dividend yield, and a risk-free interest rate of 1.5 %. The historical volatility was based on the most recent 2 -year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0 % dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate was based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2 -year term associated with the market condition of the award. The fair value of this award of $6.7 million was expensed on a straight-line basis over the grant date to the vesting date of December 31, 2023.
On January 3, 2023, the Company granted 268,738 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s
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performance against a peer group. The market-based restricted stock awards will vest as to between 0 % and 200 % of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2023 through December 31, 2024 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 78 %, 0 % dividend yield, and a risk-free interest rate of 4.4 %. The historical volatility was based on the most recent 2 -year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0 % dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate was based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2 -year term associated with the market condition of the award. The fair value of this award of $6.8 million is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2024.
On March 8, 2024, the Company granted 239,464 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between 0 % and 200 % of the number of restricted shares granted to each recipient based on our TSR during the period beginning on January 1, 2024 through December 31, 2025 as compared to the TSR of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 80 %, 0 % dividend yield and a risk-free interest rate of 4.6 %. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0 % dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2 -year term associated with the market condition of the award. The fair value of this award of $6.3 million is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2025.
We recognized stock compensation expense of $4.5 million, $6.5 million, and $4.3 million related to market-based restricted stock awards for the years ended December 31, 2024, 2023, and 2022. As of December 31, 2024, there was $3.3 million in unrecognized non-cash compensation costs related to market-based restricted stock awards expected to vest. We expect to recognize those costs over 1 year.
The aggregate fair value of the market-based awards granted during the years ended December 31, 2024, 2023, and 2022 was $6.3 million, $6.5 million, and $6.7 million, respectively. The aggregate fair value of the market-based awards that vested during the years ended December 31, 2024, 2023, and 2022 was $5.7 million, $0.7 million, and $5.0 million, respectively.
Total stock compensation expense
We recorded total stock compensation expense for the years ended December 31, 2024, 2023, and 2022, as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| Research and development costs | $ | $ | $ | ||||||||||||||
| Sales and marketing costs | |||||||||||||||||
| General and administrative costs | |||||||||||||||||
| Cost of revenue | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
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15. Income taxes
Income tax benefit from continuing operations consists of the following:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2024 | 2023 | 2022 | ||||||||||||||
| Current: | |||||||||||||||||
| State | $ | ( | $ | ( | $ | ( | |||||||||||
| Total current tax provision | ( | ( | ( | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | |||||||||||||||||
| State | |||||||||||||||||
| Total deferred tax provision | |||||||||||||||||
| Income tax benefit | $ | $ | $ | ||||||||||||||
The Company's (loss) income from continuing operations before income tax benefit did not contain any foreign components as of December 31, 2024, 2023, and 2022.
The tax benefit for the year ended December 31, 2024 contained excess tax benefits from stock-based compensation of $0.3 million. The tax benefit for the years ended December 31, 2023, and 2022 did not
A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Federal statutory tax | % | % | % | ||||||||||||||
| State tax, net of federal benefit | % | % | % | ||||||||||||||
| Stock compensation | % | ( | %) | % | |||||||||||||
| Sec. 162(m) limitation on executive compensation | ( | %) | ( | %) | ( | %) | |||||||||||
| Fair value change in contingent consideration | % | % | % | ||||||||||||||
| Tax credits | % | % | % | ||||||||||||||
| Change in valuation allowance | ( | %) | ( | %) | % | ||||||||||||
| Gain on escrow settlement | % | % | % | ||||||||||||||
| Other | ( | %) | ( | %) | ( | %) | |||||||||||
| Total | % | % | % | ||||||||||||||
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The principal components of the Company’s net deferred tax liabilities are as follows as of December 31, 2024 and 2023:
| (In thousands) | 2024 | 2023 | |||||||||
| Deferred tax assets related to: | |||||||||||
| Net operating loss carryforwards | $ | $ | |||||||||
| Capital loss carryforward | |||||||||||
| Tax credit carryforward | |||||||||||
| Stock-based compensation | |||||||||||
| Accruals and reserves | |||||||||||
| Inventory | |||||||||||
| Fixed assets | |||||||||||
| Lease liabilities | |||||||||||
| Capitalized research and development | |||||||||||
| Fair value change in investments | |||||||||||
| Other | |||||||||||
| Total deferred tax assets | |||||||||||
| Deferred tax liabilities related to: | |||||||||||
| Intangibles | ( | ( | |||||||||
| Right-of-use assets | ( | ( | |||||||||
| Fair value change in investments | ( | ||||||||||
| Total deferred tax liabilities | ( | ( | |||||||||
| Net deferred tax assets before valuation allowance | |||||||||||
| Less: valuation allowance | |||||||||||
| Net deferred tax liabilities | ( | ( | |||||||||
| Less: deferred tax liability, discontinued operations | ( | ||||||||||
| Net deferred tax liabilities, continuing operations | $ | ( | $ | ( | |||||||
Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. The assessment regarding whether a valuation allowance is required on deferred tax assets considers the evaluation of both positive and negative evidence when concluding whether it is more likely than not that deferred tax assets are realizable. The valuation allowance recorded as of December 31, 2024 and 2023 primarily relates to deferred tax assets for net operating loss carryforwards.
The changes in the valuation allowance for deferred tax assets were as follows:
| (In thousands) | 2024 | 2023 | 2022 | ||||||||||||||
| Balance at beginning of period | $ | $ | $ | ||||||||||||||
| Net deferred tax assets divested | ( | ||||||||||||||||
| Charged to income tax expense | |||||||||||||||||
| Balance at end of period | $ | $ | $ | ||||||||||||||
As of December 31, 2024, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $165.2 million. Approximately $38.7 million of NOL will expire from 2025 through 2037, and approximately $126.5 million of NOL will be carried forward indefinitely. The NOL carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest. This limited the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. Subsequent ownership changes may further affect the limitation in future years.
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The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities.
A reconciliation of the beginning and ending balances of uncertain tax positions in the years ended December 31, 2024 and 2023 is as follows:
| (In thousands) | 2024 | 2023 | |||||||||
| Balance at beginning of period | $ | $ | |||||||||
| Increase related to prior year tax positions | |||||||||||
| Increase related to current year tax positions | |||||||||||
| Balance at end of period | $ | $ | |||||||||
The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which loss carryforward is available, which includes 2005 through 2024.
16. Segment, customer, and geographic information
The Company views its operations and makes decisions regarding how to allocate resources and manages its business as one reportable segment and one reporting unit. The Company’s Chief Executive Officer, Mr. Roderick de Greef, who is the CODM, reviews the Company’s operations on a consolidated basis for purposes of allocating resources and evaluating financial performance. As a single reportable segment entity, the Company’s segment performance measure is consolidated net (loss) income from continuing operations.
Significant segment expenses are presented in the Company’s Consolidated Statements of Operations. Additional significant segment expenses that are not separately presented in the Company’s Consolidated Statements of Operations include Shared-based compensation and Depreciation expense. These are presented in the Consolidated Statement of Cash Flows, and Note 14: Stock-based compensation, Note 8: Assets held for rent, and Note 9: Property and equipment.
Other expense items not individually significant in net (loss) income from continuing operations are changes in inventory values due to changes in its carrying basis, costs associated with the Company’s acquisitions and or divestitures in the period these take place, and gain or loss on disposal of fixed assets. The information provided to the Company’s CODM for purposes of making decisions and assessing segment performance excludes asset information.
Concentrations of risk
Significant customers are those that represent more than 10% of the Company’s total revenue or gross accounts receivable balances for the periods and as of each balance sheet date presented. For each significant customer, revenue as a percentage of total revenue and gross accounts receivable as a percentage of total gross accounts receivable as of the periods presented were as follows:
| Accounts Receivable | Revenue | ||||||||||||||||||||||||||||
| December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2022 | |||||||||||||||||||||||||
| Customer A | % | * | % | % | % | ||||||||||||||||||||||||
| Customer B | % | % | % | % | % | ||||||||||||||||||||||||
*less than 10%
The following is a summary of revenue by major product family representing over 10% of the Company's total revenue:
| Years Ended December 31, | |||||||||||||||||
| Revenue by major product | 2024 | 2023 | 2022 | ||||||||||||||
| CryoStor | % | % | % | ||||||||||||||
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The following table represents the Company’s total revenue by geographic area (based on the location of the customer):
| Years Ended December 31, | |||||||||||||||||
Revenue by customers’ geographic locations(1) | 2024 | 2023 | 2022 | ||||||||||||||
| United States | % | % | % | ||||||||||||||
| Europe, Middle East, Africa (EMEA) | % | % | % | ||||||||||||||
| Other | % | % | % | ||||||||||||||
| Total revenue | % | % | % | ||||||||||||||
(1) During the year ended December 31, 2023, the Company updated its methodology for determining the country of origin for its sales. Sales are now recorded by shipping country rather than billing country. The Company updated the methodology retrospectively, adjusting the prior year presentation for all regions presented.
All of the Company's long-lived assets, totaling $22.9 million, are located within the United States.
In the year ended December 31, 2024, no suppliers accounted for more than 10% of purchases. In the years ended December 31, 2023, and 2022, one supplier accounted for 20 % and 16 % of purchases, respectively.
As of December 31, 2024, no suppliers accounted for more than 10% of accounts payable. As of December 31, 2023, one supplier accounted for 17 % of accounts payable. No other suppliers accounted for more than 10% of our accounts payable.
17. Employee benefit plan
The Company sponsors 401(k) defined contribution plans for its employees. These plans provide for pre-tax and post-tax contributions for all employees. Employee contributions are voluntary. Employees may contribute up to 100 % of their annual compensation to these plans, as limited by an annual maximum amount as determined by the Internal Revenue Service. The Company matches employee contributions in amounts to be determined at the Company’s sole discretion. The Company made contributions of $0.6 million, $0.5 million, and $0.4 million to the plans for the years ended December 31, 2024, 2023, and 2022.
18. Subsequent events
The Company has evaluated events subsequent to December 31, 2024 through the date of this filing to assess the need for potential recognition or disclosure. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the Consolidated Financial Statements.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a)Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2024. The term “disclosure controls and procedures” means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the U.S. SEC rules and forms. Management recognizes that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of our disclosure controls and procedures, our CEO and CFO have concluded that, as of December 31, 2024, our disclosure controls and procedures were not effective due to the material weakness in internal control over financial reporting described in section (b) below. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with U.S. GAAP such that there is more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected.
(b)Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) and the preparation of financial statements for external purposes in accordance with United States Generally Accepted Accounting Policies (“U.S. GAAP”). Using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013 framework), management of the Company under supervision and participation of the CEO and CFO, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024.
Based on our assessment under the framework in Internal Control—Integrated Framework (2013 framework), our management concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to the existence of the following material weakness identified:
•Management did not maintain effective internal controls to verify that key inputs for the Company's stock-based awards were entered correctly into the equity system early in 2024. This weakness was attributed to an outdated internal policy with unclear guidance regarding the appropriate inputs.
Following the identification of the material weakness and prior to filing this Annual Report on Form 10-K, we performed additional analyses and other procedures to ensure that our consolidated financial statements included in this Annual Report were prepared in accordance with U.S. GAAP. Our CEO and CFO have concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in this Annual Report.
This material weakness creates a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis. Therefore, we concluded that the deficiency above represents a material weakness in our internal control over financial reporting, and our internal control over financial reporting was not effective as of December 31, 2024.
Management has been actively engaged in developing and implementing remediation plans to address the material weakness, as described below in section (c).
The Company’s independent registered public accounting firm, Grant Thornton, LLP, who audited our internal controls over financial reporting, has issued an adverse opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, as stated in its report.
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(c)Remediation of Material Weaknesses in Internal Control over Financial Reporting
In fiscal year 2023, Management did not maintain an effective control environment encompassing the areas of risk assessment, monitoring, and other components, due to a lack of a sufficient complement of resources with the appropriate level of internal controls training, knowledge, and expertise necessary to meet our financial reporting requirements. During fiscal year 2024, Management made significant changes to its ICFR to remediate the material weaknesses, as follows:
•Trained accounting, operations, HR, and IT personnel and key management roles across the organization in the design and execution of internal controls under the required standards.
•Hired additional resources and consultants with expertise in internal control design to enhance our ICFR reporting capabilities.
•Assessed the financial reporting risks throughout fiscal year 2024 and developed or redesigned controls in all financial reporting business processes to address relevant financial reporting risks, including financial close, fixed assets, inventory, payroll, order-to-cash/revenue, stock-based compensation, and treasury.
•Implemented procedures to monitor that control activities were effectively maintained.
In fiscal year 2023, Management did not design and maintain effective internal controls over certain financial statement areas, including the procure to pay process and revenue recognition. During fiscal year 2024, Management made significant changes to its ICFR to remediate the material weaknesses identified in fiscal year 2023, as follows:
•Implemented NetSuite Order-to-Cash Management System which allowed us to: 1) automate procedures that were susceptible to manual data input errors, and 2) standardize policies and procedures over the majority of our sales transactions, including processes for new customer creation.
•Developed formal policy and process for timely and appropriate application of cash receipts.
•Developed formal policy and process over product pricing approvals and sales order reviews.
•Made a significant investment in hiring additional resources in Procure-to-Pay process that have the necessary expertise and responsibilities on properly executing control procedures over purchase order creation and maintenance.
•For control procedures where additional systematic tools or solutions will not be in place until a future period, we implemented additional look-back or data analysis procedures to review periodic transactions.
In fiscal year 2023, Management did not design and maintain effective information technology general controls for the significant systems used in the preparation of the financial statements. Specifically, we did not design and maintain (1) controls over change management for certain financial systems to ensure that data or system changes were identified, tested, and authorized according to policy, and migrated correctly into the production environment; and (2) monitoring controls which are executed by users other than those conducting changes to our financial systems. During fiscal year 2024, Management made significant changes to its ICFR to remediate the material weaknesses identified in fiscal year 2023, as follows:
•Transitioned the order-to-cash process from Salesforce to NetSuite, resulting in the removal of Salesforce as a system used in the preparation of financial statements.
•Redesigned controls in the NetSuite IT - Change Management process to address system administrator segregation of duties risks, including:
◦Implemented standard operating procedures over system changes to ensure approvals and documentation are properly retained.
◦Implemented two monitoring controls to ensure appropriate segregation of duties for changes made in the system.
◦Implemented a permissions review to ensure non-administrator users did not have inappropriate elevated access in the system.
Although the Company implemented meaningful control enhancements throughout the year and remediated the deficiencies identified in fiscal year 2023, the Company identified the material weakness described in section (b).
Management, with the oversight of the Audit Committee of the Board of Directors, will continue to take steps necessary to remedy the material weakness to reinforce the overall design and capability of our control environment. The following has been planned for implementation in Management’s ongoing efforts to remediate the identified material weakness:
91
•The Company will update its internal policy over stock-based awards to state clearly the appropriate inputs for the calculation over stock-based compensation. The Company will provide training over the updated internal policy to ensure understanding of the required procedures.
(d)Changes in Internal Control Over Financial Reporting
For the year ended December 31, 2024:
•Management remediated the prior year material weaknesses related to ineffective control environment, procure to pay, revenue recognition, and IT change management as described in section (c).
•The Company redesigned the inventory count process and standard operating procedures to ensure appropriate segregation of duties and improve the count procedures and related documentation.
•The Company completed the implementation of new human resources information system (UKG), including its payroll processing system.
•The Company implemented a new sales tax calculation system, AvaTax.
•In addition, the Company implemented a new equity administration system, Shareworks.
Other than the changes noted above, there have been no other changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
(e)Attestation Report of the Independent Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
BioLife Solutions, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of BioLife Solutions, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, because of the effect of the material weakness described in the following paragraphs on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that adversely affects the company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with U.S. GAAP, such that there is more than a remote likelihood that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment.
The Company did not maintain effective internal controls to verify that key inputs for the Company’s stock-based compensation awards were entered correctly into the Company’s equity system. This weakness was attributed to an outdated internal policy with unclear guidance regarding the appropriate inputs.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024. The material weakness identified above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated March 3, 2025 which expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
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Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance 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.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Other information
We do not express an opinion or any other form of assurance on the remediation plans and actions described in Management’s Annual Report on Internal Control over Financial Reporting.
/s/ GRANT THORNTON LLP
Bellevue, Washington
March 3, 2025
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
The following table identifies and provides the material terms of the Rule 10b5-1 trading arrangements (as such term is defined in Item 408 of Regulation S-K) adopted or terminated by our officers (as defined in Rule 16a-1(f) under the Exchange Act) and directors during the quarter ended December 31, 2024.
| Name and Position | Plan Adoption / Termination | Plan Adoption / Termination Date | Expiration Date | Number of Shares Purchased (Sold) / Terminated under Plan | ||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||
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Non-Rule 10b5-1 Trading Arrangements
During the quarter ended December 31, 2024, none of our officers or directors adopted or terminated
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Reference is made to the information regarding directors and nominees, code of ethics, corporate governance matters, and disclosure relating to compliance with Section 16(a) of the Securities Exchange Act of 1934 appearing under the captions “Election of Directors” and “Delinquent Section 16(a) Reports” in the Company’s Proxy Statement for its 2025 Annual Meeting of Stockholders (the “2025 Annual Meeting”), which information is incorporated in this Annual Report on Form 10-K by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be set forth under the caption “Executive Compensation” in the Company’s Proxy Statement for the 2025 Annual Meeting, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED STOCKHOLDER MATTERS
The information required by this item will be set forth under the captions “Security Ownership of Certain Beneficial Owners and Management Related Stockholder Matters” in the Company’s Proxy Statement for the 2025 Annual Meeting, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be set forth under the captions “Certain Relationships and Related Transactions, and Director Independence” in the Company’s Proxy Statement for the 2025 Annual Meeting, and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item will be set forth under the caption Principal Accountant Fees And Services in the Company’s Proxy Statement for the 2025 Annual Meeting, and is incorporated herein by reference.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)The following documents are filed as part of this Annual Report on Form 10-K:
(1)Financial Statements (Included Under Item 8): The Index to the Financial Statements is included in this Annual Report on Form 10-K and is incorporated herein by reference.
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(2)Financial Statement Schedules: Schedules to the Financial Statements have been omitted because the information required to be set forth therein is not applicable or is shown in the accompanying Financial Statements or notes thereto.
(b)Exhibits
| Exhibit Number | Document | |||||||
| 2.1†* | ||||||||
| 2.2† | ||||||||
| 2.3*** | ||||||||
| 2.4*** | ||||||||
| 2.5*** | ||||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 3.3 | ||||||||
| 3.4 | ||||||||
| 4.1 | ||||||||
| 10.1** | ||||||||
| 10.2** | ||||||||
| 10.3** | ||||||||
| 10.4** | ||||||||
| 10.5** | ||||||||
| 10.6** | ||||||||
| 10.7** | ||||||||
| 10.8** | ||||||||
| 10.9** | ||||||||
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| 10.10** | ||||||||
| 10.11 | ||||||||
| 10.12 | ||||||||
| 10.13 | ||||||||
| 10.14 | ||||||||
| 10.15* | ||||||||
| 10.16* | ||||||||
| 10.17 | ||||||||
| 10.18 | ||||||||
| 10.19** | ||||||||
| 10.20** | ||||||||
| 10.21** | ||||||||
| 10.22** | ||||||||
| 10.23** | ||||||||
| 10.24** | ||||||||
| 10.25** | ||||||||
| 10.26** | ||||||||
| 10.27** | ||||||||
| 19.1 | ||||||||
| 21.1 | ||||||||
| 23.1 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 97.1 | ||||||||
| 101.INS | Inline XBRL Instance Document (filed herewith) | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema (filed herewith) | |||||||
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| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith) | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith) | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase (filed herewith) | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith) | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
| * | Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K. A copy of the omitted portions will be furnished supplementally to the Securities and Exchange Commission upon request. | ||||
| ** | Management contract or compensatory plan or arrangement. | ||||
| *** | Certain potions portions of this exhibit have been redacted pursuant to Item 601(a)(5) of Regulation S-K. A copy of the omitted portions will be furnished supplementally to the Securities and Exchange Commission upon request. | ||||
| † | The exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request. | ||||
(c)Excluded financial statements:
None.
ITEM 16. FORM 10-K SUMMARY
The Company has elected not to include a summary pursuant to this Item 16.
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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.
| Date: | March 3, 2025 | BIOLIFE SOLUTIONS, INC. | ||||||
/s/ RODERICK DE GREEF | ||||||||
Roderick de Greef | ||||||||
| Chief Executive Officer (principal executive officer) and Chairman of the Board of Directors | ||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Date: | March 3, 2025 | /s/ RODERICK DE GREEF | ||||||
| Roderick De Greef | ||||||||
| Chief Executive Officer (principal executive officer) and Chairman of the Board of Directors | ||||||||
| Date: | March 3, 2025 | /s/ TROY WICHTERMAN | ||||||
| Troy Wichterman | ||||||||
| Chief Financial Officer (principal financial officer and principal accounting officer) | ||||||||
| Date: | March 3, 2025 | /s/ AMY DUROSS | ||||||
| Amy DuRoss | ||||||||
| Director | ||||||||
| Date: | March 3, 2025 | /s/ RACHEL ELLINGSON | ||||||
| Rachel Ellingson | ||||||||
| Director | ||||||||
| Date: | March 3, 2025 | /s/ JOYDEEP GOSWAMI | ||||||
| Joydeep Goswami | ||||||||
| Director | ||||||||
| Date: | March 3, 2025 | /s/ TONY HUNT | ||||||
| Tony Hunt | ||||||||
| Director | ||||||||
| Date: | March 3, 2025 | /s/ TIM MOORE | ||||||
| Tim Moore | ||||||||
| Director | ||||||||
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DESCRIPTION OF BIOLIFE SOLUTIONS, INC.’S SECURITIES REGISTERED UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 BioLife Solutions, Inc. (the “Company”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, the Company’s common stock, par value $0.001 per share (“Common Stock”). The following is a description of the material terms and provisions of the Common Stock, and also summarizes certain relevant provisions of the Delaware General Corporation Law (the “DGCL”). The following description does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the applicable provisions of the DGCL as well as the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), and the Company’s Amended and Restated Bylaws (the “Bylaws”), copies of which are incorporated by reference as exhibits to the Annual Report on Form 10-K of which this exhibit is a part. The Company encourages you to read the Certificate of Incorporation, the Bylaws and the applicable provisions of the DGCL for additional information. Authorized Capital Stock Under the Certificate of Incorporation, the Company is authorized to issue up to 150,000,000 shares of Common Stock and 100,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”), of which, as of December 31, 2023, 4,250 shares of Preferred Stock were designated as “Series A Preferred Stock” (“Series A Preferred Stock”). As of December 31, 2023, 45,167,225 shares of Common Stock were outstanding and no shares of Preferred Stock were outstanding. The outstanding shares of the Common Stock are fully paid and nonassessable. Common Stock Voting Rights The holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of the Company’s stockholders. Holders of Common Stock are not entitled to cumulative voting rights in the election of directors. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the Company’s outstanding capital stock entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL. Dividends The holders of Common Stock are entitled to receive dividends when and as determined by the Company’s board of directors, out of assets legally available for dividends, subject to preferences that may be applicable to the holders of outstanding shares of Preferred Stock, and subject to applicable law. As a Delaware corporation, the Company is subject to certain restrictions on dividends under the DGCL. Generally, a Delaware corporation may only pay dividends either out of “surplus” or out of the current or the immediately preceding year’s net profits. Surplus is defined as the excess, if any, at any given time, of the total assets of a corporation over its total liabilities and statutory capital. The value of a corporation’s assets can be measured in a number of ways and may not necessarily equal their book value. Liquidation Rights
Upon the Company’s liquidation, dissolution or winding up, after satisfaction of all its liabilities and the payment of any liquidation preference of any outstanding shares of Preferred Stock, the holders of shares of Common Stock will be entitled to share in all of the Company’s assets legally remaining for distribution after payment of all debt and other liabilities, subject to preferences that may be applicable to the holders of outstanding shares of Preferred Stock. Redemption Rights There are no redemption or sinking fund provisions applicable to the Common Stock. Preemptive Rights and Conversion Rights There are no preemptive or other subscription or conversion rights applicable to the Common Stock. Preferred Stock The Company’s board of directors is authorized, without further action by the Company’s stockholders, to create and issue one or more series of Preferred Stock and to fix the rights, powers, preferences and privileges thereof. Among other rights, the Company’s board of directors may determine, without further vote or action by the Company’s stockholders: the number of shares constituting the series and the distinctive designation of the series; the dividend rate on the shares of the series, whether dividends will be cumulative, and if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of the series; whether the series will have voting rights in addition to the voting rights provided by law and, if so, the terms of the voting rights; whether the series will have conversion privileges and, if so, the terms and conditions of conversion; whether or not the shares of the series will be redeemable or exchangeable, and, if so, the dates, terms and conditions of redemption or exchange, as the case may be; whether the series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of the sinking fund; and the rights of the shares of the series in the event of the Company’s voluntary or involuntary liquidation, dissolution or winding up and the relative rights or priority, if any, of payment of shares of the series. Any future issuance of shares of Preferred Stock, or the issuance of rights to purchase shares of Preferred Stock, could, among other things, decrease the amount of earnings and assets available for distribution to the holders of Common Stock or could adversely affect the rights and powers, including voting rights, of the holders of the Common Stock. The following summarizes the rights of holders of the Series A Preferred Stock: Voting Rights The Series A Preferred Stock does not contain any voting rights other than as required by law. However, as long as there are any shares of Series A Preferred Stock outstanding, the Company will not, without the approval of a majority of the then outstanding shares of Series A Preferred Stock, (i) alter or amend the certificate of designations, preferences and rights of Series A Preferred Stock, (ii) authorize or create any class of equity securities ranking as to distribution of assets upon a liquidation senior to the Series A Preferred Stock, (iii) enter into, create, incur, assume or suffer to exist any indebtedness for borrowed money, except for purchase money indebtedness, that
by its terms is expressly senior in right of payment to the Company’s obligations to the holders of Series A Preferred Stock, or (iv) enter into any agreement with respect to the foregoing. Dividends Holders of Series A Preferred Stock are entitled to receive cash dividends at a rate per share (as a percentage of the stated value per share) of 10% per annum. Dividends are payable quarterly in cash from legally available funds and accrue daily. Liquidation Rights Each share of Series A Preferred Stock will have a liquidation preference equal to the stated value plus any accrued but unpaid dividends thereon. In the event of the Company’s liquidation, dissolution or winding up, the holders of Series A Preferred Stock shall be entitled to receive out of the Company’s assets, before any payment is made to the holders of Common Stock and either in preference to or pari passu with the holders of any other series of Preferred Stock that may be issued in the future, a per share amount equal to the liquidation preference. Redemption Rights The Company has the right to redeem for cash outstanding Series A Preferred Stock along with accrued but unpaid dividends beginning immediately after issuance of shares of Series A Preferred Stock. Without the written consent of the holders of a majority of the Series A Preferred Stock outstanding, the Company may only redeem shares of Series A Preferred Stock in tranches of at least $50,000 in the aggregate based upon the stated value of such shares of Series A Preferred Stock. If there is more than one holder of Series A Preferred Stock and the Company desires to conduct a redemption, such redemption will be conducted on a pro rata basis among all of the holders of Series A Preferred Stock. The holders of Series A Preferred Stock will not have any right to require redemption. Anti-Takeover Effects of Provisions of the Certificate of Incorporation, Bylaws, and Delaware Law The following paragraphs regarding certain provisions of the DGCL, the Certificate of Incorporation, and the Bylaws are summaries of the material terms thereof and do not purport to be complete. You are urged to read the applicable provisions of the DGCL, the Certificate of Incorporation and the Bylaws. Delaware Anti-Takeover Law The Company is subject to Section 203 of the DGCL (“Section 203”). Section 203 generally prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the time that such stockholder became an interested stockholder, unless: prior to such time the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or at or subsequent to such time the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.
In general, Section 203 defines a business combination to include: any merger or consolidation involving the corporation and the interested stockholder; any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation; subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. In general, Section 203 defines an interested stockholder as any entity (other than the corporation and any direct or indirect majority-owned subsidiary of the corporation) or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with, associated with or controlling or controlled by such entity or person. Certificate of Incorporation and Bylaws The following provisions of the Certificate of Incorporation and Bylaws may make a change in control of the Company more difficult and could delay, defer or prevent a tender offer or other takeover attempt that a stockholder might consider to be in its best interest, including takeover attempts that might result in the payment of a premium to stockholders over the market price for their shares. These provisions also may promote the continuity of the Company’s management by making it more difficult for a person to remove or change the incumbent members of the Company’s board of directors. Authorized but Unissued Shares; Undesignated Preferred Stock. The authorized but unissued shares of Common Stock will be available for future issuance without stockholder approval, subject to applicable law and the rules of the NASDAQ Stock Market LLC. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital, acquisitions, and employee benefit plans. In addition, the Company’s board of directors may authorize, without stockholder approval, the issuance of undesignated Preferred Stock with voting rights or other rights or preferences designated from time to time by the Company’s board of directors (including the right to approve an acquisition or other change in the Company’s control). The existence of authorized but unissued shares of Common Stock or Preferred Stock may enable the Company’s board of directors to render more difficult or to discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise. Election and Removal of Directors. The exact number of the Company’s directors will be fixed from time to time by a resolution adopted by a majority of directors and shall not be less than three members. The Company’s board of directors currently consists of six members. Director Vacancies. The Bylaws authorize the Company’s board of directors to fill vacant directorships. No Cumulative Voting. The Certificate of Incorporation provides that stockholders do not have the right to cumulate votes in the election of directors (therefore allowing the holders of a majority of the shares of Common Stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose). Special Meetings of Stockholders. The Bylaws provide that special meetings of the Company’s stockholders may be called at any time by the chairman of the board of directors, the president or the board of
directors, or by the president or secretary upon written request of the holders of thirty five percent (35%) of the outstanding shares entitled to vote thereat, or as otherwise required by law. Advance Notice Procedures for Director Nominations. The Bylaws establish advance notice procedures for stockholders seeking to nominate candidates for election as directors at an annual or special meeting of stockholders, including certain requirements regarding the form and content of a stockholder’s notice. Although the Bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates to be elected at a meeting, the Bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the Company. Amendments to Bylaws. The Bylaws may be amended by vote of a majority of the directors then in office or by vote of a majority of the Company’s stock outstanding and entitled to vote. The Bylaws, whether adopted, amended or repealed by the stockholders or directors, may be amended or reinstated by the stockholders or the directors. Nasdaq Stock Market Listing The Common Stock is listed on the NASDAQ Stock Market LLC under the symbol “BLFS.” Transfer Agent and Registrar The transfer agent and registrar for the Common Stock is Broadridge Financial Solutions, Inc. The transfer agent and registrar’s address is 51 Mercedes Way, Edgewood, New York 11711.
