Exhibit 10.1

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSET PURCHASE AGREEMENT

 

between

 

SANOFI US SERVICES INC.

 

and

 

ICAGEN-T, INC.

  

dated June 27, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

Table of Contents

 

Article 1 DEFINITIONS 1   1.1 Defined terms 1   1.2  Other Definitional
Provisions; Construction and Interpretation 7   1.3 Captions 8   1.4 Exhibits
and Schedules; Incorporation by Reference 8         Article 2  Transferred
Assets and Assumed Liabilities 9   2.1 Transferred Assets 9   2.2 Assumed
Liabilities 10         Article 3 PURCHASE PRICE 12   3.1 Purchase Price 12      
  Article 4 Closing 12   4.1 Closing 12   4.2 Deliveries by the Seller 12   4.3
Deliveries by the Purchaser 13         Article 5 Conditions Precedent to Closing
14   5.1 Mutual Conditions Precedent to Closing 14   5.2 Additional Conditions
Precedent of the Purchaser 14   5.3 Additional Conditions Precedent of the
Seller 15         Article 6 Covenants of the Parties prior to Closing 16   6.1
Operation of the Transferred Assets Pending the Closing 16   6.2 Efforts to
fulfil conditions precedent 17   6.3 Litigation 17   6.4 Disclosure Supplement
18   6.5 Offer of Employment to Eligible Employees 18   6.6 Termination of
Intra-Group Agreements 18         Article 7   Post-Closing Covenants 19   7.1
Transfer of Books and Records 19   7.2 Consents pertaining to Transferred
Contracts; Shared Contracts 19   7.3 Wrongfully transferred or retained assets
and liabilities 20   7.4 Payments under Transferred Contracts 20   7.5
Transferred Employees 21   7.6 Non-Solicitation of Employees 23   7.7 Insurance
23   7.8  Further Actions 23         Article 8  Representations and Warranties
of the Seller 24   8.1   Corporate Organization 24   8.2   Authority; Binding
Effect 24   8.3   No Violations; Consents and Approvals 25   8.4   Title to
Transferred Assets 25   8.5  Transferred Contracts 25   8.6  Movable Assets 26

  

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

  8.7 Owned Real Property 26   8.8 Environmental Matters 26   8.9  Employees and
Employee Benefit Plans 27   8.10 Labor Relations 27   8.11  Information and
Consultation of Employee Representatives 27   8.12 Litigation 27   8.13
Compliance with Laws 28   8.14  Brokers and Finders 28   8.15 No Other
Representation and/or Warranty 28         Article 9 Representations and
Warranties of the Purchaser 29   9.1 Corporate Organization 29   9.2 Authority;
Binding Effect 29   9.3 No Violations; Consents and Approvals 30   9.4 Financial
Capability 30   9.5 Brokers and Finders 31   9.6 Environmental Due Diligence 31
  9.7  Waiver and Release for Environmental Matters 31   9.8 No Other
Representation and/or Warranty 31   9.9 Independent Assessment 32        
Article 10 Indemnification 32   10.1 Indemnification 32   10.2 Indemnification
Process for Direct Claims 33   10.3  Indemnification Process for Third Party
Claims 33   10.4  General Limitations on Indemnity Payments 35   10.5 Survival
of Representations, Warranties and Covenants 36   10.6 Other Limitations 36    
    Article 11 Termination 38   11.1 Conditions of Termination 38   11.2
Consequences of Termination 39         Article 12  General Provisions 39   12.1
Confidentiality 39   12.2  Public Announcements 41   12.3 Notices 41   12.4
Expenses and Taxes 42   12.5 Amendments; Waiver 43   12.6 Entire Agreement 43  
12.7 Severability 44   12.8 Binding Effect; No Assignment 44   12.9 Specific
Performance 44   12.10 Counterparts 45   12.11 Governing Law; Dispute Resolution
45   12.12 Title Insurance 45

 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

LIST OF SCHEDULES AND EXHIBITS

 

Schedule 2.1.1(b) Machinery and Equipment     Schedule 2.1.1(c) Transferred
Contracts     Schedule 5.1(b) Material Consents; Governmental Approvals    
Schedule 8.7.1 The Facility and Owned Land     Schedule 8.9.1 Eligible Employees
    Schedule 10.4.2 Data Room Index     Exhibit A Master Services Agreement    
Exhibit B Deed of Sale     Exhibit C Deed of Trust 

 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”) is made on June 27, 2016, by
and between SANOFI US SERVICES INC. (formerly known as sanofi-aventis U.S.
Inc.), a Delaware corporation with its principal place of business located at 55
Corporate Drive, Bridgewater, New Jersey 08807 (the “Seller”), and ICAGEN-T,
INC., a Delaware corporation with its principal place of business immediately
after the Closing located at 2090 E. Innovation Park Drive, Oro Valley, Arizona
85755 (the “Purchaser”). The Seller and the Purchaser are each individually
referred to as a “Party” and collectively as the “Parties.” Unless otherwise
indicated, capitalized terms used herein shall have the meaning set forth in
Article 1.

 

Recitals

 

WHEREAS, the Seller owns in fee simple the land and buildings known as the
Sanofi Tucson Research Center located in the Town of Oro Valley, Pima County,
Arizona (the “Facility”).

 

WHEREAS, the Seller engages in compound testing for the Sanofi Group at the
Facility (the “Activity”).

 

WHEREAS, the Seller desires to sell, transfer and assign, or (as the case may
be) cause its Affiliates to sell, transfer and assign, to the Purchaser, and the
Purchaser desires to purchase and assume from the Seller and its Affiliates, all
of the Transferred Assets and the Assumed Liabilities, as more specifically
provided herein.

 

WHEREAS, following the consummation of the transfer and assignment of assets and
liabilities pursuant to this Agreement, (i) the Purchaser will begin providing
compound testing services for the Sanofi Group pursuant to a Master Services
Agreement between the Parties and, to facilitate the provision of compound
testing services, the Seller or its Affiliate will grant to Purchaser the right
and license to use two chemical libraries owned by the Seller located at the
Facility pursuant to two separate Hit Discovery Services Agreements between the
Parties and (ii) the Seller and/or its Affiliates will provide transitional
services to the Purchaser pursuant to a Transition Services Agreement between
the Parties.

 

NOW, THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and agreements contained herein, the Parties hereto agree
as follows:

 

Article 1 Definitions

 

1.1Defined terms

 

As used in this Agreement, the following terms shall have the meanings set forth
below:

 

“Activity” shall have the meaning given in the Recitals.

 

“Affiliate” shall mean, as to any Person, any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For the purpose of this definition, “control”, “controlled by” or “under
common control with” means the possession of the power to direct or cause the
direction of management and policies of such Person, whether through direct or
indirect ownership of voting securities or otherwise.

 

-1-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

“Agreement” shall mean this Asset Purchase Agreement, as the same may be amended
or supplemented from time to time in accordance with the terms of this
Agreement, including the Exhibits and Schedules hereto.

 

“Ancillary Agreements” shall mean the Transition Services Agreement, the Deed of
Sale, the Master Services Agreement, the Hit Discovery Services Agreements, the
Deed of Trust and all other agreements, documents, assignments, certificates and
other instruments required to consummate the transactions contemplated hereby.

 

“Assumed Liabilities” shall have the meaning given in Section 2.2.1.

 

“Authorized Person” of any Person shall mean any officer or employee of such
Person duly authorized to take the subject action.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on
which banks in New York are obligated by Law or executive order to close.

 

“Cap” shall have the meaning given in Section 10.6.2.

 

“Closing” shall mean, subject to the satisfaction or waiver in accordance with
this Agreement of all other conditions precedent set forth in Article 4, the
closing of the transactions contemplated by this Agreement.

 

“Closing Date” shall have the meaning given in Section 4.1.

 

“Confidential Information” shall have the meaning given in Section 12.1.1(a).

 

“Consent” shall mean any of the consents, approvals, authorizations and waivers
of any Third Party that are necessary for the transfer of the Transferred
Assets, other than Governmental Approvals.

 

“Data Room” means the data room comprising the documents and other information
relating to the Transferred Assets and the Assumed Liabilities made available by
the Seller as listed on the data room index set forth in Schedule 10.4.2.

 

“Deductible” shall have the meaning given in Section 10.6.2(b).

 

“Deed of Sale” shall mean the special warranty deed with reverter transferring
to the Purchaser title to the Owned Land and the Facility to be executed by the
Seller before a public notary, subject only to the Permitted Encumbrances
identified on Schedule B (or similar schedule) of the Title Policy.

 

“Deed of Trust” shall have the meaning given in Section 4.3(e).

 

“Direct Claim” shall have the meaning given in Section 10.2.

 

“Disclosing Party” shall have the meaning given in Section 12.1.4.

 

“Disclosure Supplement” shall have the meaning given in Section 6.4.1.

 

“Eligible Employees” shall mean the employees of the Seller or its Affiliates
who work mainly or wholly in relation to and operation of the Facility and the
Transferred Assets and the conduct of the Activity.

 

-2-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

“Encumbrance” shall mean any mortgage, lien, pledge, easements or other
encumbrance in respect of a particular property or asset.

 

“Environment” shall mean any land, soil, groundwater, surface water, sediment,
facilities or systems thereof, drinking water, air, or other environmental
media.

 

“Environmental Laws” shall mean all Laws applicable to the Facility and the
Owned Land in effect on the date of this Agreement relating to the protection of
the Environment, including Laws relating to Environmental Releases of Hazardous
Materials, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials.

 

“Environmental Matters” shall mean all matters applicable to the Facility and
the Owned Land and giving rise to or resulting in: (a) pollution or
contamination of the Environment or the presence, existence, disposal or
Environmental Release of Hazardous Materials, including Liability to perform
Remedial Action; (b) any personal injury to any Person, including illness and
disease, resulting from the exposure to any Hazardous Materials; (c) the
creation or existence of any noise, vibration, odour, radiation, legal nuisance
or any other adverse impact on the Environment resulting in harm or damage to,
or restriction of use of property to the extent giving rise to Liability under
Environmental Laws, including Liability to perform Remedial Action; and/or (d) a
violation of or requirement to come into compliance with Environmental Laws or
Environmental Permits.

 

“Environmental Release” shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, escape or
migration from the Facility into the Environment.

 

“Excluded Assets” shall have the meaning given in Section 2.1.2.

 

“Excluded Liabilities” shall have the meaning given in Section 2.2.2.

 

“Facility” shall have the meaning given in the Recitals and is described further
in Schedule 8.7.1.

 

“Governmental Approvals” shall mean any notices, reports or other filings to be
made, or any consents, registrations, permits or authorizations to be obtained
from any Governmental Authority.

 

“Governmental Authority” shall mean any supranational, national, federal, state,
provincial, regional or local judicial, legislative, executive or regulatory
authority.

 

“Hazardous Materials” shall mean any material, substance, chemical, waste,
hazardous waste, pollutant, contaminant or hazardous or toxic substance which is
listed or regulated as “hazardous waste”, “hazardous substance”, “toxic waste”
or “toxic substance” pursuant to any Environmental Law, including, but not
limited to, asbestos, formaldehyde, polychlorinated biphenyls, lead based paint,
radioactive materials, waste oil and other petroleum products.

 

"Hit Discovery Services Agreements" shall have the meaning given in Section
4.2(d).

 

-3-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

“Improvements” shall mean all buildings, fixtures, sidings, parking lots,
roadways, structures, erections, fixed machinery, fixed equipment and
appurtenances situated on, in, under, over or forming part of, the Facility.

 

“Indemnifiable Party” shall have the meaning given in Section 10.1.3.

 

“Indemnifying Party” shall have the meaning given in Section 10.1.3.

 

“Independent Accountant” shall have the meaning given in Section 7.4.4.

 

“Intellectual Property” shall mean means patents, trademarks, service marks,
logos, trade names, internet domain names, copyright (including rights in
computer software) and moral rights, database rights, semi-conductor topography
rights, utility models, rights in designs, rights in get-up, rights in
inventions, rights in know-how and other intellectual property rights, in each
case whether registered or unregistered, and all rights or forms of protection
having equivalent or similar effect anywhere in the world and “registered”
includes registration and applications for registration.

 

“Just Cause” [*****]

 

“Knowledge of the Purchaser” shall mean the actual knowledge of Richard
Cunningham and the knowledge that would or should have come to the attention of
Richard Cunningham.

 

“Knowledge of the Seller” shall mean (i) for purposes of Sections 8.3.2 and
8.12, Susan A. Manardo, (ii) for purposes of Section 8.8, Michael Bogdan, (iii)
for purposes of Section 8.5.2, Simon Baeriswyl and Olivier Finance and (iv) for
purposes of Sections 8.9.1 and 8.9.2, Britt Byers and, with respect to each such
Person, the knowledge that would or should have come to the attention of such
Person.

 

“Law” shall mean, as applicable, all national, federal, territorial, foreign,
state, provincial, regional, municipal and local statutes, codes, rules,
regulations, ordinances, policies, practices, orders, permits and directives of,
or issued by, all Governmental Authorities.

 

“Legal Proceeding” shall mean any claim, assertion, notice of a claim, summons,
notice of violation, proceeding, formal investigation, inquiry, demand, action,
suit, arbitration, mediation or alternative dispute resolution proceeding.

 

“Liability” shall mean all debts, liabilities, guarantees, commitments and
obligations, whether fixed, contingent or absolute, asserted or unasserted,
matured or unmatured, liquidated or unliquidated, accrued or not accrued, known
or unknown, due or to become due, whenever or however arising (including whether
arising out of any contract or tort) and whether or not the same would be
required by generally accepted principles and accounting policies to be
reflected in financial statements or disclosed in the notes thereto.

 

“Losses” shall have the meaning given in Section 10.1.1.

 

"Master Services Agreement" shall have the meaning given in Section 4.2(a).

 

-4-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

“Material Adverse Effect” shall mean an effect or change that is reasonably
expected to be materially adverse to the transaction or the Transferred Assets,
taken as a whole, or on the ability of the Seller or its Affiliates, as the case
may be, to perform their respective obligations under, or consummate, the
transactions contemplated by this Agreement; provided, however no effect arising
from or relating to the following will be deemed to constitute a Material
Adverse Effect, or will be taken into account in determining whether a Material
Adverse Effect has occurred: (a) any change in economic, social, political or
legal conditions or financial markets generally, (b) any change or condition
generally affecting the pharmaceutical industry, (c) changes in Laws or
accounting standards, including interpretations thereof by courts or any other
Governmental Authority other than as related specifically to the Transferred
Assets, (d) the outbreak of war or acts of terrorism, or (e) the announcement
of, or the taking of any action required by or with the consent of the Purchaser
pursuant to, this Agreement and/or the Ancillary Agreements.

 

“Material Consents” shall mean the Consents set forth in Schedule 5.1(b) with
respect to Material Transferred Contracts or otherwise identified therein as a
material Consent.

 

“Material Transferred Contracts” shall mean the written contracts set forth on
Schedule 2.1.1(c) and identified therein as material.

 

“Minimum Claim Threshold” shall have the meaning given in Section 10.6.2(a).

 

“Notice” shall have the meaning given in Section 12.3.1.

 

“Order” shall mean any award, judgment, decision, injunction, stipulation,
order, ruling, subpoena, writ, determination, decree, consent decree, or verdict
entered, issued, made or rendered by any arbitrator, mediator or Governmental
Authority.

 

“Owned Land” shall mean the land of the Facility described in Schedule 8.7.1,
together with all appurtenant easements, rights-of-way and interests.

 

“Party” and “Parties” shall have the meanings given in the Preamble.

 

“Permitted Encumbrance” shall mean: (a) any security interest or title retention
clause granted in the ordinary course of business pertaining to the machinery
and equipment set forth on Schedule 2.1.1(b); (b) liens on the Transferred
Assets for Taxes and municipal utility charges not yet due and payable; (c)
matters that affect title to the Facility or the Owned Land and are approved by
Purchaser or deemed to be Permitted Encumbrances pursuant to Section 12.12
below; (d) non-exclusive licenses of Intellectual Property granted in the
ordinary course of business; (e) zoning, entitlement, municipal building
restrictions and other land use and environmental regulations by any
Governmental Authority (provided, however, that such regulations or agreements
have not been violated); (f) other covenants, easements and restrictions which
do not materially and adversely affect the use of the Facility or the Owned Land
as permitted by zoning and related ordinances and laws on the date hereof, as
well as grants to utility and/or power companies, the rights of the public in
sidewalks and abutting public rights-of-way, and easements given to the public
for water course maintenance, slope rights or sight rights; (g) standard
exceptions set forth in the Title Commitment (as such term is defined in Section
12.12 below); (h) the Encumbrance in favor of the Seller under the Deed of
Trust; and/or (i) the Seller’s reversion rights under the Deed of Sale.

 

“Person” shall mean any individual, corporation, partnership (whether general,
limited or limited liability), association, joint venture, limited liability
company, joint stock company, unincorporated organization, trust or other legal
entity or organization, having legal personality, or the right to sue in its own
name.

 

“Purchase Price” shall have the meaning given in Section 3.1.

 

-5-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

“Purchaser” shall have the meaning given in the Preamble.

 

“Purchaser Indemnified Parties” shall have the meaning given in Section 10.1.1.

 

“Relevant Information” shall have the meaning given in Section 7.1.3.

 

“Remedial Action” shall mean the investigation, remediation, cure, removal,
containment, neutralization, monitoring or other applicable response action
undertaken with respect to the presence or release of any Hazardous Materials,
pollution or contamination on or originating from the Facility to the extent
required under Environmental Laws and/or by final and binding demands from
Governmental Authorities or other Persons, in each case up to the clean-up
standards to be achieved by such Remedial Actions as are required for continued
industrial use of the Facility.

 

“Representatives” shall have the meaning given in Section 12.1.1(b).

 

"Sanofi Group" shall mean the Seller and its Affiliates.

 

“Seller” shall have the meaning given in the Preamble.

 

“Seller Compensation and Benefit Plans” shall mean: (a) all bonus, vacation,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock and
stock option, incentive, severance or change-in-control plans or other similar
plans, policies, arrangements or agreements; (b) all employment agreements (or
samples of employment agreements for non-management employees); (c) all medical,
dental, disability, health and life insurance plans; and (d) all other employee
benefit and fringe benefit plans, policies, arrangements or agreements, in the
case of each of (a) through (d), maintained or contributed to by the Seller or
any of its Affiliates for the benefit of any of the Transferred Employees or
their beneficiaries and in excess of mandatory provisions in the relevant
country pursuant to applicable Laws or industry-wide collective bargaining
agreements.

 

“Seller Indemnified Parties” shall have the meaning given in Section 10.1.2.

 

“Shared Contracts” shall mean the contracts of the Seller and/or its Affiliates
which are applicable to the Facility but not exclusively applicable to the
Facility.

 

“Subsequent Event” shall have the meaning given in Section 6.4.1.

 

“Tax Return” shall mean any return, declaration, report, claim for refund,
information return or statement relating to Taxes, including any amended return,
extension request with respect thereto and any schedule or attachment thereto.

 

“Taxes” shall mean all taxes, charges, fees, duties (including customs duties),
levies or other assessment, whether national, federal, regional, foreign, state,
provincial, territorial, municipal or local, including taxes on profits,
revenues, turnover, sales, purchases, consumption, gains and income taxes,
arising on the sale, license, hire, gift or other disposal of any assets which
are imposed by any Governmental Authority, and such term shall include any
interest, penalties or additions to tax attributable thereto.