TWELFTH AMENDMENT TO LEASE THIS TWELFTH AMENDMENT TO LEASE (this “Twelfth Amendment”) is made as of June 2024 (the "Effective Date"), by and between ARE-SEATTLE NO. 38, LLC, a Delaware limited liability company (“Landlord”), and BIOLIFE SOLUTIONS, INC., a Delaware corporation (“Tenant”) RECITALS A. Landlord and Tenant are now parties to that certain Lease dated as of July 24, 2007 (the “Original Lease”), as amended by that certain First Amendment to Lease dated as of November 4, 2008, and as further amended by that certain Second Amendment to Lease dated as of March 2, 2012, that certain Third Amendment to Lease dated as of June 15, 2012, that certain Fourth Amendment to Lease dated as of November 26, 2012, that certain Fifth Amendment to Lease dated as of August 19, 2014, that certain Sixth Amendment to Lease dated as of March 3, 2017, that certain Seventh Amendment to Lease dated as of December 4, 2018, that certain Eighth Amendment to Lease dated as of November 1, 2019, that certain Ninth Amendment to Lease dated as of November 12, 2020 (the "Ninth Amendment"), that certain Tenth Amendment to Lease dated as of October 8, 2021 (the "Tenth Amendment") and that certain Eleventh Amendment to Lease dated as of February 22, 2022 (the "Eleventh Amendment") (as amended, the “Lease”) wherein Landlord leases to Tenant certain premises in Bothell, Washington, commonly known as Suites 105 (comprised of Suites 105 and 170) and 305 at 3301 Monte Villa Parkway (the "3301 Building"), and Suites 310, 350, 355, 360 and 370 at 3303 Monte Villa Parkway (the "3303 Building", with the 3301 Building, collectively, the "Building") (collectively, the “Existing Demised Premises”), as more particularly described in the Lease Landlord also leases to Tenant on a temporary basis certain premises commonly known as Suite 330, containing approximately 4,660 rentable square feet, located in the 3303 Building, as more particularly described in the Lease Capitalized terms used herein without definition shall have the meanings defined for such terms in the Lease B. Landlord and Tenant desire, subject to the terms and conditions set forth below, to amend the Lease to, among other things, expand the size of the Existing Demised Premises to include certain space commonly known as Suite 300, containing approximately 34,306 rentable square feet, located in the mezzanine on Level 3 of the 3301 Building, as more particularly shown on Exhibit A attached hereto (the "Third Expansion Premises”) NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by this reference, the mutual promises and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows 1. Third Expansion Premises In addition to the Existing Demised Premises, commencing on the Third Expansion Premises Commencement Date (as defined below), Landlord leases to Tenant, and Tenant leases from Landlord, the Third Expansion Premises 2. Delivery Landlord shall deliver the Third Expansion Premises to Tenant for Tenant's construction of the Tenant Improvements on July 1, 2024 (the “Third Expansion Premises Commencement Date”) The “Third Expansion Premises Rent Commencement Date” shall be July 1,2025 As used herein, the term “Tenant Improvements” shall have the meaning set forth for such term in the Third Expansion Premises Work Letter attached hereto as Exhibit C Except as otherwise expressly set forth in this Twelfth Amendment or the Lease (i) Tenant shall accept the Third Expansion Premises in their condition as of the Third Expansion Premises Commencement Date, (n) Landlord shall have no obligation for any defects in the Third Expansion Premises, and (m) Tenant's taking possession of the Third Expansion Premises shall be conclusive evidence that Tenant accepts the Third Expansion Premises Nothing contained in this paragraph shall limit Landlord’s repair and maintenance obligations under Section 9 of the Original Lease __ Copyright © 2005, Alexandria Reul Estate Equities Inc ALL (Jj RIGHT S RESERVED Confidential and Proprietary - Do Not ALEXANDRIA Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc 1 DocVeiify ID 8C292B03 9CE5 467D-A549-0E2B971A02A1 www docveiify corn Page 1 of 23 10E2B971A02A1
Notwithstanding anything to the contrary contained herein, Landlord shall be responsible for the compliance of the Common Areas with Legal Requirements as of the Third Expansion Premises Commencement Date, and the cost of the same shall not be included in Operating Expenses with respect to the Third Expansion Premises but may, to the extent permitted under the Lease, be included in Operating Expenses with respect to the Existing Demised Premises Landlord shall, at its sole cost and expense (which shall not constitute an Operating Expense), be responsible for any repairs that are required to be made to the Building systems serving the Third Expansion Premises of which Tenant notifies Landlord in writing within 90 calendar days after the Third Expansion Premises Commencement Date, unless Tenant or any of Tenant's Agents was responsible for the cause of such repair, in which case Tenant shall pay the cost Except as otherwise expressly set forth in this Twelfth Amendment, Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the condition of all or any portion of the Third Expansion Premises, and/or the suitability of the Third Expansion Premises for the conduct of Tenant’s business, and Tenant waives any implied warranty that the Third Expansion Premises are suitable for the permitted use under the Lease 3. Demised Premises; Project. a. The parties acknowledge and agree that the total rentable area of the "Existing Demised Premises" identified in the Tenth Amendment and Eleventh Amendment were miscalculated In order to correct such miscalculation, the parties acknowledge and agree that, notwithstanding anything to the contrary contained in the Lease, as of the date of this Twelfth Amendment, the total rentable area of the Existing Demised Premises is equal to 40,935 rentable square feet The parties further acknowledge and agree that, notwithstanding anything to the contrary contained in the Lease, as of the date of this Twelfth Amendment, the total rentable area of the Project is equal to 280,990 rentable square feet b. As of the Third Expansion Premises Commencement Date, (i) the defined term “Demised Premises” shall mean the Office Expansion Premises, the Clean Room Premises, the Production Expansion Premises, the Cleanroom Support Premises, the Second Office Expansion Premises, the Cold Room Premises, the Server Expansion Premises, the Expansion Premises, the Second Expansion Premises and the Third Expansion Premises, and (ii) the total rentable area of the Demised Premises shall be 75,241 rentable square feet c. As of the Third Expansion Premises Commencement Date, Exhibit C.11 shall be added to the Lease, which shall depict the Third Expansion Premises as outlined in orange on Exhibit A attached to this Twelfth Amendment 4. Basic Annual Rent Tenant shall continue to pay Basic Annual Rent in accordance with the terms of the Lease with respect to the Existing Demised Premises through the Term Beginning on the Third Expansion Premises Rent Commencement Date, Tenant shall commence paying Basic Annual Rent for the Third Expansion Premises at the rate of $28 84 per rentable square foot of the Third Expansion Premises per year On each annual anniversary of the Third Expansion Premises Rent Commencement Date, Basic Annual Rent for the Third Expansion Premises shall be automatically increased by multiplying the Basic Annual Rent payable immediately before such date by 3% and adding the resulting amount to the Basic Annual Rent payable immediately before such date For the avoidance of doubt, Tenant shall commence paying Operating Expenses, Taxes and all other amounts due under the Lease (other than Basic Annual Rent for the Third Expansion 2 ALEXANDRIA Copyright © 2005, Alexandria Real Estate Equities, Inc ALL RIGHTS RESERVED Confidential and Propnetary - Do Not Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc DocVenfy ID 8C292B03-9CE5 467D-A549-0E2B971A02A1 www doevenfy com Page 2of23 20E2B971A02A1
Premises) with respect to the Third Expansion Premises on the Third Expansion Premises Commencement Date 5. Tenant’s Proportionate Share Notwithstanding anything to the contrary in the Lease, commencing on the Third Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be 26 78% 6. Landlord's Work. a. Elevator Replacement Work Following the Effective Date, Landlord shall replace, at Landlord's cost, the freight elevator servicing the 3301 Building with a replacement freight elevator selected by Landlord, in Landlord's reasonable discretion (the “Elevator Replacement Work”) Landlord shall use reasonable efforts to complete the Elevator Replacement Work pursuant to the schedule attached to this Twelfth Amendment as Exhibit D (the "Elevator Replacement Work Schedule") If Landlord reasonably anticipates that the date for the installation of the replacement freight elevator will materially deviate from the date reflected for such installation in the Elevator Replacement Work Schedule, Landlord agrees to provide Tenant with at least 5 business days prior notice of the date that Landlord intends to enter the Building to commence installation of the replacement freight elevator pursuant to the Elevator Replacement Work Landlord and Tenant shall work together in a cooperative manner, and shall likewise require each of their respective architects, engineers and contractors to work together in a cooperative manner, to coordinate the Elevator Replacement Work and the Tenant Improvements to achieve the substantial completion of all such work in as prompt and efficient manner as reasonably practicable Tenant acknowledges that Tenant shall not have access to or use of the freight elevator during the performance of the Elevator Replacement Work, and that Landlord’s performance of Elevator Replacement Work may adversely affect Tenant’s use and occupancy of the Demised Premises Tenant further acknowledges and agrees that construction noise, vibrations and dust associated with normal construction activities are expected during the course of the construction of Elevator Replacement Work Landlord will use reasonable efforts to minimize interference with Tenant’s operations in the Demised Premises during Landlord’s performance of the Elevator Replacement Work Tenant waives all claims for rent abatement in connection with the Elevator Replacement Work, except as expressly set forth below Tenant acknowledges that Landlord currently anticipates that it will complete the Elevator Replacement Work approximately 74 weeks after the Effective Date of this Twelfth Amendment (the "Estimated Elevator Replacement Work Completion Date") If Landlord fails to substantially complete the Elevator Replacement Work by the date occurring 90 days after the Estimated Elevator Replacement Work Completion Date (as such date may be extended for supply chain delays, force majeure and/or delays caused by Tenant, the "Elevator Replacement Work Abatement Date"), then Tenant shall receive a day for day abatement of Basic Annual Rent with respect to the Third Expansion Premises only for each day after the Elevator Replacement Work Abatement Date that Landlord failed to substantially complete the Elevator Replacement Work, which shall be applied toward Basic Annual Rent payable with respect to the Third Expansion Premises commencing on the Third Expansion Premises Rent Commencement Date b. Demising Improvements Tenant acknowledges that, as of the Effective Date, the Third Expansion Premises are not fully demised Following the Effective Date, Landlord shall construct, at Landlord's cost, a demising wall to fully demise the Third Expansion Premises from the adjacent Common Area in the location shown on Exhibit E attached hereto and related improvements (the "Demising Improvements") Landlord and Tenant shall reasonably coordinate to establish a mutually agreed upon schedule for the construction of the Demising Improvements Tenant acknowledges that Landlord will require access to portions of the Demised Premises after the Effective Date in order to complete the Demising Improvements Landlord and its contractors and agents shall have the right to enter such portions of the Demised Premises after the Effective Date to perform the Demising Improvements, and Tenant shall cooperate with Landlord in connection __ Copyright © 2005, Alexandria Real Estate Equities, Inc ALL (/£) RIGHTS RESERVED Confidential and Proprietary - Do Not ALEXANDRIA Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc 3 DocVenfy ID 8C292803-9CE5 467D A549-0E2B971A02A1 www doevenfy corn Page 3 of 23 30E2B971A02A1 IIIBWffilllll
with the same Landlord and Tenantshall work together in a cooperative manner, and shall likewise require each of their respective architects, engineers and contractors to work together in a cooperative manner, to coordinate the Demising Improvements and the Tenant Improvements and to achieve the substantial completion of all such work in as prompt and efficient manner as reasonably practicable Notwithstanding the foregoing, Landlord and Tenant acknowledge and agree that Landlord plans to engage Tenant's General Contractor (as defined in the Third Expansion Premises Work Letter) to perform the Demising Improvements Tenant acknowledges that Landlord’s performance of Demising Improvements may adversely affect Tenant’s use and occupancy of the Demised Premises Tenant further acknowledges and agrees that construction noise, vibrations and dust associated with normal construction activities are expected during the course of the construction of the Demising Improvements Tenant waives all claims for rent abatement in connection with the Demising Improvements 7. Ninth Amendment Improvement Allowance Pursuant to the terms of Section 3 of the Ninth Amendment, Tenant has no right to any portion of the Improvement Allowance (as defined in the Ninth Amendment) (the "Ninth Amendment Improvement Allowance") that was not disbursed before November 12, 2023 (the “Ninth Amendment Improvement Allowance Outside Date”) Notwithstanding the foregoing, Landlord hereby agrees to extend the Ninth Amendment Improvement Allowance Outside Date to the date occurring twelve (12) months after the Effective Date of this Twelfth Amendment, such that Tenant shall have the right to the remaining $231,992 83 of the Ninth Amendment Improvement Allowance that is disbursed pursuant to the terms of Section 3 of the Ninth Amendment on or before such date 8. Term The Term of the Lease with respect to the Third Expansion Premises shall expire concurrently with the expiration of the Term of the Lease with respect to the Existing Demised Premises The expiration of the Term of the Lease with respect to the Existing Demised Premises is currently scheduled for July 31,2031 9. Right of First Refusal a. Generally. Subject to the terms of this Section 9 and the rights of other tenants as reflected in Section 9(e) below, each time after the Effective Date that Landlord intends to accept a bona fide written proposal or deliver a counter proposal which Landlord would be willing to accept (the “Pending Deal”) to lease all or a portion the ROFR Space (as hereinafter defined) to a third party, Landlord shall deliver to Tenant written notice (the “Pending Deal Notice”) of the existence of such Pending Deal, which Pending Deal Notice shall include the material terms of the Pending Deal For purposes of this Section 9(a), "ROFR Space” means the balance of the mezzanine on Floor 3 of the 3301 Building, as outlined in red on Exhibit B attached hereto, which is not occupied by a tenant or which is occupied by an existing tenant whose lease is expiring within 36 months or less and such tenant has a right to renew, but does not wish to renew, its occupancy of such space For the avoidance of doubt, Tenant shall be required to exercise its right under this Section 9(a) with respect to all of the space described in the Pending Deal Notice, including, at Landlord’s option, any space in addition to the ROFR Space that is described in the Pending Deal Notice, which additional space shall be deemed to be included as part of the ROFR Space (the “Identified Space”) Within 15 business days after Tenant’s receipt of the Pending Deal Notice, Tenant shall deliver to Landlord written notice (the “Acceptance Notice”) if Tenant elects to lease the Identified Space Tenant’s right to receive the Pending Deal Notice and election to lease or not lease the Identified Space pursuant to this Section 9(a) is hereinafter referred to as the “Right of First Refusal ” If Tenant elects to lease the Identified Space described in the Pending Deal Notice by delivering the Acceptance Notice within the required 15 business day period, Tenant shall be deemed to agree to expand the Demised Premises to include the Identified Space and to lease the Identified Space on the same general terms and conditions as the Lease except that the terms of the Lease shall be modified to reflect the terms of the Pending Deal Notice for the rental of the Identified Space Tenant acknowledges that the term of the Lease with respect to the Identified A L I X A N D II I A Copyright © 2005, Alexandria Real Estate Equities, Inc ALL RIGHTS RESERVED Confidential and Proprietary - Do Not Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc DocVenfylD 3C292B03 9CE5-467D-A549-0E2B971A02A1 www doevenfy com Page 4 of_23 40E2B971A02A1
Space and the Term of the Lease with respect to the Existing Demised Premises may not be coterminous If Tenant fails to deliver an Acceptance Notice to Landlord within the required 15 business day period, Tenant shall be deemed to have waived its rights under this Section 9(a) to lease the Identified Space identified in the applicable Pending Deal Notice pursuant to the applicable Pending Deal Notice, and Landlord shall have the right to lease the Identified Space to the third party (or an affiliate of such third party) subject to the applicable Pending Deal Notwithstanding anything to the contrary contained in this Section 9(a), (i) if the terms of the Pending Deal with respect to which Landlord delivered to Tenant a Pending Deal Notice are revised in a manner that would result in a net-effective rental rate of less than 95% of the rental rate set forth in the Pending Deal Notice, or (n) if Landlord fails to execute a lease for the Identified Space with such third party (or an affiliate thereof) within 180 days after the above-referenced 15-busmess day period, Tenant’s Right of First Refusal shall be restored with respect to such Identified Space Notwithstanding anything to the contrary contained herein, Tenant shall have no right to a Pending Deal Notice and the provisions of this Section 9(a) shall no longer apply after the date that is 9 months prior to the expiration of then-existing Term if Tenant has not exercised its extension right pursuant to Section 35 of the Original Lease (as amended by Section 2 of the Ninth Amendment) Notwithstanding anything contained in this paragraph to the contrary, if Tenant delivers an Acceptance Notice within the first 24 months following the Effective Date of this Twelfth Amendment, then Tenant shall lease the applicable Identified Space upon the same terms as the Lease, except that (i) the Term of the Lease with respect to the Identified Space shall be co terminous with the Term of the Lease with respect to the Existing Demised Premises, (n) Tenant shall pay Operating Expenses with respect to the Identified Space commencing on the date Landlord delivers the Identified Space to Tenant (such date, the "Identified Space Commencement Date"), (m) Tenant shall pay Basic Annual Rent with respect to the Identified Space commencing on the date occurring 12 months after the Identified Space Commencement Date (provided, however, that such period shall be ratably reduced based on the number of months in the Term remaining after the after the Identified Space Commencement Date), and (iv) the parties shall enter into a work letter to be agreed upon by Landlord and Tenant as part of the lease amendment for the Identified Space, which shall be substantially similar to the Third Expansion Premises Work Letter and with a tenant improvement allowance in the amount of $110 00 per rentable square foot of the Identified Space (provided, however, that such amount shall be ratably reduced based on the number of months in the Term remaining after the Identified Space Commencement Date) for tenant improvements in the Identified Space as provided for in the Third Expansion Premises Work Letter b. Amended Lease If (i) Tenant fails to timely deliver an Acceptance Notice, or (n) after the expiration of a period of 30 days after Landlord’s delivery to Tenant of a draft lease amendment for Tenant’s lease of the Identified Space, no lease amendment for the Identified Space acceptable to both parties each in their reasonable discretion after using diligent good faith efforts negotiate the same, has been executed, Tenant shall, notwithstanding anything to the contrary contained herein, be deemed to have waived its right to lease such Identified Space in connection with the applicable Pending Deal Notice Notwithstanding the foregoing, if at the end of such 30-day period, Landlord and Tenant are actively negotiating a lease amendment reasonably and in good faith but have not executed a lease amendment, the parties shall extend such 30-day period (which extension may be in the form of email notice between the parties), for an additional period of 30 days, provided, that neither party shall be required to agree to further extensions if the other party is not then- actively exercising reasonable, good faith efforts to finalize and execute a lease amendment for the Identified Space c. Exceptions Notwithstanding the above, the Right of First Refusal shall not be in effect and may not be exercised by Tenant (i) during any period of time that Tenant is in default under any provision of the Lease (beyond any applicable notice and cure periods), or _ Copyright © 2005, Alexandria Rea) Estate Equities, Inc ALL (jj RIGHTS RESERVED Confidential and Proprietary - Do Not A L [ X A N D It I A Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc 5 DocVerify ID 8C292B03-9CE5 467D-A549 0E2B971A02A1 www doevenfy com Page 5 of 23 50E2B971A02A1
0. o/. zi -J u g — > u i u te (n) during any period that Tenant (along with any subtenant or assignee pursuant to a sublease or assignment which does not require Landlord's consent pursuant to the last sentence of Section 11 1 of the Original Lease) is occupying less than 100% of the Demised Premises d. Termination The Right of First Refusal shall, at Landlord’s option, terminate and be of no further force or effect even after Tenant’s due and timely delivery of an Acceptance Notice, if, after such delivery, but prior to the commencement date of the lease of such Identified Space, Tenant fails to cure any default by Tenant under the Lease prior to the expiration of any applicable notice and cure periods e. Subordinate Tenant’s rights in connection with the Right of First Refusal are and shall be subject to and subordinate to any contractual rights existing as of the Effective Date including, without limitation, (x) the expansion rights granted to Panasomcs Avionics Corporation, a Delaware corporation, and (y) the 5-year extension right granted to DPEX Bio, Inc , a Delaware corporation Any expansion right affecting the ROFR Space which is granted to any third party after the Effective Date shall be subject and subordinate to Tenant's Right of First Refusal f. Rights Personal The Right of First Refusal is personal to Tenant and is not assignable without Landlord’s prior written consent, which may be granted or withheld in Landlord’s sole discretion separate and apart from any consent by Landlord to an assignment of Tenant’s interest in the Lease, except that it may be assigned in connection with any assignment of the Lease that does not require Landlord's consent pursuant to the last sentence of Section 11 1 of the Original Lease g. No Extensions The period of time within which the Right of First Refusal may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise the Right of First Refusal 10. Extension Right For the avoidance of doubt, Tenant shall continue to have two rights to extend the Term of the Lease for periods of 5 years each pursuant to Section 35 of the Original Lease (as amended by Section 2 of the Ninth Amendment), provided, however, that Tenant must exercise such right with respect to the entire Demised Premises (i e , the Existing Demised Premises and the Third Expansion Premises, and, if applicable, any ROFR Space which Tenant has leased pursuant to Section 9 which has an expiration date co-termmous with the balance of the Demised Premises, if any) 11. Material Landlord Default; Tenant Self-Help Notwithstanding anything to the contrary contained in the Lease, if any claimed Landlord default under the Lease will immediately, materially and adversely affect Tenant’s ability to conduct its business in the Demised Premises (a “Material Landlord Default”), Tenant shall, as soon as reasonably possible, but in any event within 3 business days of obtaining knowledge of such claimed Material Landlord Default, give Landlord written notice of such claim which notice shall specifically state that a Material Landlord Default exists and telephonic notice to Tenant’s principal contact with Landlord Landlord shall then have 3 business days to commence cure of such claimed Material Landlord Default and shall diligently prosecute such cure to completion If such claimed Material Landlord Default is not a default by Landlord hereunder, Landlord shall be entitled to recover from Tenant, as Additional Rent, any costs incurred by Landlord in connection with such cure in excess of the costs, if any, that Landlord would otherwise have been liable to pay hereunder If Landlord fails to commence cure of any claimed Material Landlord Default as provided above, Tenant may commence and prosecute such cure to completion provided that it does not affect any Building systems affecting other tenants, the Building structure or the Common Areas, and shall be entitled to recover the costs of such cure (but not any consequential or other damages) from Landlord by way of reimbursement from Landlord within 30 days after Landlord's receipt of an invoice thereof from Tenant, with no right to offset against Rent, to the extent of Landlord’s obligation to cure such claimed Material Landlord _ Copyright © 2005, Alexandria Real Estate Equities, Inc ALL (£) RICH TS RESERVED Confidential and Proprietary - Do Not ALLXANDfUA or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc 6 DocVenfy ID 8C292B03-9CE5-467D-A549-0E2B971A02A1 www doeverify com Page 6 of 23 60E2B971A02A1
Default hereunder, subject to the limitations set forth in the Lease Landlord shall have the right not to reimburse Tenant as provided for in the preceding sentence and instead dispute Tenant’s entitlement to reimbursement, Tenant's right to perform such repairs and/or maintenance and/or the amount being requested by Tenant If Landlord elects, in the exercise of its good faith reasonable discretion, to dispute any of the foregoing matters, Landlord shall notify Tenant in writing of the nature of such dispute within 30 days after receipt of Tenant’s written request for reimbursement Landlord and Tenant shall meet and discuss the dispute and if Landlord and Tenant fail to reach a resolution of the dispute within 15 days after their meeting, the dispute shall be resolved by arbitration by a single arbitrator with the qualifications and experience appropriate to resolve the matter and appointed pursuant to and acting in accordance with the rules of the American Arbitration Association If the arbitrator decides in favor of Tenant, then Landlord shall promptly pay the amount of any award to Tenant If either party is determined by the arbitrator to be the prevailing party, then such party shall be entitled to have its reasonable attorneys’ fees and costs in connection with such arbitration paid by the other party If Landlord has not paid to Tenant in full the amount of any such arbitration award plus any attorneys’ fees and costs awarded by the arbitrator within 30 days of the date of the arbitrator’s decision, and so long as Tenant is not in default under the Lease beyond applicable notice and cure periods, then Tenant shall have the right to set off against the next monthly payments of Basic Annual Rent the amount of the award 12. Parking In addition to the number of parking spaces Tenant is entitled to use under the Lease, as of the Third Expansion Premises Commencement Date, Tenant shall have the right to use an additional 52 parking spaces, at no additional cost to Tenant, and subject to the terms of Section 1 3 of the Original Lease, for a total of 113 parking spaces 13. Subordination As of the Effective Date, there is no existing Mortgage encumbering the Project 14 Hazardous Substances Notwithstanding anything to the contrary contained in Section 30 of the Original Lease, Tenant shall not be responsible for, and the indemnification and hold harmless obligation set forth in Section 30 4 of the Original Lease shall not apply to (i) contamination in the Third Expansion Premises which Tenant can prove to Landlord’s reasonable satisfaction existed in the Third Expansion Premises immediately prior to the Third Expansion Premises Commencement Date, (n) the presence of any Hazardous Substances in the Third Expansion Premises which Tenant can prove to Landlord’s reasonable satisfaction migrated from outside of the Third Expansion Premises into the Third Expansion Premises, or (m) contamination caused by Landlord or any of Landlord’s employees, agents and/or contractors unless in any case, the presence of such Hazardous Substances (x) is the result of a breach by Tenant of any of its obligations under the Lease, or (y) was caused, contributed to or exacerbated by Tenant or any of Tenant's Agents 15. Brokers Landlord and Tenant each represents and warrants that it has not dealt with any broker, agent or other person (collectively, “Broker’’) in connection with the transaction reflected in this Twelfth Amendment and that no Broker brought about this transaction other than Flinn Ferguson and The Broderick Group Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any claims by any Broker, other than Flinn Ferguson and The Broderick Group, claiming a commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this Twelfth Amendment Landlord shall be responsible for all commissions due to Flinn Ferguson and The Broderick Group arising out of the execution of this Twelfth Amendment in accordance with the terms of separate agreements between Flinn Ferguson and The Broderick Group, on the one hand, and Landlord, on the other hand 16. OFAC Tenant and Landlord are currently (a) in compliance with and shall at all times during the Term of the Lease remain in compliance with the regulations of the Office of Foreign Assets Control (“OFAC”) of the U S Department of Treasury and any statute, executive order, or regulation relating thereto (collectively, the “OFAC Rules”), (b) not listed on, and shall not during the Term of __ Copyright © 2005, Alexandria Real Estate Equities, Inc ALL RIGHTS RESERVED Confidential and Proprietary - Do Not A L l x A N d u i a C°Py or Distribute Alexandru and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc 7 DocVerify ID 8C292B03-9CE5 467D-A549-0E2B971A02AI www docvenfy com Page 7 of 23 70E2B971A02A1
the Lease be listed on, the Specially Designated Nationals and Blocked Persons List maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental authority pursuant to any authorizing statute, executive order, or regulation, and (c) not a person or entity with whom a U S person is prohibited from conducting business under the OFAC Rules 17. Miscellaneous a. This Twelfth Amendment is the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions Reference to the Lease in this Twelfth Amendment shall mean the Lease as amended by this Twelfth Amendment This Twelfth Amendment may be amended only by an agreement in writing, signed by the parties hereto b. Once executed by both parties, this Twelfth Amendment is binding upon and shall mure to the benefit of the parties hereto and their respective successors and assigns c. This Twelfth Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument Counterparts may be delivered via electronic mail (including pdf or any electronic signature process complying with the U S federal ESIGN Act of 2000) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes Electronic signatures shall be deemed original signatures for purposes of this Twelfth Amendment and all matters related thereto, with such electronic signatures having the same legal effect as original signatures d. Except as amended and/or modified by this Twelfth Amendment, the Lease is hereby ratified and confirmed and all other terms of the Lease shall remain in full force and effect, unaltered and unchanged by this Twelfth Amendment In the event of any conflict between the provisions of this Twelfth Amendment and the provisions of the Lease, the provisions of this Twelfth Amendment shall prevail Whether or not specifically amended by this Twelfth Amendment, all of the terms and provisions of the Lease are hereby amended to the extent necessary to give effect to the purpose and intent of this Twelfth Amendment [Signatures are on the next page] 8 ALEXANDRIA Copyright © 2005, Alexandria Real Estate Equities, Inc ALL RIGHTS RESERVED Confidential and Propnetary - Do Not Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc DocVenfy ID 8C292B03-9CE5 467D-A549-0E2B971A02A1 www doevenfy com Page 8 of 23 80E2B971A02A1
jC E5 -4 t,7 D -A 54 9- 0E 2B 97 1A 02 A 1 — 2 02 4/ 06 /0 5 09 .-5 2 2 i -8 :0 0 — R em ot e N ot ar y IN WITNESS WHEREOF, the parties hereto have executed this Twelfth Amendment as of the day and year first above written. TENANT: BIOLIFE SOLUTIONS, INC., a Delaware corporation (Ttoy LUuJtta-mzui , -J_______________________ Its: Chief Financial Officer LANDLORD: ARE-SEATTLE NO. 38, LLC, a Delaware limited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, its managing member By: By: Its: ARE-QRS CORP., a Maryland c/frpor its general/part IlliarX Barrett------- VI resident Real Estate Legal Affairs ALEXANDRIA. Copyright © 2005, Alexandria Rea) Estate Equities, Inc. ALL RIGHTS RESERVED. Confidential and Proprietary - Do Not Copy or Distribute. Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc. DocVerify ID: 8C292B03-9CE5-467D-A549-0E2B971A02A1 www.docverify.com Page 9 of 23 J 90E2B971A02A1
£> 2B iI3 -& C E5 ^lS 7D -A 54 9- 0E 2B 9; ' 1 A0 2A 1 — 2 'Ji 4/ u6 /0 5 09 :5 2' 2 I -f l:0 0 — P .e m ct e N ot ar y LANDLORD’S ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. a Notary Public, who proved to me on the basis of STATE OF CALIFORNIA County of 4^5 On , 2024, before me, personally appeared k/lLC/AH BA satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. I Signa' (Affix seal here) RACHEL EARLE Notary Public - California E) Los Angeles County y Commission # 2336172 My Comm. Expires Nov 17, 2024 I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. 10 Copyright © 2005, Alexandria Rea) Estate Equities, Inc. ALL RIGHTS RESERVED. Confidential and Proprietary - Do Not Copy or Distribute. Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc. DocVerify ID: 8C292B03-9CE5-467D-A549-0E2B971A02A1 www.docverify.com Page 10 of 23 i 100E2B971A02A1
TENANT’S ACKNOWLEDGMENT STATE OF Washington COUNTY OF King ss On this 5th day of June , 2024, before me personally appeared Troy Wichterman fo me known to be the Chief Financial Officer of BioLife Solutions, Inc g Delaware Corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, and on oath stated that they were authorized to execute said instrument IN WITNESS WHEREOF, I have hereunto set my' above written seal the day and year first a. \oig'fiaiure or Notary/ Jade Rice b. (Legibly Print or Stamp Name of Notary) c. Notary public in and for the State of Washington d. residing at Kirkland, WA My appointment expires 6/23/2025 023511MOOD3 JADE RICE NOTARY PUBLIC STATE OF WASHINGTON Commission # 167775 My Commission Expires Jun 23, 2025 NoUry Stamp 2024'0o'05 11 22 15PST Notarial act performed by audio-visual communication ALEXANDRIA Copyright © 2005, Alexandria Real Estate Equities, Inc ALL RIGHTS RESERVED Confidential and Proprietary - Do Not Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc DocVenfy ID 8C292B03-9CE5-467D A549-0E2B971A02A1 www docverify com Page 11 of 23
8C 2L ‘2 B0 3- £i C E5 -4 t> 7D -A 54 9- O E2 B9 71 A0 2A 1 — 2 02 4/ 06 /0 5 00 :5 2 21 -8 :0 0 — R &n io te N ot ar y EXHIBIT A THIRD EXPANSION PREMISES (to be attached as Exhibit C.11 to the Lease) 2 ___________ ■______________■._______ _____________ r A-1 ALEXANDRIA. Copyright © 2005, Alexandria Real Estate Equities, Inc. ALL RIGHTS RESERVED. Confidential and Proprietary - Do Not Copy or Distribute. Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc. DocVerify ID: 8C292B03-9CE5-467D-A549-0E2B971A02A1 www.docverify.com Page 12 of 23 120E2B971A02A1
uC E5 -4 b7 D -A 54 9- 0E 2B 97 IA 02 AI — 2 02 4/ 06 /0 5 O i. 5 2 z I - 6: 00 — R er no ie N ot ar y EXHIBIT B ROFR SPACE B-1 ALEXANDRIA. Copyright © 2005, Alexandria Real Estate Equities, Inc. ALL RIGHTS RESERVED. Confidential and Proprietary - Do Not Copy or Distribute. Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc. DocVerify ID: 8C292B03-9CE5-467D-A549 0E2B971A02A1 www.docverify.com Page 13 of 23 130E2B971A02A1
EXHIBIT C THIRD EXPANSION PREMISES WORK LETTER THIS THIRD EXPANSION PREMISES WORK LETTER (this “Work Letter”) is incorporated into that certain Lease dated as of July 24, 2007, as amended by that certain First Amendment to Lease dated as of November 4, 2008, that certain Second Amendment to Lease dated as of March 2, 2012, that certain Third Amendment to Lease dated as of June 15, 2012, that certain Fourth Amendment to Lease dated as of November 26, 2012, that certain Fifth Amendment to Lease dated as of August 19, 2014, that certain Sixth Amendment to Lease dated as of March 3, 2017, that certain Seventh Amendment to Lease dated as of December 4, 2018, that certain Eighth Amendment to Lease dated as of November 1,2019, that certain Ninth Amendment to Lease dated as of November 12, 2020, that certain Tenth Amendment to Lease dated as of October 8, 2021, that certain Eleventh Amendment to Lease dated as of February 22, 2022, and that certain Twelfth Amendment to Lease dated of even date herewith (as amended, the "Lease”) now between ARE-SEATTLE NO. 38, LLC, a Delaware limited liability company ("Landlord”), and BIOLIFE SOLUTIONS, INC., a Delaware corporation ("Tenant”) Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease 1 General Requirements (a) Tenant’s Authorized Representative Tenant designates Roderick de Greef and Troy Wichterman (either such individual acting alone, “Tenant’s Representative”) as the only persons authorized to act for Tenant pursuant to this Work Letter Landlord shall not be obligated to respond to or act upon any request, approval, inquiry or other communication (“Communication”) from or on behalf of Tenant in connection with this Work Letter unless such Communication is in writing from Tenant’s Representative Tenant may change either Tenant’s Representative at any time upon not less than 5 business days advance written notice to Landlord The email address for Tenant’s Representative named in this Section 1(a) are rdegreef@BioLifeSolutions com and twichterman@BioLifeSolutions com (b) Landlord’s Authorized Representative Landlord designates Phil Dudley and Lauren Hammond (either such individual acting alone, “Landlord’s Representative”) as the only persons authorized to act for Landlord pursuant to this Work Letter Tenant shall not be obligated to respond to or act upon any request, approval, inquiry or other Communication from or on behalf of Landlord in connection with this Work Letter unless such Communication is in writing from Landlord’s Representative Landlord may change either Landlord’s Representative at any time upon not less than 5 business days advance written notice to Tenant The email address for Landlord’s Representative named in this Section 1(b) are pdudley@are com and lhammond@are com (c) Architects, Consultants and Contractors Landlord and Tenant hereby acknowledge and agree that (i) the architect (the “Tl Architect”) for the Tenant Improvements (as defined in Section 2(a) below), (ii) the general contractor for the Tenant Improvements (the “General Contractor”), and (m) any construction managers, mechanical or electrical engineers, and subcontractors for the Tenant Improvements shall be selected by Tenant, subject to Landlord’s approval, which approval shall not be unreasonably withheld, conditioned or delayed Landlord shall be named a third party beneficiary of any contract entered into by Tenant with the Tl Architect or the General Contractor, and of any warranty made by the Tl Architect or the General Contractor 2 Tenant Improvements (a) Tenant Improvements Defined As used herein, “Tenant Improvements” shall mean all improvements to the Demised Premises (i e , the Existing Demised Premises and the Third Expansion Premises) desired by Tenant of a fixed and permanent nature To the extent necessary for the construction of the Tenant Improvements, “Tenant Improvements” shall include the demolition of existing improvements in the Demised Premises Other than funding the Tl Allowance (as defined below) as provided herein, _ Copyright © 2005 Alexandria Real Estate Equities, Inc ALL (<i?) RIGHTS RESERVED Confidential and Proprietary ~ Do Not ALEXANDRIA Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc C-1 DocVenfy ID 8C292B03-9CE5-467D-A549-OE2B971A02A1 www docverify com 140E2B971A02A1Page 14 of 23
Landlord shall not have any obligation whatsoever with respect to the finishing of the Demised Premises for Tenant’s use and occupancy (b) Tenant’s Space Plans Tenant shall deliver to Landlord schematic drawings and outline specifications (the "Space Plans”) detailing Tenant’s requirements for the Tenant Improvements Not more than 10 business days thereafter, Landlord shall deliver to Tenant the written objections, questions or comments of Landlord and the Tl Architect with regard to the Space Plans Tenant shall cause the Space Plans to be revised to address such written comments and shall resubmit said drawings to Landlord for approval within 10 business days thereafter Such process shall continue until Landlord has approved the Space Plans, which approval shall not be unreasonably withheld, conditioned or delayed (c) Working Drawings After Landlord and Tenant have approved the Space Plans, Tenant shall cause the Tl Architect and engineers to complete and deliver to Landlord for review complete and fully coordinated architectural and (to the extent required) structural, mechanical, electrical and plumbing working drawings and specifications for the Tenant Improvements (the “Final Working Drawings”) in a form sufficiently complete to allow all subcontractors for the Tenant Improvements to bid on the work shown therein and to submit as needed to obtain the Tl Permit (as defined herein) The Final Working Drawings shall be prepared substantially in accordance with the Space Plans Following delivery of the Final Working Drawings, Tenant shall cause the Tl Architect to prepare and deliver to Landlord for review and comment construction plans, specifications and drawings for the Tenant Improvements (“Tl Construction Drawings”), which Tl Construction Drawings shall be prepared substantially in accordance with the Space Plans and Final Working Drawings Tenant shall be solely responsible for ensuring that the Tl Construction Drawings reflect Tenant’s requirements for the Tenant Improvements Landlord shall deliver its written comments on the Tl Construction Drawings to Tenant not later than 10 business days after Landlord’s receipt of the same, provided, however, that Landlord may not disapprove any matter that is consistent with the Space Plans and the Final Working Drawings Tenant and the Tl Architect shall consider all such comments in good faith and shall, within 10 business days after receipt, notify Landlord how Tenant proposes to respond to such comments Any disputes in connection with such comments shall be resolved in accordance with Section 2(d) hereof Provided that the design reflected in the Tl Construction Drawings is consistent with the Space Plans and Final Working Drawings, Landlord shall promptly approve the Tl Construction Drawings submitted by Tenant Once approved by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed), subject to the provisions of Section 4 below. Tenant shall not materially modify the Tl Construction Drawings except as may be reasonably required in connection with the issuance of the Tl Permit (as defined in Section 3(a) below) (d) Approval and Completion If any dispute regarding the design of the Tenant Improvements is not settled within 10 business days after notice of such dispute is delivered by one party to the other, Tenant may make the final decision regarding the design of the Tenant Improvements, provided (i) Tenant acts reasonably and such final decision is either consistent with or a compromise between Landlord’s and Tenant’s positions with respect to such dispute, (n) that all costs and expenses resulting from any such decision by Tenant shall be payable out of the Tl Fund (as defined in Section 5(d) below), and (m) Tenant’s decision will not affect the base Building, structural components of the Building, any Building systems or the Demising Improvements (in which case Landlord shall make the final decision) Any changes to the Tl Construction Drawings following Landlord’s and Tenant’s approval of same requested by Tenant shall be processed as provided in Section 4 hereof 3 Performance of the Tenant Improvements (a) Commencement and Permitting ofthe Tenant Improvements Tenant shall commence construction ofthe Tenant Improvements upon obtaining and delivering to Landlord a building permit (the “Tl Permit”) authorizing the construction of the Tenant Improvements consistent with the Tl Construction Drawings approved by Landlord The cost of obtaining the Tl Permit shall be payable from the Tl Fund Landlord shall assist Tenant in obtaining the Tl Permit, including by cooperating with all reasonable Tenant requests delivered in writing to Landlord requesting that Landlord execute permit applications and similar Copyright © 2005, Alexandria Real Estate Equities, Inc ALL kAj RIGHTS RESERVED Confidential and Proprietary - Do Not ALEXANDRIA {'opy or Dlstnbutc Alexandru and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc C-1 DocVenfy ID 8C292B03-9CE5-467D.A549-0E2B971 A02AI www doevenfy com Page 15 of 23 150E2B971A02A1 ■R
ministerial acts Prior to the commencement of the Tenant Improvements, Tenant shall deliver to Landlord a copy of any contract with Tenant’s contractors (including the Tl Architect), and certificates of insurance from any contractor performing any part of the Tenant Improvements evidencing industry standard commercial general liability, automotive liability, “builder’s risk’’, and workers’ compensation insurance Tenant shall cause the General Contractorto provide a certificate of insurance naming Landlord, Alexandria Real Estate Equities, Inc , and Landlord’s lender (if any) as additional insureds for the General Contractor’s liability coverages required above For the avoidance of doubt, Tenant may submit the approved Final Working Drawings to the appropriate governmental entities to apply for the Tl Permit prior to the date Landlord approves the Tl Construction Drawings If any changes to the Final Working Drawings that are required by any such governmental entities necessitate a change to the Tl Construction Drawings, any such change to the Tl Construction Drawings shall be subject to Landlord’s approval in accordance with Section 2(d) above (b) Selection of Materials, Etc Where more than one type of material or structure is indicated on the Tl Construction Drawings approved by Tenant and Landlord, the option will be within Tenant’s reasonable discretion if the matter concerns the Tenant Improvements, and within Landlord’s sole and absolute subjective discretion if the matter concerns the structural components of the Building or any Building system (c) Tenant Liability Tenant shall be responsible for correcting any deficiencies or defects in the Tenant Improvements (d) Substantial Completion Tenant shall substantially complete or cause to be substantially completed the Tenant Improvements in a good and workmanlike manner, in accordance with the Tl Permit subject, in each case, to Minor Variations and normal “punch list” items of a non-matenal nature which do not interfere with the use of the Demised Premises (“Substantial Completion” or “Substantially Complete”) Upon Substantial Completion of the Tenant Improvements, Tenant shall require the Tl Architect and the General Contractor to execute and deliver, for the benefit of Tenant and Landlord, a Certificate of Substantial Completion in the form of the American Institute of Architects (“AIA”) document G704 For purposes of this Work Letter, “Minor Variations” shall mean any modifications reasonably required (i) to comply with all applicable Legal Requirements and/or to obtain or to comply with any required permit (including the Tl Permit), (n) to comport with good design, engineering, and construction practices which are not material, or (m) to make reasonable adjustments for field deviations or conditions encountered during the construction of the Tenant Improvements 4 Changes Any changes requested by Tenant to the Tenant Improvements after the delivery and approval by Landlord of the Space Plans, shall be requested and instituted in accordance with the provisions of this Section 4 and shall be subject to the written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed (a) Tenant’s Right to Request Changes If Tenant shall request changes (“Changes”), Tenant shall request such Changes by notifying Landlord in writing in substantially the same form as the AIA standard change order form (a “Change Request”), which Change Request shall detail the nature and extent of any such Change Such Change Request must be signed by Tenant’s Representative Landlord shall review and approve or disapprove such Change Request within 10 business days thereafter, provided that Landlord’s approval shall not be unreasonably withheld, conditioned or delayed (b) Implementation of Changes If Landlord approves such Change, Tenant may cause the approved Change to be instituted If any Tl Permit modification or change is required as a result of such Change, Tenant shall promptly provide Landlord with a copy of such Tl Permit modification or change — Copyright © 2005, Alexandria Real Estate Equities, Inc ALL RIGHTS RESERVED Confidential and Proprietary - Do Not ALEXANDRIA <“°P^ or distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc C-1 DocVerify ID 8C292B03-9CE5-467D-A549 0E2B971A02A1 www docvenfy com Pageje^if 23 160E2B971A02A1
5 Costs (a) Budget For Tenant Improvements Before the commencement of construction of the Tenant Improvements, Tenant shall obtain a detailed breakdown, by trade, of the costs incurred or that will be incurred, in connection with the design and construction of the Tenant Improvements (the “Budget”), and deliver a copy of the Budget to Landlord for Landlord’s approval, which shall not be unreasonably withheld, conditioned or delayed The Budget shall be based upon the Tl Construction Drawings approved by Landlord Notwithstanding anything to the contrary contained in the Lease, Landlord shall not charge Tenant any form of construction management fee, project management fee, oversight fee, or similar fee with respect to Tenant's construction of the Tenant Improvements (b) Tl Allowance Landlord shall provide to Tenant a tenant improvement allowance (“Tl Allowance”) of $110 00 per rentable square foot of the Third Expansion Premises The Tl Allowance shall be disbursed in accordance with this Work Letter In addition to the Tl Allowance, Landlord shall reimburse Tenant a maximum amount of $0 20 per rentable square foot in the Third Expansion Premises (the “Space Plan Allowance”) for actual, out-of- pocket costs incurred by Tenant in connection with preparing an initial space plan for the Tenant Improvements Such Space Plan Allowance shall be reimbursed to Tenant within 30 days after Tenant submits to Landlord invoices reflecting the amounts Tenant has paid in connection with the space plans for the Tenant Improvements Landlord shall receive paper and electronic copies of all plans and drawings (and any other similar documents) paid for by the Space Plans Allowance Any portion of the Space Plans Allowance that remains unused as of the Third Expansion Premises Rent Commencement Date shall be forfeited by Tenant (c) Tenant shall have no right to the use or benefit (including any reduction to Basic Annual Rent) of any portion of the Tl Allowance not required for the construction of (i) the Tenant Improvements described in the Tl Construction Drawings approved pursuant to Section 2(d) or (ii) any Changes pursuant to Section 4 Tenant shall have no right to any portion of the Tl Allowance for which Tenant has not submitted a draw request pursuant to Section 5(f) below before September 30, 2025 (d) Costs Includable in Tl Fund The Tl Fund shall be used solely for the payment of the cost of demolition of any existing improvements in the Demised Premises and for the payment of design, permits, a reasonable administrative fee payable to Tenant's construction manager (not to exceed 5% of the Tl Allowance), and construction costs in connection with the construction of the Tenant Improvements, including, without limitation, the cost of electrical power and other utilities used in connection with the construction of the Tenant Improvements, the cost of preparing the Space Plans, the Final Working Drawings and the Tl Construction Drawings, all costs set forth in the Budget, and the cost of Changes (collectively, “Tl Costs”) Notwithstanding anything to the contrary contained herein, the Tl Fund shall not be used to purchase any furniture, personal property or other non-Buildmg system materials or equipment, including, but not be limited to, Tenant’s voice or data cabling, non-ducted biological safety cabinets and other scientific equipment not incorporated into the Tenant Improvements (e) Excess Tl Costs Landlord shall have no obligation to bear any portion of the cost of any of the Tenant Improvements except to the extent of the Tl Allowance If at any time and from time-to-time the then current Tl Costs under the Budget exceed the remaining unexpended Tl Allowance (“Excess Tl Costs”), Tenant shall be required to pay 100% of such Excess Tl Costs as a condition precedent to Landlord’s obligation to fund any remaining portion of the Tl Allowance If Tenant fails to pay, or is late in paying any Excess Tl Costs to Landlord, Landlord shall have all of the rights and remedies set forth in the Lease for nonpayment of rent (including, but not limited to, the right to interest at the default rate as provided in Section 13 2 1 of the Original Lease and the right to assess a late charge) For purposes of any litigation instituted with regard to such amounts, those amounts will be deemed rent under the Lease The Tl Allowance and Excess Tl Costs are herein referred to as the “Tl Fund ” Funds so paid by Tenant shall be the first thereafter disbursed to pay Tl Costs Notwithstanding anything to the contrary set forth in this __ Copyright © 2005 Alexandria Real Estate Equities, Inc ALL (<1?) RIGHT S RESERVED Confidential and Propnetary - Do Not alexandilia or Oistnbute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc C-1 DocVenfylD 8C292B03-9CE5-467D-A549 0E2B971A02A1 www dor verify com PageJZ of 23 170E2B971A02A1
Section 5(e), Tenant shall be fully and solely liable for Tl Costs and the cost of Minor Variations in excess of the Tl Allowance (f) Payment for Tl Costs During the course of design and construction of the Tenant Improvements, subject to the terms of Section 5(e), Landlord shall reimburse Tenant for Tl Costs once a month against a draw request in Landlord’s standard form, containing evidence of payment of such Tl Costs by Tenant and such certifications, hen waivers (including a conditional lien release for each progress payment and unconditional lien releases for the prior month’s progress payments), inspection reports and other matters as Landlord customarily obtains, to the extent of Landlord’s approval thereof for payment, no later than 30 days following receipt of such draw request Upon completion of the Tenant Improvements (and prior to any final disbursement of the Tl Fund), Tenant shall deliver to Landlord (i) sworn statements setting forth the names of all contractors and first tier subcontractors who did the work and final, unconditional hen waivers from all such contractors and first tier subcontractors, (n) as-built plans (one copy in print format and two copies in electronic CAD format) for such Tenant Improvements, (m) a certification of substantial completion in Form AIA G704, (iv) a certificate of occupancy for the Demised Premises, and (v) copies of all operation and maintenance manuals and warranties affecting the Demised Premises (g) Tenant Improvement Progress Reports On or before the 10lh day of each calendar month during the course of design and construction of the Tenant Improvements, Tenant shall deliver to Landlord a Tenant Improvement progress report in the form of Schedule 1 completed to provide all of the most up-to-date information regarding Tenant’s progress with respect the design and construction of the Tenant Improvements in addition to the corresponding AIA forms G702 and G703 (or their reasonable equivalents), if applicable, for all contracted costs Concurrently with each progress report, Tenant shall also deliver to Landlord a forecast in the form of Schedule 2 completed to provide the projected remaining Tl Costs 6 Miscellaneous (a) Consents Whenever consent or approval of either party is required under this Work Letter, that party shall not unreasonably withhold, condition or delay such consent or approval, except as may be expressly set forth herein to the contrary (b) Modification No modification, waiver or amendment of this Work Letter or of any of its conditions or provisions shall be binding upon Landlord or Tenant unless in writing signed by Landlord and Tenant (c) No Default Funding In no event shall Landlord have any obligation to fund any portion of the Tl Allowance during any period that Tenant is in default beyond all applicable notice and cure periods under the Lease 7 Infectious Conditions Tenant shall require the General Contractor to comply with and implement (and cause the Tl Architect and any consultants, contractors, subcontractors and all other service and materials providers entering the Project during the construction of, and to perform services or provide materials in connection with, the Tenant Improvements (each such party, a “Tenant Improvement Contractor Party”) to comply with and implement) the following procedures to mitigate the spread of communicable diseases and/or viruses of any kind or nature that are more virulent than the seasonal flu (collectively, “Infectious Conditions”), including COVID-19 (i) Industry best practices related to the applicable Infectious Condition (and General Contractor shall regularly monitor industry best practices), and __ Copyright © 2005, Alexandria Real Estate Equities Inc ALL RIGHTS RESERVED Confidential and Proprietary - Do Not ALEXANDRIA <“°P^ or distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc C-1 DocVerify ID 8C292B03-9CE5-467D-A549-0E2B971A02A1 wvvw docvenfy com Page 18 of 23 _ 180E2B971A02A_1
(n) All guidance and requirements of any applicable state or local Governmental Authorities relating to the applicable Infectious Condition (and General Contractor shall regularly monitor such guidance and requirements), (hi) All guidance and requirements of the Occupational Safety and Health Administration (“OSHA”) related to the applicable Infectious Condition (and General Contractor shall continually monitor the OSHA’s website for updates thereto), and (iv) All guidance issued by the CDC related to the applicable Infectious Condition (and General Contractor shall continually monitor CDC’s website for updates thereto), and (v) All reasonable policies or procedures adopted by Landlord with respect to the Project from time to time in order to protect the health and physical well-being of others at the Project or intended to limit the spread of Infectious Conditions of which Landlord has notified Tenant Landlord shall not have any obligation to notify Tenant, General Contractor, or any Tenant Improvement Contractor Party of the existence of any CDC guidance or any modifications thereto C-1 A L [ X A N D R. 1 A Copyright © 2005, Alexandria Rea) Estate Equities, Inc ALL RICH TS RESERVED Confidential and Proprietary - Do Not Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc DocVenfy ID 8C292B03-9CE5-467D A549 0E2B971A02A1 wv^w doc verify com Page 19 of_2_3 190E2B971A02A1 |||| ill
Schedule 1 Tenant Improvement Progress Report Project Address Certification Period 1 Original Project Budget $ 2 Net change by Change Orders/Update to budget $ 3 Current budget to date (Line 1 + 2) $ 4 Total costs incurred to date $ 5 Remaining balance to budget (Line 3 less Line 4) $ Certification signature C-1 A L £ X A N D II I A Copyright © 2005, Alexandria Real Estate Equities Inc ALL RIGHTS RESERVED Confidential and Proprietary - Do Not Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc DocVenfy ID 8C292B03-9CE5 467D-A549-0E2B971A02A1 www doevenfy com Page 20 of 23_ 200E2B971A02A1
Schedule 2 Tl Cost Forecast Tenant Improvement Construction Spending Summary Property Address As of Date Budget Incurred |___________________________________________Proiect Cash Flows___________________________________________| to Date MM-YY MM-YY MM-YY MM-YY MM-YY MM-YY MM-YY MM-YY MM-YY MM-YY Total Cost Description Hard Cost (General Contractor) Architecture & Engineering Soft Cost Total Cumulative $ $" $ - $*■ $■* $■* $■* $'* $ “ s ■ $** Total % Complete % % % % % % % % % % % * Incurred to date and projected cash flows should be based on accrual accounting when the transaction occurs rather when payment Is made C-1 ALEXANDRIA Copynght © 2005, Alexandria Real Estate Equities, Inc ALL RIGHTS RESERVED Confidential and Proprietary - Do Not Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc DocVei ify ID 8C292B03 9CE5-467D A549 0E2B971A07A1 www docvenfy com Page 21 of 23 210E2B971A02A1
EXHIBIT D ELEVATOR REPLACEMENT WORK SCHEDULE 3301 Freight Elevator - Estimated Draft Schedule Scope Description Start Calendar Days End Comments Approved Start 5/27/2024 RFP for Elevator - Kone 5/27/2024 14 6/10/2024 ARE Review and Approve 6/10/2024 7 6/17/2024 ARE Contracting - Executed Contract 6/17/2024 21 7/8/2024 Kone Elevator Design 7/8/2024 31 8/8/2024 Kone Permit Submission 8/8/2024 84 10/31/2024 Kone Permit Issued 10/31/2024 0 10/31/2024 Kone Elevator Fabrication 8/8/2024 364 8/7/2025 Note 42 to 52 Weeks - Plugged 52 Weeks for Worst Case Kone Elevator Install 8/7/2025 70 10/16/2025 Note 8-10 Week install - plugged 10 weeks for worst case Inspections 10/16/2025 14 10/30/2025 Ready for Use 10/30/2025 Total Duration 521 Calendar Days Year 1 year 5 months Months 17 Months 3 Days Weeks 74 weeks 3 days Note- Potential 3-Months savings pending fabrication duration and installation Best Case Completion 7/30/2025 Days 429 Days Months 14 Months 3 Days Weeks 61 Weeks D-1 A L [ X AN D III A Cop>right © 2005, Alexandria Real Estate Equities, Inc ALL RIGHTS RESERVED Confidential and Propnetary - Do Not Copy or Distribute Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc DocVenfy ID 8C292B03 9CE5-467D-A549-0E2B971A02A1 www doevenfy com Page 22 of 23 220E2B971A02A1 ■BBBIIIII
EXHIBIT E DEMISING IMPROVEMENTS1 1 Even though the attached plan references "Floor 2", the plan reflects Demising Improvements to be constructed on the third floor of the 3301 Building. E-1 ALEXANDRIA. Copyright © 2005, Alexandria Real Estate Equities, Inc. ALL RIGHTS RESERVED. Confidential and Proprietary - Do Not Copy or Distribute. Alexandria and the Alexandria Logo are registered trademarks of Alexandria Real Estate Equities, Inc. DocVerify ID: 8C292B03-9CE5-467D-A549-0E2B971A02A1 www. d oeverif y. com Page 23 of 23 230E2B971A02A1 ■ mh ni
FIRST AMENDMENT TO AMENDED EXECUTIVE EMPLOYMENT AGREEMENT THIS FIRST AMENDMENT TO AMENDED EXECUTIVE EMPLOYMENT AGREEMENT (“Amendment”) is an agreement made between BioLife Solutions, Inc., a Delaware corporation (“Employer” or the “Company”), and Aby J. Mathew, PhD (“Executive”). Executive and the Employer are sometimes referred to herein as the “Parties.” The effective date is January 5, 2023 (“Effective Date”). WHEREAS, the Parties entered into that certain Amended Executive Employment Agreement effective December 1, 2020 as amended (the “Agreement”); and WHEREAS, the Parties wish to amend the Agreement as set forth herein; NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other good and valuable consideration, the receipt of and sufficiency of which are hereby acknowledged, the Employer and the undersigned Executive agree as follows: 1. Defined Terms. Except as specifically provided herein, capitalized terms not defined herein shall have the meanings ascribed to them in the Agreement. 2. Amendment of Section 5.d(ii). As of the Effective Date, Section 5.d(ii) of the Agreement is hereby deleted and replaced in its entirety with the following (exclusive of subparagraphs (A) through (E) of the Agreement which are not deleted shall remain in full force and effect): 5. . . . d. . . . ii. Employer may terminate Executive’s employment under this Agreement or Executive may resign for Good Reason upon or within 12 months following a Change in Control without advance notice; provided, however, that Employer will pay, no later than sixty (60) days from the termination date in a lump sum: . . . 3. Amendment of Section 5.(d)(iv). As of the Effective Date, Section 5.d(ii) of the Agreement is hereby deleted and replaced in its entirety with the following: 5 . . . . d. . . . iv. Upon termination of Executive’s employment hereunder due to a Change in Control, including by Executive for Good Reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. 4. No Other Amendments. Nothing in this Amendment is intended to amend any language of the Agreement other than as specifically set forth above, and the remainder of the Agreement shall be unmodified and remain in full force and effect.