 

“Termination Date” shall have the meaning given in Section 10.5.

 

-6-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

“Third Party” shall mean any Person who is not a Party. “Third Party” shall not
include any Affiliate of a Party, except where the context otherwise requires.

 

“Third Party Claim” shall have the meaning given in Section 10.3.1.

 

“Third Party Claim Notice” shall have the meaning given in Section 10.3.1.

 

“Transfer Taxes” shall mean any federal, state, provincial, county, local,
foreign or other sales, use, transfer, conveyance, documentary transfer,
recording or other similar Tax, fee or charge imposed upon the sale, transfer or
assignment of property or any interest therein or the recording thereof, and any
penalty, addition to Tax or interest with respect thereto, but such term will
not include any Tax on, based upon or measured by, the net income, gains or
profits from such sale, transfer or assignment of the property or any interest
thereon.

 

“Transferred Assets” shall have the meaning given in Section 2.1.1.

 

“Transferred Books and Records” shall mean all current and historical books and
records in the possession or control of the Seller or its Affiliates, in
whatever form kept, including electronic form, including the books, records,
files, research, documents and manuals used in, or held for use primarily in or
related primarily to the Transferred Assets or the Facility; provided, however,
that the Transferred Books and Records shall not include: (a) invoices;
(b) books or records that are subject to restrictions on transfer pursuant to
applicable Law regarding personally identifiable information or subject to
privacy policies regarding personally identifiable information; (c) books or
records to the extent that they embody any know-how or other Intellectual
Property of the Seller or any of its Affiliates; (d) books and records relating
to any chemical libraries, in whatever form kept, including electronic lab
notebooks; (e) all organizational documents, minute books and other documents
relating exclusively to the organization, governance, maintenance and existence
of the Seller, as an entity, including tax payer and other identification
numbers, Tax Returns, Tax information and Tax records, and books and records
relating exclusively to the Excluded Liabilities; or (f) any records relating to
the negotiation and consummation of the transactions contemplated by this
Agreement or any of the Ancillary Agreements, including (i) communications with
Third Parties and analyses relating to such transactions and (ii) communications
with legal counsel representing the Seller and the right to assert the
attorney-client privilege with respect thereto.

 

“Transferred Contracts” shall mean the written contracts set forth on
Schedule 2.1.1(c).

 

“Transferred Employees” shall mean the Eligible Employees who have accepted the
Purchaser’s offer of employment, made pursuant to Section 6.5, no later than the
Closing Date.

 

“Transition Services Agreement” shall have the meaning given in Section 4.2(b).

 

1.2Other Definitional Provisions; Construction and Interpretation

 

1.2.1The words “hereof,” “herein,” “hereinafter,” “hereinabove” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. A reference to an
Article, Section, Schedule or Exhibit is, except as otherwise expressly stated,
a reference to an Article or Section of, or a Schedule or Exhibit to, this
Agreement.

 

-7-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

1.2.2Terms defined in the singular shall have a comparable meaning when used in
the plural, and vice versa. Whenever required by the context, any pronoun used
in this Agreement will include the corresponding masculine, feminine or neuter
forms.

 

1.2.3The words “include,” “includes” and “including” and words of similar import
will be by way of example rather than by limitation.

 

1.2.4Where there is any inconsistency between the definitions set out in
Section 1.1 and the definitions set out in any other Section or Schedule then,
for the purposes of construing such other Section or Schedule, the definitions
set out in such other Section or Schedule shall prevail.

 

1.2.5All references to dollar amounts in this Agreement shall be references to
United States dollars unless otherwise provided.

 

1.2.6The Parties have participated jointly in the negotiation and drafting of
this Agreement. If any ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favouring or disfavouring any Party
by virtue of the authorship of any of the provisions of this Agreement.

 

1.2.7In computing any time period provided for in this Agreement, the first day
of the time period shall not be counted but the last day of the time period
shall be counted. Any action required to be taken on a particular day must be
taken before 5:00 p.m. (Eastern Time) on that day.

 

1.3Captions

 

The captions appearing in this Agreement and the Ancillary Agreements are
inserted only as a matter of convenience and as a reference and in no way
define, limit or describe the scope or intent of such agreements or any of the
provisions thereof.

 

1.4Exhibits and Schedules; Incorporation by Reference

 

1.4.1The Exhibits and Schedules attached to this Agreement each when executed
and/or delivered, are incorporated by reference into and made a part of this
Agreement.

 

1.4.2There may be included in the Schedules items and information that are not
“material,” and such inclusion will not be deemed to be an acknowledgment or
agreement that any such item or information (or any non-disclosed item or
information of comparable or greater significance) is “material,” or to affect
the interpretation of such term for purposes of this Agreement. Matters
reflected in the Schedules are not necessarily limited to matters required by
this Agreement to be disclosed therein. The Schedules each set forth items of
disclosure with specific reference to the particular Section or sub-Section of
this Agreement to which the information in the applicable disclosure relates;
provided, however, that any information set forth in one Section of the
Schedules will be deemed to apply to each other Section or sub-Section thereof
to which its relevance is reasonably apparent on its face.

 

-8-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

Article 2 Transferred Assets and Assumed Liabilities

 

2.1Transferred Assets

 

2.1.1Upon the terms and subject to the conditions of this Agreement, including
the conditions precedent set forth in Article 4, on the Closing Date, the Seller
shall, and/or (as the case may be) shall cause its Affiliates to, sell, assign,
transfer, convey and deliver to the Purchaser all of the Seller’s and/or its
Affiliates’ right, title and interest to, in and under the Transferred Assets,
free and clear of all Encumbrances, other than Permitted Encumbrances, and the
Purchaser shall purchase, acquire and assume the Transferred Assets from the
Seller and/or its Affiliates. For the purposes of this Agreement, “Transferred
Assets” means the following:

 

(a)all right, title and interest of the Seller and its Affiliates in the
Facility and Owned Land, including all Improvements thereon;

 

(b)all right, title and interest of the Seller and its Affiliates in the
machinery and equipment (other than Improvements) physically located at the
Facility set forth on Schedule 2.1.1(b);

 

(c)subject to Section 7.2, all rights in the Transferred Contracts set forth on
Schedule 2.1.1(c), including any cause of action, lawsuit, judgment, claim or
demand with respect to such Transferred Contracts (other than in respect of the
Excluded Liabilities); and

 

(d)subject to Section 7.1, all Transferred Books and Records existing on the
Closing Date.

 

2.1.2Any assets, rights and business of the Seller and/or its Affiliates other
than the Transferred Assets shall be retained and are not being sold, assigned,
transferred, conveyed or delivered to the Purchaser (the “Excluded Assets”),
including:

 

(a)cash and cash equivalents (including investments and securities) and all bank
or other deposit accounts of the Seller and any of its Affiliates;

 

(b)any Intellectual Property;

 

(c)any cause of action, lawsuit, judgment, claim or demand of the Seller or any
of its Affiliates in respect of the Excluded Liabilities or the Excluded Assets;

 

(d)any rights to insurance policies of the Seller or any of its Affiliates, any
refunds paid or payable in connection with the cancellation or discontinuance of
any such policies or practices and any claims made under such policies other
than in respect of the Transferred Assets or the Assumed Liabilities;

 

(e)any Seller Compensation and Benefit Plan, any assets in respect of any Seller
Compensation and Benefit Plan and any other compensation and benefit plans
sponsored by the Seller or any of its Affiliates in respect of Transferred
Employees;

 

(f)any rights of the Seller and its Affiliates under this Agreement and any
Ancillary Agreements;

 

(g)any chemical libraries currently maintained at the Facility;

 

-9-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(h)any machinery, equipment and other movable assets other than the machinery
and equipment referred to in Section 2.1.1(b);

 

(i)any employees of the Seller or its Affiliates (including sales force), other
than Transferred Employees; and

 

(j)any other asset, property or right not included in the definition of
Transferred Asset.

 

The Purchaser acknowledges and agrees that the Seller may file, upon prior
notice to the Purchaser and after providing a copy of any such filing to the
Purchaser, any and all financing statements and fixture filings in any
appropriate filing office for the purpose of providing notice that Excluded
Assets are maintained at the Facility.

 

2.2Assumed Liabilities

 

2.2.1In consideration of the sale by the Seller to the Purchaser of the
Transferred Assets and the additional covenants and agreements of the Seller
contained herein, upon the terms and subject to the conditions of this
Agreement, including the conditions precedent set forth in Article 4, on the
Closing Date, the Purchaser shall assume and become liable for the following
Liabilities of the Seller and/or (as the case may be) its Affiliates, other than
the Excluded Liabilities (the “Assumed Liabilities”):

 

(a)any Liability or Tax arising from and after the Closing Date in respect of or
relating to the Purchaser’s ownership or operation of any of the Transferred
Assets or the Facility or performance or non-performance of any of the
Transferred Contracts from and after the Closing Date; provided, however, that
the Purchaser shall not assume or be responsible for any such Liabilities to the
extent arising out of or relating to the performance or non-performance of the
Transferred Contracts prior to the Closing Date or that arise from breaches by
the Seller or its Affiliates of the Transferred Contracts or defaults by the
Seller or its Affiliates occurring prior to the Closing Date, all of which
Liabilities in this proviso shall constitute Excluded Liabilities;

 

(b)any Transfer Taxes arising from or relating to the consummation of the
transactions contemplated by this Agreement;

 

(c)any Liability of the Purchaser under this Agreement or any Ancillary
Agreement;

 

(d)any Liability arising in respect of the employment or termination of
employment of the Transferred Employees from and/or after the Closing Date; and

 

(e)subject to indemnification rights as provided in and subject to Article 10
below, any Liability with respect to Environmental Matters. Purchaser
acknowledges and agrees that upon the closing, Seller shall sell and convey to
Purchaser and Purchaser shall accept the Facility on an "as-is, where is, with
all faults" basis. Purchaser also acknowledges that the Purchase Price reflects
and takes into account that the Facility and the Owned Land are being sold on an
"AS-IS, WHERE IS, WITH ALL FAULTS" basis. From and after the Closing Date,
Purchaser expressly assumes all Liability relating to any Environmental Matters
resulting or arising from, or related in any way to the Facility or the Owned
Land, or its or their ownership, use, condition, location, maintenance, repair,
or operation, whether arising as a result of acts or circumstances occurring
before, on, or after the Closing Date, without regard to disclosure or
non-disclosure.

 

-10-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

2.2.2Any Liability of the Seller and/or its Affiliates other than the Assumed
Liabilities (the “Excluded Liabilities”) shall be retained and the Purchaser
shall not hereunder assume or become liable for any Excluded Liability,
including (to the extent related to the ownership or operation of any of the
Transferred Assets or the Facility):

 

(a)any Liability for accounts payable, accrued expenses and similar items to the
extent that they arise or are incurred prior to the Closing (even if such
Liabilities are invoiced after the Closing);

 

(b)any Liability relating to any Legal Proceeding that:

 

(i)on the Closing Date is pending against the Seller and/or its Affiliates, in
connection with the Transferred Assets, the Facility, or any other business of
the Seller or its Affiliates; or

 

(ii)arises after the Closing Date, to the extent arising from or relating to
acts or omissions of the Seller and/or its Affiliates prior to the Closing Date
or its or their use or operation of the Transferred Assets prior to the Closing
Date;

 

provided, however, that notwithstanding any provision to the contrary in this
Agreement or the Ancillary Agreements, except for indemnification obligations as
provided in and subject to Article 10 below, the Seller and its Affiliates shall
not be liable for any Legal Proceeding which arises out of, or relates to, (i)
Environmental Matters, or (ii) practices which existed prior to and after the
Closing Date in connection with the Facility if the Purchaser has continued to
implement such practices in a similar manner after the Closing Date;

 

(c)any Liability with respect to paying fees or commissions to any broker,
finder or agent retained by the Seller, its Affiliates or their Representatives
with respect to the transactions contemplated by this Agreement;

 

(d)subject always to Section 2.2.1(b), any Tax Liability of the Seller or any of
its Affiliates;

 

(e)any Liability arising from or in connection with the employment of any person
employed by the Seller or its Affiliates (including any Transferred Employee)
during the period prior to the Closing Date, except as required by Law, or
arising from a Transferred Employee’s termination of employment by Purchaser,
its successors and/or assigns, following the Closing; and

 

(f)any Liability arising out of or related to any contract of the Seller or its
Affiliates that is not (i) a Transferred Contract or (ii) a Shared Contract (to
the extent that such Shared Contract is assigned to the Purchaser pursuant to
Section 7.2.2).

 

-11-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

Article 3 PURCHASE PRICE

 

3.1Purchase Price

 

Upon the terms and subject to the conditions of this Agreement, the Purchaser
shall deliver or cause to be delivered to the Seller at Closing, in
consideration of the aforesaid sale, transfer and assignment of the Transferred
Assets and the assumption of the Assumed Liabilities, the total amount of $1.00
(the “Purchase Price”). The Purchase Price shall not be subject to any
adjustment or revision whatsoever.

 

Article 4 Closing

 

4.1Closing

 

The Closing shall take place at the offices of McCarter & English, LLP, Four
Gateway Center, 100 Mulberry Street, Newark, New Jersey 07102, at 10:00 a.m.
(local time) on the fifth ( 5th) Business Day following the date on which the
last condition to Closing set forth in Article 5 shall have been satisfied
(other than those conditions that by their nature or pursuant to the terms of
this Agreement are to be satisfied at the Closing, but subject to the
satisfaction or the waiver of those conditions), or at such other place and time
and on such other day as shall be mutually agreed upon in writing by the Parties
(the “Closing Date”).

 

4.2Deliveries by the Seller

 

At the Closing, the Seller shall deliver or cause to be delivered to the
Purchaser the following:

 

(a)a Master Services Agreement, substantially in the form attached hereto as
Exhibit A (the “Master Services Agreement”), duly executed by the Seller and
pertaining to the provision of compound testing services by the Purchaser to the
Sanofi Group after Closing, which Master Services Agreement shall provide for
both subsidy payments and service payments from the Seller to the Purchaser (to
secure the Purchaser's obligations for the term of the Master Services
Agreement, the Purchaser shall execute and deliver to the Seller a deed of trust
encumbering the Owned Land and the Improvements);

 

(b)a Transition Services Agreement, in the form to be mutually agreed to by the
parties (the “Transition Services Agreement”), duly executed by the Seller,
pertaining to the transitional services to be provided to the Purchaser after
the Closing by the relevant Sanofi Affiliates;

 

(c)the Deed of Sale, substantially in the form attached as Exhibit B, duly
executed by the Seller;

 

(d)A Non-Foreign Person Affidavit with respect to compliance with the Foreign
Investment in Real Property Tax Act (Internal Revenue Code Sec. 1445, as
amended, and the regulations issued thereunder) in form reasonably acceptable to
Purchaser;

 

(e)An Affidavit of Property Value in form required by applicable law;

 

-12-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(f)the Hit Discovery Services Agreements, in the forms to be mutually agreed to
by the parties (together, the “Hit Discovery Services Agreements”), duly
executed by the Seller, pursuant to which the Purchaser shall have the right and
license to use of two chemical libraries maintained at the Facility;

 

(g)a certificate of the Secretary of the Seller, in form and substance
reasonably acceptable to the Purchaser, certifying with respect to (i) the
Seller’s certificate of incorporation and bylaws and (ii) incumbency;

 

(h)the initial Subsidy Payment (as defined in the Master Services Agreement);
and

 

(i)such other bills of sale, assignments and instruments of conveyance in form
and substance reasonably acceptable to the Purchaser, as shall be effective to
vest in the Purchaser title to all the Transferred Assets in accordance with the
provisions of this Agreement.

 

In addition, at the Closing, the Seller will reimburse the Purchaser for the
insurance premium paid by the Purchaser for the pollution legal liability
insurance policy referenced in Section 4.3(g), up to a maximum reimbursement of
$120,000.

 

4.3Deliveries by the Purchaser

 

At the Closing, the Purchaser shall deliver or cause to be delivered to the
Seller the following:

 

(a)The payment of the Purchase Price;

 

(b)the Master Services Agreement, duly executed by the Purchaser;

 

(c)the Transition Services Agreement, duly executed by the Purchaser;

 

(d)the Hit Discovery Services Agreements, duly executed by the Purchaser;

 

(e)a deed of trust, substantially in the form attached hereto as Exhibit C (the
“Deed of Trust”), duly executed by the Purchaser before a public notary,
encumbering the Owned Land and the Improvements, up to a maximum amount of
$5,000,000, to secure the Purchaser’s obligations under the Master Services
Agreement;

 

(f)a certificate of the Secretary of the Purchaser, in form and substance
reasonably acceptable to the Seller, certifying with respect to (i) the
authorization by the Purchaser’s board of directors or other governing body of
this Agreement, the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby, (ii) the Purchaser’s certificate
of incorporation, bylaws or similar constituent documents and (iii) incumbency;

 

(g)a pollution legal liability insurance policy acceptable to the Seller with a
term expiring no later than ten years after the Closing Date insuring the
Purchaser with respect to the Owned Land for an aggregate policy limit of
$5,000,000 and evidence that the Seller is an additional insured under such
policy; and

 

(h)such other agreements and instruments in form and substance reasonably
acceptable to the Seller, as shall be sufficient to effect the assumption by the
Purchaser of the Assumed Liabilities.

 

-13-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

Article 5 Conditions Precedent to Closing

 

5.1Mutual Conditions Precedent to Closing

 

The obligations of each Party hereto to consummate the Closing shall be subject
to the satisfaction, or waiver by each Party, at or prior to the Closing, of the
following conditions:

 

(a)no Legal Proceeding by any Government Authority or any other Person shall be
pending, and no Law shall have been promulgated or come into effect or enforced
by any court of competent jurisdiction or Governmental Authority, that restrains
or prohibits any party from performing this Agreement, the Ancillary Agreements
or any transaction contemplated hereby or thereby or that would reasonably be
expected to result in substantial damage to such Party as a consequence thereof;
and

 

(b)the Material Consents and Governmental Approvals identified in
Schedule 5.1(b) shall have been obtained by and for the benefit of the
Purchaser.

 

5.2Additional Conditions Precedent of the Purchaser

 

In addition to the fulfilment of the conditions set forth in Section 5.1, the
obligation of the Purchaser to consummate the Closing is subject to the
satisfaction or the Purchaser’s waiver at or prior to Closing of each of the
following additional conditions:

 

(a)since the date of this Agreement, no event or events shall have occurred
which have had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;

 

(b)the representations and warranties of the Seller set forth in this Agreement
shall be true and correct on the Closing Date, as though made on and as of the
Closing Date (except to the extent such representations and warranties are
specifically made as of a particular date, in which case such representations
and warranties shall be true and correct as of such date, and subject to any
matters disclosed in a Disclosure Supplement), except where the failure to be
true and correct has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;

 

(c)the Seller shall have delivered the payments and executed, and shall have
caused its Affiliates, as the case may be, to execute, the agreements and other
documents required to be delivered pursuant to Section 4.2;

 

(d)the Title Insurer (defined below) shall be obligated to issue to Purchaser
the Title Policy (defined below), subject only to the Permitted Encumbrances
applicable to the Owned Land and Facility, together with any endorsements
required by Purchaser or agreed to be provided by Seller in order to cure any
Defects (defined below) which Seller elected to cure pursuant to Section 12.12;
and

 

-14-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(e)No disclosures being added to a Disclosure Supplement which, individually or
in the aggregate, could reasonably be expected to be materially adverse to the
operations of the Facility as currently operated.

 

5.3Additional Conditions Precedent of the Seller

 

In addition to the fulfilment of the conditions set forth in Section 5.1, the
obligation of the Seller to consummate the Closing is subject to the
satisfaction or the Seller’s waiver at or prior to Closing of each of the
following additional conditions:

 

(a)the representations and warranties of the Purchaser set forth in this
Agreement shall be true and correct on the Closing Date, as though made on and
as of the Closing Date (except to the extent such representations and warranties
are specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such date),
except where the failure to be true and correct has not had and would not
reasonably be expected to, individually or in the aggregate, result in a
material delay in the Closing or materially adversely affect the Purchaser’s
ability to perform its obligations under this Agreement and the Ancillary
Agreements;

 

(b)the Purchaser shall have delivered to the Seller a copy of (i) the
certificate of incorporation of the Purchaser as filed with the Delaware
Secretary of State, (ii) the bylaws of the Purchaser and (iii) the
organizational resolutions of the sole shareholder and board of directors of the
Purchaser, each in form and substance satisfactory to the Seller;

 

(c)the Purchaser shall have delivered to the Seller evidence that the Purchaser
has obtained a firm commitment for debt financing to the Purchaser in an
aggregate principal amount of $1,100,000;

 

(d)the Purchaser shall have delivered to the Seller the written acknowledgement
of [*****] and its wholly-owned subsidiary [*****] (individually and
collectively, [*****]) that any amounts paid by the Seller to the Purchaser
pursuant to the Master Services Agreement or other Ancillary Agreement and any
revenue generated by the Purchaser shall be excluded for purposes of calculating
earnout payments owed by Icagen, Inc. to [*****] under that certain Asset
Purchase and Collaboration Agreement dated June 26, 2015 between Icagen, Inc.
and XRPro Sciences, Inc., which acknowledgement shall be in form and substance
satisfactory to the Seller;

 

(e)each of the Transferred Employees shall have executed and delivered to the
Seller an Employee Confidentiality and Cooperation Agreement and each other
Eligible Employee shall have executed and delivered to the Seller an agreement
that contains terms substantively identical to those contained in an Employee
Confidentiality and Cooperation Agreement;

 

(f)the Purchaser shall have delivered to the Seller a business plan of the
Purchaser that is acceptable to the Seller;

 

-15-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(g)confirmation from the Purchaser’s payroll and benefit plan providers that the
Transferred Employees shall begin to receive the compensation and benefit plan
coverage required by Section 7.5 effective as of the Closing Date; and

 

(h)the Purchaser shall have delivered the Purchase Price and executed the
agreements and other document required to be delivered pursuant to Section 4.3.

 

Article 6 Covenants of the Parties prior to Closing

 

6.1Operation of the Transferred Assets Pending the Closing

 

6.1.1Except as otherwise contemplated by this Agreement or with the prior
written consent of the Purchaser, during the period from the date of this
Agreement until the Closing Date, the Seller covenants and agrees that the
Seller shall, and shall (as the case may be) cause its Affiliates to operate the
Transferred Assets in the ordinary course of business, consistent in all
material respects with past practice and in compliance in all material respects
with applicable Laws.

 

6.1.2Without limiting the generality of the foregoing, and except always as
otherwise contemplated by this Agreement or with the prior written consent of
the Purchaser, during the period from the date of this Agreement until the
Closing Date, the Seller covenants and agrees that, with respect to the
Transferred Assets, the Seller shall not, and shall not permit its Affiliates
to:

 

(a)fail to maintain in the ordinary course of business consistent in all
material respects with past practice their business relations with their Third
Party vendors and regulators;

 

(b)sell, pledge, dispose of, grant, transfer, lease, license, encumber or
authorize the sale, pledge, disposition, grant, transfer, lease, license or
encumbrance of any Transferred Assets, other than (i) in the ordinary course of
business consistent in all material respects with past practice, or
(ii) Permitted Encumbrances;

 

(c)with respect to the assets of the Facility set forth on Schedule 2.1.1(b):

 

(i)fail to maintain such assets in their current state of repair, order and
condition, in the ordinary course of business in a manner consistent in all
material respects with past practice, usual and ordinary wear and tear excepted;
or

 

(ii)fail to maintain the insurance coverage with respect thereto as in effect on
the date of this Agreement;

 

(d)enter into any new contract, agreement or commitment that would be a
Transferred Contract; provided that, notwithstanding any provision to the
contrary in this Agreement or the Ancillary Agreements:

 

(i)the Seller and/or its Affiliates may after the date of this Agreement renew
any contract, agreement or commitment pertaining to the Transferred Assets on
terms that are generally consistent with their current terms, and enter into new
ordinary course of business contracts;

 

-16-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(ii)any such new or renewed agreements shall be deemed to be included on the
Schedules to this Agreement; and

 

(iii)the execution of such new or renewed agreement shall not constitute a
breach of any representation, warranty or covenant of the Seller or its
Affiliates;

 

(e)except as may be required pursuant to applicable Law, or otherwise in the
ordinary course of business consistent in all material respects with past
practice, increase the compensation payable to any Transferred Employee
(including wages, bonuses or salaries);

 

(f)settle any litigation or claim or waive any claims or rights of value in a
manner that would constitute an Assumed Liability or otherwise be materially
adverse to the Transferred Assets, taken as a whole, from and after the Closing;
or

 

(g)agree, in writing or otherwise, to take any of the foregoing actions.

 

6.2Efforts to fulfil conditions precedent

 

6.2.1Upon the terms and subject to the conditions of this Agreement, each of the
Parties shall use all commercially reasonable efforts to fulfil, or cause to be
fulfilled, as promptly as reasonably practicable the conditions precedent set
forth in Article 5 and fully cooperate with the other Party for such purpose and
to cause its Affiliates to take all actions required under this Agreement.

 

6.2.2Notwithstanding anything to the contrary in Section 6.2.1 above, at
Closing:

 

(a)the Seller shall deliver the payments and execute, and shall cause its
Affiliates, as the case may be, to execute, the agreements and other documents
required to be delivered pursuant to Section 4.2; and

 

(b)the Purchaser shall deliver the Purchase Price and execute the agreements and
other documents required to be delivered pursuant to Section 4.3.

 

6.2.3Nothing in this Section 6.2 will under any circumstances purport to require
either Party to do, or omit to do, any act which would, in its reasonable
opinion, put it in breach of any applicable Laws or regulations relating to
anti-bribery, including but not limited to, the US Foreign Corrupt Practices Act
of 1977.

 

6.3Litigation

 

Until the Closing Date, the Purchaser and the Seller shall promptly notify each
other of any Legal Proceedings commenced or threatened in writing against the
Purchaser or the Seller which relate to the Transferred Assets, this Agreement
or the transactions contemplated hereby.

 

-17-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

6.4Disclosure Supplement

 

6.4.1Promptly after becoming aware of any Subsequent Event, and, in any event,
no later than the fifth (5th) Business Day prior to Closing, in respect of the
representations and warranties of the Seller set forth in Article 8, the Seller
may supplement or amend in writing the Schedules to this Agreement (a
“Disclosure Supplement”) with respect to any matter, event or fact which first
arises after the date hereof and prior to Closing (a “Subsequent Event”), if
such Subsequent Event, if existing or occurring prior to the date hereof, would
have been required to be set forth or described in the Schedules.

 

6.4.2The Purchaser shall not be entitled to any indemnification under Article 10
with respect to any Subsequent Events disclosed in the Disclosure Supplement.

 

6.4.3If any Subsequent Event (whether individually or in the aggregate) causes
the non-fulfilment of the condition precedent set forth in Section 5.2(a) or
constitutes a Material Adverse Effect, the Purchaser shall have the right to
refuse to consummate the transactions contemplated by this Agreement; provided
that, to the extent the Purchaser shall elect to consummate the transactions
contemplated by this Agreement, the Purchaser shall not be entitled to any
indemnification under Article 10 with respect to such matters disclosed in the
Disclosure Supplement and Purchaser acknowledges and agrees that, by
consummating the transactions contemplated by this Agreement, the Purchaser
shall be deemed to have waived any indemnification under Article 10 for such
matters disclosed in the Disclosure Supplement.

 

6.5Offer of Employment to Eligible Employees

 

Not less than two (2) Business Days after the date of this Agreement, the
Purchaser shall confirm to Seller in writing the names of not less than
forty-six (46) of the Eligible Employees the Purchaser wishes to employ. Not
less than two (2) Business Days after the date of this Agreement, the Purchaser
shall make an offer of employment, effective as of the Closing Date, to the
Eligible Employees identified by the Purchaser pursuant to the preceding
sentence who are employed by the Seller or one of its Affiliates as of the
Closing Date. Each such offer of employment to an Eligible Employee shall be
made so that, on the Closing Date, such Eligible Employee shall be employed by
the Purchaser at the same location, with the same or substantially the same job
duties and at the same base rate of pay as such Eligible Employee was entitled
to prior to the Closing.

 

6.6Termination of Intra-Group Agreements

 

Effective as of the Closing, the Seller shall terminate, and shall (as the case
may be) cause its Affiliates to terminate, at its own cost and expenses, and
only to the extent they relate exclusively to the Facility, the agreements among
them pertaining to the Facility. The Seller shall indemnify and hold harmless
the Purchaser and its Affiliates from any claim of any Affiliate of the Seller
in connection with the termination of agreements referenced in this Section 6.6.

 

-18-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

Article 7 Post-Closing Covenants

 

7.1Transfer of Books and Records

 

7.1.1As promptly as reasonably possible after the Closing Date, but no later
than ten (10) Business Days thereafter, the Seller shall transmit, and/or (as
the case may be) shall cause its Affiliates to transmit, to the Purchaser all
Transferred Books and Records not then already in the possession or under the
control of the Purchaser.

 

7.1.2The Seller and/or its Affiliates shall have the right to retain any
Transferred Books and Records for legal, regulatory, tax or accounting purposes,
so long as the Seller or such Affiliates provide at least one copy of such
Transferred Books and Records to the Purchaser.

 

7.1.3The Seller shall give, and shall cause its Affiliates to give, the
Purchaser access to its books and records that relate partially but not
exclusively to the Transferred Assets (the “Relevant Information”), subject to
the following conditions:

 

(a)if it is reasonably practicable for the Relevant Information to be physically
extracted from the corresponding books and records, or if it is reasonably
practicable for a copy of the corresponding books and records to be transmitted
to the Purchaser, redacting any information that is not Relevant Information,
then the Seller shall, and shall cause its Affiliates to, transmit to the
Purchaser such extract or such redacted copy;

 

(b)if it is not reasonably practicable for the Relevant Information to be
physically extracted or to be transmitted in a redacted form, then the Seller
shall, and shall cause its Affiliates to, give access to such Relevant
Information to the Purchaser according to the following conditions:

 

(i)such Relevant Information must be reasonably useful to the Purchaser to
satisfy the Purchaser’s Tax or financial reporting requirements;

 

(ii)the access shall be given in the offices of the Seller or its Affiliates
during normal business hours on a Business Day; and

 

(iii)all information included in such books and records that is not Relevant
Information shall constitute Confidential Information and shall be subject to
the provisions of Section 12.1.

 

7.2Consents pertaining to Transferred Contracts; Shared Contracts

 

7.2.1Prior to the Closing Date, and thereafter to the extent reasonably
necessary, the Seller shall use all commercially reasonable efforts to obtain
the Material Consents. Prior to and until three (3) months after the Closing
Date, if reasonably required by the Purchaser, the Seller shall use all
commercially reasonable efforts to obtain any Consents other than a Material
Consent. The Purchaser shall, and shall cause its Affiliates to, cooperate with
the Seller to obtain the Material Consents and any other Consents. Neither the
Seller nor any of its Affiliates shall be obligated to pay any consideration to
any Third Party from whom Consent or approval is required in order to obtain
such Consent or approval.

 

-19-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

7.2.2Notwithstanding the foregoing, the Shared Contracts shall be either
partially assigned on or after Closing to the Purchaser or its Affiliates solely
with respect to the Facility or the Transferred Assets, or terminated on the
Closing Date with respect to the Transferred Assets, whichever is permitted
according to the terms of such Shared Contracts.

 

7.2.3In each instance in which a Consent cannot be obtained, or if an attempted
transfer or assignment would be ineffective or would adversely affect the
ability of the Seller and/or (as the case may be) its Affiliate to convey the
interest in question to the Purchaser, the Seller shall use, and/or shall cause
the corresponding Affiliate to use, all commercially reasonable efforts to enter
into any such alternative arrangement and agreement with the Purchaser as may be
appropriate in order to allow the Purchaser to realize, receive and enjoy
substantially similar rights and benefits at no incremental cost to the Seller
and its Affiliates.

 

7.2.4For the avoidance of doubt, no provision of this Agreement shall be
interpreted or construed:

 

(a)as an attempt to transfer or assign any Transferred Contract that is by its
terms non-transferable or assignable without the required Consent, or

 

(b)as far as any such Consent which pertains to a Transferred Contract and which
is not a Material Consent, as creating a condition precedent to the Purchaser’s
obligation to close under this Agreement.

 

7.3Wrongfully transferred or retained assets and liabilities

 

In the event any of the Parties discovers after the Closing that it, or its
Affiliates, is the owner of, receives or otherwise comes to possess any asset
(including the receipt of payments made pursuant to Transferred Contracts) or is
liable for any Liability that is allocated to any Person other than in
accordance with this Agreement or any Ancillary Agreement (except as the Parties
may otherwise agree), such Party shall, or shall cause its Affiliates to, use
all commercially reasonable efforts to convey such asset or liability, at no
cost, to the Party so entitled thereto in accordance with this Agreement (and
the relevant Party will cause such entitled Party to accept such asset or assume
such liability).

 

7.4Payments under Transferred Contracts

 

7.4.1If and to the extent that the Seller (or any of its Affiliates) has, prior
to the Closing Date, received any deposit or payment in advance in respect of
obligations to be satisfied after the Closing under any Transferred Contracts,
the Seller (or its Affiliate) shall reimburse to the Purchaser, within twenty
(20) Business Days from the Closing Date, an amount corresponding to the amount
of such deposit or payment in advance.

 

7.4.2If and to the extent that the Seller (or any of its Affiliates) has, prior
to the Closing Date, made any deposit or payment in respect of supplies of goods
or services not received prior to Closing under any Transferred Contracts, the
Seller shall, in its sole discretion, within twenty (20) Business Days from the
Closing Date either (a) set-off against Subsidy Payments otherwise payable to
the Purchaser under the Master Services Agreement the amount of such prepayment
or (ii) invoice the Purchaser for the amount of such prepayment, such amount not
to exceed in aggregate $1,000,000.

 

-20-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

7.4.3If and to the extent that the Seller (or any Affiliate thereof) has, prior
to the Closing Date, received any good or service prior to the Closing under any
Transferred Contract, the payment for which becomes due and payable and is paid
by the Purchaser after the Closing Date, upon request and the presentation of
reasonable supporting documentation of such payment by the Purchaser, the Seller
shall reimburse the Purchaser for the amount of such payment within twenty (20)
Business Days from the date of such request.

 

7.4.4In the event of a disagreement between the Parties as to the determination
of amounts due pursuant to this Section 7.4, such disagreement shall be
submitted for final and binding adjudication to an internationally reputed
independent accounting firm (other than the auditors of the Seller or the
Purchaser) (the “Independent Accountant”) as the Seller and the Purchaser may
agree. In the event that the Parties are unable to agree upon such accounting
firm, either Party may request the designation of such accounting firm by the
American Arbitration Association, New York, New York, with each Party having the
right to be heard. The American Arbitration Association shall not, however,
administer the dispute resolution procedure. The request to the American
Arbitration Association shall include a copy of this Agreement. The Independent
Accountant shall, acting as experts and not as arbitrators, make a final
determination as to the matters in dispute with respect to amounts due pursuant
to this Section 7.4, which determination shall be conclusive and binding on the
Purchaser and the Seller in the absence of manifest error. The cost of retaining
the Independent Accountant shall be borne by the Party whose proposal with
respect to the amount due pursuant to this Section 7.4 deviates greatest from
the amount due finally determined by the Independent Accountant. The Purchaser
and the Seller agree to cooperate with each other in order to resolve any and
all matters in dispute as soon as possible and all commercially reasonable
efforts to cause the Independent Accountant to determine disputed matters within
twenty (20) Business Days following its appointment.

 

7.5Transferred Employees

 

7.5.1Effective as of the Closing Date, the Purchaser shall continue to employ
all of the Transferred Employees on terms and conditions which are no less
favorable in the aggregate in terms of title, compensation, benefits, hours of
work and location, and with duties that are similar to the duties now being
performed by such Transferred Employees to those under which such Transferred
Employees are currently employed by the Seller or its Affiliates. All
Transferred Employees shall receive the benefits offered under the current
Icagen, Inc. benefit plans.

 

7.5.2For a period ending not earlier than two (2) years following the Closing
Date, except as otherwise required by applicable Law, the Purchaser shall
provide each Transferred Employee with:

 

(a)a salary or wage level and bonus opportunity during employment at least equal
to the salary or wage level and bonus opportunity to which he or she was
entitled immediately prior to the Closing Date;

 

(b)benefits, perquisites and other terms and conditions of employment that are
at least equivalent to the benefits, perquisites and other terms and conditions
that he or she was entitled to receive as an employee of the Sanofi Group
immediately prior to the Closing Date; and

 

(c)in the event of the termination of employment of a Transferred Employee by
the Purchaser without Just Cause, severance benefits that are at least
equivalent to the severance benefits such Transferred Employee was entitled to
receive as an employee of the Sanofi Group immediately prior to the Closing
Date.

 

-21-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

7.5.3The Purchaser shall be responsible for all liabilities:

 

(a)for salary, wages, bonuses, commissions, vacations, vacation pay and other
compensation relating to employment of all Transferred Employees accruing on and
after the Closing Date; and

 

(b)arising as a result of or in respect of the termination of employment of any
Transferred Employees following the Closing Date (including by way of
constructive dismissals, deemed termination or equivalent concepts under
applicable Laws).

 

7.5.4The Purchaser shall recognize the past service of Transferred Employees
with the Seller or its Affiliates for purposes of a Transferred Employee’s
eligibility for leave under the Family Medical Leave Act. The Purchaser shall
recognize the past service of Transferred Employees with the Seller or its
Affiliates for such purposes and for any required notice of termination,
termination or severance pay (contractual or under the applicable Law).

 

7.5.5From and after the Closing Date, Transferred Employees shall be entitled to
use and obtain their unused vacation benefits and vacation pay under the Seller
or its Affiliates’ vacation arrangements to the extent earned by Transferred
Employees in 2016 and accrued up to, and including, the Closing Date, determined
as of the Closing Date and the Purchaser shall assume and have all liability
therefor; not in limitation of the foregoing, the Purchaser acknowledges and
agrees that, after the Closing Date, the Transferred Employees shall be
permitted to utilize all of their unused vacation benefits and vacation pay
which had been earned in 2016 and accrued up to, and including, the Closing
Date. The Seller shall retain liability to Transferred Employees for (a) any
bonus accrued or any discretionary bonus consistent with past practice with
respect to periods prior to the Closing Date and (b) any unused vacation
benefits and vacation pay earned by Transferred Employees prior to January 1,
2016; the amounts and timing of such payments shall be in accordance with the
Seller or its Affiliates’ bonus plans and, in particular, amounts will be paid
as determined by the Seller or its Affiliates.