2 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Amended Executive Employment Agreement as of the date and year first above written. BIOLIFE SOLUTIONS, INC. By: Michael Rice Chief Executive Officer EXECUTIVE: ___________________________ Aby J. Mathew, PhD
Page 1 of 21 AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made between BioLife Solutions Inc., a Delaware corporation (“Employer” or the “Company”), and Todd Berard (“Executive”). Executive and the Company are sometimes referred to herein as the “Parties”. The effective date of this Agreement is June [1], 2023. This Agreement supersedes and replaces all prior employment agreements (and any amendments thereto) between the Company and Executive, including, for the avoidance of doubt, the employment agreement between the Parties that became effective on December 1, 2020 and any amendments thereto. RECITALS A. Employer is in the business (the “Business”) of manufacturing and marketing biopreservation media and cold chain products for cells, tissues, and organs. B. Employer desires to obtain the services of Executive, in which capacity Executive has access to Employer’s Confidential Information (as hereinafter defined), and to obtain assurance that Executive will protect Employer’s Confidential Information and will not compete with Employer or solicit its customers or its other employees during the term of employment and for a reasonable period of time after termination of employment pursuant to this Agreement, and Executive is willing to agree to these terms. C. Executive desires to be assured of the salary and other benefits provided for in this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows: 1. Employment. a. Employer hereby employs Executive, and Executive agrees to be employed as Senior Vice President and Chief Marketing Officer (“CMO”), in accordance with the terms and conditions set forth in this Agreement. Changes may be made from time to time by Employer and/or the Board in its sole discretion to the duties, authorities, reporting relationships and title of Executive. b. Executive will devote full time, attention, and best efforts to achieving the purposes and discharging the responsibilities of the CMO. Executive will comply with all rules, policies and procedures of Employer as modified from time to time, including without limitation, rules and procedures set forth in the Employer’s employee handbook, supervisor’s manuals and operating manuals.
Page 2 of 21 Executive will perform all of Executive’s responsibilities in compliance with all applicable laws and will ensure that the operations that Executive manages are in compliance with all applicable laws. During Executive’s employment, Executive will not engage in any other business activity which, in the reasonable judgment of the Employer, conflicts with the duties of Executive under this Agreement, whether or not such activity is pursued for gain, profit or other pecuniary advantage. c. Nothing herein shall preclude Executive from: (1) continuing to serve on the board of directors or trustees of any business corporation or any charitable organization on which Executive currently serves and which is identified on Exhibit A hereto, or (2) subject to the prior approval of the Board, appointment to any additional directorships or trusteeships, or (3) serving in an advisory role for other business entities, provided in each case, and in the aggregate, that such activities do not interfere with the performance of Executive’s duties hereunder or conflict with Section 7 of this Agreement. 2. Term of Employment. The term of employment (“Term”) will not be for a definite period, but rather continue indefinitely until terminated in accordance with the terms and conditions of this Agreement. 3. Compensation. For the duration of Executive’s employment hereunder, the Executive will be entitled to compensation which will be computed and paid pursuant to the following subparagraphs. a. Base Salary. Employer will pay to Executive a base salary (“Base Salary”) at an annual rate of three hundred thirty-two thousand Dollars ($332,000), payable in such installments (but in no event less than monthly), subject to withholdings and deductions as required or permitted by law, as is Employer’s policy with respect to other employees. Executive’s Base Salary will be reviewed periodically by the Board of Directors of Employer during the term of Executive’s employment and may be adjusted in the sole discretion of the Board of Directors based on such review, but will not be reduced by Employer unless a material adverse change in the financial condition or operations of Employer has occurred or unless Executive’s responsibilities are altered to reflect less responsibility. b. Performance Bonus. Employer under direction of its Board may pay or cause to be paid to Executive such Bonus as it from time to time determines appropriate. 4. Other Benefits. a. Certain Benefits. Executive will be eligible to participate in all employee benefit programs established by Employer that are applicable to management personnel such as medical, pension, disability and life insurance plans on a basis commensurate with Executive’s position and in accordance with Employer’s
Page 3 of 21 policies from time to time, but nothing herein shall require the adoption or maintenance of any such plan. b. Vacations, Holidays and Expenses. Executive will be provided accrued paid vacation of three (3) weeks each calendar year, which shall be the maximum number of days Executive may accrue at any time, and which shall be taken at such times as are consistent with Executive’s responsibilities hereunder. Executive will be provided such holidays and vacation as Executive makes available to its management level employees generally. Employer will reimburse Executive in accordance with company policies and procedures for reasonable expenses necessarily incurred in the performance of duties hereunder against appropriate receipts and vouchers indicating the specific business purpose for each such expenditure. In no case shall any reimbursement be made later than December 31st of the year following the calendar year in which such expense is incurred. c. Right of Set-off. By accepting this Agreement, Executive consents to a deduction from any amounts Employer owes Executive from time to time (including amounts owed to Executive as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to Executive by Employer), to the extent of the amounts Executive owes to Employer. Whether or not Employer elects to make any set-off in whole or in part, if Employer does not recover by means of set-off the full amount Executive owes it, calculated as set forth above, Executive agrees to pay immediately the unpaid balance to Employer. 5. Termination, Discharge. a. For Cause. Employer will have the right to immediately terminate Executive’s services and this Agreement for Cause. “Cause” means the Employer’s belief that any of the following has occurred: (i) any breach of this Agreement by Executive, including, without limitation, breach of Executive’s covenants in Sections 7, 8, 9, 10, 11 or 12; (ii) any failure to perform assigned job responsibilities that continues unremedied for a period of ten (10) days after written notice to Executive by Employer; (iii) Executive’s malfeasance or misconduct in connection with Executive’s duties hereunder or any act or omission of Executive which is materially injurious to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates, (iv) commission or conviction of a felony or misdemeanor (other than a misdemeanor traffic violation), including a plea of guilty or failure to contest prosecution for a felony or misdemeanor;
Page 4 of 21 (v) the Employer’s reasonable belief that Executive engaged in a violation of any statute, rule or regulation, any of which in the judgment of Employer is harmful to the Business or to Employer’s reputation; (vi) the Employer’s reasonable belief that Executive engaged in unethical practices, dishonesty or disloyalty, unless Executive has evidence establishing that Employer directed Executive to commit such practice or act; (vii) or any reason that would constitute Cause under the laws the State of Washington. Upon termination of Executive’s employment hereunder for Cause, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (x) Executive’s salary through the date of termination, (y) for any unused vacation time, and (z) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Executive will have no rights to any unvested benefits or any other compensation or payments after the termination date. b. Due to Death or Disability. Employer will have the right to immediately terminate Executive’s services and this Agreement due to death or disability. For purposes of this Agreement, “disability” means the incapacity or inability of Executive, whether due to accident, sickness or otherwise, as determined by a medical doctor acceptable to the Board of Directors of Employer and confirmed in writing by such doctor, to perform the essential functions of Executive’s position under this Agreement, with or without reasonable accommodation (provided that no accommodation that imposes undue hardship on Employer will be required) for a period of sixty (60) consecutive days or for an aggregate of ninety (90) days during any period of twelve (12) months, or such longer period as may be required under disability law. Upon termination of Executive’s employment hereunder due to death or disability, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) Executive’s salary through the date of termination, (ii) a prorated portion of any incentive bonus opportunity previously approved by the Board, (iii) for any unused vacation time, and (iv) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Upon termination of Executive’s employment hereunder due to death or disability, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest for the benefit of Executive’s estate. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law.
Page 5 of 21 c. Without Cause. Employer may terminate Executive’s employment under this Agreement without cause and without advance notice; provided, however, that Employer will pay (unless subparagraph 5.d of this Agreement applies, in which case the provisions therein shall govern), no later than fourteen (14) days from the termination date in a lump sum: (i) (x) Executive’s salary through the date of termination, (y) for any unused vacation time, and (z) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. (ii) severance pay of twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date. (iii) the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and (iv) an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.c(iii) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.c(iii) if no tax withholding was made. Such payments will be subject to all appropriate deductions and withholdings. Upon termination of Executive’s employment hereunder due to termination without cause, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. d. Change in Control. (i) For purposes of this Agreement, Change in Control shall mean (x) the consummation of a merger or consolidation of the Company
Page 6 of 21 with or into another entity, (y) the dissolution, liquidation or winding up of the Company or (z) the sale of all or substantially all of the Company’s assets. The foregoing notwithstanding, a merger or consolidation of the Company shall not constitute a “Change in Control” if immediately after such merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of such continuing or surviving entity, will be owned by the persons who were the Company’s stockholders immediately prior to such merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company’s capital stock immediately prior to such merger or consolidation. (ii) Employer may terminate Executive’s employment under this Agreement or Executive may resign for Good Reason upon or within 12 months following a Change in Control without advance notice; provided, however, that Employer will pay, no later than sixty (60) days from the termination date in a lump sum: (A) (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses; (B) as severance pay, twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date; (C) 100% of any incentive cash and/or stock bonus opportunity for the current year; (D) the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and (E) an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.d(ii)(D) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.d(ii)(D) if no tax withholding was made. (iii) Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that
Page 7 of 21 such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. (iv) Upon termination of Executive’s employment hereunder due to a Change in Control, including by Executive for Good Reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. e. No Fault Termination By Executive. Executive may terminate Executive’s employment under this Agreement for any reason provided that Executive gives Employer at least ninety (90) days’ notice in writing. Employer may, at its option, accelerate such termination date to any date at least two weeks after Executive’s notice of termination. Employer may also, at its option, relieve Executive of all duties and authority after notice of termination has been provided. Upon termination of Executive’s employment in accordance with this Section, Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Such payments will be subject to all appropriate deductions and withholdings. Upon termination, Executive will have no rights to any unvested benefits or any other compensation. f. Termination By Executive for Good Reason. Executive’s employment pursuant to this Agreement shall terminate in the event Executive shall determine that there is “Good Reason” to terminate Executive’s employment, which shall mean the following: (i) Employer’s material breach of the terms of this Agreement or any other written agreement between Executive and Employer; or (ii) The occurrence of any of the following conditions, without Executive’s consent: (A) a significant diminution in the nature or scope of Executive’s authority, title, function or duties; (B) a ten percent (10%) reduction in Executive’s base salary or a twenty-five percent (25%) reduction in Executive’s target bonus
Page 8 of 21 opportunity (unless such reduction is part of a Company officer- wide program to reduce expenses); (C) the Company’s requiring Executive to be based and work out of an office or location more than 50 miles from the office where Executive is currently employed; (D) any material breach of the terms of this Agreement by the Company; or (E) failure of any successor or assignee to the Company to assume this Agreement. Provided that Executive has provided with notice of the existence of a condition giving rise to “Good Reason” to terminate within ninety (90) days following the initial existence of such a condition, Employer shall have thirty (30) days to cure any such alleged breach, assignment, reduction or requirement referenced above, after Executive provides Employer written notice of the actions or omissions constituting such breach, assignment, reduction or requirement. If Executive resigns Executive’s employment for Good Reason, Executive shall be paid no later than fourteen (14) days from the termination date in a lump sum: I. (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. II. severance pay of twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date. III. the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and IV. an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.f(III) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.f(III) if no tax withholding was made. Such payments will be subject to all appropriate deductions and withholdings. Upon termination of Executive’s employment hereunder due to resignation for good reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any
Page 9 of 21 vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. 6. Return of Company Property. Upon termination of this Agreement or upon request of the Company, Executive shall deliver to the Corporation all property, documents and materials pertaining to the Company’s business including, but not limited to, memoranda, notes, records, drawings, manuals, disks, copies, representations, extracts, summaries and analyses, all inventory, demonstration units, and any other property, documents or media of the Corporation, and all equipment belonging to the company, including but not limited to corporate cards, access cards, office keys, office equipment, laptop and desktop computers, cell phones and other wireless devices, thumb drives, zip drives and all other media storage devices. 7. Covenant Not To Compete. During Executive’s employment by Employer and for a period expiring one (1) year after the termination of Executive’s employment for any reason, Executive covenants and agrees that Executive will not: a. Directly, indirectly, or otherwise, own, manage, operate, control, serve as a consultant to, be employed by, participate in, or be connected, in any manner, with the ownership, management, operation or control of any business that competes with the Business or that competes with Employer or any of its affiliates or that is engaged in any type of business which, at any time during Executive’s employment with Employer, Employer or any of its affiliates planned to develop; b. Hire, offer to hire, entice away or in any other manner persuade or attempt to persuade any officer, employee or agent of Employer or any of its affiliates to alter or discontinue a relationship with Employer or to do any act that is inconsistent with the interests of Employer or any of its affiliates; c. Directly or indirectly solicit, divert, take away or attempt to solicit, divert or take away any customers of Employer or any of its affiliates; or d. Directly or indirectly solicit, divert, or in any other manner persuade or attempt to persuade any supplier of Employer or any of its affiliates to alter or discontinue its relationship with Employer or any of its affiliates.
Page 10 of 21 For the purposes of this Section 7, businesses that are deemed to compete with Employer include, without limitation, businesses engaged in manufacturing and marketing biopreservation media for cells, tissues, and organs or cold chain management products and/or services. The geographic scope of the prohibitions in this Section 7 shall be any city, town or county in which the Company conducts or does any business as of or within one (1) year of Executive’s last day of employment with the Company. Notwithstanding Executive’s obligations under this Section 7, Executive will be entitled to own, as a passive investor, up to five percent (5%) of any publicly traded company without violating this provision. Employer and Executive agree that: this provision does not impose an undue hardship on Executive and is not injurious to the public; that this provision is necessary to protect the business of Employer and its affiliates; the nature of Executive’s responsibilities with Employer under this Agreement require Executive to have access to confidential information which is valuable and confidential to all of the Business; the scope of this Section 7 is reasonable in terms of length of time and geographic scope; and adequate consideration supports this Section 7, including consideration herein. 8. Confidential Information. Executive recognizes that Employer’s business and continued success depend upon the use and protection of confidential and proprietary business information, including, without limitation, the information and technology developed by or available through licenses to Employer, to which Executive has access (all such information being “Confidential Information”). For purposes of this Agreement, the phrase “Confidential Information” includes, for Employer and its current or future subsidiaries and affiliates, without limitation, and whether or not specifically designated as confidential or proprietary: all business plans and marketing strategies; information concerning existing and prospective markets and customers; financial information; information concerning the development of new products and services; information concerning any personnel of Employer (including, without limitation, skills and compensation information); intellectual property; and technical and non-technical data related to software programs, designs, specifications, compilations, inventions, improvements, methods, processes, procedures and techniques; provided, however, that the phrase does not include information that (a) was lawfully in Executive’s possession prior to disclosure of such information by Employer; (b) was, or at any time becomes, available in the public domain other than through a violation of this Agreement; (c) is documented by Executive as having been developed by Executive outside the scope of Executive’s employment and independently; or (d) is furnished to Executive by a third party not under an obligation of confidentiality to Employer. Executive agrees that during Executive’s employment and after termination of employment irrespective of cause, Executive will use Confidential Information only (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information, and then only after providing written notice to Employer that such a demand has been made. Executive’s obligation under this Agreement is in addition to any
Page 11 of 21 obligations Executive has under state or federal law. Executive agrees to deliver to Employer immediately upon termination of Executive’s employment, or at any time Employer so requests, all tangible items containing any Confidential Information (including, without limitation, all memoranda, photographs, records, reports, manuals, drawings, blueprints, prototypes, notes taken by or provided to Executive, and any other documents or items of a confidential nature belonging to Employer), together with all copies of such material in Executive’s possession or control. Executive agrees that in the course of Executive’s employment with Employer, Executive will not violate in any way the rights that any entity has with regard to trade secrets or proprietary or confidential information. Executive’s obligations under this Section 8 are indefinite in term and shall survive the termination of this Agreement. 9. Work Product and Copyrights. Executive agrees that all right, title and interest in and to the materials resulting from the performance of Executive’s duties at Employer and all copies thereof, including works in progress, in whatever media, (the “Work”), will be and remain in Employer upon their creation. Executive will mark all Work with Employer’s copyright or other proprietary notice as directed by Employer. Executive further agrees: a. To the extent that any portion of the Work constitutes a work protectable under the copyright laws of the United States (the “Copyright Law”), that all such Work will be considered a “work made for hire” as such term is used and defined in the Copyright Law, and that Employer will be considered the “author” of such portion of the Work and the sole and exclusive owner throughout the world of copyright therein; and b. If any portion of the Work does not qualify as a “work made for hire” as such term is used and defined in the Copyright Law, that Executive hereby assigns and agrees to assign to Employer, without further consideration, all right, title and interest in and to such Work or in any such portion thereof and any copyright therein and further agrees to execute and deliver to Employer, upon request, appropriate assignments of such Work and copyright therein and such other documents and instruments as Employer may request to fully and completely assign such Work and copyright therein to Employer, its successors or nominees, and that Executive hereby appoints Employer as attorney-in-fact to execute and deliver any such documents on Executive’s behalf in the event Executive should fail or refuse to do so within a reasonable period following Employer’s request. 10. Inventions and Patents. For purposes of this Agreement, “Inventions” includes, without limitation, information, inventions, contributions, improvements, ideas, or discoveries, whether protectable or not, and whether or not conceived or made during work hours. Executive agrees that all Inventions conceived or made by Executive during the period of employment with Employer belong to Employer, provided they grow out of Executive’s work with Employer or are related in some manner to the Business, including, without limitation, research and product development, and projected business of Employer or its affiliated companies. Accordingly, Executive will:
Page 12 of 21 a. Make adequate written records of such Inventions, which records will be Employer’s property; b. Assign to Employer, at its request, any rights Executive may have to such Inventions for the U.S. and all foreign countries; c. Waive and agree not to assert any moral rights Executive may have or acquire in any Inventions and agree to provide written waivers from time to time as requested by Employer; and d. Assist Employer (at Employer’s expense) in obtaining and maintaining patents or copyright registrations with respect to such Inventions. Executive understands and agrees that Employer or its designee will determine, in its sole and absolute discretion, whether an application for patent will be filed on any Invention that is the exclusive property of Employer, as set forth above, and whether such an application will be abandoned prior to issuance of a patent. Employer will pay to Executive, either during or after the term of this Agreement, the following amounts if Executive is sole inventor, or Executive’s proportionate share if Executive is joint inventor: $750 upon filing of the initial application for patent on such Invention; and $1,500 upon issuance of a patent resulting from such initial patent application, provided Executive is named as an inventor in the patent. Executive further agrees that Executive will promptly disclose in writing to Employer during the term of Executive’s employment and for one (1) year thereafter, all Inventions whether developed during the time of such employment or thereafter (whether or not Employer has rights in such Inventions) so that Executive’s rights and Employer’s rights in such Inventions can be determined. Except as set forth on the initialed Exhibit B (List of Inventions) to this Agreement, if any, Executive represents and warrants that Executive has no Inventions, software, writings or other works of authorship useful to Employer in the normal course of the Business, which were conceived, made or written prior to the date of this Agreement and which are excluded from the operation of this Agreement. NOTICE: In accordance with Washington law, this Section 10 does not apply to Inventions for which no equipment, supplies, facility, or trade secret information of Employer was used and which was developed entirely on Executive’s own time, unless: (a) the Invention relates (i) directly to the business of Employer or (ii) to Employer’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by Executive for Employer. 11. Cooperation. The parties agree that certain matters in which Executive will be involved during the Term may necessitate Executive’s cooperation in the future. Accordingly, following the termination of Executive’s employment for any reason, to the extent reasonably requested by the Board, Executive shall cooperate with the Employer in connection with matters arising out of Executive’s service to the Employer; provided that, the Employer shall make reasonable efforts to minimize disruption of Executive’s other
Page 13 of 21 activities. The Employer shall reimburse Executive for reasonable expenses incurred in connection with such cooperation. 12. Non-Disparagement. Executive agrees and covenants that Executive will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Employer or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section 12 does not, in any way, restrict or impede Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Executive shall promptly provide written notice of any such order to the Chief Financial Officer. 13. Remedies. Notwithstanding other provisions of this Agreement regarding dispute resolution, Executive agrees that Executive’s violation of any of Sections 7, 8, 9, 10, 11 or 12 of this Agreement would cause Employer irreparable harm which would not be adequately compensated by monetary damages and that an injunction may be granted by any court or courts having jurisdiction, restraining Executive from violation of the terms of this Agreement, upon any breach or threatened breach of Executive of the obligations set forth in any of Sections 7, 8, 9, 10, 11 or 12. The preceding sentence shall not be construed to limit Employer from any other relief or damages to which it may be entitled as a result of Executive’s breach of any provision of this Agreement, including Sections 7, 8, 9, 10, 11 or 12. Executive also agrees that a violation of any of Sections 7, 8, 9, 10, 11 or 12 would entitle Employer, in addition to all other remedies available at law or equity, to recover from Executive any and all funds, including, without limitation, wages, salary and profits, which will be held by Executive in constructive trust for Employer, received by Executive in connection with such violation. 14. Dispute Resolution. Except for the right of Employer and Executive to seek injunctive relief in court, any controversy, claim or dispute of any type arising out of or relating to Executive’s employment or the provisions of this Agreement shall be resolved in accordance with this Section 14 regarding resolution of disputes, which will be the sole and exclusive procedure for the resolution of any disputes. This Agreement shall be enforced in accordance with the Federal Arbitration Act, the enforcement provisions of which are incorporated by this reference. Matters subject to these provisions include, without limitation, claims or disputes based on statute, contract, common law and tort and will include, for example, matters pertaining to termination, discrimination, harassment, compensation and benefits. Matters to be resolved under these procedures also include claims and disputes arising out of statutes such as the Fair Labor Standards Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Washington Minimum Wage Act, and the Washington Law Against Discrimination. Nothing in this provision is intended to restrict Executive from submitting any matter to an administrative agency with jurisdiction over such matter.
Page 14 of 21 a. Mediation. Employer and Executive will make a good faith attempt to resolve any and all claims and disputes by submitting them to mediation in Snohomish County, Washington before resorting to arbitration or any other dispute resolution procedure. The mediation of any claim or dispute must be conducted in accordance with the then-current JAMS procedures for the resolution of employment disputes by mediation, by a mediator who has had both training and experience as a mediator of general employment and commercial matters. If the parties to this Agreement cannot agree on a mediator, then the mediator will be selected by JAMS in accordance with JAMS’ strike list method. Within thirty (30) days after the selection of the mediator, Employer and Executive and their respective attorneys will meet with the mediator for one mediation session of at least four hours. If the claim or dispute cannot be settled during such mediation session or mutually agreed continuation of the session, either Employer or Executive may give the mediator and the other party to the claim or dispute written notice declaring the end of the mediation process. All discussions connected with this mediation provision will be confidential and treated as compromise and settlement discussions. Nothing disclosed in such discussions, which is not independently discoverable, may be used for any purpose in any later proceeding. The mediator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees. b. Arbitration. If any claim or dispute has not been resolved in accordance with Section 14.a., then the claim or dispute will be determined by arbitration in accordance with the then-current JAMS employment arbitration rules and procedures, except as modified herein. The arbitration will be conducted by a sole neutral arbitrator who has had both training and experience as an arbitrator of general employment and commercial matters and who is and for at least ten (10) years has been, a partner, a shareholder, or a member in a law firm. The arbitration shall be held in Snohomish County, Washington. If Employer and Executive cannot agree on an arbitrator, then the arbitrator will be selected by JAMS in accordance with Rule 15 of the JAMS employment arbitration rules and procedures. No person who has served as a mediator under the mediation provision, however, may be selected as the arbitrator for the same claim or dispute. Reasonable discovery will be permitted and the arbitrator may decide any issue as to discovery. The arbitrator may decide any issue as to whether or as to the extent to which any dispute is subject to the dispute resolution provisions in Section 14 and the arbitrator may award any relief permitted by law. The arbitrator must base the arbitration award on the provisions of Section 14 and applicable law and must render the award in writing, including an explanation of the reasons for the award. Judgment upon the award may be entered by any court having jurisdiction of the matter, and the decision of the arbitrator will be final and binding. The statute of limitations applicable to the commencement of a lawsuit will apply to the commencement of an arbitration under Section 14.b. The arbitrator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees.
Page 15 of 21 15. Fees Related to Dispute Resolution. Unless otherwise agreed, the prevailing party will be entitled to its costs and attorneys’ fees incurred in any litigation or dispute relating to the interpretation or enforcement of this Agreement. 16. 409A. It is intended that any payment or benefit that is provided pursuant to or in connection with this Agreement that is considered to be deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) shall be paid and provided in a manner, and at such time and form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. It is further intended that the payments hereunder shall, to the maximum extent permissible under Section 409A of the Code, be exempt from Section 409A of the Code under either (i) the exception for involuntary separation pay to the extent that all payments are payable within the limitations described in Treasury Regulation Section 1.409A-1(b)(9), or (ii) the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4) to the extent that all payments are payable no later than two and a half months after the end of the first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture. a. If the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code at such time, any payments to be made or benefits to be delivered in connection with the Executive’s “Separation from Service” (as defined below) that constitute deferred compensation subject to Section 409A of the Code shall not be made until six months plus one day after the Executive’s Separation from Service (the “409A Deferral Period”) as required by Section 409A of the Code, provided that the payment of any such deferred compensation may be paid immediately following the Executive’s death. Payments of any such deferred compensation otherwise due to be made in installments or periodically during the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payment shall be made as otherwise scheduled. b. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. c. For purposes of this Agreement, with respect to the timing of any amounts that constitute deferred compensation subject to Section 409A of the Code that depends on termination of employment or separation from service, termination of employment or separation from service shall mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services would be performed after such date or that the level of bona fide services the Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to a level less than or equal to twenty percent (20%) of the average level of bona fide services the Executive performed over the immediately preceding thirty-six (36) month period.
Page 16 of 21 17. Disclosure. Executive agrees fully and completely to reveal the terms of this Agreement to any future employer or potential employer of Executive and authorizes Employer, at its election, to make such disclosure. 18. Representation of Executive. Executive represents and warrants to Employer that Executive is free to enter into this Agreement and has no contract, commitment, arrangement or understanding to or with any party that restrains or is in conflict with Executive’s performance of the covenants, services and duties provided for in this Agreement, and is not contravene the terms of any statute, law, or regulation to which Executive is subject. Executive agrees to indemnify Employer and to hold it harmless against any and all liabilities or claims arising out of any unauthorized act or acts by Executive that, the foregoing representation and warranty to the contrary notwithstanding, are in violation, or constitute a breach, of any such contract, commitment, arrangement or understanding. 19. Conditions of Employment. Employer’s obligations to Executive under this Agreement are conditioned upon Executive’s timely compliance with requirements of the United States immigration laws. 20. Assignability. This Agreement shall not be assignable by Executive. This Agreement may be assigned by the Company to a company which is a successor in interest to substantially all of the business operations of the Company. Such assignment shall become effective when the Company notifies the Executive of such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such successor company, provided that any assignee expressly assumes the obligations, rights and privileges of this Agreement. 21. Notices. Any notices required or permitted to be given hereunder are sufficient if in writing and delivered by hand, by facsimile, by registered or certified mail, postage prepaid, or by overnight courier, to Executive at Executive’s home address as most recently updated in Executive’s Human Resources records, or to BioLife Solutions, Inc., 3303 Monte Villa Parkway, #310, Bothell, WA 98021, Attention: Chief Executive Officer. Notices shall be deemed to have been given (i) upon delivery, if delivered by hand or by email, (ii) seven days after mailing, if mailed, (iii) one business day after delivery, if delivered by courier, and (iv) one business day following receipt of an appropriate electronic confirmation, if by facsimile. 22. Severability. If any provision of this Agreement or compliance by any of the parties with any provision of this Agreement constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, shall be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. The Parties shall engage in good faith negotiations to modify and replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that
Page 17 of 21 of the invalid or unenforceable provision which it replaces. If such modification is not possible, said provision, to the extent that it is in violation of law, unenforceable or void, shall be deemed severable from the remaining provisions of this Agreement, which provisions will remain binding on the parties. 23. Waivers. No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial waiver of a breach of any provision of this Agreement operate or be construed as a waiver of any subsequent breach; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or by law. 24. Governing Law. Except as provided in Section 14 above, the validity, construction and performance of this Agreement shall be governed by the laws of the State of Washington without regard to the conflicts of law provisions of such laws. The parties hereto expressly recognize and agree that the implementation of this Section 24 is essential in light of the fact that Employer has its corporate headquarters and its principal executive offices within the State of Washington, and there is a critical need for uniformity in the interpretation and enforcement of the employment agreements between Employer and its key employees. Aside from any disputes that must be resolved by arbitration as provided for in Section 14, the Snohomish County Superior Court in Washington shall have exclusive jurisdiction of any lawsuit arising from or relating to Executive’s employment with, or termination from, Employer, or arising from or relating to this Agreement. Executive consents to such venue and personal jurisdiction. 25. Counterparts. This agreement may be executed in counterpart in different places, at different times and on different dates, and in that case all executed counterparts taken together collectively constitute a single binding agreement. 26. Costs and Fees Related to Negotiation and Execution of Agreement. Each Party Shall be responsible for the payment of its own costs and expenses, including legal fees and expenses, in connection with the negotiation and execution of this Agreement. Neither Party will be liable for the payment of any commissions or compensation in the nature of finders’ fees or brokers’ fees, gratuity or other similar thing or amount in consideration of the other Party entering into this Agreement to any broker, agent or third party acting on behalf of the other Party. 27. Entire Agreement. This instrument contains the entire agreement of the parties with respect to the relationship between Executive and Employer and supersedes all prior agreements and understandings, and there are no other representations or agreements other than as stated in this Agreement related to the terms and conditions of Executive’s employment. This Agreement may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought, and any such modification will be signed by an authorized representative of Employer.