 

7.5.6The Purchaser shall indemnify, defend and hold harmless the Seller
Indemnified Parties from all Losses arising from, with respect to or in
connection with all Liabilities under or relating to any Laws regarding
collective or mass termination of employment, including but not limited to the
federal Workers Adjustment and Retraining Notification Act ("WARN") or under any
severance plan maintained by the Seller or any of its Affiliates that may result
from the Purchaser's failure to continue to employ each of the Transferred
Employees in accordance with the provisions of applicable Laws.

 

-22-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

7.6Non-Solicitation of Employees

 

7.6.1For a period of eighteen (18) months following the Closing Date, the Seller
shall not, directly or indirectly, and shall cause its Affiliates not to,
directly or indirectly, solicit or otherwise attempt to induce any of the
Transferred Employees to terminate their employment relationship with the
Purchaser (or its Affiliates); provided, however, that the foregoing shall not
restrict the Seller or any of its Affiliates from:

 

(a)advertising for employment in a newspaper, trade publications or other media
not targeted specifically at the Transferred Employees; or

 

(b)hiring employees who apply for employment with the Seller or any of its
Affiliates to the extent neither the Seller nor any of its Affiliates solicited
such employees in violation of this Section 7.6.1.

 

7.6.2For a period of eighteen (18) months following the Closing Date, the
Purchaser shall not, directly or indirectly, and shall cause its Affiliates not
to, directly or indirectly, hire or enter into any arrangement for the services
of any employees employed by the Seller (or its Affiliates) with any amount of
responsibility relating to the Facility or the Activity who is not a Transferred
Employee, unless the individual’s employment has been previously terminated by
the Seller (or its Affiliates).

 

7.7Insurance

 

From the Closing Date, the Purchaser shall be responsible for all insurance
coverage of the Transferred Assets and the Purchaser acknowledges that, as of
such Closing Date, the Facility and all other Transferred Assets shall cease to
be covered by insurance policies of the Seller or of any of its Affiliates
(other than in relation to insured events taking place before the Closing) and
neither the Purchaser nor any of its Affiliates shall make any claim under any
such policies in relation to insured events arising after the Closing. The
Seller shall be entitled to make arrangements with its insurers to reflect this
Section 7.7.

 

7.8Further Actions

 

7.8.1Each of the Parties shall execute, deliver and file such instruments of
transfer or assignment, files, books and records and shall take such other
actions as may be required or reasonably requested by the other Party to carry
out the intent of this Agreement and to consummate the transactions contemplated
hereby, at the requesting Party’s cost and expense.

 

7.8.2After the Closing, upon reasonable advance written notice, the Purchaser
and the Seller shall furnish or cause to be furnished to each other, as promptly
as reasonably practicable, such information and assistance (to the extent within
the reasonable control of such Party) relating to the Transferred Assets
(including access to books and records) as is reasonably requested for the
filing of all Tax Returns or the satisfaction of contractual or legal
obligations to Third Parties, subject to Section 7.1, in each case at the
requesting Party’s cost and expense.

 

7.8.3Neither Party shall be required by this Section 7.8 to take any action that
would unreasonably interfere with the conduct of its business or unreasonably
disrupt its normal operations.

 

-23-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

Article 8 Representations and Warranties of the Seller

 

The Seller hereby represents and warrants to the Purchaser as of the date of
this Agreement and the Closing Date as follows (and notwithstanding any
provision to the contrary in the Deed of Sale, the following representations
shall be the sole and exclusive representations and warranties given to the
Purchaser with respect to the Transferred Assets, and shall equally apply to any
Transferred Asset which is subject to the Deed of Sale):

 

8.1Corporate Organization

 

The Seller (and any of its Affiliates which is a party to any of the Ancillary
Agreements) is a corporation or other legal entity duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
organization and has all requisite corporate power and authority to own, license
and operate the Transferred Assets as and in the places where currently owned,
licensed or operated by such Person. The Seller (and any of its Affiliates which
is a party to any of the Ancillary Agreements) is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which such
qualification or licensing is necessary under applicable Law, except where the
failure to be so qualified or licensed and to be in good standing would not
reasonably be expected, individually or in the aggregate, to be materially
adverse to the Transferred Assets, taken as a whole.

 

8.2Authority; Binding Effect

 

8.2.1The Seller has full corporate power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement and the
Seller (and any of its Affiliates which is a party to any of the Ancillary
Agreements) has full corporate power and authority to execute, deliver and
perform its obligations under the Ancillary Agreements to which it is a party
and each other agreement, document, instrument or certificate contemplated by
this Agreement and the Ancillary Agreements to be executed by the Seller (and/or
any such Affiliates, as the case may be) in connection with the consummation of
the transactions contemplated hereby and thereby.

 

8.2.2The execution, delivery and performance by the Seller of this Agreement,
and the execution, delivery and performance by the Seller (and/or by any of its
Affiliates which is a party to any of the Ancillary Agreements) of the Ancillary
Agreements have been duly authorized or, with respect to the Ancillary
Agreements, shall have been duly authorized at the Closing Date, by all
necessary corporate action on the part of the Seller (and/or any such
Affiliates, as the case may be), and no additional authorization on the part of
the Seller or any such Affiliates is necessary in connection with the execution,
delivery and performance of this Agreement or the Ancillary Agreements.

 

8.2.3This Agreement constitutes, and on the Closing Date, will constitute, and
each of the Ancillary Agreements when duly executed and delivered on the Closing
Date will constitute, legal, valid and binding obligations of the Seller and its
Affiliates that are parties thereto, enforceable against them in accordance with
their respective terms.

 

-24-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

8.3No Violations; Consents and Approvals

 

8.3.1Subject to receipt of the Consents and Governmental Approvals set forth in
Schedule 5.1(b), the execution, delivery and performance of this Agreement and
the Ancillary Agreements by the Seller (and/or any of its Affiliates which is a
party to any of the Ancillary Agreements), and the consummation of the
transactions contemplated hereby and thereby, do not and will not:

 

(a)conflict with, violate, result in the breach of, or constitute a default
under, any provision of the certificate of incorporation or bylaws or similar
governing documents of the Seller or any such Affiliates;

 

(b)conflict with, violate, result in the breach of, or constitute a default
under, the Transferred Contracts or any other commitment of the Seller or any
such Affiliates; or

 

(c)conflict with, violate, result in the breach of, or constitute a default
under, any Law applicable to the Seller and/or any such Affiliates;

 

except in the case of Section 8.3.1(a) or 8.3.1(b) as would not, individually or
in the aggregate, reasonably be expected to be materially adverse to the
Transferred Assets, taken as a whole.

 

8.3.2There is no pending Legal Proceeding involving the Seller or, to the
Knowledge of the Seller, threatened against the Seller, which questions or
challenges the validity of this Agreement or seeks to prevent, enjoin, alter or
delay any other transactions contemplated hereby or any action to be taken
pursuant to this Agreement or affects the Transferred Assets or Purchaser’s
rights to the Transferred Assets.

 

8.4Title to Transferred Assets

 

The Seller and/or its Affiliates have good title to, or in the case of leased
property, a valid leasehold interest in, the Transferred Assets, free and clear
of all Encumbrances except Permitted Encumbrances and Purchaser will acquire the
Transferred Assets free and clear of all Encumbrances except Permitted
Encumbrances. The Seller and/or such Affiliates:

 

(a)have not granted, or agreed to grant, (i) any ownership interest or right in,
or with respect to, any Transferred Asset or (ii) any right to acquire or
receive any Transferred Asset or any interest or right therein or with respect
thereto; and

 

(b)are not a party to or bound by any contract, other than this Agreement,
affecting or relating to the transfer of any Transferred Asset or any interest
or right therein or with respect thereto.

 

8.5Transferred Contracts

 

8.5.1The Seller has made available to the Purchaser or its Representatives a
true and correct copy of each Transferred Contract, together with all
amendments, modifications or supplements thereto.

 

8.5.2Each Material Transferred Contract is a valid and binding agreement of the
Seller and/or its Affiliates that are parties thereto, and to the Knowledge of
the Seller, the counterparties thereto, and is in full force and effect in all
material respects.

 

8.5.3The Seller and/or its Affiliates that are parties thereto have performed in
all material respects all of the obligations required to be performed by the
Seller and/or such Affiliates under the Material Transferred Contracts, and none
of them is in material breach thereunder. To the Knowledge of the Seller, no
Third Party to any of the Material Transferred Contracts is in material breach
thereunder.

 

-25-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

8.5.4Neither the Seller nor any of its Affiliates which are parties thereto has
received from any Third Party to any of the Material Transferred Contracts:

 

(a)any written notice that any such Third Party intends to terminate any such
Material Transferred Contract; or

 

(b)any claim of material breach from any such Third Party with respect to the
performance of obligations by the Seller or such Affiliates pursuant to any such
Material Transferred Contract.

 

8.6Movable Assets

 

The moveable assets that are included in the Transferred Assets are in normal
working order, ordinary wear and tear excepted and having regard to their
respective age and use.

 

8.7Owned Real Property

 

8.7.1Schedule 8.7.1 sets out the municipal address of the Facility and a legal
description of all of the Owned Land. The Facility and Owned Land are free and
clear of all Encumbrances except Permitted Encumbrances. There are no
sublicenses, leases or other occupancy rights with respect to the Owned Land or
the Facility. The Owned Land and the Facility and all present uses thereof
comply in all material respects with all applicable Laws. Purchaser will obtain
peaceful, undisturbed, exclusive possession of the Facility and the Owned Land
at the Closing.

 

8.7.2The Improvements on the Owned Land are in good operating condition and
repair, and are suitable and adequate for the purposes for which they have been
designed, ordinary wear and tear excepted and having regard to their respective
age and use.

 

8.7.3All Taxes with respect to the Facility that are due have been paid in full,
and there are no local improvement charges or special levies outstanding in
respect of the Facility nor has the Seller received any notice of proposed local
improvement charges or special levies.

 

8.7.4The Facility has full and free legally enforceable access to and from
public roadways.

 

8.7.5The Owned Land is zoned so as to permit its current uses of the Facility.

 

8.7.6Neither Seller, the Owned Land nor the Facility are in material violation
of any conditions, covenants and restrictions or easement agreements that burden
or benefit the Owned Land or the Facility.

 

8.8Environmental Matters

 

The Seller has not received any written notice regarding any actual or alleged
violation in any respect of, or any potentially material Liability (contingent
or otherwise) or mandatory investigatory, corrective or remedial obligation
under, any Environmental Law with respect to the Facility and is not subject to
any pending claim, any pending investigation, or to the Knowledge of Seller,
threatened claim or investigation related to any Environmental Matter. Seller is
in compliance in all material respects with all Environmental Laws and has all
approvals and permits required to use the Transferred Assets as presently being
used. To the Knowledge of the Seller, no Environmental Release of Hazardous
Materials has occurred in connection with the Facility or the Owned Land.

 

-26-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

8.9Employees and Employee Benefit Plans

 

8.9.1Schedule 8.9.1, which will be delivered by the Seller to the Purchaser on
the date of this Agreement, shall contain a list of the names of the Eligible
Employees, together with a description of such Eligible Employees’ respective
job title or function, seniority, location, gross annual compensation (including
salaries, hourly wages, bonuses or incentive compensation), date of hire and
status (disability, temporary, part-time, full-time, etc.). To the Knowledge of
the Seller, no Eligible Employee has the right to demand employment from the
Purchaser or its Affiliates as a result of the purchase of the Transferred
Assets by the Purchaser.

 

8.9.2To the Knowledge of the Seller, the Seller and its Affiliates have complied
in all material respects with all obligations owed to the Transferred Employees
including any obligations arising under applicable Laws, collective bargaining
agreements, terms and conditions of employment, as appropriate.

 

8.9.3None of the Transferred Employees has received any notice terminating his
employment or will be entitled to receive any termination indemnity as a result
of the sale of the Transferred Assets to the Purchaser.

 

8.10Labor Relations

 

8.10.1Since January 1, 2013, neither the Seller nor any of its Affiliates which
are employers thereof has been or is a party to or was or is bound by any
collective bargaining agreement covering the Transferred Employees and, to the
Knowledge of the Seller, there are no labor unions or other organizations
representing the Transferred Employees.

 

8.10.2Since January 1, 2016, there has not occurred or, to the Knowledge of the
Seller, been threatened any material strike, slowdown, picketing or work
stoppage with respect to any Transferred Employees.

 

8.10.3There are no labor disputes currently subject to any Legal Proceeding with
respect to any Transferred Employee.

 

8.11Information and Consultation of Employee Representatives

 

All formalities regarding the information and/or consultation of employee
representatives to be complied with by the Seller and/or its Affiliates which
are employers of any Transferred Employees in connection with the transactions
contemplated hereby have been complied with in accordance with applicable Laws.

 

8.12Litigation

 

There are no material Legal Proceedings pending against the Seller or any of its
Affiliates or, to the Knowledge of the Seller, threatened, that relate to the
Transferred Assets, the Owned Land or the Facility including, without
limitation, condemnation proceedings.

 

-27-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

8.13Compliance with Laws

 

8.13.1The Seller and/or its Affiliates hold all material Governmental Approvals
necessary for the Facility or the Transferred Assets. No event has occurred
which, with the giving or notice or the passage of time, or both, would be a
violation of any applicable Law or any Governmental Approval.

 

8.13.2Neither the Seller nor any of its Affiliates which owns any of the
Transferred Assets has received any written notice that the Seller or any such
Affiliate is not in compliance in any material respect with any applicable Law
with respect to the Facility or the Transferred Assets.

 

8.14Brokers and Finders

 

Except for the Seller’s engagement of Results International and the fees payable
to Results International, which fees shall be paid by the Seller, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of the Seller or any of its Affiliates who
might be entitled to any fee or commission from the Purchaser or any of its
Affiliates in connection with the transactions contemplated by this Agreement or
the Ancillary Agreements.

 

8.15No Other Representation and/or Warranty

 

8.15.1The representations and/or warranties provided in this Article 8 are the
only representations and/or warranties given by the Seller in connection with
the Transferred Assets, the Facility and the transactions herein contemplated.
The representations and warranties made in this Agreement with respect to the
Transferred Assets, the Facility and the transactions herein contemplated are in
lieu of all other representations and warranties the Seller or any of its
Affiliates might have given the Purchaser, including implied warranties of
merchantability and implied warranties of fitness for a particular purpose.

 

8.15.2None of the Seller, its Affiliates nor any other Person acting on their
behalf shall be deemed to have made any representation or warranty as to the
accuracy or completeness of any information, documents, projections, estimates,
budgets, forecasts, forward-looking statements, pro-forma business plans or
other material such as confidential information memoranda, data rooms or
management interviews and presentations prepared and made available to the
Purchaser in order to assist the Purchaser in making its own evaluation of the
transactions contemplated herein. The Purchaser acknowledges that such
information relies on assumptions and that it has conducted its own
investigation and analysis of such information and data and assumes any
responsibility in connection with the relevance of the use of such information
for its own analyses.

 

8.15.3The Purchaser acknowledges that:

 

(a)all representations and warranties other than those provided in this
Article 8 that the Seller, its Affiliates or anyone purporting to represent the
Seller or its Affiliates gave or might have given, or which might be provided or
implied by applicable Law or commercial practice with respect to the Transferred
Assets, the Facility and the transactions herein are hereby expressly excluded;
and

 

-28-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(b)Except as expressly set forth in Article 10, none of the Seller, its
Affiliates nor any other Person acting on their behalf shall have or be subject
to any Liability or indemnification obligation to the Purchaser, its Affiliates
or any other Person acting on their behalf resulting from any written or oral
communication to the Purchaser, or use by the Purchaser of, any information,
documents, pro-forma business plan, budgets, estimates, projections, forecasts,
forward-looking statements or other material made available to the Purchaser,
confidential information memoranda, data rooms or management interviews and
presentations in respect of the transactions contemplated herein.

 

Article 9 Representations and Warranties of the Purchaser

 

The Purchaser hereby represents and warrants to the Seller that the following
are true and correct on the date of this Agreement and shall be true and correct
on the Closing Date:

 

9.1Corporate Organization

 

The Purchaser is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and the Purchaser has all
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as currently conducted. The Purchaser is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which such qualification or licensing is necessary under
applicable Law, except where the failure to be so qualified or licensed and to
be in good standing would not reasonably be expected, individually or in the
aggregate, to materially delay the Closing or prevent the Purchaser from
complying with its obligations under this Agreement and the Ancillary
Agreements. The Purchaser has not engaged in any business activities prior to
the date of this Agreement and shall not engage in any business activities prior
to the Closing.

 

9.2Authority; Binding Effect

 

9.2.1The Purchaser has full corporate power and authority to execute and deliver
and to perform its obligations under this Agreement and the Ancillary
Agreements, and each other agreement, document, instrument or certificate
contemplated by this Agreement and the Ancillary Agreements to be executed by
the Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby.

 

9.2.2The execution, delivery and performance by the Purchaser of this Agreement
and the Ancillary Agreements have been duly authorized or, with respect to the
Ancillary Agreements, shall have been duly authorized at the Closing Date, by
all necessary corporate action on the part of the Purchaser, and no additional
authorization on the part of the Purchaser is necessary in connection with the
execution, delivery and performance of this Agreement or the Ancillary
Agreements.

 

9.2.3This Agreement constitutes, and on the Closing Date, will constitute, and
each of the Ancillary Agreements when duly executed and delivered on the Closing
Date will constitute, legal, valid and binding obligations of the Purchaser
enforceable against it in accordance with their respective terms.

 

-29-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

9.3No Violations; Consents and Approvals

 

9.3.1The execution, delivery and performance of this Agreement and the Ancillary
Agreements, and the consummation of the transactions contemplated hereby and
thereby do not and will not:

 

(a)conflict with, violate, result in the breach of, or constitute a default
under, any provision of the certificate of incorporation or bylaws or similar
governing documents of the Purchaser;

 

(b)conflict with, violate, result in the breach of, constitute a default under,
any contract pursuant to which the Purchaser is bound; or

 

(c)conflict with, violate, result in the breach of, or constitute a default
under, any Law applicable to the Purchaser.

 

9.3.2No consents or approvals are required on the part of the Purchaser in
connection with the execution, delivery and performance of this Agreement or any
of the Ancillary Agreements.

 

9.3.3Without prejudice to the generality of Section 9.3.2 above, no approvals
are required or advisable to be obtained by the Purchaser under any applicable
antitrust or competition Laws in connection with the consummation of
transactions contemplated by this Agreement or any of the Ancillary Agreements.

 

9.3.4There is no pending Legal Proceeding involving the Purchaser or, to the
Knowledge of the Purchaser, threatened against the Purchaser, which questions or
challenges the validity of this Agreement or seeks to prevent, enjoin, alter or
delay any of the transactions contemplated hereby or any action to be taken
pursuant to this Agreement.