Page 18 of 21
Page 19 of 21 IN WITNESS WHEREOF, the parties have duly signed and delivered this Agreement as of the day and year first above written. EMPLOYER By: Title: Chief Executive Officer EXECUTIVE Todd Berard
Page 20 of 21 EXHIBIT A DISCLOSURE OF OUTSIDE BOARD OF DIRECTORS AND TRUSTEE POSITIONS
Page 21 of 21 EXHIBIT B LIST OF INVENTIONS
Page 1 of 21 AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made between BioLife Solutions Inc., a Delaware corporation (“Employer” or the “Company”), and Karen Foster (“Executive”). Executive and the Company are sometimes referred to herein as the “Parties”. The effective date of this Agreement is June 1, 2023. This Agreement supersedes and replaces all prior employment agreements (and any amendments thereto) between the Company and Executive, including, for the avoidance of doubt, the employment agreement between the Parties that became effective on December 1, 2020 and any amendments thereto. RECITALS A. Employer is in the business (the “Business”) of manufacturing and marketing biopreservation media and cold chain products for cells, tissues, and organs. B. Employer desires to obtain the services of Executive, in which capacity Executive has access to Employer’s Confidential Information (as hereinafter defined), and to obtain assurance that Executive will protect Employer’s Confidential Information and will not compete with Employer or solicit its customers or its other employees during the term of employment and for a reasonable period of time after termination of employment pursuant to this Agreement, and Executive is willing to agree to these terms. C. Executive desires to be assured of the salary and other benefits provided for in this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows: 1. Employment. a. Employer hereby employs Executive, and Executive agrees to be employed as Senior Vice President and Chief Quality Officer (“CQO”), in accordance with the terms and conditions set forth in this Agreement. Changes may be made from time to time by Employer and/or the Board in its sole discretion to the duties, authorities, reporting relationships and title of Executive. b. Executive will devote full time, attention, and best efforts to achieving the purposes and discharging the responsibilities of the CQO. Executive will comply with all rules, policies and procedures of Employer as modified from time to time, including without limitation, rules and procedures set forth in the
Page 2 of 21 Employer’s employee handbook, supervisor’s manuals and operating manuals. Executive will perform all of Executive’s responsibilities in compliance with all applicable laws and will ensure that the operations that Executive manages are in compliance with all applicable laws. During Executive’s employment, Executive will not engage in any other business activity which, in the reasonable judgment of the Employer, conflicts with the duties of Executive under this Agreement, whether or not such activity is pursued for gain, profit or other pecuniary advantage. c. Nothing herein shall preclude Executive from: (1) continuing to serve on the board of directors or trustees of any business corporation or any charitable organization on which Executive currently serves and which is identified on Exhibit A hereto, or (2) subject to the prior approval of the Board, appointment to any additional directorships or trusteeships, or (3) serving in an advisory role for other business entities, provided in each case, and in the aggregate, that such activities do not interfere with the performance of Executive’s duties hereunder or conflict with Section 7 of this Agreement. 2. Term of Employment. The term of employment (“Term”) will not be for a definite period, but rather continue indefinitely until terminated in accordance with the terms and conditions of this Agreement. 3. Compensation. For the duration of Executive’s employment hereunder, the Executive will be entitled to compensation which will be computed and paid pursuant to the following subparagraphs. a. Base Salary. Employer will pay to Executive a base salary (“Base Salary”) at an annual rate of three hundred eighty-two thousand Dollars ($382,000), payable in such installments (but in no event less than monthly), subject to withholdings and deductions as required or permitted by law, as is Employer’s policy with respect to other employees. Executive’s Base Salary will be reviewed periodically by the Board of Directors of Employer during the term of Executive’s employment and may be adjusted in the sole discretion of the Board of Directors based on such review, but will not be reduced by Employer unless a material adverse change in the financial condition or operations of Employer has occurred or unless Executive’s responsibilities are altered to reflect less responsibility. b. Performance Bonus. Employer under direction of its Board may pay or cause to be paid to Executive such Bonus as it from time to time determines appropriate. 4. Other Benefits. a. Certain Benefits. Executive will be eligible to participate in all employee benefit programs established by Employer that are applicable to management personnel such as medical, pension, disability and life insurance plans on a basis
Page 3 of 21 commensurate with Executive’s position and in accordance with Employer’s policies from time to time, but nothing herein shall require the adoption or maintenance of any such plan. b. Vacations, Holidays and Expenses. Executive will be provided accrued paid vacation of three (3) weeks each calendar year, which shall be the maximum number of days Executive may accrue at any time, and which shall be taken at such times as are consistent with Executive’s responsibilities hereunder. Executive will be provided such holidays and vacation as Executive makes available to its management level employees generally. Employer will reimburse Executive in accordance with company policies and procedures for reasonable expenses necessarily incurred in the performance of duties hereunder against appropriate receipts and vouchers indicating the specific business purpose for each such expenditure. In no case shall any reimbursement be made later than December 31st of the year following the calendar year in which such expense is incurred. c. Right of Set-off. By accepting this Agreement, Executive consents to a deduction from any amounts Employer owes Executive from time to time (including amounts owed to Executive as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to Executive by Employer), to the extent of the amounts Executive owes to Employer. Whether or not Employer elects to make any set-off in whole or in part, if Employer does not recover by means of set-off the full amount Executive owes it, calculated as set forth above, Executive agrees to pay immediately the unpaid balance to Employer. 5. Termination, Discharge. a. For Cause. Employer will have the right to immediately terminate Executive’s services and this Agreement for Cause. “Cause” means the Employer’s belief that any of the following has occurred: (i) any breach of this Agreement by Executive, including, without limitation, breach of Executive’s covenants in Sections 7, 8, 9, 10, 11 or 12; (ii) any failure to perform assigned job responsibilities that continues unremedied for a period of ten (10) days after written notice to Executive by Employer; (iii) Executive’s malfeasance or misconduct in connection with Executive’s duties hereunder or any act or omission of Executive which is materially injurious to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates,
Page 4 of 21 (iv) commission or conviction of a felony or misdemeanor (other than a misdemeanor traffic violation), including a plea of guilty or failure to contest prosecution for a felony or misdemeanor; (v) the Employer’s reasonable belief that Executive engaged in a violation of any statute, rule or regulation, any of which in the judgment of Employer is harmful to the Business or to Employer’s reputation; (vi) the Employer’s reasonable belief that Executive engaged in unethical practices, dishonesty or disloyalty, unless Executive has evidence establishing that Employer directed Executive to commit such practice or act; (vii) or any reason that would constitute Cause under the laws the State of Washington. Upon termination of Executive’s employment hereunder for Cause, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (x) Executive’s salary through the date of termination, (y) for any unused vacation time, and (z) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Executive will have no rights to any unvested benefits or any other compensation or payments after the termination date. b. Due to Death or Disability. Employer will have the right to immediately terminate Executive’s services and this Agreement due to death or disability. For purposes of this Agreement, “disability” means the incapacity or inability of Executive, whether due to accident, sickness or otherwise, as determined by a medical doctor acceptable to the Board of Directors of Employer and confirmed in writing by such doctor, to perform the essential functions of Executive’s position under this Agreement, with or without reasonable accommodation (provided that no accommodation that imposes undue hardship on Employer will be required) for a period of sixty (60) consecutive days or for an aggregate of ninety (90) days during any period of twelve (12) months, or such longer period as may be required under disability law. Upon termination of Executive’s employment hereunder due to death or disability, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) Executive’s salary through the date of termination, (ii) a prorated portion of any incentive bonus opportunity previously approved by the Board, (iii) for any unused vacation time, and (iv) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Upon termination of Executive’s employment hereunder due to death or disability, all unvested stock
Page 5 of 21 options, awards, or other equity grants or awards shall immediately fully vest for the benefit of Executive’s estate. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. c. Without Cause. Employer may terminate Executive’s employment under this Agreement without cause and without advance notice; provided, however, that Employer will pay (unless subparagraph 5.d of this Agreement applies, in which case the provisions therein shall govern), no later than fourteen (14) days from the termination date in a lump sum: (i) (x) Executive’s salary through the date of termination, (y) for any unused vacation time, and (z) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. (ii) severance pay of twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date. (iii) the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and (iv) an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.c(iii) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.c(iii) if no tax withholding was made. Such payments will be subject to all appropriate deductions and withholdings. Upon termination of Executive’s employment hereunder due to termination without cause, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested
Page 6 of 21 employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. d. Change in Control. (i) For purposes of this Agreement, Change in Control shall mean (x) the consummation of a merger or consolidation of the Company with or into another entity, (y) the dissolution, liquidation or winding up of the Company or (z) the sale of all or substantially all of the Company’s assets. The foregoing notwithstanding, a merger or consolidation of the Company shall not constitute a “Change in Control” if immediately after such merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of such continuing or surviving entity, will be owned by the persons who were the Company’s stockholders immediately prior to such merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company’s capital stock immediately prior to such merger or consolidation. (ii) Employer may terminate Executive’s employment under this Agreement or Executive may resign for Good Reason upon or within 12 months following a Change in Control without advance notice; provided, however, that Employer will pay, no later than sixty (60) days from the termination date in a lump sum: (A) (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses; (B) as severance pay, twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date; (C) 100% of any incentive cash and/or stock bonus opportunity for the current year; (D) the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and (E) an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.d(ii)(D) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is
Page 7 of 21 the full amount Executive would have received under Section 5.d(ii)(D) if no tax withholding was made. (iii) Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. (iv) Upon termination of Executive’s employment hereunder due to a Change in Control, including by Executive for Good Reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. e. No Fault Termination By Executive. Executive may terminate Executive’s employment under this Agreement for any reason provided that Executive gives Employer at least ninety (90) days’ notice in writing. Employer may, at its option, accelerate such termination date to any date at least two weeks after Executive’s notice of termination. Employer may also, at its option, relieve Executive of all duties and authority after notice of termination has been provided. Upon termination of Executive’s employment in accordance with this Section, Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Such payments will be subject to all appropriate deductions and withholdings. Upon termination, Executive will have no rights to any unvested benefits or any other compensation. f. Termination By Executive for Good Reason. Executive’s employment pursuant to this Agreement shall terminate in the event Executive shall determine that there is “Good Reason” to terminate Executive’s employment, which shall mean the following: (i) Employer’s material breach of the terms of this Agreement or any other written agreement between Executive and Employer; or
Page 8 of 21 (ii) The occurrence of any of the following conditions, without Executive’s consent: (A) a significant diminution in the nature or scope of Executive’s authority, title, function or duties; (B) a ten percent (10%) reduction in Executive’s base salary or a twenty-five percent (25%) reduction in Executive’s target bonus opportunity (unless such reduction is part of a Company officer- wide program to reduce expenses); (C) the Company’s requiring Executive to be based and work out of an office or location more than 50 miles from the office where Executive is currently employed; (D) any material breach of the terms of this Agreement by the Company; or (E) failure of any successor or assignee to the Company to assume this Agreement. Provided that Executive has provided with notice of the existence of a condition giving rise to “Good Reason” to terminate within ninety (90) days following the initial existence of such a condition, Employer shall have thirty (30) days to cure any such alleged breach, assignment, reduction or requirement referenced above, after Executive provides Employer written notice of the actions or omissions constituting such breach, assignment, reduction or requirement. If Executive resigns Executive’s employment for Good Reason, Executive shall be paid no later than fourteen (14) days from the termination date in a lump sum: I. (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. II. severance pay of twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date. III. the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and
Page 9 of 21 IV. an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.f(III) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.f(III) if no tax withholding was made. Such payments will be subject to all appropriate deductions and withholdings. Upon termination of Executive’s employment hereunder due to resignation for good reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. 6. Return of Company Property. Upon termination of this Agreement or upon request of the Company, Executive shall deliver to the Corporation all property, documents and materials pertaining to the Company’s business including, but not limited to, memoranda, notes, records, drawings, manuals, disks, copies, representations, extracts, summaries and analyses, all inventory, demonstration units, and any other property, documents or media of the Corporation, and all equipment belonging to the company, including but not limited to corporate cards, access cards, office keys, office equipment, laptop and desktop computers, cell phones and other wireless devices, thumb drives, zip drives and all other media storage devices. 7. Covenant Not To Compete. During Executive’s employment by Employer and for a period expiring one (1) year after the termination of Executive’s employment for any reason, Executive covenants and agrees that Executive will not: a. Directly, indirectly, or otherwise, own, manage, operate, control, serve as a consultant to, be employed by, participate in, or be connected, in any manner, with the ownership, management, operation or control of any business that competes with the Business or that competes with Employer or any of its affiliates or that is engaged in any type of business which, at any time during Executive’s employment with Employer, Employer or any of its affiliates planned to develop;
Page 10 of 21 b. Hire, offer to hire, entice away or in any other manner persuade or attempt to persuade any officer, employee or agent of Employer or any of its affiliates to alter or discontinue a relationship with Employer or to do any act that is inconsistent with the interests of Employer or any of its affiliates; c. Directly or indirectly solicit, divert, take away or attempt to solicit, divert or take away any customers of Employer or any of its affiliates; or d. Directly or indirectly solicit, divert, or in any other manner persuade or attempt to persuade any supplier of Employer or any of its affiliates to alter or discontinue its relationship with Employer or any of its affiliates. For the purposes of this Section 7, businesses that are deemed to compete with Employer include, without limitation, businesses engaged in manufacturing and marketing biopreservation media for cells, tissues, and organs or cold chain management products and/or services. The geographic scope of the prohibitions in this Section 7 shall be any city, town or county in which the Company conducts or does any business as of or within one (1) year of Executive’s last day of employment with the Company. Notwithstanding Executive’s obligations under this Section 7, Executive will be entitled to own, as a passive investor, up to five percent (5%) of any publicly traded company without violating this provision. Employer and Executive agree that: this provision does not impose an undue hardship on Executive and is not injurious to the public; that this provision is necessary to protect the business of Employer and its affiliates; the nature of Executive’s responsibilities with Employer under this Agreement require Executive to have access to confidential information which is valuable and confidential to all of the Business; the scope of this Section 7 is reasonable in terms of length of time and geographic scope; and adequate consideration supports this Section 7, including consideration herein. 8. Confidential Information. Executive recognizes that Employer’s business and continued success depend upon the use and protection of confidential and proprietary business information, including, without limitation, the information and technology developed by or available through licenses to Employer, to which Executive has access (all such information being “Confidential Information”). For purposes of this Agreement, the phrase “Confidential Information” includes, for Employer and its current or future subsidiaries and affiliates, without limitation, and whether or not specifically designated as confidential or proprietary: all business plans and marketing strategies; information concerning existing and prospective markets and customers; financial information; information concerning the development of new products and services; information concerning any personnel of Employer (including, without limitation, skills and compensation information); intellectual property; and technical and non-technical data related to software programs, designs, specifications, compilations, inventions, improvements, methods, processes, procedures and techniques; provided, however, that the phrase does not include information that (a) was lawfully in Executive’s possession prior
Page 11 of 21 to disclosure of such information by Employer; (b) was, or at any time becomes, available in the public domain other than through a violation of this Agreement; (c) is documented by Executive as having been developed by Executive outside the scope of Executive’s employment and independently; or (d) is furnished to Executive by a third party not under an obligation of confidentiality to Employer. Executive agrees that during Executive’s employment and after termination of employment irrespective of cause, Executive will use Confidential Information only (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information, and then only after providing written notice to Employer that such a demand has been made. Executive’s obligation under this Agreement is in addition to any obligations Executive has under state or federal law. Executive agrees to deliver to Employer immediately upon termination of Executive’s employment, or at any time Employer so requests, all tangible items containing any Confidential Information (including, without limitation, all memoranda, photographs, records, reports, manuals, drawings, blueprints, prototypes, notes taken by or provided to Executive, and any other documents or items of a confidential nature belonging to Employer), together with all copies of such material in Executive’s possession or control. Executive agrees that in the course of Executive’s employment with Employer, Executive will not violate in any way the rights that any entity has with regard to trade secrets or proprietary or confidential information. Executive’s obligations under this Section 8 are indefinite in term and shall survive the termination of this Agreement. 9. Work Product and Copyrights. Executive agrees that all right, title and interest in and to the materials resulting from the performance of Executive’s duties at Employer and all copies thereof, including works in progress, in whatever media, (the “Work”), will be and remain in Employer upon their creation. Executive will mark all Work with Employer’s copyright or other proprietary notice as directed by Employer. Executive further agrees: a. To the extent that any portion of the Work constitutes a work protectable under the copyright laws of the United States (the “Copyright Law”), that all such Work will be considered a “work made for hire” as such term is used and defined in the Copyright Law, and that Employer will be considered the “author” of such portion of the Work and the sole and exclusive owner throughout the world of copyright therein; and b. If any portion of the Work does not qualify as a “work made for hire” as such term is used and defined in the Copyright Law, that Executive hereby assigns and agrees to assign to Employer, without further consideration, all right, title and interest in and to such Work or in any such portion thereof and any copyright therein and further agrees to execute and deliver to Employer, upon request, appropriate assignments of such Work and copyright therein and such other documents and instruments as Employer may request to fully and completely assign such Work
Page 12 of 21 and copyright therein to Employer, its successors or nominees, and that Executive hereby appoints Employer as attorney-in-fact to execute and deliver any such documents on Executive’s behalf in the event Executive should fail or refuse to do so within a reasonable period following Employer’s request. 10. Inventions and Patents. For purposes of this Agreement, “Inventions” includes, without limitation, information, inventions, contributions, improvements, ideas, or discoveries, whether protectable or not, and whether or not conceived or made during work hours. Executive agrees that all Inventions conceived or made by Executive during the period of employment with Employer belong to Employer, provided they grow out of Executive’s work with Employer or are related in some manner to the Business, including, without limitation, research and product development, and projected business of Employer or its affiliated companies. Accordingly, Executive will: a. Make adequate written records of such Inventions, which records will be Employer’s property; b. Assign to Employer, at its request, any rights Executive may have to such Inventions for the U.S. and all foreign countries; c. Waive and agree not to assert any moral rights Executive may have or acquire in any Inventions and agree to provide written waivers from time to time as requested by Employer; and d. Assist Employer (at Employer’s expense) in obtaining and maintaining patents or copyright registrations with respect to such Inventions. Executive understands and agrees that Employer or its designee will determine, in its sole and absolute discretion, whether an application for patent will be filed on any Invention that is the exclusive property of Employer, as set forth above, and whether such an application will be abandoned prior to issuance of a patent. Employer will pay to Executive, either during or after the term of this Agreement, the following amounts if Executive is sole inventor, or Executive’s proportionate share if Executive is joint inventor: $750 upon filing of the initial application for patent on such Invention; and $1,500 upon issuance of a patent resulting from such initial patent application, provided Executive is named as an inventor in the patent. Executive further agrees that Executive will promptly disclose in writing to Employer during the term of Executive’s employment and for one (1) year thereafter, all Inventions whether developed during the time of such employment or thereafter (whether or not Employer has rights in such Inventions) so that Executive’s rights and Employer’s rights in such Inventions can be determined. Except as set forth on the initialed Exhibit B (List of Inventions) to this Agreement, if any, Executive represents and warrants that Executive has no Inventions, software, writings or other works of authorship useful to Employer in
Page 13 of 21 the normal course of the Business, which were conceived, made or written prior to the date of this Agreement and which are excluded from the operation of this Agreement. NOTICE: In accordance with Washington law, this Section 10 does not apply to Inventions for which no equipment, supplies, facility, or trade secret information of Employer was used and which was developed entirely on Executive’s own time, unless: (a) the Invention relates (i) directly to the business of Employer or (ii) to Employer’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by Executive for Employer. 11. Cooperation. The parties agree that certain matters in which Executive will be involved during the Term may necessitate Executive’s cooperation in the future. Accordingly, following the termination of Executive’s employment for any reason, to the extent reasonably requested by the Board, Executive shall cooperate with the Employer in connection with matters arising out of Executive’s service to the Employer; provided that, the Employer shall make reasonable efforts to minimize disruption of Executive’s other activities. The Employer shall reimburse Executive for reasonable expenses incurred in connection with such cooperation. 12. Non-Disparagement. Executive agrees and covenants that Executive will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Employer or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section 12 does not, in any way, restrict or impede Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Executive shall promptly provide written notice of any such order to the Chief Financial Officer. 13. Remedies. Notwithstanding other provisions of this Agreement regarding dispute resolution, Executive agrees that Executive’s violation of any of Sections 7, 8, 9, 10, 11 or 12 of this Agreement would cause Employer irreparable harm which would not be adequately compensated by monetary damages and that an injunction may be granted by any court or courts having jurisdiction, restraining Executive from violation of the terms of this Agreement, upon any breach or threatened breach of Executive of the obligations set forth in any of Sections 7, 8, 9, 10, 11 or 12. The preceding sentence shall not be construed to limit Employer from any other relief or damages to which it may be entitled as a result of Executive’s breach of any provision of this Agreement, including Sections 7, 8, 9, 10, 11 or 12. Executive also agrees that a violation of any of Sections 7, 8, 9, 10, 11 or 12 would entitle Employer, in addition to all other remedies available at law or equity, to recover from Executive any and all funds, including, without limitation, wages, salary and profits, which will be held by Executive in constructive trust for Employer, received by Executive in connection with such violation.
Page 14 of 21 14. Dispute Resolution. Except for the right of Employer and Executive to seek injunctive relief in court, any controversy, claim or dispute of any type arising out of or relating to Executive’s employment or the provisions of this Agreement shall be resolved in accordance with this Section 14 regarding resolution of disputes, which will be the sole and exclusive procedure for the resolution of any disputes. This Agreement shall be enforced in accordance with the Federal Arbitration Act, the enforcement provisions of which are incorporated by this reference. Matters subject to these provisions include, without limitation, claims or disputes based on statute, contract, common law and tort and will include, for example, matters pertaining to termination, discrimination, harassment, compensation and benefits. Matters to be resolved under these procedures also include claims and disputes arising out of statutes such as the Fair Labor Standards Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Washington Minimum Wage Act, and the Washington Law Against Discrimination. Nothing in this provision is intended to restrict Executive from submitting any matter to an administrative agency with jurisdiction over such matter. a. Mediation. Employer and Executive will make a good faith attempt to resolve any and all claims and disputes by submitting them to mediation in Snohomish County, Washington before resorting to arbitration or any other dispute resolution procedure. The mediation of any claim or dispute must be conducted in accordance with the then-current JAMS procedures for the resolution of employment disputes by mediation, by a mediator who has had both training and experience as a mediator of general employment and commercial matters. If the parties to this Agreement cannot agree on a mediator, then the mediator will be selected by JAMS in accordance with JAMS’ strike list method. Within thirty (30) days after the selection of the mediator, Employer and Executive and their respective attorneys will meet with the mediator for one mediation session of at least four hours. If the claim or dispute cannot be settled during such mediation session or mutually agreed continuation of the session, either Employer or Executive may give the mediator and the other party to the claim or dispute written notice declaring the end of the mediation process. All discussions connected with this mediation provision will be confidential and treated as compromise and settlement discussions. Nothing disclosed in such discussions, which is not independently discoverable, may be used for any purpose in any later proceeding. The mediator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees. b. Arbitration. If any claim or dispute has not been resolved in accordance with Section 14.a., then the claim or dispute will be determined by arbitration in accordance with the then-current JAMS employment arbitration rules and procedures, except as modified herein. The arbitration will be conducted by a sole neutral arbitrator who has had both training and experience as an arbitrator of general employment and commercial matters and who is and for at least ten (10) years has been, a partner, a shareholder, or a member in a law firm. The arbitration shall be held in Snohomish County, Washington. If Employer and Executive cannot agree on an arbitrator, then the arbitrator will be selected by JAMS in accordance
Page 15 of 21 with Rule 15 of the JAMS employment arbitration rules and procedures. No person who has served as a mediator under the mediation provision, however, may be selected as the arbitrator for the same claim or dispute. Reasonable discovery will be permitted and the arbitrator may decide any issue as to discovery. The arbitrator may decide any issue as to whether or as to the extent to which any dispute is subject to the dispute resolution provisions in Section 14 and the arbitrator may award any relief permitted by law. The arbitrator must base the arbitration award on the provisions of Section 14 and applicable law and must render the award in writing, including an explanation of the reasons for the award. Judgment upon the award may be entered by any court having jurisdiction of the matter, and the decision of the arbitrator will be final and binding. The statute of limitations applicable to the commencement of a lawsuit will apply to the commencement of an arbitration under Section 14.b. The arbitrator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees. 15. Fees Related to Dispute Resolution. Unless otherwise agreed, the prevailing party will be entitled to its costs and attorneys’ fees incurred in any litigation or dispute relating to the interpretation or enforcement of this Agreement. 16. 409A. It is intended that any payment or benefit that is provided pursuant to or in connection with this Agreement that is considered to be deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) shall be paid and provided in a manner, and at such time and form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. It is further intended that the payments hereunder shall, to the maximum extent permissible under Section 409A of the Code, be exempt from Section 409A of the Code under either (i) the exception for involuntary separation pay to the extent that all payments are payable within the limitations described in Treasury Regulation Section 1.409A-1(b)(9), or (ii) the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4) to the extent that all payments are payable no later than two and a half months after the end of the first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture. a. If the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code at such time, any payments to be made or benefits to be delivered in connection with the Executive’s “Separation from Service” (as defined below) that constitute deferred compensation subject to Section 409A of the Code shall not be made until six months plus one day after the Executive’s Separation from Service (the “409A Deferral Period”) as required by Section 409A of the Code, provided that the payment of any such deferred compensation may be paid immediately following the Executive’s death. Payments of any such deferred compensation otherwise due to be made in installments or periodically during the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payment shall be made as otherwise scheduled.
Page 16 of 21 b. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. c. For purposes of this Agreement, with respect to the timing of any amounts that constitute deferred compensation subject to Section 409A of the Code that depends on termination of employment or separation from service, termination of employment or separation from service shall mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services would be performed after such date or that the level of bona fide services the Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to a level less than or equal to twenty percent (20%) of the average level of bona fide services the Executive performed over the immediately preceding thirty-six (36) month period. 17. Disclosure. Executive agrees fully and completely to reveal the terms of this Agreement to any future employer or potential employer of Executive and authorizes Employer, at its election, to make such disclosure. 18. Representation of Executive. Executive represents and warrants to Employer that Executive is free to enter into this Agreement and has no contract, commitment, arrangement or understanding to or with any party that restrains or is in conflict with Executive’s performance of the covenants, services and duties provided for in this Agreement, and is not contravene the terms of any statute, law, or regulation to which Executive is subject. Executive agrees to indemnify Employer and to hold it harmless against any and all liabilities or claims arising out of any unauthorized act or acts by Executive that, the foregoing representation and warranty to the contrary notwithstanding, are in violation, or constitute a breach, of any such contract, commitment, arrangement or understanding. 19. Conditions of Employment. Employer’s obligations to Executive under this Agreement are conditioned upon Executive’s timely compliance with requirements of the United States immigration laws. 20. Assignability. This Agreement shall not be assignable by Executive. This Agreement may be assigned by the Company to a company which is a successor in interest to substantially all of the business operations of the Company. Such assignment shall become effective when the Company notifies the Executive of such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such successor company, provided that any assignee expressly assumes the obligations, rights and privileges of this Agreement. 21. Notices. Any notices required or permitted to be given hereunder are sufficient if in writing and delivered by hand, by facsimile, by registered or certified mail,
Page 17 of 21 postage prepaid, or by overnight courier, to Executive at Executive’s home address as most recently updated in Executive’s Human Resources records, or to BioLife Solutions, Inc., 3303 Monte Villa Parkway, #310, Bothell, WA 98021, Attention: Chief Executive Officer. Notices shall be deemed to have been given (i) upon delivery, if delivered by hand or by email, (ii) seven days after mailing, if mailed, (iii) one business day after delivery, if delivered by courier, and (iv) one business day following receipt of an appropriate electronic confirmation, if by facsimile. 22. Severability. If any provision of this Agreement or compliance by any of the parties with any provision of this Agreement constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, shall be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. The Parties shall engage in good faith negotiations to modify and replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. If such modification is not possible, said provision, to the extent that it is in violation of law, unenforceable or void, shall be deemed severable from the remaining provisions of this Agreement, which provisions will remain binding on the parties. 23. Waivers. No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial waiver of a breach of any provision of this Agreement operate or be construed as a waiver of any subsequent breach; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or by law. 24. Governing Law. Except as provided in Section 14 above, the validity, construction and performance of this Agreement shall be governed by the laws of the State of Washington without regard to the conflicts of law provisions of such laws. The parties hereto expressly recognize and agree that the implementation of this Section 24 is essential in light of the fact that Employer has its corporate headquarters and its principal executive offices within the State of Washington, and there is a critical need for uniformity in the interpretation and enforcement of the employment agreements between Employer and its key employees. Aside from any disputes that must be resolved by arbitration as provided for in Section 14, the Snohomish County Superior Court in Washington shall have exclusive jurisdiction of any lawsuit arising from or relating to Executive’s employment with, or termination from, Employer, or arising from or relating to this Agreement. Executive consents to such venue and personal jurisdiction. 25. Counterparts. This agreement may be executed in counterpart in different places, at different times and on different dates, and in that case all executed counterparts taken together collectively constitute a single binding agreement.
Page 18 of 21 26. Costs and Fees Related to Negotiation and Execution of Agreement. Each Party Shall be responsible for the payment of its own costs and expenses, including legal fees and expenses, in connection with the negotiation and execution of this Agreement. Neither Party will be liable for the payment of any commissions or compensation in the nature of finders’ fees or brokers’ fees, gratuity or other similar thing or amount in consideration of the other Party entering into this Agreement to any broker, agent or third party acting on behalf of the other Party. 27. Entire Agreement. This instrument contains the entire agreement of the parties with respect to the relationship between Executive and Employer and supersedes all prior agreements and understandings, and there are no other representations or agreements other than as stated in this Agreement related to the terms and conditions of Executive’s employment. This Agreement may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought, and any such modification will be signed by an authorized representative of Employer.
Page 19 of 21 IN WITNESS WHEREOF, the parties have duly signed and delivered this Agreement as of the day and year first above written. EMPLOYER By: Title: Chief Executive Officer EXECUTIVE Karen Foster
Page 20 of 21 EXHIBIT A DISCLOSURE OF OUTSIDE BOARD OF DIRECTORS AND TRUSTEE POSITIONS
Page 21 of 21 EXHIBIT B LIST OF INVENTIONS
Page 1 of 21 AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made between BioLife Solutions Inc., a Delaware corporation (“Employer” or the “Company”), and Sarah Aebersold (“Executive”). Executive and the Company are sometimes referred to herein as the “Parties”. The effective date of this Agreement is June 1, 2023. This Agreement supersedes and replaces all prior employment agreements (and any amendments thereto) between the Company and Executive, including, for the avoidance of doubt, the employment agreement between the Parties that became effective on January 1, 2021 and any amendments thereto. RECITALS A. Employer is in the business (the “Business”) of manufacturing and marketing biopreservation media and cold chain products for cells, tissues, and organs. B. Employer desires to obtain the services of Executive, in which capacity Executive has access to Employer’s Confidential Information (as hereinafter defined), and to obtain assurance that Executive will protect Employer’s Confidential Information and will not compete with Employer or solicit its customers or its other employees during the term of employment and for a reasonable period of time after termination of employment pursuant to this Agreement, and Executive is willing to agree to these terms. C. Executive desires to be assured of the salary and other benefits provided for in this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows: 1. Employment. a. Employer hereby employs Executive, and Executive agrees to be employed as Chief Human Resources Officer (“CHRO”), in accordance with the terms and conditions set forth in this Agreement. Changes may be made from time to time by Employer and/or the Board in its sole discretion to the duties, authorities, reporting relationships and title of Executive. b. Executive will devote full time, attention, and best efforts to achieving the purposes and discharging the responsibilities of the CHRO. Executive will comply with all rules, policies and procedures of Employer as modified from time to time, including without limitation, rules and procedures set forth in the
Page 2 of 21 Employer’s employee handbook, supervisor’s manuals and operating manuals. Executive will perform all of Executive’s responsibilities in compliance with all applicable laws and will ensure that the operations that Executive manages are in compliance with all applicable laws. During Executive’s employment, Executive will not engage in any other business activity which, in the reasonable judgment of the Employer, conflicts with the duties of Executive under this Agreement, whether or not such activity is pursued for gain, profit or other pecuniary advantage. c. Nothing herein shall preclude Executive from: (1) continuing to serve on the board of directors or trustees of any business corporation or any charitable organization on which Executive currently serves and which is identified on Exhibit A hereto, or (2) subject to the prior approval of the Board, appointment to any additional directorships or trusteeships, or (3) serving in an advisory role for other business entities, provided in each case, and in the aggregate, that such activities do not interfere with the performance of Executive’s duties hereunder or conflict with Section 7 of this Agreement. 2. Term of Employment. The term of employment (“Term”) will not be for a definite period, but rather continue indefinitely until terminated in accordance with the terms and conditions of this Agreement. 3. Compensation. For the duration of Executive’s employment hereunder, the Executive will be entitled to compensation which will be computed and paid pursuant to the following subparagraphs. a. Base Salary. Employer will pay to Executive a base salary (“Base Salary”) at an annual rate of Three hundred twenty-five thousand Dollars ($325,000), payable in such installments (but in no event less than monthly), subject to withholdings and deductions as required or permitted by law, as is Employer’s policy with respect to other employees. Executive’s Base Salary will be reviewed periodically by the Board of Directors of Employer during the term of Executive’s employment and may be adjusted in the sole discretion of the Board of Directors based on such review, but will not be reduced by Employer unless a material adverse change in the financial condition or operations of Employer has occurred or unless Executive’s responsibilities are altered to reflect less responsibility. b. Performance Bonus. Employer under direction of its Board may pay or cause to be paid to Executive such Bonus as it from time to time determines appropriate, up to an annual maximum of 40% of Executive’s Base Salary, to be payable in cash or stock in the Board’s sole discretion. 4. Other Benefits. a. Certain Benefits. Executive will be eligible to participate in all employee benefit programs established by Employer that are applicable to management
Page 3 of 21 personnel such as medical, pension, disability and life insurance plans on a basis commensurate with Executive’s position and in accordance with Employer’s policies from time to time, but nothing herein shall require the adoption or maintenance of any such plan. b. Vacations, Holidays and Expenses. Executive will be provided accrued paid vacation of three (3) weeks each calendar year, which shall be the maximum number of days Executive may accrue at any time, and which shall be taken at such times as are consistent with Executive’s responsibilities hereunder. Executive will be provided such holidays and vacation as Executive makes available to its management level employees generally. Employer will reimburse Executive in accordance with company policies and procedures for reasonable expenses necessarily incurred in the performance of duties hereunder against appropriate receipts and vouchers indicating the specific business purpose for each such expenditure. In no case shall any reimbursement be made later than December 31st of the year following the calendar year in which such expense is incurred. c. Right of Set-off. By accepting this Agreement, Executive consents to a deduction from any amounts Employer owes Executive from time to time (including amounts owed to Executive as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to Executive by Employer), to the extent of the amounts Executive owes to Employer. Whether or not Employer elects to make any set-off in whole or in part, if Employer does not recover by means of set-off the full amount Executive owes it, calculated as set forth above, Executive agrees to pay immediately the unpaid balance to Employer. 5. Termination, Discharge. a. For Cause. Employer will have the right to immediately terminate Executive’s services and this Agreement for Cause. “Cause” means the Employer’s belief that any of the following has occurred: (i) any breach of this Agreement by Executive, including, without limitation, breach of Executive’s covenants in Sections 7, 8, 9, 10, 11 or 12; (ii) any failure to perform assigned job responsibilities that continues unremedied for a period of ten (10) days after written notice to Executive by Employer; (iii) Executive’s malfeasance or misconduct in connection with Executive’s duties hereunder or any act or omission of Executive which is materially injurious to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates,
Page 4 of 21 (iv) commission or conviction of a felony or misdemeanor (other than a misdemeanor traffic violation), including a plea of guilty or failure to contest prosecution for a felony or misdemeanor; (v) the Employer’s reasonable belief that Executive engaged in a violation of any statute, rule or regulation, any of which in the judgment of Employer is harmful to the Business or to Employer’s reputation; (vi) the Employer’s reasonable belief that Executive engaged in unethical practices, dishonesty or disloyalty, unless Executive has evidence establishing that Employer directed Executive to commit such practice or act; (vii) or any reason that would constitute Cause under the laws the State of Washington. Upon termination of Executive’s employment hereunder for Cause, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (x) Executive’s salary through the date of termination, (y) for any unused vacation time, and (z) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Executive will have no rights to any unvested benefits or any other compensation or payments after the termination date. b. Due to Death or Disability. Employer will have the right to immediately terminate Executive’s services and this Agreement due to death or disability. For purposes of this Agreement, “disability” means the incapacity or inability of Executive, whether due to accident, sickness or otherwise, as determined by a medical doctor acceptable to the Board of Directors of Employer and confirmed in writing by such doctor, to perform the essential functions of Executive’s position under this Agreement, with or without reasonable accommodation (provided that no accommodation that imposes undue hardship on Employer will be required) for a period of sixty (60) consecutive days or for an aggregate of ninety (90) days during any period of twelve (12) months, or such longer period as may be required under disability law. Upon termination of Executive’s employment hereunder due to death or disability, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) Executive’s salary through the date of termination, (ii) a prorated portion of any incentive bonus opportunity previously approved by the Board, (iii) for any unused vacation time, and (iv) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Upon termination of Executive’s employment hereunder due to death or disability, all unvested stock
Page 5 of 21 options, awards, or other equity grants or awards shall immediately fully vest for the benefit of Executive’s estate. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. c. Without Cause. Employer may terminate Executive’s employment under this Agreement without cause and without advance notice; provided, however, that Employer will pay (unless subparagraph 5.d of this Agreement applies, in which case the provisions therein shall govern), no later than fourteen (14) days from the termination date in a lump sum: (i) (x) Executive’s salary through the date of termination, (y) for any unused vacation time, and (z) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. (ii) severance pay of twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date. (iii) the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and (iv) an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.c(iii) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.c(iii) if no tax withholding was made. Such payments will be subject to all appropriate deductions and withholdings. Upon termination of Executive’s employment hereunder due to termination without cause, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested
Page 6 of 21 employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. d. Change in Control. (i) For purposes of this Agreement, Change in Control shall mean (x) the consummation of a merger or consolidation of the Company with or into another entity, (y) the dissolution, liquidation or winding up of the Company or (z) the sale of all or substantially all of the Company’s assets. The foregoing notwithstanding, a merger or consolidation of the Company shall not constitute a “Change in Control” if immediately after such merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of such continuing or surviving entity, will be owned by the persons who were the Company’s stockholders immediately prior to such merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company’s capital stock immediately prior to such merger or consolidation. (ii) Employer may terminate Executive’s employment under this Agreement or Executive may resign for Good Reason upon or within 12 months following a Change in Control without advance notice; provided, however, that Employer will pay, no later than sixty (60) days from the termination date in a lump sum: (A) (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses; (B) as severance pay, twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date; (C) 100% of any incentive cash and/or stock bonus opportunity for the current year; (D) the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and (E) an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.d(ii)(D) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is
Page 7 of 21 the full amount Executive would have received under Section 5.d(ii)(D) if no tax withholding was made. (iii) Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. (iv) Upon termination of Executive’s employment hereunder due to a Change in Control, including by Executive for Good Reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. e. No Fault Termination By Executive. Executive may terminate Executive’s employment under this Agreement for any reason provided that Executive gives Employer at least ninety (90) days’ notice in writing. Employer may, at its option, accelerate such termination date to any date at least two weeks after Executive’s notice of termination. Employer may also, at its option, relieve Executive of all duties and authority after notice of termination has been provided. Upon termination of Executive’s employment in accordance with this Section, Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Such payments will be subject to all appropriate deductions and withholdings. Upon termination, Executive will have no rights to any unvested benefits or any other compensation. f. Termination By Executive for Good Reason. Executive’s employment pursuant to this Agreement shall terminate in the event Executive shall determine that there is “Good Reason” to terminate Executive’s employment, which shall mean the following: (i) Employer’s material breach of the terms of this Agreement or any other written agreement between Executive and Employer; or
Page 8 of 21 (ii) The occurrence of any of the following conditions, without Executive’s consent: (A) a significant diminution in the nature or scope of Executive’s authority, title, function or duties; (B) a ten percent (10%) reduction in Executive’s base salary or a twenty-five percent (25%) reduction in Executive’s target bonus opportunity (unless such reduction is part of a Company officer- wide program to reduce expenses); (C) the Company’s requiring Executive to be based and work out of an office or location more than 50 miles from the office where Executive is currently employed; (D) any material breach of the terms of this Agreement by the Company; or (E) failure of any successor or assignee to the Company to assume this Agreement. Provided that Executive has provided with notice of the existence of a condition giving rise to “Good Reason” to terminate within ninety (90) days following the initial existence of such a condition, Employer shall have thirty (30) days to cure any such alleged breach, assignment, reduction or requirement referenced above, after Executive provides Employer written notice of the actions or omissions constituting such breach, assignment, reduction or requirement. If Executive resigns Executive’s employment for Good Reason, Executive shall be paid no later than fourteen (14) days from the termination date in a lump sum: I. (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. II. severance pay of twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date. III. the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and
Page 9 of 21 IV. an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.f(III) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.f(III) if no tax withholding was made. Such payments will be subject to all appropriate deductions and withholdings. Upon termination of Executive’s employment hereunder due to resignation for good reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. 6. Return of Company Property. Upon termination of this Agreement or upon request of the Company, Executive shall deliver to the Corporation all property, documents and materials pertaining to the Company’s business including, but not limited to, memoranda, notes, records, drawings, manuals, disks, copies, representations, extracts, summaries and analyses, all inventory, demonstration units, and any other property, documents or media of the Corporation, and all equipment belonging to the company, including but not limited to corporate cards, access cards, office keys, office equipment, laptop and desktop computers, cell phones and other wireless devices, thumb drives, zip drives and all other media storage devices. 7. Covenant Not To Compete. During Executive’s employment by Employer and for a period expiring one (1) year after the termination of Executive’s employment for any reason, Executive covenants and agrees that Executive will not: a. Directly, indirectly, or otherwise, own, manage, operate, control, serve as a consultant to, be employed by, participate in, or be connected, in any manner, with the ownership, management, operation or control of any business that competes with the Business or that competes with Employer or any of its affiliates or that is engaged in any type of business which, at any time during Executive’s employment with Employer, Employer or any of its affiliates planned to develop;
Page 10 of 21 b. Hire, offer to hire, entice away or in any other manner persuade or attempt to persuade any officer, employee or agent of Employer or any of its affiliates to alter or discontinue a relationship with Employer or to do any act that is inconsistent with the interests of Employer or any of its affiliates; c. Directly or indirectly solicit, divert, take away or attempt to solicit, divert or take away any customers of Employer or any of its affiliates; or d. Directly or indirectly solicit, divert, or in any other manner persuade or attempt to persuade any supplier of Employer or any of its affiliates to alter or discontinue its relationship with Employer or any of its affiliates. For the purposes of this Section 7, businesses that are deemed to compete with Employer include, without limitation, businesses engaged in manufacturing and marketing biopreservation media for cells, tissues, and organs or cold chain management products and/or services. The geographic scope of the prohibitions in this Section 7 shall be any city, town or county in which the Company conducts or does any business as of or within one (1) year of Executive’s last day of employment with the Company. Notwithstanding Executive’s obligations under this Section 7, Executive will be entitled to own, as a passive investor, up to five percent (5%) of any publicly traded company without violating this provision. Employer and Executive agree that: this provision does not impose an undue hardship on Executive and is not injurious to the public; that this provision is necessary to protect the business of Employer and its affiliates; the nature of Executive’s responsibilities with Employer under this Agreement require Executive to have access to confidential information which is valuable and confidential to all of the Business; the scope of this Section 7 is reasonable in terms of length of time and geographic scope; and adequate consideration supports this Section 7, including consideration herein. 8. Confidential Information. Executive recognizes that Employer’s business and continued success depend upon the use and protection of confidential and proprietary business information, including, without limitation, the information and technology developed by or available through licenses to Employer, to which Executive has access (all such information being “Confidential Information”). For purposes of this Agreement, the phrase “Confidential Information” includes, for Employer and its current or future subsidiaries and affiliates, without limitation, and whether or not specifically designated as confidential or proprietary: all business plans and marketing strategies; information concerning existing and prospective markets and customers; financial information; information concerning the development of new products and services; information concerning any personnel of Employer (including, without limitation, skills and compensation information); intellectual property; and technical and non-technical data related to software programs, designs, specifications, compilations, inventions, improvements, methods, processes, procedures and techniques; provided, however, that the phrase does not include information that (a) was lawfully in Executive’s possession prior
Page 11 of 21 to disclosure of such information by Employer; (b) was, or at any time becomes, available in the public domain other than through a violation of this Agreement; (c) is documented by Executive as having been developed by Executive outside the scope of Executive’s employment and independently; or (d) is furnished to Executive by a third party not under an obligation of confidentiality to Employer. Executive agrees that during Executive’s employment and after termination of employment irrespective of cause, Executive will use Confidential Information only (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information, and then only after providing written notice to Employer that such a demand has been made. Executive’s obligation under this Agreement is in addition to any obligations Executive has under state or federal law. Executive agrees to deliver to Employer immediately upon termination of Executive’s employment, or at any time Employer so requests, all tangible items containing any Confidential Information (including, without limitation, all memoranda, photographs, records, reports, manuals, drawings, blueprints, prototypes, notes taken by or provided to Executive, and any other documents or items of a confidential nature belonging to Employer), together with all copies of such material in Executive’s possession or control. Executive agrees that in the course of Executive’s employment with Employer, Executive will not violate in any way the rights that any entity has with regard to trade secrets or proprietary or confidential information. Executive’s obligations under this Section 8 are indefinite in term and shall survive the termination of this Agreement. 9. Work Product and Copyrights. Executive agrees that all right, title and interest in and to the materials resulting from the performance of Executive’s duties at Employer and all copies thereof, including works in progress, in whatever media, (the “Work”), will be and remain in Employer upon their creation. Executive will mark all Work with Employer’s copyright or other proprietary notice as directed by Employer. Executive further agrees: a. To the extent that any portion of the Work constitutes a work protectable under the copyright laws of the United States (the “Copyright Law”), that all such Work will be considered a “work made for hire” as such term is used and defined in the Copyright Law, and that Employer will be considered the “author” of such portion of the Work and the sole and exclusive owner throughout the world of copyright therein; and b. If any portion of the Work does not qualify as a “work made for hire” as such term is used and defined in the Copyright Law, that Executive hereby assigns and agrees to assign to Employer, without further consideration, all right, title and interest in and to such Work or in any such portion thereof and any copyright therein and further agrees to execute and deliver to Employer, upon request, appropriate assignments of such Work and copyright therein and such other documents and instruments as Employer may request to fully and completely assign such Work
Page 12 of 21 and copyright therein to Employer, its successors or nominees, and that Executive hereby appoints Employer as attorney-in-fact to execute and deliver any such documents on Executive’s behalf in the event Executive should fail or refuse to do so within a reasonable period following Employer’s request. 10. Inventions and Patents. For purposes of this Agreement, “Inventions” includes, without limitation, information, inventions, contributions, improvements, ideas, or discoveries, whether protectable or not, and whether or not conceived or made during work hours. Executive agrees that all Inventions conceived or made by Executive during the period of employment with Employer belong to Employer, provided they grow out of Executive’s work with Employer or are related in some manner to the Business, including, without limitation, research and product development, and projected business of Employer or its affiliated companies. Accordingly, Executive will: a. Make adequate written records of such Inventions, which records will be Employer’s property; b. Assign to Employer, at its request, any rights Executive may have to such Inventions for the U.S. and all foreign countries; c. Waive and agree not to assert any moral rights Executive may have or acquire in any Inventions and agree to provide written waivers from time to time as requested by Employer; and d. Assist Employer (at Employer’s expense) in obtaining and maintaining patents or copyright registrations with respect to such Inventions. Executive understands and agrees that Employer or its designee will determine, in its sole and absolute discretion, whether an application for patent will be filed on any Invention that is the exclusive property of Employer, as set forth above, and whether such an application will be abandoned prior to issuance of a patent. Employer will pay to Executive, either during or after the term of this Agreement, the following amounts if Executive is sole inventor, or Executive’s proportionate share if Executive is joint inventor: $750 upon filing of the initial application for patent on such Invention; and $1,500 upon issuance of a patent resulting from such initial patent application, provided Executive is named as an inventor in the patent. Executive further agrees that Executive will promptly disclose in writing to Employer during the term of Executive’s employment and for one (1) year thereafter, all Inventions whether developed during the time of such employment or thereafter (whether or not Employer has rights in such Inventions) so that Executive’s rights and Employer’s rights in such Inventions can be determined. Except as set forth on the initialed Exhibit B (List of Inventions) to this Agreement, if any, Executive represents and warrants that Executive has no Inventions, software, writings or other works of authorship useful to Employer in
Page 13 of 21 the normal course of the Business, which were conceived, made or written prior to the date of this Agreement and which are excluded from the operation of this Agreement. NOTICE: In accordance with Washington law, this Section 10 does not apply to Inventions for which no equipment, supplies, facility, or trade secret information of Employer was used and which was developed entirely on Executive’s own time, unless: (a) the Invention relates (i) directly to the business of Employer or (ii) to Employer’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by Executive for Employer. 11. Cooperation. The parties agree that certain matters in which Executive will be involved during the Term may necessitate Executive’s cooperation in the future. Accordingly, following the termination of Executive’s employment for any reason, to the extent reasonably requested by the Board, Executive shall cooperate with the Employer in connection with matters arising out of Executive’s service to the Employer; provided that, the Employer shall make reasonable efforts to minimize disruption of Executive’s other activities. The Employer shall reimburse Executive for reasonable expenses incurred in connection with such cooperation. 12. Non-Disparagement. Executive agrees and covenants that Executive will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Employer or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section 12 does not, in any way, restrict or impede Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Executive shall promptly provide written notice of any such order to the Board of Directors. 13. Remedies. Notwithstanding other provisions of this Agreement regarding dispute resolution, Executive agrees that Executive’s violation of any of Sections 7, 8, 9, 10, 11 or 12 of this Agreement would cause Employer irreparable harm which would not be adequately compensated by monetary damages and that an injunction may be granted by any court or courts having jurisdiction, restraining Executive from violation of the terms of this Agreement, upon any breach or threatened breach of Executive of the obligations set forth in any of Sections 7, 8, 9, 10, 11 or 12. The preceding sentence shall not be construed to limit Employer from any other relief or damages to which it may be entitled as a result of Executive’s breach of any provision of this Agreement, including Sections 7, 8, 9, 10, 11 or 12. Executive also agrees that a violation of any of Sections 7, 8, 9, 10, 11 or 12 would entitle Employer, in addition to all other remedies available at law or equity, to recover from Executive any and all funds, including, without limitation, wages, salary and profits, which will be held by Executive in constructive trust for Employer, received by Executive in connection with such violation.
Page 14 of 21 14. Dispute Resolution. Except for the right of Employer and Executive to seek injunctive relief in court, any controversy, claim or dispute of any type arising out of or relating to Executive’s employment or the provisions of this Agreement shall be resolved in accordance with this Section 14 regarding resolution of disputes, which will be the sole and exclusive procedure for the resolution of any disputes. This Agreement shall be enforced in accordance with the Federal Arbitration Act, the enforcement provisions of which are incorporated by this reference. Matters subject to these provisions include, without limitation, claims or disputes based on statute, contract, common law and tort and will include, for example, matters pertaining to termination, discrimination, harassment, compensation and benefits. Matters to be resolved under these procedures also include claims and disputes arising out of statutes such as the Fair Labor Standards Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Washington Minimum Wage Act, and the Washington Law Against Discrimination. Nothing in this provision is intended to restrict Executive from submitting any matter to an administrative agency with jurisdiction over such matter. a. Mediation. Employer and Executive will make a good faith attempt to resolve any and all claims and disputes by submitting them to mediation in Snohomish County, Washington before resorting to arbitration or any other dispute resolution procedure. The mediation of any claim or dispute must be conducted in accordance with the then-current JAMS procedures for the resolution of employment disputes by mediation, by a mediator who has had both training and experience as a mediator of general employment and commercial matters. If the parties to this Agreement cannot agree on a mediator, then the mediator will be selected by JAMS in accordance with JAMS’ strike list method. Within thirty (30) days after the selection of the mediator, Employer and Executive and their respective attorneys will meet with the mediator for one mediation session of at least four hours. If the claim or dispute cannot be settled during such mediation session or mutually agreed continuation of the session, either Employer or Executive may give the mediator and the other party to the claim or dispute written notice declaring the end of the mediation process. All discussions connected with this mediation provision will be confidential and treated as compromise and settlement discussions. Nothing disclosed in such discussions, which is not independently discoverable, may be used for any purpose in any later proceeding. The mediator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees. b. Arbitration. If any claim or dispute has not been resolved in accordance with Section 14.a., then the claim or dispute will be determined by arbitration in accordance with the then-current JAMS employment arbitration rules and procedures, except as modified herein. The arbitration will be conducted by a sole neutral arbitrator who has had both training and experience as an arbitrator of general employment and commercial matters and who is and for at least ten (10) years has been, a partner, a shareholder, or a member in a law firm. The arbitration shall be held in Snohomish County, Washington. If Employer and Executive cannot agree on an arbitrator, then the arbitrator will be selected by JAMS in accordance
Page 15 of 21 with Rule 15 of the JAMS employment arbitration rules and procedures. No person who has served as a mediator under the mediation provision, however, may be selected as the arbitrator for the same claim or dispute. Reasonable discovery will be permitted and the arbitrator may decide any issue as to discovery. The arbitrator may decide any issue as to whether or as to the extent to which any dispute is subject to the dispute resolution provisions in Section 14 and the arbitrator may award any relief permitted by law. The arbitrator must base the arbitration award on the provisions of Section 14 and applicable law and must render the award in writing, including an explanation of the reasons for the award. Judgment upon the award may be entered by any court having jurisdiction of the matter, and the decision of the arbitrator will be final and binding. The statute of limitations applicable to the commencement of a lawsuit will apply to the commencement of an arbitration under Section 14.b. The arbitrator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees. 15. Fees Related to Dispute Resolution. Unless otherwise agreed, the prevailing party will be entitled to its costs and attorneys’ fees incurred in any litigation or dispute relating to the interpretation or enforcement of this Agreement. 16. 409A. It is intended that any payment or benefit that is provided pursuant to or in connection with this Agreement that is considered to be deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) shall be paid and provided in a manner, and at such time and form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. It is further intended that the payments hereunder shall, to the maximum extent permissible under Section 409A of the Code, be exempt from Section 409A of the Code under either (i) the exception for involuntary separation pay to the extent that all payments are payable within the limitations described in Treasury Regulation Section 1.409A-1(b)(9), or (ii) the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4) to the extent that all payments are payable no later than two and a half months after the end of the first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture. a. If the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code at such time, any payments to be made or benefits to be delivered in connection with the Executive’s “Separation from Service” (as defined below) that constitute deferred compensation subject to Section 409A of the Code shall not be made until six months plus one day after the Executive’s Separation from Service (the “409A Deferral Period”) as required by Section 409A of the Code, provided that the payment of any such deferred compensation may be paid immediately following the Executive’s death. Payments of any such deferred compensation otherwise due to be made in installments or periodically during the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payment shall be made as otherwise scheduled.
Page 16 of 21 b. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. c. For purposes of this Agreement, with respect to the timing of any amounts that constitute deferred compensation subject to Section 409A of the Code that depends on termination of employment or separation from service, termination of employment or separation from service shall mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services would be performed after such date or that the level of bona fide services the Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to a level less than or equal to twenty percent (20%) of the average level of bona fide services the Executive performed over the immediately preceding thirty-six (36) month period. 17. Disclosure. Executive agrees fully and completely to reveal the terms of this Agreement to any future employer or potential employer of Executive and authorizes Employer, at its election, to make such disclosure. 18. Representation of Executive. Executive represents and warrants to Employer that Executive is free to enter into this Agreement and has no contract, commitment, arrangement or understanding to or with any party that restrains or is in conflict with Executive’s performance of the covenants, services and duties provided for in this Agreement, and is not contravene the terms of any statute, law, or regulation to which Executive is subject. Executive agrees to indemnify Employer and to hold it harmless against any and all liabilities or claims arising out of any unauthorized act or acts by Executive that, the foregoing representation and warranty to the contrary notwithstanding, are in violation, or constitute a breach, of any such contract, commitment, arrangement or understanding. 19. Conditions of Employment. Employer’s obligations to Executive under this Agreement are conditioned upon Executive’s timely compliance with requirements of the United States immigration laws. 20. Assignability. This Agreement shall not be assignable by Executive. This Agreement may be assigned by the Company to a company which is a successor in interest to substantially all of the business operations of the Company. Such assignment shall become effective when the Company notifies the Executive of such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such successor company, provided that any assignee expressly assumes the obligations, rights and privileges of this Agreement. 21. Notices. Any notices required or permitted to be given hereunder are sufficient if in writing and delivered by hand, by facsimile, by registered or certified mail,
Page 17 of 21 postage prepaid, or by overnight courier, to Executive at Executive’s home address as most recently updated in Executive’s Human Resources records, or to BioLife Solutions, Inc., 3303 Monte Villa Parkway, #310, Bothell, WA 98021, Attention: Chief Executive Officer. Notices shall be deemed to have been given (i) upon delivery, if delivered by hand or by email, (ii) seven days after mailing, if mailed, (iii) one business day after delivery, if delivered by courier, and (iv) one business day following receipt of an appropriate electronic confirmation, if by facsimile. 22. Severability. If any provision of this Agreement or compliance by any of the parties with any provision of this Agreement constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, shall be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. The Parties shall engage in good faith negotiations to modify and replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. If such modification is not possible, said provision, to the extent that it is in violation of law, unenforceable or void, shall be deemed severable from the remaining provisions of this Agreement, which provisions will remain binding on the parties. 23. Waivers. No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial waiver of a breach of any provision of this Agreement operate or be construed as a waiver of any subsequent breach; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or by law. 24. Governing Law. Except as provided in Section 14 above, the validity, construction and performance of this Agreement shall be governed by the laws of the State of Washington without regard to the conflicts of law provisions of such laws. The parties hereto expressly recognize and agree that the implementation of this Section 24 is essential in light of the fact that Employer has its corporate headquarters and its principal executive offices within the State of Washington, and there is a critical need for uniformity in the interpretation and enforcement of the employment agreements between Employer and its key employees. Aside from any disputes that must be resolved by arbitration as provided for in Section 14, the Snohomish County Superior Court in Washington shall have exclusive jurisdiction of any lawsuit arising from or relating to Executive’s employment with, or termination from, Employer, or arising from or relating to this Agreement. Executive consents to such venue and personal jurisdiction. 25. Counterparts. This agreement may be executed in counterpart in different places, at different times and on different dates, and in that case all executed counterparts taken together collectively constitute a single binding agreement.
Page 18 of 21 26. Costs and Fees Related to Negotiation and Execution of Agreement. Each Party Shall be responsible for the payment of its own costs and expenses, including legal fees and expenses, in connection with the negotiation and execution of this Agreement. Neither Party will be liable for the payment of any commissions or compensation in the nature of finders’ fees or brokers’ fees, gratuity or other similar thing or amount in consideration of the other Party entering into this Agreement to any broker, agent or third party acting on behalf of the other Party. 27. Entire Agreement. This instrument contains the entire agreement of the parties with respect to the relationship between Executive and Employer and supersedes all prior agreements and understandings, and there are no other representations or agreements other than as stated in this Agreement related to the terms and conditions of Executive’s employment. This Agreement may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought, and any such modification will be signed by an authorized representative of Employer.