 

9.4Financial Capability

 

9.4.1The Purchaser will have on hand available funds sufficient to enable the
Purchaser to pay in full all amounts to be paid in a timely manner and to
satisfy all other obligations hereunder by the Purchaser in connection with this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby, without recourse to any borrowing or other financing (whether or
not committed). Giving effect thereto, following the Closing, the Purchaser will
have capital resources sufficient to satisfy all Assumed Liabilities as they
become due and the Purchaser’s covenants, agreements and obligations relating to
the Transferred Assets and the Transferred Employees.

 

9.4.2The original source of monies being used by the Purchaser to pay all
amounts contemplated to be paid and to satisfy all other obligations hereunder
by the Purchaser in connection with this Agreement and the transactions
contemplated hereby is derived from legitimate activities. Such monies do not
originate from any country or territory that is identified as the subject of
country-wide or territory-wide sanctions (economic or otherwise), or from a
Person that is described or designated on any prohibited parties’ lists
maintained by any country or international organization (such as the Specially
Designated Nationals and Blocked Persons (SDN) list maintained by the U.S.
Office of Foreign Assets Control (OFAC) and the United Nations Security Council
1267 Committee’s List of Terrorists and Supporters of Terrorism).

 

-30-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

9.5Brokers and Finders

 

There is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Purchaser or any of
its Affiliates who might be entitled to any fee or commission from the Seller or
any of its Affiliates in connection with the transactions contemplated by this
Agreement or the Ancillary Agreements.

 

9.6Environmental Due Diligence

 

Purchaser acknowledges that, with respect to the environmental condition of the
Facility and the Owned Land and any Environmental Matters, Seller does not make
or provide any representations, warranties, covenants, or guarantees regarding
Environmental Matters, Hazardous Materials, or the presence or disposal of any
Hazardous Materials or any other hazardous or toxic substances in, on, emanating
from, or resulting from activities at the Facility and/or the Owned Land, except
as set forth in Section 8.8. Purchaser acknowledges that Purchaser will have had
a full opportunity and ample time to make independent investigations to assess
the environmental conditions of the Facility and the Owned Land and the
existence or non-existence of any Environmental Matters, any violation of
Environmental Laws, or any curative action to be taken with respect to any
Environmental Matters, and will rely solely upon the same and the express
representations contained herein. Purchaser acknowledges and agrees that it will
have conducted its own tests, inspections, investigations, environmental audits,
inquiries of third parties, and other reviews as Purchaser deems necessary or
appropriate, and that Purchaser will solely rely on its own such tests,
inspections, investigations, environmental audits, inquiries of third parties
and other reviews in having determined the advisability of acquiring the
Facility and the Owned Land on the terms set forth herein.

 

9.7Waiver and Release for Environmental Matters

 

Except as provided in and subject to Article 10, below, Purchaser acknowledges
that, upon the closing, Purchaser shall be deemed to have waived, relinquished
and released the Seller and each of its parents or Affiliates from and against
any and all claims, demands, causes of action (including causes of action in
contract, strict liability or tort), losses, damages, liabilities, costs and
expenses (including attorneys' fees and court costs) of any and every kind or
character, known or unknown, which Purchaser might have asserted or alleged
against Seller or any of its parents or Affiliates at any time by reason of or
arising out of an Environmental Matter. Purchaser acknowledges and agrees that
the waivers, releases and other provisions contained in this Agreement were a
material factor in Seller's acceptance of the Purchase Price and that Seller
would have been unwilling to sell the Facility and the Owned Land to Purchaser
unless Seller and each of its parents and Affiliates is released as expressly
set forth above. Purchaser, with Purchaser's counsel, has fully reviewed the
disclaimers and waivers set forth in this Agreement, and understands the
significance and effect thereof.

 

9.8No Other Representation and/or Warranty

 

The representations and/or warranties provided in this Article 9 are the only
representations and/or warranties given by the Purchaser in connection with the
transactions herein contemplated.

 

-31-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

9.9Independent Assessment

 

The Purchaser acknowledges that it and its Representatives have been permitted
satisfactory access to the records, contracts, and other properties and assets
of the Seller and its Affiliates relating to the Facility and the Transferred
Assets, and have had a satisfactory opportunity to meet with the officers and
employees of the Seller to discuss the contemplated purchase of the Transferred
Assets and the transactions contemplated by this Agreement and the Ancillary
Agreements. The Purchaser acknowledges that it has made its own and independent
assessment of the present condition and the future prospects of the Facility and
its operations and is sufficiently experienced to make an informed judgment with
respect thereto. The Purchaser has not relied on any representation and warranty
of the Seller, except those expressly included herein.

 

Article 10 Indemnification

 

10.1Indemnification

 

10.1.1From and after the Closing, and subject to this Article 10, the Seller
hereby agrees to indemnify the Purchaser, its Affiliates and their respective
Representatives (collectively, the “Purchaser Indemnified Parties”) for any and
all losses, Liabilities, claims, demands, judgments, demands, fines, suits,
actions, costs and expenses (including reasonable attorneys’ fees)
(collectively, “Losses”) incurred by the Purchaser Indemnified Parties arising
out of, or related to:

 

(a)any inaccuracy or breach of any representation or warranty on the part of the
Seller contained in this Agreement, or on the part of the Seller and/or any of
its Affiliates, as the case may be, contained in any of the Ancillary
Agreements;

 

(b)any failure to perform, breach or violation by the Seller of any of its
covenants or agreements contained in this Agreement, or by the Seller and/or any
of its Affiliates, as the case may be, of any of their respective covenants or
agreements contained in any of the Ancillary Agreements; and

 

(c)any Excluded Liabilities.

 

10.1.2From and after the Closing, and subject to this Article 10, the Purchaser
hereby agrees to indemnify the Seller, its Affiliates and their respective
Representatives (collectively, the “Seller Indemnified Parties”) for any and all
Losses incurred by the Seller Indemnified Parties arising out of, or related to:

 

(a)any inaccuracy or breach of any representation or warranty on the part of the
Purchaser contained in this Agreement or any of the Ancillary Agreements;

 

(b)any failure to perform, breach or violation by the Purchaser of any of its
covenants or agreements contained in this Agreement or any of the Ancillary
Agreements;

 

(c)subject to indemnification rights provided in Section 10.1.1(a), any
Liability with respect to Environmental Matters; and

 

(d)any of the Assumed Liabilities.

 

-32-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

10.1.3All claims made by any Party (the “Indemnifiable Party”) against the other
Party (the “Indemnifying Party”) under this Article 10 shall only be validly
asserted as provided by Sections 10.2 and 10.3 below.

 

10.2Indemnification Process for Direct Claims

 

In the event of a claim (other than a Third Party Claim, as defined in
Section 10.3) made by one Party against another Party under Section 10.1 (a
“Direct Claim”), the Indemnifiable Party shall promptly (and in any event within
ten ( 10) Business Days of becoming aware of it) give written notice to the
Indemnifying Party of such Direct Claim, specifying the nature and grounds of
such Direct Claim and the amount or estimated amount thereof (which estimate is
for informational purposes only and shall not be considered a conclusive
determination of the final amount of such Direct Claim); provided, however, that
the failure to give such notice promptly shall not relieve the applicable
Indemnifying Party of its indemnification obligations under this Agreement,
except to the extent that the Indemnifying Party is prejudiced by any delay in
receiving such notice.

 

10.3Indemnification Process for Third Party Claims

 

10.3.1In the event that any Legal Proceeding is asserted or instituted by any
Third Party in respect of which an Indemnifying Party may be obligated to
provide indemnification hereunder (such Legal Proceeding being hereinafter
referred to as a “Third Party Claim”), the Indemnifiable Party shall promptly
(and in any event within ten (10) Business Days of becoming aware of it) give
written notice to the Indemnifying Party of such Third Party Claim, specifying
the nature and grounds of such Third Party Claim and the amount or estimated
amount thereof (which estimate shall not be considered a conclusive
determination of the final amount of such Third Party Claim) (a “Third Party
Claim Notice”); provided, however, that the failure to give such notice promptly
shall not relieve the applicable Indemnifying Party of its indemnification
obligations under this Agreement, except to the extent that the Indemnifying
Party is prejudiced by any delay in receiving such notice.

 

10.3.2In the event of a Third Party Claim:

 

(a)the Indemnifying Party shall have the right, if it so elects, to assume the
defense of the Third Party Claim and take such action to avoid, defend, dispute,
resist, appeal or compromise such Third Party Claim and for such purpose may
retain counsel of its choice to represent the Indemnifiable Party and any others
that the Indemnifying Party may reasonably designate in connection with such
Third Party Claim and shall pay the fees and disbursements of such counsel with
regard thereto;

 

(b)the Indemnifiable Party shall have the right, if it so notifies the
Indemnifying Party, to be consulted in such defense of the Third Party Claim and
to participate at its own expense and with counsel of its choice. In such event,
the Indemnifying Party shall afford the Indemnifiable Party and its counsel the
opportunity to comment (which comments shall be taken into account to the extent
reasonable) with respect to the conduct of the defense of such Third Party
Claim;

 

-33-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(c)if requested by the Indemnifying Party, the Indemnifiable Party agrees to
cooperate with the Indemnifying Party and its counsel in contesting any Third
Party Claim which the Indemnifying Party defends or, if (i) appropriate and
related to the Third Party Claim in question and (ii) reasonable in the judgment
of the Indemnifying Party, in making any counterclaim against the Person
asserting the Third Party Claim, or any cross complaint against any Person. The
Indemnifying Party shall consult the Indemnifiable Party with respect to the
prosecution of such counterclaim, demand or cross complaint. In such case and to
the extent the counterclaim or cross complaint is related to the circumstances
or facts giving rise to the Loss, the amount obtained as a result thereof shall
be deducted from the amount of the indemnification to be paid by the
Indemnifying Party to the Indemnifiable Party.

 

10.3.3In the event the Indemnifying Party does not assume the defense in respect
of the Third Party Claim, the Indemnifying Party shall have the right, if it so
notifies the Indemnifiable Party, to be consulted in such defense of the Third
Party Claim and to participate at its own expense and with counsel of its
choice. In such event, the Indemnifiable Party shall afford the Indemnifying
Party and its counsel the opportunity to comment (which comments shall be taken
into account to the extent reasonable) with respect to the conduct of the
defense of such Third Party Claim.

 

10.3.4From and after the delivery of a Third Party Claim Notice hereunder, at
the reasonable request of the Indemnifying Party, the Indemnifiable Party shall
promptly provide the Indemnifying Party with copies of any document received or
sent in connection with the Third Party Claim and shall grant the Indemnifying
Party and its Representatives all reasonable access to the books, records and
properties of the Indemnifiable Party to the extent reasonably related to the
matters to which the Third Party Claim Notice relates. The Indemnifying Party
shall not, and shall require that its Representatives shall not, use (except in
connection with such Third Party Claim) or disclose to any Third Party other
than the Indemnifying Party’s Representatives (except as may be required by
applicable Law) any information obtained pursuant to this Section 10.3.4 which
is designated confidential by the Indemnifiable Party. All such access shall be
granted during normal business hours on a Business Day and shall be granted
under conditions which will not unreasonably interfere with the business and
operations of the Indemnifiable Party.

 

10.3.5Any compromise or settlement made or caused to be made by the Indemnifying
Party or the Indemnifiable Party, as the case may be, in connection with any
Third Party Claim shall be binding upon, and be for the benefit of, the
Indemnifying Party and the Indemnifiable Party, as the case may be, in the same
manner as if a final Order had been entered by a court of competent jurisdiction
in the amount of such settlement or compromise; provided, however, that no
settlement or compromise shall be entered into by either the Indemnifying Party
or the Indemnifiable Party without the express written consent of the other
Party (which consent shall not be unreasonably withheld or delayed). In the
event the Indemnifiable Party refuses to consent to a settlement providing for a
monetary payment that does not impose any other restrictions on the
Indemnifiable Party, the Indemnifying Party shall not be liable to indemnify the
Indemnifiable Party for any amount in excess of the amount of such settlement
proposal.

 

-34-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

10.4General Limitations on Indemnity Payments

 

10.4.1From and after the Closing, indemnification under this Article 10 shall
constitute the sole and exclusive remedy of any Party with respect to any and
all claims relating to this Agreement and the Ancillary Agreements. Each Party
waives, and shall cause its Affiliates to waive, any other right against the
other Party and its Affiliates for indemnification pursuant to any breach of
representations or warranties, other than as provided in this Agreement or any
Ancillary Agreement. The Purchaser is purchasing the Transferred Assets and
assuming the Assumed Liabilities based solely on the results of its inspections
and investigations and on the representations and warranties of the Seller set
forth in Article 8 (as modified by any Schedule or Disclosure Supplement) and
the Ancillary Agreements. In light of these inspections and investigations and
the representations and warranties made to the Purchaser by the Seller in
Article 8 or in the Ancillary Agreements, the Purchaser is waiving any right to
any claim based on any representation and warranty, other than those as provided
in this Agreement or any Ancillary Agreement.

 

10.4.2No claim for indemnification made by a Purchaser Indemnified Party
pursuant to Section 10.1.1(a) will be indemnifiable if and to the extent that
the fact, matter, event or circumstance giving rise to such claim is disclosed
by this Agreement, the Schedules to this Agreement (as they may be supplemented
pursuant to Section 6.4), any other Ancillary Agreement or any document
disclosed in the Data Room.

 

10.4.3The Indemnifiable Party shall take all commercially reasonable steps to
avoid or mitigate any Losses in respect of which it might be entitled to
indemnification pursuant to this Article 10.

 

10.4.4No indemnification shall be available to the Purchaser Indemnified Parties
hereunder in respect of any Loss which is directly attributable to:

 

(a)the conduct by the Purchaser or its Affiliates after the Closing Date; or

 

(b)the conduct by the Seller or its Affiliates before the Closing Date at the
direction or request of the Purchaser or its Affiliates.

 

10.4.5The amount of any Loss for which indemnification is provided under this
Article 10 shall be net of any amounts actually recovered by the Indemnifiable
Party under insurance policies, including without limitation the pollution legal
liability insurance policy obtained by the Purchaser in accordance with Section
4.3(g), or from Third Parties (other than amounts recovered from another
Indemnifiable Party) with respect to such Loss. If any Loss related to a claim
by an Indemnifiable Party is covered by one or more third-party insurance
policies held by the Indemnifiable Party, the Indemnifiable Party shall use all
commercially reasonable efforts to pursue claims against the applicable insurers
for coverage of such Loss under such policies. If the Indemnifiable Party
actually receives a full or partial recovery under such insurance policies or
from a Third Party (other than from another Indemnifiable Party) following
payment of indemnification by the Indemnifying Party in respect of such Loss,
the Indemnifiable Party shall forward such insurance or other such amounts
recovered to the Indemnifying Party less any costs, fees and expenses, duly
evidenced, incurred by the Indemnifiable Party in connection with the recovery
of such amount (not to exceed the amount of indemnification paid by the
Indemnifying Party).

 

10.4.6The amount of any Loss for which indemnification is provided under this
Article 10 shall be reduced to take account of the actual amount by which the
Taxes of the Indemnifiable Party or its Affiliates shall be reduced by such
Loss.

 

10.4.7In no event shall any Indemnified Party be entitled to indemnification
hereunder for any Loss arising out of or in connection with a change or
development in Law after the date hereof including any change or development in
the enforcement thereof or any change in the rates of taxation in force at the
date of this Agreement.

 

-35-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

10.4.8In no event shall any Indemnifiable Party be entitled to double recovery
under this Agreement or any Ancillary Agreement. In particular, in the event any
circumstances giving rise to a Loss constitute a breach of more than one
representation and warranty, obligation or covenant on the part of the
Indemnifying Party, the Indemnifiable Party shall only be entitled to be
indemnified once in respect of such Loss.

 

10.4.9If any claim for indemnification is based upon a liability which is
contingent, the Indemnifying Party shall not be liable to make any
indemnification payment to the Indemnifiable Party unless and until such
contingent liability becomes due and payable, other than payments made to the
Indemnifiable Party to cover the costs and expenses of investigating or
defending such contingent liability, including reasonable attorneys’ fees
incurred by the Indemnifiable Party; provided, however, that any claim for
indemnification that is made with respect to a contingent liability prior to the
termination of the survival period defined in Section 10.5 shall not be denied,
and no Indemnifying Party’s liability hereunder shall be extinguished solely
because such liability remains contingent at the end of such survival period.

 

10.4.10For the purposes of this Article 10, all amounts which are denominated in
a currency other than the U.S. dollar shall be converted into U.S. dollars at
the rate published in the Wall Street Journal on the date of the notice of claim
by the Indemnifiable Party.

 

10.5Survival of Representations, Warranties and Covenants

 

Notwithstanding anything to the contrary contained in this Agreement, and
notwithstanding any statute of limitations that might otherwise apply, the
obligation of any Indemnifying Party to indemnify any Indemnifiable Party from
and against any Loss arising from the breach of a representation or warranty set
forth in this Agreement or the breach of a covenant in Article 6 will terminate
twelve (12) months after the Closing Date (the “Termination Date”), except that
claims in respect of breaches thereof pending on, or asserted prior to, the
Termination Date will continue to survive until such claims have been resolved.

 

10.6Other Limitations

 

10.6.1To the extent that any Losses incurred by a Purchaser Indemnified Party
arise out of (a) a breach of the Seller’s representations in any of Section 8.3,
Section 8.4 or Section 8.6, or (b) a breach of the Seller’s covenants to convey
a Transferred Asset, and is capable of mitigation through the conveyance to the
Purchaser or the applicable Purchaser Indemnified Party of any non-conveyed
asset giving rise to such Loss (or another non-conveyed asset that would cure
such Loss), the Purchaser and the Seller shall cooperate (at the Seller’s
expense) to effect any arrangement reasonably proposed by the Purchaser for the
conveyance to the Purchaser or the applicable Purchaser Indemnified Party of
such asset. To the extent that any Losses incurred by a Purchaser Indemnified
Party arise out of a breach of the Seller’s covenants in Section 7.2 which is
capable of mitigation through making available to the Purchaser or the
applicable Purchaser Indemnified Party any Shared Contract giving rise to such
Loss (or another asset that would cure such Loss), the Purchaser and the Seller
shall cooperate (at the Seller’s expense) to effect any arrangement reasonably
proposed by the Purchaser to mitigate such Loss. In such event, if the Seller is
unable to effect such arrangement, the Purchaser shall be entitled to obtain a
reasonably equivalent replacement or substitute for such asset on a commercially
reasonable basis, and the reasonable cost of such reasonably equivalent
replacement or substitute will be an indemnifiable Loss hereunder.

 

-36-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

10.6.2Notwithstanding the foregoing, and subject to Section 10.6.3 below, no
claim for indemnification made pursuant to Section 10.1.1(a) will be
indemnifiable:

 

(a)unless the Losses with respect to each individual item or group of related
items underlying such claim exceed One Hundred Thousand U.S. dollars ($100,000)
(the “Minimum Claim Threshold”), provided that if the Losses with respect to
such item or group of related items exceed the Minimum Claim Threshold, the full
amount of the Claim (and not just the excess above the Minimum Claim Threshold)
will be indemnifiable, subject to the other limitations herein; and

 

(b)until the indemnifiable Losses pursuant to Section 10.1.1(a) exceed Two
Hundred Fifty Thousand U.S. dollars ($250,000) in the aggregate (the
“Deductible”), in which event the Seller will reimburse the Purchaser
Indemnified Party only for the amount of the indemnifiable Losses in excess of
the Deductible,

 

provided that notwithstanding any other provision of this Agreement, the maximum
amount for which the Seller may be liable with respect to claims made pursuant
to Section 10.1.1 will not exceed One Million U.S. dollars ($1,000,000) (the
“Cap”).