Page 19 of 21 IN WITNESS WHEREOF, the parties have duly signed and delivered this Agreement as of the day and year first above written. EMPLOYER By: Title: Chief Executive Officer EXECUTIVE Sarah Aebersold
Page 20 of 21 EXHIBIT A DISCLOSURE OF OUTSIDE BOARD OF DIRECTORS AND TRUSTEE POSITIONS
Page 21 of 21 EXHIBIT B LIST OF INVENTIONS
Page 1 of 21 AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made between BioLife Solutions Inc., a Delaware corporation (“Employer” or the “Company”), and Troy Wichterman (“Executive”). Executive and the Company are sometimes referred to herein as the “Parties”. The effective date of this Agreement is June 1, 2023. This Agreement supersedes and replaces all prior employment agreements (and any amendments thereto) between the Company and Executive, including, for the avoidance of doubt, the employment agreement between the Parties that became effective on November 4, 2021 and any amendments thereto. RECITALS A. Employer is in the business (the “Business”) of manufacturing and marketing biopreservation media and cold chain products for cells, tissues, and organs. B. Employer desires to obtain the services of Executive, in which capacity Executive has access to Employer’s Confidential Information (as hereinafter defined), and to obtain assurance that Executive will protect Employer’s Confidential Information and will not compete with Employer or solicit its customers or its other employees during the term of employment and for a reasonable period of time after termination of employment pursuant to this Agreement, and Executive is willing to agree to these terms. C. Executive desires to be assured of the salary and other benefits provided for in this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows: 1. Employment. a. Employer hereby employs Executive, and Executive agrees to be employed as Chief Financial Officer (“CFO”), reporting to the Chief Executive Officer, in accordance with the terms and conditions set forth in this Agreement. Changes may be made from time to time by Employer and/or the Board in its sole discretion to the duties, authorities, reporting relationships and title of Executive. b. Executive will devote full time, attention, and best efforts to achieving the purposes and discharging the responsibilities of the CFO. Executive will comply with all rules, policies and procedures of Employer as modified from time
Page 2 of 21 to time, including without limitation, rules and procedures set forth in the Employer’s employee handbook, supervisor’s manuals and operating manuals. Executive will perform all of Executive’s responsibilities in compliance with all applicable laws and will ensure that the operations that Executive manages are in compliance with all applicable laws. During Executive’s employment, Executive will not engage in any other business activity which, in the reasonable judgment of the Employer, conflicts with the duties of Executive under this Agreement, whether or not such activity is pursued for gain, profit or other pecuniary advantage. c. Nothing herein shall preclude Executive from: (1) continuing to serve on the board of directors or trustees of any business corporation or any charitable organization on which Executive currently serves and which is identified on Exhibit A hereto, or (2) subject to the prior approval of the Board, appointment to any additional directorships or trusteeships, or (3) serving in an advisory role for other business entities, provided in each case, and in the aggregate, that such activities do not interfere with the performance of Executive’s duties hereunder or conflict with Section 7 of this Agreement. 2. Term of Employment. The term of employment (“Term”) will not be for a definite period, but rather continue indefinitely until terminated in accordance with the terms and conditions of this Agreement. 3. Compensation. For the duration of Executive’s employment hereunder, the Executive will be entitled to compensation which will be computed and paid pursuant to the following subparagraphs. a. Base Salary. Employer will pay to Executive a base salary (“Base Salary”) at an annual rate of four hundred seventy-two thousand Dollars ($472,000), payable in such installments (but in no event less than monthly), subject to withholdings and deductions as required or permitted by law, as is Employer’s policy with respect to other employees. Executive’s Base Salary will be reviewed periodically by the Board of Directors of Employer during the term of Executive’s employment and may be adjusted in the sole discretion of the Board of Directors based on such review, but will not be reduced by Employer unless a material adverse change in the financial condition or operations of Employer has occurred or unless Executive’s responsibilities are altered to reflect less responsibility. b. Performance Bonus. Employer under direction of its Board may pay or cause to be paid to Executive such Bonus as it from time to time determines appropriate. 4. Other Benefits. a. Certain Benefits. Executive will be eligible to participate in all employee benefit programs established by Employer that are applicable to management
Page 3 of 21 personnel such as medical, pension, disability and life insurance plans on a basis commensurate with Executive’s position and in accordance with Employer’s policies from time to time, but nothing herein shall require the adoption or maintenance of any such plan. b. Vacations, Holidays and Expenses. Executive will be provided accrued paid vacation of four (4) weeks each calendar year, which shall be the maximum number of days Executive may accrue at any time, and which shall be taken at such times as are consistent with Executive’s responsibilities hereunder. Executive will be provided such holidays and vacation as Executive makes available to its management level employees generally. Employer will reimburse Executive in accordance with company policies and procedures for reasonable expenses necessarily incurred in the performance of duties hereunder against appropriate receipts and vouchers indicating the specific business purpose for each such expenditure. In no case shall any reimbursement be made later than December 31st of the year following the calendar year in which such expense is incurred. c. Right of Set-off. By accepting this Agreement, Executive consents to a deduction from any amounts Employer owes Executive from time to time (including amounts owed to Executive as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to Executive by Employer), to the extent of the amounts Executive owes to Employer. Whether or not Employer elects to make any set-off in whole or in part, if Employer does not recover by means of set-off the full amount Executive owes it, calculated as set forth above, Executive agrees to pay immediately the unpaid balance to Employer. 5. Termination, Discharge. a. For Cause. Employer will have the right to immediately terminate Executive’s services and this Agreement for Cause. “Cause” means the Employer’s belief that any of the following has occurred: (i) any breach of this Agreement by Executive, including, without limitation, breach of Executive’s covenants in Sections 7, 8, 9, 10, 11 or 12; (ii) any failure to perform assigned job responsibilities that continues unremedied for a period of ten (10) days after written notice to Executive by Employer; (iii) Executive’s malfeasance or misconduct in connection with Executive’s duties hereunder or any act or omission of Executive which is materially injurious to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates,
Page 4 of 21 (iv) commission or conviction of a felony or misdemeanor (other than a misdemeanor traffic violation), including a plea of guilty or failure to contest prosecution for a felony or misdemeanor; (v) the Employer’s reasonable belief that Executive engaged in a violation of any statute, rule or regulation, any of which in the judgment of Employer is harmful to the Business or to Employer’s reputation; (vi) the Employer’s reasonable belief that Executive engaged in unethical practices, dishonesty or disloyalty, unless Executive has evidence establishing that Employer directed Executive to commit such practice or act; (vii) or any reason that would constitute Cause under the laws the State of Washington. Upon termination of Executive’s employment hereunder for Cause, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (x) Executive’s salary through the date of termination, (y) for any unused vacation time, and (z) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Executive will have no rights to any unvested benefits or any other compensation or payments after the termination date. b. Due to Death or Disability. Employer will have the right to immediately terminate Executive’s services and this Agreement due to death or disability. For purposes of this Agreement, “disability” means the incapacity or inability of Executive, whether due to accident, sickness or otherwise, as determined by a medical doctor acceptable to the Board of Directors of Employer and confirmed in writing by such doctor, to perform the essential functions of Executive’s position under this Agreement, with or without reasonable accommodation (provided that no accommodation that imposes undue hardship on Employer will be required) for a period of sixty (60) consecutive days or for an aggregate of ninety (90) days during any period of twelve (12) months, or such longer period as may be required under disability law. Upon termination of Executive’s employment hereunder due to death or disability, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) Executive’s salary through the date of termination, (ii) a prorated portion of any incentive bonus opportunity previously approved by the Board, (iii) for any unused vacation time, and (iv) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Upon termination of Executive’s employment hereunder due to death or disability, all unvested stock
Page 5 of 21 options, awards, or other equity grants or awards shall immediately fully vest for the benefit of Executive’s estate. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. c. Without Cause. Employer may terminate Executive’s employment under this Agreement without cause and without advance notice; provided, however, that Employer will pay (unless subparagraph 5.d of this Agreement applies, in which case the provisions therein shall govern), no later than fourteen (14) days from the termination date in a lump sum: (i) (x) Executive’s salary through the date of termination, (y) for any unused vacation time, and (z) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. (ii) severance pay of twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date. (iii) the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and (iv) an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.c(iii) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.c(iii) if no tax withholding was made. Such payments will be subject to all appropriate deductions and withholdings. Upon termination of Executive’s employment hereunder due to termination without cause, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested
Page 6 of 21 employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. d. Change in Control. (i) For purposes of this Agreement, Change in Control shall mean (x) the consummation of a merger or consolidation of the Company with or into another entity, (y) the dissolution, liquidation or winding up of the Company or (z) the sale of all or substantially all of the Company’s assets. The foregoing notwithstanding, a merger or consolidation of the Company shall not constitute a “Change in Control” if immediately after such merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of such continuing or surviving entity, will be owned by the persons who were the Company’s stockholders immediately prior to such merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company’s capital stock immediately prior to such merger or consolidation. (ii) Employer may terminate Executive’s employment under this Agreement or Executive may resign for Good Reason upon or within 12 months following a Change in Control without advance notice; provided, however, that Employer will pay, no later than sixty (60) days from the termination date in a lump sum: (A) (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses; (B) as severance pay, twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date; (C) 100% of any incentive cash and/or stock bonus opportunity for the current year; (D) the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and (E) an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.d(ii)(D) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is
Page 7 of 21 the full amount Executive would have received under Section 5.d(ii)(D) if no tax withholding was made. (iii) Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. (iv) Upon termination of Executive’s employment hereunder due to a Change in Control, including by Executive for Good Reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. e. No Fault Termination By Executive. Executive may terminate Executive’s employment under this Agreement for any reason provided that Executive gives Employer at least ninety (90) days’ notice in writing. Employer may, at its option, accelerate such termination date to any date at least two weeks after Executive’s notice of termination. Employer may also, at its option, relieve Executive of all duties and authority after notice of termination has been provided. Upon termination of Executive’s employment in accordance with this Section, Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Such payments will be subject to all appropriate deductions and withholdings. Upon termination, Executive will have no rights to any unvested benefits or any other compensation. f. Termination By Executive for Good Reason. Executive’s employment pursuant to this Agreement shall terminate in the event Executive shall determine that there is “Good Reason” to terminate Executive’s employment, which shall mean the following: (i) Employer’s material breach of the terms of this Agreement or any other written agreement between Executive and Employer; or
Page 8 of 21 (ii) The occurrence of any of the following conditions, without Executive’s consent: (A) a significant diminution in the nature or scope of Executive’s authority, title, function or duties; (B) a ten percent (10%) reduction in Executive’s base salary or a twenty-five percent (25%) reduction in Executive’s target bonus opportunity (unless such reduction is part of a Company officer- wide program to reduce expenses); (C) the Company’s requiring Executive to be based and work out of an office or location more than 50 miles from the office where Executive is currently employed; (D) any material breach of the terms of this Agreement by the Company; or (E) failure of any successor or assignee to the Company to assume this Agreement. Provided that Executive has provided with notice of the existence of a condition giving rise to “Good Reason” to terminate within ninety (90) days following the initial existence of such a condition, Employer shall have thirty (30) days to cure any such alleged breach, assignment, reduction or requirement referenced above, after Executive provides Employer written notice of the actions or omissions constituting such breach, assignment, reduction or requirement. If Executive resigns Executive’s employment for Good Reason, Executive shall be paid no later than fourteen (14) days from the termination date in a lump sum: I. (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. II. severance pay of twelve (12) months’ worth of Executive’s salary at the rate in effect on the termination date. III. the amount equal to the cost of twelve (12) months’ medical insurance premiums at a monthly amount equal to the amount of COBRA coverage in effect as of the termination date; and
Page 9 of 21 IV. an additional tax gross up payment in an amount necessary so that the amount received by Executive to cover COBRA premiums under Section 5.f(III) after all applicable withholding tax is deducted (using applicable supplemental wage withholding rates) is the full amount Executive would have received under Section 5.f(III) if no tax withholding was made. Such payments will be subject to all appropriate deductions and withholdings. Upon termination of Executive’s employment hereunder due to resignation for good reason, all unvested stock options, awards, or other equity grants or awards shall immediately fully vest. Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to Executive’s status as a shareholder of the Company. 6. Return of Company Property. Upon termination of this Agreement or upon request of the Company, Executive shall deliver to the Corporation all property, documents and materials pertaining to the Company’s business including, but not limited to, memoranda, notes, records, drawings, manuals, disks, copies, representations, extracts, summaries and analyses, all inventory, demonstration units, and any other property, documents or media of the Corporation, and all equipment belonging to the company, including but not limited to corporate cards, access cards, office keys, office equipment, laptop and desktop computers, cell phones and other wireless devices, thumb drives, zip drives and all other media storage devices. 7. Covenant Not To Compete. During Executive’s employment by Employer and for a period expiring one (1) year after the termination of Executive’s employment for any reason, Executive covenants and agrees that Executive will not: a. Directly, indirectly, or otherwise, own, manage, operate, control, serve as a consultant to, be employed by, participate in, or be connected, in any manner, with the ownership, management, operation or control of any business that competes with the Business or that competes with Employer or any of its affiliates or that is engaged in any type of business which, at any time during Executive’s employment with Employer, Employer or any of its affiliates planned to develop;
Page 10 of 21 b. Hire, offer to hire, entice away or in any other manner persuade or attempt to persuade any officer, employee or agent of Employer or any of its affiliates to alter or discontinue a relationship with Employer or to do any act that is inconsistent with the interests of Employer or any of its affiliates; c. Directly or indirectly solicit, divert, take away or attempt to solicit, divert or take away any customers of Employer or any of its affiliates; or d. Directly or indirectly solicit, divert, or in any other manner persuade or attempt to persuade any supplier of Employer or any of its affiliates to alter or discontinue its relationship with Employer or any of its affiliates. For the purposes of this Section 7, businesses that are deemed to compete with Employer include, without limitation, businesses engaged in manufacturing and marketing biopreservation media for cells, tissues, and organs or cold chain management products and/or services. The geographic scope of the prohibitions in this Section 7 shall be any city, town or county in which the Company conducts or does any business as of or within one (1) year of Executive’s last day of employment with the Company. Notwithstanding Executive’s obligations under this Section 7, Executive will be entitled to own, as a passive investor, up to five percent (5%) of any publicly traded company without violating this provision. Employer and Executive agree that: this provision does not impose an undue hardship on Executive and is not injurious to the public; that this provision is necessary to protect the business of Employer and its affiliates; the nature of Executive’s responsibilities with Employer under this Agreement require Executive to have access to confidential information which is valuable and confidential to all of the Business; the scope of this Section 7 is reasonable in terms of length of time and geographic scope; and adequate consideration supports this Section 7, including consideration herein. 8. Confidential Information. Executive recognizes that Employer’s business and continued success depend upon the use and protection of confidential and proprietary business information, including, without limitation, the information and technology developed by or available through licenses to Employer, to which Executive has access (all such information being “Confidential Information”). For purposes of this Agreement, the phrase “Confidential Information” includes, for Employer and its current or future subsidiaries and affiliates, without limitation, and whether or not specifically designated as confidential or proprietary: all business plans and marketing strategies; information concerning existing and prospective markets and customers; financial information; information concerning the development of new products and services; information concerning any personnel of Employer (including, without limitation, skills and compensation information); intellectual property; and technical and non-technical data related to software programs, designs, specifications, compilations, inventions, improvements, methods, processes, procedures and techniques; provided, however, that the phrase does not include information that (a) was lawfully in Executive’s possession prior
Page 11 of 21 to disclosure of such information by Employer; (b) was, or at any time becomes, available in the public domain other than through a violation of this Agreement; (c) is documented by Executive as having been developed by Executive outside the scope of Executive’s employment and independently; or (d) is furnished to Executive by a third party not under an obligation of confidentiality to Employer. Executive agrees that during Executive’s employment and after termination of employment irrespective of cause, Executive will use Confidential Information only (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information, and then only after providing written notice to Employer that such a demand has been made. Executive’s obligation under this Agreement is in addition to any obligations Executive has under state or federal law. Executive agrees to deliver to Employer immediately upon termination of Executive’s employment, or at any time Employer so requests, all tangible items containing any Confidential Information (including, without limitation, all memoranda, photographs, records, reports, manuals, drawings, blueprints, prototypes, notes taken by or provided to Executive, and any other documents or items of a confidential nature belonging to Employer), together with all copies of such material in Executive’s possession or control. Executive agrees that in the course of Executive’s employment with Employer, Executive will not violate in any way the rights that any entity has with regard to trade secrets or proprietary or confidential information. Executive’s obligations under this Section 8 are indefinite in term and shall survive the termination of this Agreement. 9. Work Product and Copyrights. Executive agrees that all right, title and interest in and to the materials resulting from the performance of Executive’s duties at Employer and all copies thereof, including works in progress, in whatever media, (the “Work”), will be and remain in Employer upon their creation. Executive will mark all Work with Employer’s copyright or other proprietary notice as directed by Employer. Executive further agrees: a. To the extent that any portion of the Work constitutes a work protectable under the copyright laws of the United States (the “Copyright Law”), that all such Work will be considered a “work made for hire” as such term is used and defined in the Copyright Law, and that Employer will be considered the “author” of such portion of the Work and the sole and exclusive owner throughout the world of copyright therein; and b. If any portion of the Work does not qualify as a “work made for hire” as such term is used and defined in the Copyright Law, that Executive hereby assigns and agrees to assign to Employer, without further consideration, all right, title and interest in and to such Work or in any such portion thereof and any copyright therein and further agrees to execute and deliver to Employer, upon request, appropriate assignments of such Work and copyright therein and such other documents and instruments as Employer may request to fully and completely assign such Work
Page 12 of 21 and copyright therein to Employer, its successors or nominees, and that Executive hereby appoints Employer as attorney-in-fact to execute and deliver any such documents on Executive’s behalf in the event Executive should fail or refuse to do so within a reasonable period following Employer’s request. 10. Inventions and Patents. For purposes of this Agreement, “Inventions” includes, without limitation, information, inventions, contributions, improvements, ideas, or discoveries, whether protectable or not, and whether or not conceived or made during work hours. Executive agrees that all Inventions conceived or made by Executive during the period of employment with Employer belong to Employer, provided they grow out of Executive’s work with Employer or are related in some manner to the Business, including, without limitation, research and product development, and projected business of Employer or its affiliated companies. Accordingly, Executive will: a. Make adequate written records of such Inventions, which records will be Employer’s property; b. Assign to Employer, at its request, any rights Executive may have to such Inventions for the U.S. and all foreign countries; c. Waive and agree not to assert any moral rights Executive may have or acquire in any Inventions and agree to provide written waivers from time to time as requested by Employer; and d. Assist Employer (at Employer’s expense) in obtaining and maintaining patents or copyright registrations with respect to such Inventions. Executive understands and agrees that Employer or its designee will determine, in its sole and absolute discretion, whether an application for patent will be filed on any Invention that is the exclusive property of Employer, as set forth above, and whether such an application will be abandoned prior to issuance of a patent. Employer will pay to Executive, either during or after the term of this Agreement, the following amounts if Executive is sole inventor, or Executive’s proportionate share if Executive is joint inventor: $750 upon filing of the initial application for patent on such Invention; and $1,500 upon issuance of a patent resulting from such initial patent application, provided Executive is named as an inventor in the patent. Executive further agrees that Executive will promptly disclose in writing to Employer during the term of Executive’s employment and for one (1) year thereafter, all Inventions whether developed during the time of such employment or thereafter (whether or not Employer has rights in such Inventions) so that Executive’s rights and Employer’s rights in such Inventions can be determined. Except as set forth on the initialed Exhibit B (List of Inventions) to this Agreement, if any, Executive represents and warrants that Executive has no Inventions, software, writings or other works of authorship useful to Employer in
Page 13 of 21 the normal course of the Business, which were conceived, made or written prior to the date of this Agreement and which are excluded from the operation of this Agreement. NOTICE: In accordance with Washington law, this Section 10 does not apply to Inventions for which no equipment, supplies, facility, or trade secret information of Employer was used and which was developed entirely on Executive’s own time, unless: (a) the Invention relates (i) directly to the business of Employer or (ii) to Employer’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by Executive for Employer. 11. Cooperation. The parties agree that certain matters in which Executive will be involved during the Term may necessitate Executive’s cooperation in the future. Accordingly, following the termination of Executive’s employment for any reason, to the extent reasonably requested by the Board, Executive shall cooperate with the Employer in connection with matters arising out of Executive’s service to the Employer; provided that, the Employer shall make reasonable efforts to minimize disruption of Executive’s other activities. The Employer shall reimburse Executive for reasonable expenses incurred in connection with such cooperation. 12. Non-Disparagement. Executive agrees and covenants that Executive will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Employer or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Section 12 does not, in any way, restrict or impede Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Executive shall promptly provide written notice of any such order to the Chief Executive Officer. 13. Remedies. Notwithstanding other provisions of this Agreement regarding dispute resolution, Executive agrees that Executive’s violation of any of Sections 7, 8, 9, 10, 11 or 12 of this Agreement would cause Employer irreparable harm which would not be adequately compensated by monetary damages and that an injunction may be granted by any court or courts having jurisdiction, restraining Executive from violation of the terms of this Agreement, upon any breach or threatened breach of Executive of the obligations set forth in any of Sections 7, 8, 9, 10, 11 or 12. The preceding sentence shall not be construed to limit Employer from any other relief or damages to which it may be entitled as a result of Executive’s breach of any provision of this Agreement, including Sections 7, 8, 9, 10, 11 or 12. Executive also agrees that a violation of any of Sections 7, 8, 9, 10, 11 or 12 would entitle Employer, in addition to all other remedies available at law or equity, to recover from Executive any and all funds, including, without limitation, wages, salary and profits, which will be held by Executive in constructive trust for Employer, received by Executive in connection with such violation.
Page 14 of 21 14. Dispute Resolution. Except for the right of Employer and Executive to seek injunctive relief in court, any controversy, claim or dispute of any type arising out of or relating to Executive’s employment or the provisions of this Agreement shall be resolved in accordance with this Section 14 regarding resolution of disputes, which will be the sole and exclusive procedure for the resolution of any disputes. This Agreement shall be enforced in accordance with the Federal Arbitration Act, the enforcement provisions of which are incorporated by this reference. Matters subject to these provisions include, without limitation, claims or disputes based on statute, contract, common law and tort and will include, for example, matters pertaining to termination, discrimination, harassment, compensation and benefits. Matters to be resolved under these procedures also include claims and disputes arising out of statutes such as the Fair Labor Standards Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Washington Minimum Wage Act, and the Washington Law Against Discrimination. Nothing in this provision is intended to restrict Executive from submitting any matter to an administrative agency with jurisdiction over such matter. a. Mediation. Employer and Executive will make a good faith attempt to resolve any and all claims and disputes by submitting them to mediation in Snohomish County, Washington before resorting to arbitration or any other dispute resolution procedure. The mediation of any claim or dispute must be conducted in accordance with the then-current JAMS procedures for the resolution of employment disputes by mediation, by a mediator who has had both training and experience as a mediator of general employment and commercial matters. If the parties to this Agreement cannot agree on a mediator, then the mediator will be selected by JAMS in accordance with JAMS’ strike list method. Within thirty (30) days after the selection of the mediator, Employer and Executive and their respective attorneys will meet with the mediator for one mediation session of at least four hours. If the claim or dispute cannot be settled during such mediation session or mutually agreed continuation of the session, either Employer or Executive may give the mediator and the other party to the claim or dispute written notice declaring the end of the mediation process. All discussions connected with this mediation provision will be confidential and treated as compromise and settlement discussions. Nothing disclosed in such discussions, which is not independently discoverable, may be used for any purpose in any later proceeding. The mediator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees. b. Arbitration. If any claim or dispute has not been resolved in accordance with Section 14.a., then the claim or dispute will be determined by arbitration in accordance with the then-current JAMS employment arbitration rules and procedures, except as modified herein. The arbitration will be conducted by a sole neutral arbitrator who has had both training and experience as an arbitrator of general employment and commercial matters and who is and for at least ten (10) years has been, a partner, a shareholder, or a member in a law firm. The arbitration shall be held in Snohomish County, Washington. If Employer and Executive cannot agree on an arbitrator, then the arbitrator will be selected by JAMS in accordance
Page 15 of 21 with Rule 15 of the JAMS employment arbitration rules and procedures. No person who has served as a mediator under the mediation provision, however, may be selected as the arbitrator for the same claim or dispute. Reasonable discovery will be permitted and the arbitrator may decide any issue as to discovery. The arbitrator may decide any issue as to whether or as to the extent to which any dispute is subject to the dispute resolution provisions in Section 14 and the arbitrator may award any relief permitted by law. The arbitrator must base the arbitration award on the provisions of Section 14 and applicable law and must render the award in writing, including an explanation of the reasons for the award. Judgment upon the award may be entered by any court having jurisdiction of the matter, and the decision of the arbitrator will be final and binding. The statute of limitations applicable to the commencement of a lawsuit will apply to the commencement of an arbitration under Section 14.b. The arbitrator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees. 15. Fees Related to Dispute Resolution. Unless otherwise agreed, the prevailing party will be entitled to its costs and attorneys’ fees incurred in any litigation or dispute relating to the interpretation or enforcement of this Agreement. 16. 409A. It is intended that any payment or benefit that is provided pursuant to or in connection with this Agreement that is considered to be deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) shall be paid and provided in a manner, and at such time and form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. It is further intended that the payments hereunder shall, to the maximum extent permissible under Section 409A of the Code, be exempt from Section 409A of the Code under either (i) the exception for involuntary separation pay to the extent that all payments are payable within the limitations described in Treasury Regulation Section 1.409A-1(b)(9), or (ii) the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4) to the extent that all payments are payable no later than two and a half months after the end of the first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture. a. If the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code at such time, any payments to be made or benefits to be delivered in connection with the Executive’s “Separation from Service” (as defined below) that constitute deferred compensation subject to Section 409A of the Code shall not be made until six months plus one day after the Executive’s Separation from Service (the “409A Deferral Period”) as required by Section 409A of the Code, provided that the payment of any such deferred compensation may be paid immediately following the Executive’s death. Payments of any such deferred compensation otherwise due to be made in installments or periodically during the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payment shall be made as otherwise scheduled.
Page 16 of 21 b. For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. c. For purposes of this Agreement, with respect to the timing of any amounts that constitute deferred compensation subject to Section 409A of the Code that depends on termination of employment or separation from service, termination of employment or separation from service shall mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services would be performed after such date or that the level of bona fide services the Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to a level less than or equal to twenty percent (20%) of the average level of bona fide services the Executive performed over the immediately preceding thirty-six (36) month period. 17. Disclosure. Executive agrees fully and completely to reveal the terms of this Agreement to any future employer or potential employer of Executive and authorizes Employer, at its election, to make such disclosure. 18. Representation of Executive. Executive represents and warrants to Employer that Executive is free to enter into this Agreement and has no contract, commitment, arrangement or understanding to or with any party that restrains or is in conflict with Executive’s performance of the covenants, services and duties provided for in this Agreement, and is not contravene the terms of any statute, law, or regulation to which Executive is subject. Executive agrees to indemnify Employer and to hold it harmless against any and all liabilities or claims arising out of any unauthorized act or acts by Executive that, the foregoing representation and warranty to the contrary notwithstanding, are in violation, or constitute a breach, of any such contract, commitment, arrangement or understanding. 19. Conditions of Employment. Employer’s obligations to Executive under this Agreement are conditioned upon Executive’s timely compliance with requirements of the United States immigration laws. 20. Assignability. This Agreement shall not be assignable by Executive. This Agreement may be assigned by the Company to a company which is a successor in interest to substantially all of the business operations of the Company. Such assignment shall become effective when the Company notifies the Executive of such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such successor company, provided that any assignee expressly assumes the obligations, rights and privileges of this Agreement. 21. Notices. Any notices required or permitted to be given hereunder are sufficient if in writing and delivered by hand, by facsimile, by registered or certified mail,
Page 17 of 21 postage prepaid, or by overnight courier, to Executive at Executive’s home address as most recently updated in Executive’s Human Resources records, or to BioLife Solutions, Inc., 3303 Monte Villa Parkway, #310, Bothell, WA 98021, Attention: Chief Executive Officer. Notices shall be deemed to have been given (i) upon delivery, if delivered by hand or by email, (ii) seven days after mailing, if mailed, (iii) one business day after delivery, if delivered by courier, and (iv) one business day following receipt of an appropriate electronic confirmation, if by facsimile. 22. Severability. If any provision of this Agreement or compliance by any of the parties with any provision of this Agreement constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, shall be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. The Parties shall engage in good faith negotiations to modify and replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. If such modification is not possible, said provision, to the extent that it is in violation of law, unenforceable or void, shall be deemed severable from the remaining provisions of this Agreement, which provisions will remain binding on the parties. 23. Waivers. No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial waiver of a breach of any provision of this Agreement operate or be construed as a waiver of any subsequent breach; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or by law. 24. Governing Law. Except as provided in Section 14 above, the validity, construction and performance of this Agreement shall be governed by the laws of the State of Washington without regard to the conflicts of law provisions of such laws. The parties hereto expressly recognize and agree that the implementation of this Section 24 is essential in light of the fact that Employer has its corporate headquarters and its principal executive offices within the State of Washington, and there is a critical need for uniformity in the interpretation and enforcement of the employment agreements between Employer and its key employees. Aside from any disputes that must be resolved by arbitration as provided for in Section 14, the Snohomish County Superior Court in Washington shall have exclusive jurisdiction of any lawsuit arising from or relating to Executive’s employment with, or termination from, Employer, or arising from or relating to this Agreement. Executive consents to such venue and personal jurisdiction. 25. Counterparts. This agreement may be executed in counterpart in different places, at different times and on different dates, and in that case all executed counterparts taken together collectively constitute a single binding agreement.
Page 18 of 21 26. Costs and Fees Related to Negotiation and Execution of Agreement. Each Party Shall be responsible for the payment of its own costs and expenses, including legal fees and expenses, in connection with the negotiation and execution of this Agreement. Neither Party will be liable for the payment of any commissions or compensation in the nature of finders’ fees or brokers’ fees, gratuity or other similar thing or amount in consideration of the other Party entering into this Agreement to any broker, agent or third party acting on behalf of the other Party. 27. Entire Agreement. This instrument contains the entire agreement of the parties with respect to the relationship between Executive and Employer and supersedes all prior agreements and understandings, and there are no other representations or agreements other than as stated in this Agreement related to the terms and conditions of Executive’s employment. This Agreement may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought, and any such modification will be signed by an authorized representative of Employer.