 

10.6.3[Reserved.]

 

10.6.4The Indemnifying Party shall be liable only for Losses that are direct
damages incurred by the Indemnifiable Party. The Indemnifying Party shall not be
liable for any consequential, incidental, indirect, special or punitive damages,
including loss of income, revenue, goodwill or profits or diminution in value,
whether actual or prospective.

 

10.6.5Notwithstanding any other provision to the contrary, in relation to
Environmental Matters, the Purchaser Indemnified Parties shall not be entitled
to indemnification under Section 10.1.1 for that portion of any Losses
attributable to the commencement of any Remedial Action, or the increase,
exacerbation, or aggravation of any Remedial Action, resulting from an
Environmental Matter existing prior to the Closing Date, when such Remedial
Action, or such increase, exacerbation or aggravation, results from:

 

(a)any conduct or failure to act of any Purchaser Indemnified Party if the
Purchaser knew or should have known (exercising reasonable care) of such
existing Environmental Matter and that their conduct or failure to act would
increase, exacerbate or aggravate such Environmental Matter causing the Loss and
failed to take reasonable corrective action in connection therewith as a result
of such knowledge or imputed knowledge;

 

(b)any site closure at the Facility resulting in the application of a clean-up
standard for Remedial Action stricter than the standard which would have applied
for a use comparable to the last industrial operation of the Facility on the
Closing Date; or

 

(c)any substantial change in the nature of the activities and services performed
at the Facility or any substantial change at the Facility resulting in the
application of a clean-up standard for Remedial Action stricter than the
standard which would have applied for a use comparable to the industrial
operation of the Facility on the Closing Date.

 

-37-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

10.6.6The Purchaser shall not voluntarily approach any Governmental Authorities
for the purpose of instigating Remedial Action for pollution which is reasonably
likely to require indemnification by the Seller pursuant to Section 10.1.1
unless the Purchaser has first consulted with the Seller as to the
appropriateness and contents of such approach; provided, however, that the
Purchaser shall not be obligated to first consult with the Seller if such
consultation would be impracticable under the circumstances, including, without
limitation, if an approach to the Governmental Authorities is reasonably
necessary to avert an imminent danger of harm or serious pollution of the
Environment (in which circumstances, the Purchaser shall promptly notify the
Seller after such approach). If the Purchaser goes forward with an approach to
Governmental Authorities after conferring with the Seller, the Purchaser shall
take into account reasonable comments from the Seller and shall keep the Seller
reasonably informed of any material developments in such matter. If permitted by
the Governmental Authorities, the Purchaser shall provide the Seller with the
opportunity to attend scheduled meetings with the Governmental Authorities with
respect to such matter.

 

Article 11 Termination

 

11.1Conditions of Termination

 

This Agreement may be only terminated, by notice in writing, and the
transactions contemplated hereby may be only abandoned prior to the Closing:

 

(a)by the mutual written agreement of each of the Purchaser and the Seller;

 

(b)by either Party if the Closing shall not have occurred on or before July 31,
2016; provided, however, that the right to terminate pursuant to this
Section 11.1(b) is not available to any Party whose breach of any provision of
this Agreement results in or causes the failure of the Closing to be consummated
by such time;

 

(c)by either Party if any Law is enacted that makes the consummation of the
transactions contemplated by this Agreement illegal or otherwise prohibited, or
if consummation of the transactions contemplated by this Agreement would violate
any non-appealable final Order of any Governmental Authority; or

 

(d)by the Purchaser if the condition precedent set forth in Section 5.2(b) is
not fulfilled, or by the Seller if the condition precedent set forth in
Section 5.3(a) is not fulfilled, in each case as a result of a breach, failure
or misrepresentation which has not been cured within twenty (20) Business Days
of receiving written notice thereof from the terminating Party indicating that
unless such breach, failure or misrepresentation is cured in accordance with
this Section 11.1(d), the terminating Party intends to terminate this Agreement
(it being understood that such twenty (20) Business Day cure period will, to the
extent necessary, extend the date set forth in Section 11.1(b)).

 

-38-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

11.2Consequences of Termination

 

In the event of termination of this Agreement in accordance with Section 11.1,
this Agreement shall thereafter become void and have no effect, and no Party
hereto shall have any liability or obligations to the other Party or their
respective Affiliates, except for:

 

(a)the obligations contained in this Section 11.2 and Sections 12.1, 12.2, 12.3,
12.4 and 12.11; and

 

(b)the obligations resulting from a wilful breach of any obligations under this
Agreement, provided that such breach occurred prior to the termination of this
Agreement.

 

Article 12 General Provisions

 

12.1Confidentiality

 

12.1.1For the purposes of this Section 12.1:

 

(a)subject to Section 12.1.2 below, “Confidential Information” shall mean:

 

(i)(in relation to the obligations of the Purchaser) any and all information
related to the Seller and/or its Affiliates or, prior to Closing, the
Transferred Assets, received or held by the Purchaser or its Representatives,
whether oral or written;

 

(ii)(in relation to the obligations of the Seller) any and all information
related to the Purchaser and/or its Affiliates or, following Closing, the
Transferred Assets, received or held by the Seller or its Representatives,
whether oral or written; and

 

(iii)any of the terms, conditions or content of the discussions between the
Parties with respect to, and the existence and the terms of, this Agreement and
the other Ancillary Agreements; and

 

(b)“Representatives” in respect of a Party shall mean any Affiliates and/or any
directors, officers, managers, employees, agents and/or advisors (including,
without limitation, financial advisors, counsels and accountants) of such Party
or any of its Affiliates.

 

12.1.2Confidential Information shall however not include any information that:

 

(a)is or becomes generally available to the public other than as a result of a
disclosure by that Party or any of its Representatives in violation of this
Section 12.1;

 

(b)was lawfully in the possession of that Party or any of its Representatives
prior to such information being received from the other Party or its
Representatives free of any restriction as to its use and disclosure (as can be
demonstrated by that Party’s or its Representative’s written records);

 

-39-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(c)becomes available to that Party or any of its Representatives thereafter,
provided that at the time of its receipt such information is not, to the best of
that Party’s and its Representative’s knowledge, subject to any confidentiality
or restricted-use obligation for the benefit of the other Party; and/or

 

(d)is independently developed by that Party or any of its Representatives
without reference to the other Party’s Confidential Information (as can be
demonstrated by that Party’s or its Representative’s written records).

 

12.1.3Subject to the provisions of this Section 12.1, or unless otherwise agreed
to in writing by the other Party, each of the Seller and the Purchaser hereby
agrees not to (and to cause its Representatives not to):

 

(a)disclose any Confidential Information to any Person other than its
Representatives who need to know the Confidential Information for the purpose of
the consummation of the transactions contemplated by this Agreement or any of
the Ancillary Agreements; and

 

(b)use any Confidential Information for any purpose other than in connection
with the consummation of the transactions contemplated by this Agreement or any
of the Ancillary Agreements.

 

12.1.4If a Party (the “Disclosing Party”) (or its Representative) is, as per its
legal counsel’s written opinion, required by applicable Law, by applicable stock
exchange regulation or other regulation, by legal process, or for the purposes
of enforcement of its rights under this Agreement, to disclose all or any
portion of the Confidential Information, the Disclosing Party (or its
Representative) may so disclose such Confidential Information, provided that the
Disclosing Party shall, to the extent permitted by Law:

 

(a)provide the other Party with a written notice of such requirement so that the
other Party may seek a protective order or other appropriate remedy;

 

(b)exercise commercially reasonable efforts to narrow the scope of any such
requirement and consult with the other Party to that effect; and

 

(c)if such protective order or other remedy is not obtained, furnish only that
portion of the Confidential Information which the Disclosing Party (or its
Representative) is compelled to disclose and exercise commercially reasonable
efforts to obtain assurance that confidential treatment will be accorded to such
Confidential Information.

 

The Parties acknowledge that the Purchaser may be required to file a redacted
copy of this Agreement with the Securities and Exchange Commission and the
Parties will cooperate (at no additional cost or expense to Seller) to prepare
the filing and seek confidential treatment of mutually agreed to portions of
this Agreement.

 

12.1.5In the event of termination of this Agreement in accordance with
Section 11.1, the Purchaser shall (and shall ensure that its Representatives
shall) promptly, upon the Seller’s written request, and in any event within ten
(10) Business Days of such request return all copies of Confidential Information
in its possession or in the possession of any of its Representatives and destroy
all information or other documents derived from such Confidential Information.
Notwithstanding the foregoing, the Purchaser (and its Representatives) shall be
permitted, subject to their continued compliance with the obligations specified
in this Section 12.1, to retain copies of any computer records and files
containing such Confidential Information which have been created pursuant to its
automatic electronic archiving and back up procedures. If so requested by the
Seller, the Purchaser shall confirm in writing that its undertakings relating to
the return or destruction of any such Confidential Information have been
complied with.

 

-40-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

12.2Public Announcements

 

Without limitation to Section 12.1 above (and subject always to Section 12.1.4
above), the Purchaser and the Seller shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement, the other Party’s name or the transactions contemplated
hereby and neither the Purchaser nor the Seller shall issue any such press
release or make any such public statement without having first submitted a draft
thereof to the other Party. The issuance thereof shall not be made without the
prior written approval of the other Party (such approval not to be unreasonably
withheld or delayed).

 

12.3Notices

 

12.3.1Any notice or other communication provided for herein (the “Notice”) or
given hereunder to a Party must be in writing, and delivered in person or sent
by a reputable express courier, addressed as follows:

 

(a)if to the Purchaser or any of its Affiliates:

 

Icagen-T, Inc.

2090 E. Innovation Park Drive

Oro Valley, Arizona 85755

Attention: Richard Cunningham, President & CEO

 

with a copy to:

 

Leslie Marlow, Esq.

Gracin & Marlow, LLP

The Chrysler Building 

405 Lexington Avenue, 26th Floor

New York, New York 10174

 

(b)if to the Seller or any of its Affiliates:

 

Sanofi US Services Inc.

c/o Sanofi

54 rue La Boétie
75008 Paris
France
Attention: General Counsel

 

with a copy to:

 

Carol Stern, Esq.

McCarter & English, LLP 

100 Mulberry Street

Newark, New Jersey 07102

 

-41-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

12.3.2All such Notices shall be deemed given:

 

(a)if delivered in person, upon actual receipt by the Person to receive
delivery; and

 

(b)if sent by overnight courier, be deemed given two (2) Business Days following
the day sent by express courier,

 

provided that any such Notice delivered after 5:00 p.m. (local time) in the
place of receipt or on a day that is not a Business Day will not be deemed given
or received until 9:00 a.m. (local time) on the next succeeding Business Day.

 

12.3.3Any Party from time to time may change its address or other information
for the purpose of Notices to that Party by giving Notice specifying such change
to the other Parties.

 

12.3.4Except as otherwise expressly provided in this Agreement, all Notices
shall be in English or, if in any other language, accompanied by a translation
into English. In the event of any conflict between the English text and the text
in any other language, the English text shall prevail.

 

12.4Expenses and Taxes

 

12.4.1Except as expressly set forth otherwise in this Agreement and to the
extent legally feasible, any and all payments to be made by one Party and/or its
Affiliates to the other Party and/or its Affiliates as a result of or in
connection with this Agreement shall be made solely by the Seller to the
Purchaser or by the Purchaser to the Seller, as the case may be, it being
understood that each Party will be then responsible for allocating the amounts
thus received from the other Party to its Affiliates.

 

12.4.2Each Party shall pay all fees and expenses incurred by it in connection
with this Agreement and the transactions contemplated hereby, except that the
Parties agree that the Purchaser shall pay all Transfer Taxes with respect to
the transactions contemplated hereby and the Purchaser shall indemnify and hold
harmless the Seller and its Affiliates with respect to such Transfer Taxes. Each
Party will cooperate and consult with each other prior to filing Tax Returns in
respect of Transfer Taxes and will cooperate and otherwise take all commercially
reasonable efforts to obtain any exemptions for or refunds of Transfer Taxes.

 

12.4.3The Seller shall be responsible for the timely filing (taking into account
any extensions received form the relevant Governmental Authorities) of all Tax
Returns required by Law to be filed with respect to the Transferred Assets for
periods ending on or prior to the Closing Date. All Taxes, other than Transfer
Taxes with respect to the transactions contemplated hereby, indicated as due and
payable on such Tax Returns shall be paid by the Seller when required by Law,
except for such Taxes as may be contested by the Seller in good faith and
pursuant to appropriate Legal Proceedings.

 

12.4.4The Purchaser shall be responsible for the timely filing (taking into
account any extensions received from the relevant Government Authorities) of all
Tax Returns required by Law to be filed with respect to the Transferred Assets
for the periods ending after the Closing Date. All Taxes indicated as due and
payable on such Tax Returns shall be paid by the Purchaser when required by Law,
except for such Taxes as maybe contested by the Purchaser in good faith and
pursuant to appropriate Legal Proceedings.

 

-42-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

12.4.5Seller will pay (a) with respect to the Title Policy, the premium
allocable to a standard ALTA owner’s policy of title insurance and the premium
only for those endorsements the Seller has agreed to provide to cure Defects as
provided in Section 12.12 below, (b) one-half of any escrow fee, (c) all of the
costs for recording reconveyances of existing monetary or other liens or
encumbrances on the Transferred Assets, and (d) all unpaid special assessments
that are due and payable on or prior to Closing.

 

12.4.6Purchaser will pay (a) one-half of any escrow fee, (b) recording fees with
respect to the Deed of Sale, the Deed of Trust and the Affidavit of Property
Value, (c) with respect to the Title Policy, any additional premium allocable to
an ALTA extended coverage title policy and the costs of all endorsements to the
Title Policy (other than those to be provided by Seller to cure Defects), and
(d) the cost of any survey (or survey revisions) required by the Purchaser.

 

12.4.7Real property taxes and all general assessments shall be prorated as of
the Closing Date made on the basis of the fiscal year for which assessed. If the
Closing Date shall occur before the real property tax rate is fixed, the
apportionment of taxes shall be made on the basis on the tax rate for the
preceding year applied to the latest assessed valuation; within thirty (30) days
after both Parties have received notice that the final rates have been fixed by
the applicable Government Authority (such notice being delivered by the other
Party or by the applicable Governmental Authority), the real property tax and
assessment proration made on the Closing Date shall be recalculated and
apportioned and an appropriate payment shall be made by the Seller to the
Purchaser or by the Purchaser to the Seller, as the case may be. Any matters
whose proration is not specifically covered in this Section 12.4.7 shall be
prorated in accordance with customary procedure in the county where the Owned
Land is located.

 

12.5Amendments; Waiver

 

This Agreement and the Ancillary Agreements may only be amended, supplemented or
modified and any provision of this Agreement may only be waived, pursuant to a
written instrument making specific reference to this Agreement and executed by
duly Authorized Persons of the Parties.

 

12.6Entire Agreement

 

12.6.1This Agreement and the Ancillary Agreements constitute the entire
understanding and agreement between the Parties with respect to the matters
herein and supersede any previous agreements, understandings, or statement of
intent in each case, written or oral, of every nature between the Parties with
respect to those matters.

 

12.6.2To the extent any provision of any Ancillary Agreement is inconsistent
with the provisions of this Agreement, the provisions of this Agreement shall
prevail.

 

12.6.3Without prejudice to the generality of Section 12.6.2 above, the
provisions of Article 10 on indemnification for breach of representations and
warranties shall collectively and exclusively apply to the breach of any and all
of the representations and warranties contained in any Ancillary Agreement.

 

-43-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

12.7Severability

 

The invalidity or unenforceability of any provision of this Agreement or the
Ancillary Agreements shall not affect the validity or enforceability of any
other provision of this Agreement, each of which shall remain in full force and
effect and the invalidity and unenforceability of this Agreement or the
Ancillary Agreements shall not affect the validity or enforceability in any
jurisdiction in which such determination had not been made except to the extent
such invalidity or unenforceability causes such agreements to no longer contain
all of the material provisions reasonably expected by the Parties to be
contained. The Parties, however, agree to substitute any invalid or
unenforceable provision by a valid and enforceable provision which maintains, to
the fullest extent possible, the respective interests of the Parties as
established by the present terms and conditions of the Agreement.

 

12.8Binding Effect; No Assignment

 

12.8.1This Agreement and the Ancillary Agreements shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns.

 

12.8.2Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any Person not Party to this Agreement other than,
as the context requires, any Affiliate of the Seller which, according to the
provisions of this Agreement, is intended to be a signatory to any of the
Ancillary Agreements, or on behalf of which a right is created or a commitment
is taken by the Seller pursuant to this Agreement.

 

12.8.3No assignment of this Agreement or of any rights or obligations hereunder
may be made by either Party without the prior written consent of the other
Party, and any attempted assignment without such required consent shall be null
and void; except that the Seller may assign its rights under this Agreement to
an Affiliate (provided that such assignee undertakes at the time of the
assignment that if such assignee ceases to be an Affiliate such right will,
immediately prior to the assignee ceasing to be an Affiliate, be re-assigned to
the Seller or another of its Affiliates) and no such assignment will relieve the
Seller of liability.

 

12.9Specific Performance

 

The Parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, that monetary damages may be
inadequate and that a Party may have no adequate remedy at Law. The Parties
accordingly agree that, without the necessity of posting bond or other
undertaking, the Parties hereto will be entitled to an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in accordance with this Agreement, this being in
addition to any other remedy to which such Party is entitled at Law or in
equity. In the event that any action is brought in equity to enforce the
provisions of this Agreement, no Party will allege, and each Party hereby waives
the defense or counterclaim that, there is an adequate remedy at Law.

 

-44-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

12.10Counterparts

 

This Agreement may be executed in any number of counterparts, each of which will
be deemed an original, but all of which together shall constitute one and the
same instrument.

 

12.11Governing Law; Dispute Resolution

 

12.11.1This Agreement shall be governed in all respects by the Laws of the State
of Delaware, without regard to the principles of conflicts of Laws that might
otherwise be applicable.

 

12.11.2In the event that any dispute or any part thereof arising out of or in
connection with this Agreement and/or the Ancillary Agreements is not
satisfactorily resolved by amicable negotiation between the Parties within
twenty (20) Business Days of a Notice of claim sent by either Party, all such
disputes or any unresolved part thereof shall be finally settled under the Rules
of Arbitration of the International Chamber of Commerce (“ICC”) as in effect as
of the date of commencement of the arbitration proceedings by three arbitrators
appointed in accordance with such Rules of Arbitration, as modified by this
Section 12.11.2. The arbitration proceedings shall take place in New York, New
York and shall be conducted in the English language. The arbitral tribunal shall
be obliged to render a final award on the merits no longer than six (6) months
following the constitution of the arbitral tribunal. The arbitral award shall be
binding upon the Parties and judgment upon any award rendered may be entered in
any court having jurisdiction. However, any Party may bring an action or
proceeding in any court of competent jurisdiction seeking specific performance
or other equitable relief (or its equivalent), including without limitation
pursuant to Section 12.9, or to preserve the status quo until any arbitration is
concluded. Except in a proceeding to enforce the results of the arbitration or
as otherwise required by Law, no Party nor any arbitrator may disclose the
existence, content or results of any arbitration hereunder without the prior
written agreement of both Parties. The arbitrators may award the prevailing
party such reasonable attorneys’ fees, costs and necessary disbursements in
addition to any other Losses to which such arbitrators determine such party may
be entitled.

 

12.12Title Insurance

 

12.12.1Within five (5) Business Days after the date of this Agreement, Seller
shall cause a national title insurance company (the “Title Insurer”) to provide
Purchaser with a current title commitment (the “Title Commitment”) committing to
the issuance of a 2006 ALTA extended owner’s title insurance policy insuring
Purchaser’s fee simple ownership of the Owned Land and Facility in the amount of
$17,000,000 (the “Title Policy”), together with legible copies of all title
exception documents identified therein.

 

-45-

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

12.12.2If the Title Commitment reflects objections to title (other than the
Permitted Encumbrances) not acceptable to Purchaser, in Purchaser’s sole and
absolute discretion (collectively, “Defects”), and Purchaser shall notify Seller
of same in writing (“Purchaser’s Title Notice”) within five (5) Business Days
(the “Title Review Period”) after the later of (i) the date of this Agreement
and (ii) the date Purchaser receives the Title Commitment and such documents,
then within five (5) Business Days after Seller's receipt of Purchaser's Title
Notice, Seller shall notify Purchaser which Defects Seller will cure prior to
Closing and which Defects Seller will not cure prior to Closing. If Seller's
notice specifies Defects which will not be cured by Seller prior to Closing,
then Purchaser may, within two (2) Business Days after the expiration of the
second five-Business Day period referenced above, accept such Defects (in which
event such Defects shall be deemed to be "Permitted Encumbrances" hereunder) or
Purchaser may elect to terminate this Agreement, in which case the provisions of
Section 11.2 above shall apply. All matters referenced in the Title Commitment
which are not Defects shall be deemed to be “Permitted Encumbrances” hereunder.
If Seller fails to provide the required notice to Purchaser within the
applicable five-Business Day period, then Seller shall be deemed to have elected
not to cure such Defects. Notwithstanding anything to the contrary contained in
this Agreement, any title exceptions for parties in possession and liens or
encumbrances securing loans or evidencing security interests created by Seller
shall not constitute Permitted Encumbrances hereunder and Seller shall provide
the Title Insurer with all necessary documentation for the removal or release of
same at or prior to Closing. The Seller or its agents, employees or affiliates
shall not record any additional liens, encumbrances or other matters against
title to the Owned Land and Facility after the date of this Agreement.

 

12.12.3Purchaser may, at or prior to the Closing, notify Seller in writing
(“Amended Title Notice”) of any Defects first disclosed by the Title Insurer
between the expiration of the Title Review Period and the Closing Date, as set
forth in an amended Title Commitment; provided that Purchaser must notify Seller
of such objection within five (5) Business Days of being given such amended
Title Commitment and copies of any new title exception documents referenced
therein, otherwise the right to object thereto shall be waived. If Purchaser
delivers an Amended Title Notice to Seller, then Purchaser and Seller shall have
the same rights and obligations with respect to such Amended Title Notice as are
applicable to a Purchaser’s Title Notice, regarding title matters, pursuant to
Section 12.12.2 above. The Closing Date shall be extended, as necessary, to
permit Seller at least five (5) Business Days to respond to an Amended Title
Notice, and Purchaser at least five (5) Business Days after receipt of Seller’s
response (if Seller fails to respond, Seller shall be deemed to have elected not
to cure the Defects identified in the Amended Title Notice or provide
endorsement coverage with respect thereto) to elect to terminate this Agreement.
Purchaser’s election to terminate this Agreement shall be made, if at all, on or
before 5:00 p.m. (EDT) on the fifth (5th) Business Day after Seller’s response
is given (or deemed given) to the Amended Title Notice. Subject to any Defects
which Seller has agreed to cure or endorse prior to the Closing in response to
the Amended Title Notice, if Purchaser does not terminate this Agreement
strictly in the manner and within the time provided in this Section 12.12.3,
Purchaser shall be deemed to have waived its previous objections to Defects
specified in the Amended Title Notice that Seller has elected not to cure, which
Defects shall thereafter be deemed to be “Permitted Encumbrances” hereunder.

 

-46-

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
by their respective Authorized Persons on the day and year first above written.

 

  SANOFI US SERVICES INC.         By: /s/ Mark Staudenmeier   Name: Mark
Staudenmeier   Title: Vice President, US R&D Finance         ICAGEN-T, INC.    
    By: /s/ Richard Cunningham   Name: Richard Cunningham   Title: President and
Chief Executive Officer

 

 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

Exhibit A

 

MASTER SERVICES AGREEMENT

 

This MASTER SERVICES AGREEMENT (this "Agreement") is entered into on this _____
day of ______, 2016 (the "Effective Date"), by and between SANOFI US SERVICES
INC., with offices at 55 Corporate Drive, Bridgewater, NJ 08807 ("SANOFI") and
ICAGEN-T, INC., with offices at 2090 E. Innovation Park Drive, Oro Valley, AZ
85755 ("VENDOR"). SANOFI and VENDOR are each referred to herein as a "Party" and
collectively as the "Parties."

 

RECITALS:

 

WHEREAS, SANOFI and VENDOR entered into an Asset Purchase Agreement (“APA”)
dated _________, 2016.

 

WHEREAS SANOFI would like VENDOR to provide certain services and VENDOR would
like to provide such services using the capabilities available at VENDOR’s
research and development site located in Tucson, Arizona, in accordance with the
terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, the Parties hereto agree as follows:

  

1.SERVICES

 

A.        Purpose; Scope of Services. The purpose of this Agreement is to
establish an on-going services arrangement between SANOFI and VENDOR for the
provision of certain services as further described on Exhibit A, attached hereto
and incorporated by reference (the "Services"), as may be amended from time to
time to add or delete Services. SANOFI may request in writing minor
modifications or changes (collectively “Minor Changes”) to each Service which
approval shall be effective only upon approval in writing by VENDOR, such
approval not to be unreasonably withheld. Examples of such minor modifications
or changes include variations in Service component content (e.g. an increase or
decrease in the number of components or the complexity of the Service
component). Each specific project for which SANOFI wishes to engage VENDOR shall
be covered either by (i) a separate Work Order provided to VENDOR by SANOFI and
executed by the Parties (each, a "Work Order"), or (ii) upon mutual agreement of
VENDOR and SANOFI, a purchase order issued by SANOFI (each, a “Purchase Order”).
Each fully executed Work Order or Purchase Order shall be considered as annexed
to this Agreement as a specially numbered Work Order (e.g., Work Order No. 1,
Work Order No. 2, etc.), or Purchase Order (e.g., Purchase Order No. 1, Purchase
Order No. 2, etc.) and shall become part of this Agreement. Each such Work Order
or Purchase Order shall contain a reference to the Agreement, a description of
the Services, the Service Fee (as defined in Section 3.C.), the anticipated
period of performance, a payment schedule and any other items agreed to by the
Parties. Any special or related service that the Parties agree are outside the
scope of the Services (“Other Services”) to be provided under a particular Work
Order or Purchase Order shall be (x) added via an amendment to Exhibit A as
provided for in the first sentence of this Section 1.A., or (y) handled in
accordance with Section 1.D. below. All such Other Services shall be considered
a Service for purposes of obtaining credit against the applicable monthly
Subsidy Payment as set forth in Section 3.F. As applicable, SANOFI will provide
to VENDOR the format, file type, and other specifications that SANOFI requires
for data associated with the Services and VENDOR shall supply the data in
accordance with such requirements. Affiliates (as defined in Section 5.A.) of
SANOFI can participate in this Agreement by entering into their own separately
numbered Work Order, or Purchase Order, if applicable, and agreeing in such Work
Order or Purchase Order to be bound by the terms and conditions of this
Agreement. Each Affiliate that participates under this Agreement shall be
severally and solely responsible for its own transactions, liabilities, acts,
negligence, conduct and/or responsibilities of any nature arising by reason of
such Affiliate's participation under this Agreement. Neither SANOFI nor any
participating Affiliate shall be responsible for the transactions, liabilities,
acts, negligence, conduct and/or responsibilities of any other participating
Affiliate under this Agreement. 

 

 - 1 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

B.         Performance by VENDOR. VENDOR shall provide necessary individuals to
perform the Services (collectively, "Personnel"), facilities, equipment,
technology and supplies, as required for fulfillment of its obligations under
this Agreement. All Services throughout the Term (as defined in Section 4.A.)
will be performed at the site located at 2090 E. Innovation Park Drive, Oro
Valley, AZ 85755 (“Tucson Site”). Prior to performing Services under any Work
Order or Purchase Order at another VENDOR site, VENDOR shall provide a good
faith justification as to the need for such Services to be performed at a
location other than the Tucson Site and obtain advance written approval from
SANOFI. The Service Fee associated with all Services performed at a location
other than the Tucson Site shall be credited against the applicable Subsidy
Payment as set forth in Section 3.F. Furthermore, VENDOR shall perform such
Services in a professional manner with care, skill and diligence, and shall use
all commercially reasonable efforts to successfully complete such Services
within the time frame set forth in each Work Order or Purchase Order. VENDOR
will promptly notify the SANOFI Alliance Manager (as defined in Section 1.H.) as
well as the SANOFI notice contact set forth in the applicable Work Order or
Purchase Order, by telephone and subsequently in written form, of any events
that occur that materially interrupt or affect the performance of the Services
or the completion of the Services in accordance with the time frame set forth in
the Work Order or Purchase Order.

 

C.         Personnel. If, at any time during the course of the Services, SANOFI
reasonably determines that any performance of the Services by any Personnel is
unsatisfactory, SANOFI may require VENDOR to immediately remove such Personnel
and VENDOR will use reasonable efforts to replace such individual, at no cost or
penalty to SANOFI for delays or inefficiencies such replacement may cause, but
without prejudice to any damages that SANOFI may be entitled to as a result of
any delays or inefficiencies in the performance of the Services. SANOFI
acknowledges that all current personnel at such location are satisfactory.

 

D.         Modification of Services. Subject to the Binding Forecast (as defined
in Section 1.F.), in the event SANOFI wishes to (i) modify any of the Services
described in a particular Work Order or Purchase Order, or (ii) obtain
additional Services not covered by such Work Order or Purchase Order, SANOFI
shall submit to VENDOR a written document containing the specifications for the
changed or additional Services (each, a "Change Order Request"). Within fourteen
(14) days of its receipt of SANOFI's Change Order Request, VENDOR shall provide
SANOFI with a cost and revised time estimate for performing the changed or
additional Services. The Parties will then discuss in good faith the cost and
project time schedule effects of any required modification of Services, and once
agreed upon, the Parties shall execute a change order ("Change Order") to the
Work Order. Each Change Order executed by the Parties shall be incorporated into
the applicable Work Order. If changes to the Services described in a particular
Purchase Order are required, such changes shall be made through issuance of an
amended Purchase Order. VENDOR will not implement any changed or additional
Services until either (i) both Parties have signed the applicable Change Order
to the Work Order or, (ii) an amended Purchase Order has been issued by SANOFI
to VENDOR. If an amended Purchase Order is not issued by SANOFI or a Change
Order is not signed by SANOFI within ten (10) days, VENDOR shall continue the
Services assuming the Change Order Request has been withdrawn until such time
that an amended Purchase Order or Change Order is received by VENDOR.

 

 - 2 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

E.         SANOFI’s Library of Compounds. In addition to the requirements and
obligations set forth in this Agreement pertaining to all Services, additional
terms pertaining solely to SANOFI’s library of compounds (“SANOFI’s Library of
Compounds”) located on the Tucson Site, are set forth on Exhibit B (“Library of
Compounds Services”) attached hereto and incorporated by reference. For the
avoidance of doubt it is recognized and understood by VENDOR that SANOFI’s
Library of Compounds is the sole and exclusive property of SANOFI and that
sufficient storage capacity at the Tucson Site related to SANOFI’s Library of
Compounds shall be reserved for the storage and maintenance of SANOFI’s Library
of Compounds throughout the Term. The storage capacity at the Tucson Site
related to SANOFI’s Library of Compounds existing as of the Effective Date is
considered sufficient for purposes of the foregoing sentence.

 

F.         Rolling Forecast. As soon as reasonably practicable after the
Effective Date, SANOFI shall provide VENDOR with a rolling forecast estimating
the Service needs of SANOFI for the succeeding nine (9) month period (“Rolling
Forecast”). Such Rolling Forecast shall identify SANOFI’s estimated demand for
Services, including the number of full-time equivalent employees (“FTEs”)
anticipated to be required to complete such Services. SANOFI shall prepare
Rolling Forecasts in good faith and provide an updated Rolling Forecast prior to
the first day of the succeeding calendar quarter throughout the Term. Such
estimates shall not be binding on either Party. Notwithstanding the foregoing,
the first two (2) calendar quarters of each Rolling Forecast shall be binding
(“Binding Forecast”) on (i) SANOFI solely with respect to the Service Fee and
subject to the provisions of Section 1.G., associated with the Services set
forth in such Binding Forecast, and (ii) VENDOR with respect to ensuring that
FTEs have been reserved and available to perform such Services during such
period. As an example of the foregoing, using July 1, 2016 as the Effective Date
for purposes of this example, as soon as reasonably practicable after July 1,
2016, SANOFI shall provide VENDOR with a Rolling Forecast covering the time
period July 1, 2016 through March 31, 2017. For such Rolling Forecast, the time
period extending from July 1, 2016 through December 31, 2016 shall be considered
the Binding Forecast. Subsequently, prior to October 1, 2016, SANOFI shall
provide VENDOR with a Rolling Forecast covering the time period October 1, 2016
through June 30, 2017. For such Rolling Forecast, the time period extending from
October 1, 2016 through March 31, 2017 shall be considered the Binding Forecast.

 

G.         Effect of Service Cancellation by SANOFI in a Binding Forecast. If
SANOFI cancels any Service contained in the Binding Forecast prior to initiation
of work by VENDOR or during performance of work by Vendor (except for reasons
associated with performance issues by VENDOR not attributable to an act or
failure to act by SANOFI), Sanofi shall remain responsible for the Service Fee
and expenses incurred for materials for such cancelled Services. Notwithstanding
the foregoing, (i) to the extent materials for such cancelled Services have been
purchased by VENDOR and such materials can be used for other Services, VENDOR
shall use best efforts to reallocate such materials for use on other Services
and such reallocated materials will reduce the Materials Cost for the Services
for which such materials are used, or (ii) to the extent materials for such
cancelled Services have not been purchased, or if VENDOR is able to cancel its
purchase order for such materials with the applicable third party, as of the
date of notice of Services cancellation by SANOFI to VENDOR, SANOFI shall not be
responsible for the associated Materials Cost. In addition, in the event of
Service cancellation as set forth in the first sentence of this Section 1.G.,
VENDOR will use commercially reasonable efforts to reallocate FTEs associated
with such cancelled Services to perform work for a Third Party. SANOFI shall not
be responsible for the associated Direct Service Costs (as defined in Section
3.C.) for such reallocated FTEs.

 

 - 3 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

H.         Alliance Managers. Each Party shall appoint one (1) representative
with knowledge of their respective Party’s operations to serve as an alliance
manager (“Alliance Manager”) with responsibility for overseeing that the
Parties’ activities are conducted in accordance with this Agreement, and for
being the primary point of contact between the Parties with respect to all such
activities. The Alliance Manager may also serve as the alliance manager for
other agreements in place between the Parties (e.g. Hit Discovery Services
Agreement). The Alliance Managers shall meet via teleconference at least once
during every calendar quarter following SANOFI’s receipt of the KPI Scorecard
(as defined in Section 1.I.4.). Examples of activities for which the Alliance
Managers provide oversight include, but are not limited to, review of the KPI
Scorecard, KPI Breaches (as defined in Section 1.I.5.), the Rolling Forecast and
the Binding Forecast. Either Party may replace its Alliance Manager at any time
upon written notice to the other Party. In the event of a KPI Breach, the
Alliance Managers shall organize a meeting with the appropriate representatives
from each side to review and discuss the cause of such breach and opportunities
for change with the goal of minimizing the possibility of a subsequent KPI
Breach in the future.

 

I.          Key Performance Indicators.

 

1.        Key Performance Indicators. Key performance indicators for each
Service (each a “Service KPI”) are set forth on Exhibit A. Service KPIs may be
modified and updated at any time upon mutual agreement of the Parties. In the
event of a Change Order Request as described in Section 1.D., the cycle time for
the applicable KPI for the Service(s) subject to the Change Order Request shall
be extended by twenty-four (24) days.

 

2.        KPI Targets. For each Service KPI there is a KPI target (“KPI Target”)
as set forth on Exhibit A. Beginning on the Effective Date, all Service KPIs
must meet or exceed the corresponding KPI Target.

 

3.        KPI Performance Levels. For each KPI Target for each Service KPI there
are two (2) performance levels: (i) a level at which the Service KPI has a value
equal to or greater than the applicable KPI Target (“Meets or Exceeds”), and
(ii) a level at which the Service KPI has a value less than the applicable KPI
Target (“Below Expectations”). Beginning on the Effective Date and for the
duration of the Term, all Service KPIs must have a Meets or Exceeds value
against the applicable KPI Target.

 

4.        KPI Scorecard. Within fifteen (15) days after the end of each calendar
quarter, VENDOR shall supply to SANOFI’s Alliance Manager a KPI scorecard (“KPI
Scorecard”) in a form substantially similar to the one attached hereto as
Exhibit C and incorporated by reference. The KPI Scorecard shall indicate for
each Service KPI the performance level against the applicable target level.

 

 - 4 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

5.        KPI Breach. With respect to each Service KPI in any calendar quarter
throughout the Term, in the event the performance value for a Service KPI has a
value that is Below Expectations against the applicable KPI Target level due to
the failure of VENDOR to perform in accordance with the terms and conditions
contained in the applicable Work Order or Purchase Order, if such failure is
other than attributable to an act or failure to act by SANOFI or a Force Majeure
Event, such Service KPI shall be considered in breach (“KPI Breach”). The KPI
Breach shall remain in effect until such time that the Service KPI has a
performance value of Meets or Exceeds on a successive KPI Scorecard and the
Alliance Managers are in agreement on such value.