Page 19 of 21 IN WITNESS WHEREOF, the parties have duly signed and delivered this Agreement as of the day and year first above written. EMPLOYER By: Title: Chief Executive Officer EXECUTIVE Troy Wichterman
Page 20 of 21 EXHIBIT A DISCLOSURE OF OUTSIDE BOARD OF DIRECTORS AND TRUSTEE POSITIONS
Page 21 of 21 EXHIBIT B LIST OF INVENTIONS
BioLife Solutions, Inc. Insider Trading Compliance Manual In order to take an active role in the prevention of insider trading violations by its officers, directors, employees, consultants, attorneys, advisors and other related individuals, the Board of Directors (the “Board”) of BioLife Solutions, Inc., a Delaware corporation (the “Company”), has adopted the policies and procedures described in this Insider Trading Compliance Manual. I. Adoption of Insider Trading Policy Effective as of the date first written above, the Board has adopted the Insider Trading Policy attached hereto as Exhibit A (as the same may be amended from time to time by the Board, the “Policy”), which prohibits trading based on material, nonpublic information regarding the Company or any company whose securities are listed for trading or quotation in the United States (“Material Non-Public Information”). This Policy covers all officers and directors of the Company and its subsidiaries, all other employees of the Company and its subsidiaries, and consultants or contractors to the Company or its subsidiaries who have or may have access to Material Non-Public Information and members of the immediate family or household of any such person. This Policy (and/or a summary thereof) is to be delivered to all employees, consultants and related individuals who are within the categories of covered persons upon the commencement of their relationships with the Company. II. Designation of Certain Persons A. Section 16 Individuals. All directors and executive officers of the Company will be subject to the reporting and liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (“Section 16 Individuals”). B. Other Persons Subject to Policy. In addition, certain employees, consultants, and advisors of the Company as described in Section I above have, or are likely to have, from time to time access to Material Non-Public Information and together with the Section 16 Individuals, are subject to the Policy, including the pre-clearance requirement described in Section IV. A. below. III. Appointment of Compliance and Chief Ethics Officer. By the adoption of this Policy, the Board has appointed the Company’s Chief Financial Officer as the Insider Trading Compliance Officer (the “Compliance Officer”). IV. Duties of Compliance Officer. The Compliance Officer has been designated by the Board to handle any and all matters relating to the Company’s Insider Trading Compliance Program. Certain of those duties may be delegated to outside counsel with special expertise in securities issues and relevant law. The duties of the Compliance Officer shall include the following: A. Pre-clearing all transactions involving the Company’s securities by the Section 16 Individuals and those individuals having regular access to Material Non-Public Information in order to determine compliance with the Policy, insider trading laws, Section 16 of the Exchange Act and Rule 144 promulgated under the Securities Act of 1933, as amended (“Rule 144”). Attached hereto as Exhibit B is a Pre-Clearance Checklist to assist the Compliance Officer’s performance of this duty. B. Assisting in the preparation and filing of Section 16 reports (Forms 3, 4 and 5) for all Section 16 Individuals, bearing in mind, however, that the preparation of such reports is undertaken by the Company as a courtesy only and that the Section 16 Individuals alone (and not the Company, its employees or advisors) shall be
solely responsible for the content of such reports and for any violations of Section 16 under the Exchange Act and related rules and regulations. C. Serving as the designated recipient at the Company of copies of reports filed with the Securities and Exchange Commission (“SEC”) by Section 16 Individuals under Section 16 of the Exchange Act. D. Performing periodic reviews of available materials, which may include Forms 3, 4 and 5, Form 144, officers and director’s questionnaires, and reports received from the Company’s stock administrator and transfer agent, to determine trading activity by officers, directors and others who have, or may have, access to Material Non-Public Information. E. Circulating the Policy (and/or a summary thereof) to all covered employees, including Section 16 Individuals, on an annual basis, and providing the Policy and other appropriate materials to new officers, directors and others who have, or may have, access to Material Non-Public Information. F. Assisting the Board in implementation of the Policy and all related Company policies. G. Coordinating with Company internal or external legal counsel regarding all securities compliance matters. H. Retaining copies of all appropriate securities reports, and maintaining records of his or her activities as Compliance Officer. Insider Trading Policy and Guidelines with Respect to Certain Transactions in Company Securities Applicability of Policy This Policy applies to all transactions in the Company’s securities, including common stock, options and warrants to purchase common stock and any other securities the Company may issue from time to time, such as preferred stock, warrants and convertible notes, as well as to derivative securities relating to the Company’s stock, whether or not issued by the Company, such as exchange-traded options. It applies to all officers and directors of the Company, all other employees of the Company and its subsidiaries, and consultants or contractors to the Company or its subsidiaries who have or may have access to Material Nonpublic Information (as defined below) regarding the Company and members of the immediate family or household of any such person. This group of people is sometimes referred to in this Policy as “Insiders.” This Policy also applies to any person who receives Material Nonpublic Information from any Insider. Any person who possesses Material Nonpublic Information regarding the Company is an Insider for so long as such information is not publicly known. Definition of Material Nonpublic Information It is not possible to define all categories of material information. However, information should be regarded as material if there is a reasonable likelihood that it would be considered important to an investor in making an investment decision regarding the purchase or sale of the Company’s securities. Nonpublic information is information that has not been previously disclosed to the general public and is otherwise not available to the general public.
While it may be difficult to determine whether particular information is material, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. In addition, material information may be positive or negative. Examples of such information may include: • Financial results • Information regarding the Company’s clinical trials • Information regarding regulatory review of Company products • Intellectual property and other proprietary/scientific information • Projections of future earnings or losses • Major contract awards, cancellations or write-offs • Joint ventures/commercial partnerships with third parties • Research milestones and related payments or royalties • News of a pending or proposed merger or acquisition • News of the disposition of material assets • Impending bankruptcy or financial liquidity problems • Gain or loss of a substantial customer or supplier • New product announcements of a significant nature • Significant pricing changes • Stock splits • New equity or debt offerings • Significant litigation exposure due to actual or threatened litigation • Changes in senior management or the Board of Directors of the Company • Capital investment plans • Changes in dividend policy Certain Exceptions For purposes of this Policy, the Company considers that the exercise of stock options for cash under the Company’s equity incentive or similar plan (but not the sale of any such shares) to be exempt from this Policy, since the other party to the transaction is the Company itself and the price does not vary with the market but is fixed by the terms of the option agreement or the plan.
Statement of Policy General Policy It is the policy of the Company to prohibit the unauthorized disclosure of any nonpublic information acquired in the workplace and the misuse of Material Nonpublic Information in securities trading related to the Company or any other company. Specific Policies 1. Trading on Material Nonpublic Information. With certain exceptions, no Insider shall engage in any transaction involving a purchase or sale of the Company’s or any other company’s securities, including any offer to purchase or offer to sell, during any period commencing with the date that he or she possesses Material Nonpublic Information concerning the Company, and ending at the close of business on the second Trading Day following the date of public disclosure of that information, or at such time as such nonpublic information is no longer material. However, see Section 2 under “Permitted Trading Period” below for a full discussion of trading pursuant to a pre-established plan or by delegation. As used herein, the term “Trading Day” shall mean a day on which national stock exchanges are open for trading. 2. Tipping. No Insider shall disclose (“tip”) Material Nonpublic Information to any other person (including family members) where such information may be used by such person to his or her profit by trading in the securities of companies to which such information relates, nor shall such Insider or related person make recommendations or express opinions on the basis of Material Nonpublic Information as to trading in the Company’s securities. Regulation FD (Fair Disclosure) is an issuer disclosure rule implemented by the SEC that addresses selective disclosure of Material Nonpublic Information. The regulation provides that when the Company, or person acting on its behalf, discloses material nonpublic information to certain enumerated persons (in general, securities market professionals and holders of the Company’s securities who may well trade on the basis of the information), it must make public disclosure of that information. The timing of the required public disclosure depends on whether the selective disclosure was intentional or unintentional; for an intentional selective disclosure, the Company must make public disclosures simultaneously; for a non- intentional disclosure the Company must make public disclosure promptly. Under the regulation, the required public disclosure may be made by filing or furnishing a Form 8-K, or by another method or combination of methods that is reasonably designed to effect broad, non-exclusionary distribution of the information to the public. It is the policy of the Company that all public communications of the Company (including, without limitation, communications with the press, other public statements, statements made via the Internet or social media outlets, or communications with any regulatory authority) be handled only through the Company’s President and/or Chief Executive Officer (the “CEO”), an authorized designee of the CEO or the Company’s public or investor relations firm. Please refer all press, analyst or similar requests for information to the CEO and do not respond to any inquiries without prior authorization from the CEO. If the CEO is unavailable, the Company’s Chief Financial Officer (or the authorized designee of such officer) will fill this role. 3. Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information (including, without limitation, via email or by posting on Internet message boards, blogs or social media) is strictly forbidden.
4. Duty to Report Inappropriate and Irregular Conduct. All employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within the company, consistent with generally accepted accounting principles and both federal and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or irregularities, whether by witnessing the incident or being told of it, must report it to their immediate supervisor and to any member of the Company’s Audit Committee. In certain instances, employees are allowed to participate in federal or state proceedings. For a more complete understanding of this issue, employees should consult their employee manual and or seek the advice of counsel. Our general corporate and securities counsel is K&L Gates LLP, attention: Michael A. Hedge at (949) 623-3519, email: michael.hedge@klgates.com Potential Criminal & Civil Liability and/or Disciplinary Action 1. Liability for Insider Trading. Insiders may be subject to penalties of up to $5,000,000 and up to ten (10) years in jail for engaging in transactions in the Company’s securities at a time when they possess Material Nonpublic Information regarding the Company. In addition, the SEC has the authority to seek a civil monetary penalty of up to three times the amount of profit gained or loss avoided by illegal insider trading. “Profit gained” or “loss avoided” generally means the difference between the purchase or sale price of the Company’s stock and its value as measured by the trading price of the stock a reasonable period after public dissemination of the nonpublic information. 2. Liability for Tipping. Insiders may also be liable for improper transactions by any person (commonly referred to as a “tippee”) to whom they have disclosed Material Nonpublic Information regarding the Company or to whom they have made recommendations or expressed opinions on the basis of such information as to trading in the Company’s securities. The SEC has imposed large penalties even when the disclosing person did not profit from the trading. The SEC, the stock exchanges and the National Association of Securities Dealers, Inc. use sophisticated electronic surveillance techniques to monitor and uncover insider trading. 3. Possible Disciplinary Actions. Individuals subject to the Policy who violate this Policy shall also be subject to disciplinary action by the Company, which may include suspension, forfeiture of perquisites, ineligibility for future participation in the Company’s equity incentive plans and/or termination of employment. Permitted Trading Period 1. Black-Out Period and Trading Window. To ensure compliance with this Policy and applicable federal and state securities laws, the Company requires that all officers, directors, employees, members of the immediate family or household of any such person and others who are subject to this Policy refrain from conducting any transactions involving the purchase or sale of the Company’s securities, other than during the period in any fiscal quarter commencing at the close of business on the second Trading Day following the date of public disclosure of the financial results for the prior fiscal quarter or year and ending on the fifteenth day (i.e., there shall be NO trading on the 15th day) of the third month of the fiscal quarter (the “Trading Window”). If such public disclosure occurs on a Trading Day before the markets close, then such date of disclosure shall be considered the first Trading Day following such public disclosure. It is the Company’s policy that the period when the Trading Window is “closed” is a particularly sensitive periods of time for transactions in the Company’s securities from the perspective of compliance with
applicable securities laws. This is because Insiders, as any quarter progresses, are increasingly likely to possess Material Nonpublic Information about the expected financial results for the quarter. The purpose of the Trading Window is to avoid any unlawful or improper transactions or the appearance of any such transactions. It should be noted that even during the Trading Window any person possessing Material Nonpublic Information concerning the Company shall not engage in any transactions in the Company’s (or any other company’s, as applicable) securities until such information has been known publicly for at least two Trading Days. The Company has adopted the policy of delaying trading for “at least two Trading Days” because the securities laws require that the public be informed effectively of previously undisclosed material information before Insiders trade in the Company’s stock. Public disclosure may occur through a widely disseminated press release or through filings, such as Forms 10-Q and 8-K, with the SEC. Furthermore, in order for the public to be effectively informed, the public must be given time to evaluate the information disclosed by the Company. Although the amount of time necessary for the public to evaluate the information may vary depending on the complexity of the information, generally two Trading Days is a sufficient period of time. From time to time, the Company may also require that Insiders suspend trading because of developments known to the Company and not yet disclosed to the public. In such event, such persons may not engage in any transaction involving the purchase or sale of the Company’s securities during such period and may not disclose to others the fact of such suspension of trading. Although the Company may from time to time require during a Trading Window that Insiders and others suspend trading because of developments known to the Company and not yet disclosed to the public, each person is individually responsible at all times for compliance with the prohibitions against insider trading. Trading in the Company’s securities during the Trading Window should not be considered a “safe harbor,” and all directors, officers and other persons should use good judgment at all times. Notwithstanding these general rules, Insiders may trade outside of the Trading Window provided that such trades are made pursuant to a pre-established plan or by delegation; these alternatives are discussed in the next section. 2. Trading According to a Pre-established Plan (10b5-1) or by Delegation. The SEC has adopted Rule 10b5-1 under which insider trading liability can be avoided if Insiders follow very specific procedures. In general, such procedures involve trading according to pre-established instructions, plans or programs (a “10b5-1 Plan”). 10b5-1 Plans must: a. Be documented by a contract, written plan, or formal instruction which provides that the trade take place in the future. For example, an Insider can contract to sell his or her shares on a specific date, or simply delegate such decisions to an investment manager, 401(k) plan administrator or similar third party. This documentation must be provided to the Company’s Insider Trading Compliance Officer; b. Include in its documentation the specific amount, price and timing of the trade, or the formula for determining the amount, price and timing. For example, the Insider can buy or sell shares in a specific amount and on a specific date each month, or according to a pre-established percentage (of the Insider’s salary, for example) each time that the share price falls or rises to pre-established
levels. In the case where trading decisions have been delegated, the specific amount, price and timing need not be provided; c. Be implemented at a time when the Insider does not possess material non-public information. As a practical matter, this means that the Insider may set up 10b5-1 Plans, or delegate trading discretion, only during a “Trading Window” (discussed in Section 1, above); and, d. Remain beyond the scope of the Insider’s influence after implementation. In general, the Insider must allow the 10b5-1 Plan to be executed without changes to the accompanying instructions, and the Insider cannot later execute a hedge transaction that modifies the effect of the 10b5-1 Plan. An Insider wishing to change the amount, price or timing of a 10b5-1 Plan can do so only during a “Trading Window” (discussed in Section 1, above). Termination of a 10b5-1 Plan may be undertaken at any time, provided that the termination must be approved in advance by the Company’s Insider Trading Compliance Officer in order to ensure that the Insider is not in possession of Material Nonpublic Information.[1] If the Insider has delegated decision-making authority to a third party, the Insider cannot subsequently influence the third party in any way and such third party must not possess material non-public information at the time of any of the trades. Prior to implementing a pre-established plan for trading, all officers and directors must receive the approval for such plan from the Company’s Insider Trading Compliance Officer. 3. Pre-Clearance of Trades. Even during a Trading Window, all Insiders, must comply with the Company’s “pre-clearance” process prior to trading in the Company’s securities, implementing a pre-established plan for trading, or delegating decision-making authority over the Insider’s trades. To do so, each Insider must contact the Company’s Insider Trading Compliance Officer prior to initiating any of these actions. The Company may also find it necessary, from time to time, to require compliance with the pre-clearance process from others who may be in possession of Material Nonpublic Information. 4. Individual Responsibility. Every person subject to this Policy has the individual responsibility to comply with this Policy against insider trading, regardless of whether the Company has established a Trading Window applicable to that Insider or any other Insiders of the Company. Each individual, and not necessarily the Company, is responsible for his or her own actions and will be individually responsible for the consequences of their actions. Therefore, appropriate judgment, diligence and caution should be exercised in connection with any trade in the Company’s securities. An Insider may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of the Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting. 5. Exceptions to the Policy. Any exceptions to this Policy may only be made by advance written approval of each of: (i) the Company’s President, (ii) the Insider Trading Compliance Officer and (iii) the Chairman of the Governance and Nominating Committee of the Board. Any such exceptions shall be immediately reported to the remaining members of the Board. [1] Insiders should be aware that termination of a 10b5-1 Plan after trades have been undertaken under such plan could negate the 10b5-1 affirmative defense afforded by such program for all such prior trades. As such,
termination of a 10b5-1 Plan should only be undertaken in consultation with the Insider Trading Compliance Officer and, if necessary, the Company’s General Counsel or outside legal counsel. Applicability of Policy to Inside information Regarding Other Companies This Policy and the guidelines described herein also apply to Material Nonpublic Information relating to other companies, including the Company’s customers, vendors or suppliers (“business partners”), when that information is obtained in the course of employment with, or other services performed on behalf of the Company. Civil and criminal penalties, as well as termination of employment, may result from trading on Material Nonpublic Information regarding the Company’s business partners. All Insiders should treat Material Nonpublic Information about the Company’s business partners with the same care as is required with respect to information relating directly to the Company. Prohibition Against Buying & Selling Company Common Stock Within a Six-month Period Directors, Officers and 10% Shareholders Purchases and sales (or sales and purchases) of Company common stock occurring within any six-month period in which a mathematical profit is realized result in illegal “short-swing profits.” The prohibition against short-swing profits is found in Section 16 of the Exchange Act. Section 16 was drafted as a rather arbitrary prohibition against profitable “insider trading” in a company’s securities within any six-month period regardless of the presence or absence of material nonpublic information that may affect the market price of those securities. Each executive officer, director and 10% shareholder of the Company is subject to the prohibition against short-swing profits under Section 16. Such persons are required to file Forms 3, 4 and 5 reports reporting his or her initial ownership of the Company’s common stock and any subsequent changes in such ownership. The Sarbanes-Oxley Act of 2002 requires executive officers and directors who must report transactions on Form 4 to do so by the end of the second business day following the transaction date. Profit realized, for the purposes of Section 16, is calculated generally to provide maximum recovery by the Company. The measure of damages is the profit computed from any purchase and sale or any sale and purchase within the short-swing (i.e., six-month) period, without regard to any setoffs for losses, any first-in or first-out rules, or the identity of the shares of common stock. This approach sometimes has been called the “lowest price in, highest price out” rule. In order to avoid trading activity that could inadvertently trigger a short-swing profit, it is the Company’s policy that no executive officer, director and 10% shareholder of the Company who has a 10b5-1 Plan in place may engage in voluntary purchases or sales of Company securities outside of and while such 10b5-1 Plan remains in place. Inquiries Please direct your questions as to any of the matters discussed in this Policy to the Company’s Insider Trading Compliance Officer. Team Member Acknowledgment: _____________________________________________________ ______________________________________ Team Member name Location _____________________________________________________ ______________________________________ Team Member signature Date signed
Insider Trading Compliance Program - Pre-Clearance Checklist Individual Proposing to Trade:_________________________ Number of Shares covered by Proposed Trade:_________________________ Date:_________________________ Trading Window. Confirm that the trade will be made during the Company’s “trading window.” Section 16 Compliance. Confirm, if the individual is subject to Section 16, that the proposed trade will not give rise to any potential liability under Section 16 as a result of matched past (or intended future) transactions. Also, ensure that a Form 4 has been or will be completed and will be timely filed. Prohibited Trades. Confirm, if the individual is subject to Section 16, that the proposed transaction is not a “short sale,” put, call or other prohibited or strongly discouraged transaction. Rule 144 Compliance (as applicable). Confirm that: Current public information requirement has been met; Shares are not restricted or, if restricted, the one year holding period has been met; Volume limitations are not exceeded (confirm that the individual is not part of an aggregated group); The manner of sale requirements have been met; and The Notice of Form 144 Sale has been completed and filed. Rule 10b-5 Concerns. Confirm that (i) the individual has been reminded that trading is prohibited when in possession of any material information regarding the Company that has not been adequately disclosed to the public, and (ii) the Insider Trading Compliance Officer has discussed with the individual any information known to the individual or the Insider Trading Compliance Officer which might be considered material, so that the individual has made an informed judgment as to the presence of inside information. ___________________________________________ Signature of Insider Trading Compliance Officer
SUBSIDIARIES OF THE REGISTRANT
| Subsidiaries | Place of Incorporation | |||||||
| SAVSU Technologies, Inc. | Delaware | |||||||
| Sexton Biotechnologies, Inc. | Delaware | |||||||
Consent of Independent Registered Public Accounting Firm
BioLife Solutions, Inc.
Bothell, Washington
We have issued our reports dated March 3, 2025, with respect to the consolidated financial statements and internal control over financial reporting included in the Annual Report of BioLife Solutions, Inc. on Form 10-K for the year ended December 31, 2024. We consent to the incorporation by reference of said reports in the Registration Statements of BioLife Solutions, Inc. on Forms S-3 (File Nos. 333-275646, 333-275645, 333-259249, 333-239637, 333-233912, 333-222433, and 333-208912) and on Forms S-8 (File Nos. 333-274016, 333-267391, 333-222437, 333-205101, and 333-189551).
/s/ Grant Thornton LLP
Bellevue, Washington
March 3, 2025
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULE 13a-14(a) or RULE 13d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Roderick de Greef, certify that:
1.I have reviewed this annual report on Form 10-K of BioLife Solutions, Inc.;
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 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 controls 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 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.
Date: March 3, 2025
/s/ Roderick de Greef | |||||
Roderick de Greef | |||||
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14(a) or RULE 13d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
I, Troy Wichterman, certify that:
1.I have reviewed this annual report on Form 10-K of BioLife Solutions, Inc.;
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 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 controls 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 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.
Date: March 3, 2025
/s/ Troy Wichterman | |||||
Troy Wichterman | |||||
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 Annual Report of BioLife Solutions, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Rice, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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: March 3, 2025
/s/ Roderick de Greef | |||||
Roderick de Greef | |||||
| Chief Executive Officer and Chairman of the Board of Directors | |||||
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 Annual Report of BioLife Solutions, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Troy Wichterman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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: March 3, 2025
| /s/ Troy Wichterman | |||||
| Troy Wichterman | |||||
| Chief Financial Officer | |||||
507226237.3 BIOLIFE SOLUTIONS, INC. INCENTIVE-BASED COMPENSATION RECOVERY POLICY 1. Policy Purpose. The purpose of this BioLife Solutions, Inc. (the “Company”) Incentive-Based Compensation Recovery Policy (this “Policy”) is to enable the Company to recover Erroneously Awarded Compensation in the event that the Company is required to prepare an Accounting Restatement. This Policy is intended to comply with the requirements set forth in Listing Rule 5608 of the corporate governance rules of The NASDAQ Stock Market (the “Listing Rule”) and shall be construed and interpreted in accordance with such intent. Unless otherwise defined in this Policy, capitalized terms shall have the meaning ascribed to such terms in Section 7. This Policy shall become effective on December 1, 2023. Where the context requires, reference to the Company shall include the Company’s subsidiaries and affiliates (as determined by the Committee in its discretion). 2. Policy Administration. This Policy shall be administered by the Compensation Committee of the Board (the “Committee”) unless the Board determines to administer this Policy itself. The Committee has full and final authority to make all determinations under this Policy. All determinations and decisions made by the Committee pursuant to the provisions of this Policy shall be final, conclusive and binding on all persons, including the Company, its affiliates, its stockholders and Executive Officers. Any action or inaction by the Committee with respect to an Executive Officer under this Policy in no way limits the Committee’s actions or decisions not to act with respect to any other Executive Officer under this Policy or under any similar policy, agreement or arrangement, nor shall any such action or inaction serve as a waiver of any rights the Company may have against any Executive Officer other than as set forth in this Policy. 3. Policy Application. This Policy applies to all Incentive-Based Compensation received by a person: (a) on or after October 2, 2023, and beginning service as an Executive Officer; (b) who served as an Executive Officer at any time during the performance period for such Incentive-Based Compensation; (c) while the Company had a class of securities listed on a national securities exchange or a national securities association; and (d) during the three completed fiscal years immediately preceding the Accounting Restatement Date. In addition to such last three completed fiscal years, the immediately preceding clause (d) includes any transition period that results from a change in the Company’s fiscal year within or immediately following such three completed fiscal years; provided, however, that a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to twelve months shall be deemed a completed fiscal year. For purposes of this Policy, Incentive-Based Compensation is deemed received in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period. For the avoidance of doubt, Incentive-Based Compensation that is subject to both a Financial Reporting Measure vesting condition and a service-based vesting condition shall be considered received when the relevant Financial Reporting Measure is achieved, even if the Incentive-Based Compensation continues to be subject to the service-based vesting condition. 4. Policy Recovery Requirement. In the event an Accounting Restatement is required, the Company must recover, reasonably promptly, Erroneously Awarded Compensation, in amounts determined pursuant to this Policy. The Company’s obligation to recover Erroneously Awarded Compensation is not dependent on if or when the Company files the required restated financial statements. Recovery under this Policy with respect to an Executive Officer shall not require the finding of any misconduct by such Executive Officer or such Executive Officer being found responsible for the accounting error leading to an Accounting Restatement. In the event of an Accounting Restatement, the Company shall satisfy the Company’s obligations under this Policy to recover any amount owed from any applicable Executive Officer by exercising its sole and absolute discretion in how to accomplish such recovery. The Company’s
2 507226237.3 recovery obligation pursuant to this Section 4 shall not apply to the extent that the Committee, or in the absence of the Committee, a majority of the independent directors serving on the Board, determines that such recovery would be impracticable and: a. The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on expense of enforcement, the Company must make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, and provide that documentation to the Stock Exchange; or b. Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the registrant, to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Code. 5. Policy Prohibition on Indemnification and Insurance Reimbursement. The Company is prohibited from indemnifying any Executive Officer or former Executive Officer against the loss of Erroneously Awarded Compensation. Further, the Company is prohibited from paying or reimbursing an Executive Officer for purchasing insurance to cover any such loss. 6. Required Policy-Related Filings. The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the Federal securities laws, including disclosures required by U.S. Securities and Exchange Commission filings. 7. Definitions. a. “Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. b. “Accounting Restatement Date” means the earlier to occur of: (i) the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if the Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement; and (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting Restatement. c. “Board” means the board of directors of the Company. d. “Code” means the U.S. Internal Revenue Code of 1986, as amended. Any reference to a section of the Code or regulation thereunder includes such section or regulation, any valid regulation or other official guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation. e. “Erroneously Awarded Compensation” means, in the event of an Accounting Restatement, the amount of Incentive-Based Compensation previously received that exceeds the amount of Incentive-Based Compensation that otherwise would have been received had it been determined based on the restated amounts in such Accounting Restatement, and must be
3 507226237.3 computed without regard to any taxes incurred or paid by the relevant Executive Officer; provided, however, that for Incentive-Based Compensation based on stock price or total stockholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement: (i) the amount of Erroneously Awarded Compensation must be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total stockholder return upon which the Incentive-Based Compensation was received; and (ii) the Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to the Stock Exchange. f. “Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. An executive officer of the Company’s parent or subsidiary is deemed an “Executive Officer” if the executive officer performs such policy making functions for the Company. For the avoidance of doubt, “Executive Officer” includes, but is not limited to, any person identified as an executive officer pursuant to Item 401(b) of Regulation S-K under the U.S. Securities Act of 1933, as amended. g. “Financial Reporting Measure” means any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measure; provided, however, that a Financial Reporting Measure is not required to be presented within the Company’s financial statements or included in a filing with the U.S. Securities and Exchange Commission to qualify as a “Financial Reporting Measure.” For purposes of this Policy, “Financial Reporting Measure” includes, but is not limited to, stock price and total stockholder return. h. “Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure. i. “Stock Exchange” means the national stock exchange on which the Company’s common stock is listed. 8. Acknowledgement. Each Executive Officer shall sign and return to the Company, within 30 calendar days following the later of (i) the effective date of this Policy first set forth above or (ii) the date the individual becomes an Executive Officer, the Acknowledgement Form attached hereto as Exhibit A, pursuant to which the Executive Officer agrees to be bound by, and to comply with, the terms and conditions of this Policy. 9. Committee Indemnification. Any members of the Committee, and any other members of the Board who assist in the administration of this Policy, shall not be personally liable for any action, determination or interpretation made with respect to this Policy and shall be fully indemnified by the Company to the fullest extent under applicable law and Company policy with respect to any such action, determination or interpretation. The foregoing sentence shall not limit any other rights to indemnification of the members of the Board under applicable law or Company policy. 10. Severability. The provisions in this Policy are intended to be applied to the fullest extent of the law. To the extent that any provision of this Policy is found to be unenforceable or invalid under any applicable
4 507226237.3 law, such provision shall be applied to the maximum extent permitted, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. 11. Amendment; Termination. The Board may amend this Policy from time to time in its sole and absolute discretion and shall amend this Policy as it deems necessary to reflect the Listing Rule. The Board may terminate this Policy at any time. 12. Other Recovery Obligations; General Rights. To the extent that the application of this Policy would provide for recovery of Incentive-Based Compensation that the Company recovers pursuant to Section 304 of the Sarbanes-Oxley Act or other recovery obligations, the amount the relevant Executive Officer has already reimbursed the Company will be credited to the required recovery under this Policy. This Policy shall not limit the rights of the Company to take any other actions or pursue other remedies that the Company may deem appropriate under the circumstances and under applicable law. To the maximum extent permitted under the Listing Rule, this Policy shall be administered in compliance with (or pursuant to an exemption from the application of) Section 409A of the Code. 13. Successors. This Policy is binding and enforceable against all Executive Officers and their beneficiaries, heirs, executors, administrators or other legal representatives. 14. Governing Law; Venue. This Policy and all rights and obligations hereunder are governed by and construed in accordance with the internal laws of the State of Delaware, excluding any choice of law rules or principles that may direct the application of the laws of another jurisdiction. All actions arising out of or relating to this Policy shall be heard and determined exclusively in the Court of Chancery of the State of Delaware or, if such court declines to exercise jurisdiction or if subject matter jurisdiction over the matter that is the subject of any such legal action or proceeding is vested exclusively in the U.S. Federal courts, the U.S. District Court for the District of Delaware.
507226237.3 A-1 EXHIBIT A BIOLIFE SOLUTIONS, INC. INCENTIVE-BASED COMPENSATION RECOVERY POLICY ACKNOWLEDGEMENT FORM By signing below, the undersigned acknowledges and confirms that the undersigned has received and reviewed a copy of the BioLife Solutions, Inc. (the “Company”) Incentive-Based Compensation Recovery Policy (the “Policy”). By signing this Acknowledgement Form, the undersigned acknowledges and agrees that the undersigned is and will continue to be subject to the Policy and that the Policy will apply both during and after the undersigned’s employment with the Company. Further, by signing below, the undersigned agrees to abide by the terms of the Policy, including, without limitation, by returning any Erroneously Awarded Compensation (as defined in the Policy) to the Company to the extent required by, and in a manner consistent with, the Policy. Further, by signing below, the undersigned agrees that the terms of the Policy shall govern in the event of any inconsistency between the Policy and the terms of any employment agreement to which the undersigned is a party, or the terms of any compensation plan, program or agreement under which any compensation has been granted, awarded, earned or paid. EXECUTIVE OFFICER Signature Print Name Date