 

6.        Effect of KPI Breach or Rejected Service. With the exception of
Services associated with SANOFI’s Library of Compounds, in the event of a KPI
Breach or a material deviation from the terms and conditions contained in the
applicable Work Order or Purchase Order that affects a Service other than due to
the act or failure to act by SANOFI or a Force Majeure Event (collectively, the
“Rejected Service”), SANOFI shall have the following remedies: (1) require
VENDOR to promptly repeat the Rejected Service at no cost to SANOFI, or (2) if
such repetition of the Rejected Services is not successful or not feasible (e.g.
VENDOR cannot repeat the Service in a reasonable timeframe required by SANOFI),
SANOFI may perform the Rejected Service at either a SANOFI location or have such
Rejected Service performed at a third-party site with VENDOR providing SANOFI
with a deduction on the next Subsidy Payment in the amount of (i) one hundred
and twenty percent (120%) of the Service Fee in the event SANOFI performs such
service at a SANOFI location, and (ii) one hundred and twenty percent (120%) of
the amount invoiced to SANOFI by a third party for the Service if the Service is
performed by a third party. In the event of a KPI Breach for a Service
associated with SANOFI’s Library of Compounds, VENDOR must promptly repeat such
Service at no cost to SANOFI. For clarity, in the event SANOFI performs a
portion of the Rejected Service in-house and has a portion of the Rejected
Service performed at a third party, the total combined deduction taken in
accordance with subsections (i) and (ii) herein may not exceed one hundred and
twenty percent (120%) of the affected Service Fee. For purposes of this Section
1.I.6., a Rejected Service means a Service affected by an equipment malfunction
or any negligent act or omission on the part of VENDOR, other than a KPI Breach,
that results in SANOFI not being able to use the results of such Service.

 

J.          Executive Steering Committee. Within sixty (60) days after the
Effective Date, the Parties shall establish an executive steering committee (the
“ESC”), which shall consist of two (2) senior executive members, one (1) from
each Party. Each Party may replace its representative on the ESC at any time
upon prior written notice to the other Party. The ESC shall meet via
teleconference as requested by the Alliance Managers to review and analyze the
KPI Scorecard to determine whether a breach of KPIs has occurred, and provide
other assistance with regards to the management of the Services performed
pursuant to this Agreement, including acting as a first arbiter of disputes that
may arise. All decisions of the ESC shall be made by unanimous vote or written
consent, with SANOFI and VENDOR each having one (1) vote in all decisions. In
the event the ESC is unable to reach resolution on an issue submitted to it for
handling, the matter may be handled in accordance with the dispute resolution
process set forth in Section 10.C.

 

 - 5 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

K.         SANOFI’S Right to Outsource and Subsidy Payment Credit. In the event
that Services requested by SANOFI in a calendar quarter exceeds the quantity of
Services set forth in the Binding Forecast for that calendar quarter by twenty
percent (20%) or less (such Services that exceed the aforementioned Binding
Forecast by twenty percent (20%) or less are referred to collectively as “Excess
Services”), and VENDOR is unable to perform such Excess Services in a timely
manner, SANOFI retains the ability to perform the Excess Services at a SANOFI
location and/or contract with a third party, with VENDOR providing SANOFI with a
deduction on the next Subsidy Payment in the amount of (i) one hundred percent
(100%) of the Direct Service Costs associated with the Excess Services in the
event SANOFI performs such Excess Services at a SANOFI location, and (ii) one
hundred percent (100%) of the amount invoiced (excluding Materials Cost (as
defined in Section 3.C.) to SANOFI by a third party(ies) for any Excess Services
performed by such third party(ies). To the extent that Services requested by
SANOFI in a calendar quarter exceeds the quantity of Services set forth in the
Binding Forecast for that calendar quarter by greater than twenty percent (20%)
(“Over-Excess Services”), SANOFI retains the ability to perform Over-Excess
Services at a SANOFI location and/or contract with a third party, but VENDOR
will not provide a deduction on the next Subsidy Payment for any Service Fees
associated with the Over-Excess Services. For clarity, in the event of
Over-Excess Services in a calendar quarter, SANOFI will obtain a deduction for
the Excess Services but not for the Over-Excess Services as described herein. In
addition, in the event (a) VENDOR in performing Services requested pursuant to a
Purchase Order or duly executed Work Order is unable to comply with any
reasonable specifications, standards or requirements (including, but not limited
to, technical and functional contents as well as related cost and delivery
requirements) consistent with reasonable industry practice provided by SANOFI to
VENDOR for a particular Service and/or the Service KPIs (“SANOFI
Specifications”), or (b) VENDOR refuses to perform a particular Service or is
otherwise unable to perform requested Services set forth in a Purchase Order or
in a duly executed Work Order in a timely manner, SANOFI shall be entitled to
perform such Services at a SANOFI location or contract with a third party to
provide such Services with VENDOR providing SANOFI with a deduction on the next
Subsidy Payment in the amount of (i) one hundred and twenty percent (120%) of
the Direct Service Costs in the event SANOFI performs such Services at a SANOFI
location, and (ii) one hundred and twenty percent (120%) of the amount invoiced
(excluding Materials Cost) to SANOFI by a third party for the Services if the
Services are performed by a third party.

 

2.VENDOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

A.        Corporate Compliance. VENDOR represents, warrants and covenants to
SANOFI as follows:

 

i.         the execution of this Agreement and full and timely performance of
the covenants, duties and obligations described herein have been, and shall be,
duly authorized by all necessary corporate action in accordance with all
applicable laws;

 

ii.        this Agreement is a valid, legal and binding obligation upon VENDOR,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable insolvency and other laws affecting creditors' rights
generally or by the availability of equitable remedies; and

 

 - 6 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

iii.       it is not now a party to any agreement which would prevent it from
fulfilling its obligations under this Agreement and it will not knowingly enter
into any agreement with any other party that would in any way prevent it from
performing its obligations under this Agreement.

 

B.         Miscellaneous. VENDOR further represents, warrants and covenants to
SANOFI as follows:

 

i.         it has, and shall maintain, the resources and Personnel necessary to
perform the Services in a timely manner;

 

ii.        neither it nor any individual employed or engaged by VENDOR, to the
best of VENDOR’s knowledge after due inquiry, are currently (a) under
investigation for debarment or debarred pursuant to the Generic Drug Enforcement
Act of 1992, 21 U.S.C. § 335(a), as amended, or any similar state law or
regulation; (b) excluded by the Office of Inspector General pursuant to 42
U.S.C. § 1320a-7, et seq. or any state agency from participation in any federal
or state health care program; or (c) otherwise disqualified or restricted by the
FDA pursuant to 21 C.F.R. 312.70 or any other regulatory authority, nor will
VENDOR utilize any debarred, excluded or disqualified Personnel to perform
Services hereunder;

 

iii.       it will notify SANOFI immediately in the event any investigation or
proceeding for debarment, exclusion or disqualification is initiated against
VENDOR or any Personnel;

 

iv.       its Personnel are qualified and will have sufficient technical
expertise to perform VENDOR's obligations under this Agreement;

 

v.        it shall provide the Services in compliance in all material respects
with all applicable foreign, federal, state and local laws, rules and
regulations;

 

vi.       it shall use any materials and information supplied by SANOFI such as,
but not limited to, compounds, samples, and protocols for the sole purpose of
performing the Services in accordance with this Agreement and to the exclusive
benefit of SANOFI or its Affiliates. Unless otherwise agreed by SANOFI in
writing, VENDOR shall not and shall not permit any other person or entity to
directly or indirectly reverse engineer, modify, derivatize, deconstruct or in
any way analyze or determine the identity, structure or composition of any
materials provided by SANOFI; and

 

vii.      it has not accepted nor been offered any payment of money or other
assets for the purpose of influencing its decisions or actions to help SANOFI
obtain or maintain business or obtain a business advantage where such payment
would constitute violation of any applicable anti-bribery/anti-corruption law or
a violation of the U.S. Foreign Corrupt Practices Act. VENDOR further represents
and warrants that it has not made and agrees that it shall not make any payment
or any offer or promise for payment, either directly or indirectly, of money or
other assets, to government or political party officials, officials of
international organizations, candidates for public office, or representatives of
other businesses or persons acting on behalf of any of the foregoing for the
purpose of influencing decisions or actions or where such payment would
constitute violation of any applicable anti-bribery/anti-corruption law or a
violation of the U.S. Foreign Corrupt Practices Act.

 

 - 7 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

C.         VENDOR Affirmative Covenants. VENDOR further represents, warrants and
covenants to SANOFI as follows:

 

i.         it shall maintain an arm's length relationship with its Affiliates.
For the purposes hereof arm’s length relationship shall mean the adherence to
the following:

 

a.its books and records shall be maintained separate from those of its
Affiliates;

 

b.it shall maintain a separate board of directors from its Affiliates;

  

c.it shall conduct business in its own name;

 

d.it shall open and maintain its own separate bank accounts, separate
stationery, invoices and checks;

 

e.it shall pay liabilities from its own bank accounts;

 

f.it shall observe all corporate formalities;

 

ii.        its assets and liabilities shall be kept segregated and distinct from
assets and liabilities of other entities/Affiliates; and

 

iii.       any shared overhead and expenses shall be allocated between VENDOR
and its Affiliates pursuant to intercompany agreement(s) in a manner consistent
with the way that similarly situated, uncontrolled parties would price
comparable transactions at arm’s length; and

 

iv.       VENDOR shall promptly notify SANOFI in the event any person seeks to
levy, execute, transfer or otherwise foreclose Icagen’s (or its successor’s)
equity interest in VENDOR.

 

D.         VENDOR Negative Covenants. VENDOR further represents, warrants and
covenants to SANOFI as follows:

 

i.         no dividends except Permissible Dividends shall be issued in the
first two (2) years after the Effective Date;

 

ii.        it shall provide no loans to its Affiliates;

 

iii.       it shall provide no guaranty of debts of its Affiliates;

 

iv.       it shall not pledge any of its assets for the benefit of any
Affiliate;

 

 - 8 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

v.        no liens or borrowing shall be permitted unless done in furtherance of
the Tucson Site business, and in such event, liens or borrowing shall be
exclusively related to the operation of the Tucson Site business;

 

vi.       there shall be no acquisitions/sale of assets outside the ordinary
course of business (e.g. equipment replacement); and

 

vii.      there shall be no amendment of its organizational documents.

 

E.         VENDOR Maintenance Covenants. VENDOR further represents, warrants and
covenants to SANOFI as follows:

 

i.         it shall at all times maintain a sufficient Minimum Cash Balance.
“Minimum Cash Balance” shall mean the average daily ending cash balance
(unrestricted and unencumbered cash-on-hand and cash equivalent investments)
held in all accounts at financial institutions by VENDOR for the prior five (5)
business days in an amount not less than five hundred seventy-five thousand
dollars ($575,000.00);

 

ii.        it shall maintain a Current Ratio of at least 1.05. “Current Ratio”
shall mean the ratio of Current Assets to Current Liabilities. “Current Assets”
shall mean, at any date, the sum of cash, accounts receivable due within twelve
(12) months after that time (less any reserves for bad debts), inventory and
prepaid expenses in accordance with GAAP. “Current Liabilities” shall mean, at
any date, accounts payable, current portion of notes payable, accrued expenses
such as wages and salaries, taxes payable, and any portion of long-term debts
due within twelve (12) months in accordance with GAAP; and

 

iii.       it shall maintain a Minimum Net Worth of one million five hundred
thousand dollars ($1,500,000.00). “Minimum Net Worth” shall mean the total
assets of VENDOR as of such date less total liabilities as of such date
determined in accordance with GAAP.  For purposes of this calculation, the
Parties agree that the value of the Tucson Site as of the Effective Date is
fifteen million dollars ($15,000,000.00) (Initial Tucson Site Value”) without
consideration of the Sanofi lien or any other mortgages, liens or encumbrances.
VENDOR may use the value of the Tucson Site obtained in a subsequent appraisal
for purposes of this calculation (“Post Closing Date Appraisal”) provided that:
(i) VENDOR notifies SANOFI in advance pursuant to Section 10.B that it intends
to retain an appraiser to perform a Post Closing Date Appraisal; (ii) the
appraiser is CBRE, Inc., or any other appraiser mutually agreed upon by the
parties; (iii) both VENDOR and SANOFI are simultaneously provided with a copy of
any Post Closing Date Appraisal and (iv) the Post Closing Date Appraisal shall
be prepared on a “net” basis, inclusive of any costs to be incurred at the
Tucson Site to obtain such appraised value which shall include the two million
dollars ($2,000,000.00) cost to convert the Tucson Site to office space.

 

 - 9 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

3.COMPENSATION

 

A.         Subsidy Payment. On the Effective Date, and thereafter monthly
(subject to Section 3.D.), in consideration for VENDOR’s provision of expected
Services at the Tucson Site throughout the Term, SANOFI shall make monthly
payments (individually, each a “Subsidy Payment”) in advance to VENDOR in the
amounts and on the dates as set forth below:

 

Subsidy Payment Due Date Subsidy Payment Amount (USD)     Effective Date
$11,916,667.00* Aug. 15th, Sept. 15th, Oct. 15th, Nov. 15th, Dec. 15th 2016
$416,667.00 Jan. 15th, Feb. 15th, Mar. 15th, Apr. 15th, May 15th, Jun. 15th 2017
$416,667.00 July 15th, 2017 $4,458,333.00**

Aug. 15th, Sept. 15th, Oct. 15th, Nov. 15th, Dec. 15th 2017 

$458,333.00 Jan. 15th, Feb. 15th, Mar. 15th, Apr. 15th, May 15th, Jun. 15th 2018
$458,333.00 Jul. 15th, Aug. 15th, Sept. 15th, Oct. 15th, Nov. 15th, Dec. 15th
2018 $250,000.00 Jan. 15th, Feb. 15th, Mar. 15th, Apr. 15th, May 15th, Jun. 15th
2019 $250,000.00 Jul. 15th, Aug. 15th, Sept. 15th, Oct. 15th, Nov. 15th, Dec.
15th  2019 $166,667.00 Jan. 15th, Feb. 15th, Mar. 15th, Apr. 15th, May 15th,
Jun.15th 2020 $166,667.00 Jul. 15th, Aug. 15th, Sept. 15th, Oct. 15th, Nov.
15th, Dec. 15th 2020 $83,333.00 Jan. 15th, Feb. 15th, Mar. 15th, Apr. 15th, May
15th, Jun. 15th 2021 $83,333.00

  

*Only $1,916,667.00 of this Subsidy Payment Amount is creditable against Direct
Service Costs in accordance with Section 3.B.

 

**Only $458,333.00 of this Subsidy Payment Amount is creditable against Direct
Service Costs in accordance with Section 3.B.

 

 - 10 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

B.         Service Fee. For the Term, pricing for each Service consists of two
(2) components, with each component clearly identified in each Invoice: (i) a
direct Service cost (“Direct Service Cost(s)”), which is calculated as follows
for each Service: (number of full-time equivalents (“FTEs”) per Service as set
forth in Exhibit A x the FTE Rate (as defined in this Section and expressed as a
monthly value for purposes of the calculation) x the duration of each Service in
months), and (ii) materials cost (“Materials Cost”) (collectively, the Direct
Service Cost and Materials Cost comprise the “Service Fee”). The full-time
equivalent rate (“FTE Rate”) used to calculate the Direct Service Cost for each
Service is [*****] and shall remain fixed throughout the Term. As an example of
the foregoing calculation using service package S1 in Exhibit A is as follows.

 

Service FTE Rate # FTEs Duration of Service in months Materials Cost Service Fee
[*****] [*****] [*****] [*****] [*****] [*****]            

 

Unless agreed by SANOFI in advance, in no event shall the Materials Cost for a
Service exceed fifteen percent (15%) of the Direct Service Cost for such
Service. In addition, in no event shall Minor Changes cause the applicable
Service Fee to vary by more than twenty percent (20%). As consideration for
VENDOR's performance of the Services, subject to Sections 3.E. and F., SANOFI
shall pay VENDOR the Service Fee set forth in the applicable Work Order or
Purchase Order. SANOFI shall also pay VENDOR for reasonable and necessary travel
and other expenses approved in advance by SANOFI that are incurred by VENDOR in
the performance of the Services provided that the sum of such expenses together
with the Service Fee shall not exceed the cap amount set forth in the Work Order
or Purchase Order without advance written approval from SANOFI unless agreed
otherwise between the Parties in writing. In the event SANOFI requests VENDOR to
purchase any material, which should have been provided by SANOFI, such material
will be purchased by VENDOR and the additional cost of the material invoiced to
SANOFI at VENDOR’s cost. If a license(s) from a third party is (are) required to
perform the Services and payment to such third party for such individual
license(s) is (are) required, SANOFI shall be notified of, and shall make a
decision as to whether to (i) obtain said license(s) that enable VENDOR to
perform such Service(s) only to the extent specified in the respective Work
Order or Purchase Order, (ii) exclude the portion infringing from such
Service(s), or (iii) cease the entire Service(s). If SANOFI determines to obtain
said license(s), then SANOFI shall bear the cost of said license(s).

 

C.         Reporting Obligations.

 

i.         For purposes of this Section 3.C. only, “Calendar Quarter” shall
mean, each of the three month periods ending March 31, June 30, September 30 and
December 31.

 

ii.        Reporting Certificate. Beginning on the Effective Date, and
terminating on the earlier of: (a) receipt by SANOFI of an acceptable Valuation
Report (as defined in Section 3.D.), or (b) termination or expiration of the
Agreement, VENDOR will provide to SANOFI a certification of covenant compliance
for the most recently completed Calendar Quarter (“Reporting Certificate”) in
the form attached hereto as Exhibit D. Such Reporting Certificate will provide
information supporting VENDOR’s declaration of compliance with all covenants
contained in Sections 2.C., D., and E., including any supporting information
reasonably requested by SANOFI from time-to-time. Payment by SANOFI for any
Subsidy Payment due in each Calendar Quarter pursuant to the terms of this
Agreement is conditioned upon VENDOR providing a Reporting Certificate for the
most recently completed Calendar Quarter in advance of the next Subsidy Payment
due date. As an example of the foregoing, VENDOR does not provide a Reporting
Certificate prior to January 15, 2017 for the Calendar Quarter ending December
31, 2016. VENDOR ultimately provides a compliant Reporting Certificate on March
1, 2017. Upon SANOFI’s receipt of such report on March 1, 2017, SANOFI shall
make the January 15, 2017 and February 15, 2017 Subsidy Payments.
Notwithstanding anything to the contrary contained in this Agreement, VENDOR
shall have a grace period of 45 days from the end of each quarter to provide
SANOFI with the requisite Reporting Certificate and the provision of a Reporting
Certificate within such 45 days period that certifies compliance with all
covenants contained in Sections 2.C., D., and E., shall be deemed to satisfy the
obligations contained in this paragraph ii.

 

 - 11 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

iii.       Unaudited Financial Statements. Beginning on the Effective Date, and
terminating on the earlier of: (a) receipt by SANOFI of an acceptable Valuation
Report (as defined in Section 3.D.), or (b) termination or expiration of the
Agreement, VENDOR will provide to SANOFI unaudited financial statements for the
most recently completed Calendar Quarter for VENDOR in a form and manner used in
the preparation of financial statements for VENDOR’s ultimate parent entity.

 

D.         Valuation Report. At any time on or after the second anniversary of
the Effective Date, VENDOR may inform SANOFI of VENDOR’s decision to engage, an
independent third party professional of national reputation certified by the
National Association of Certified Valuation Analysts (“NACVA”) or an independent
third party professional mutually agreed to by both VENDOR and SANOFI, to
prepare a valuation report of VENDOR (“Valuation Report”). Prior to engagement
by VENDOR: (i) the identity of such independent third party shall be presented
to SANOFI for its approval as to acceptability, such approval not to be
unreasonably withheld, and (ii) the Parties will jointly agree on the scope and
criteria for such Valuation Report. The cost of the preparation of the Valuation
Report shall be borne 50% by VENDOR and 50% by SANOFI. To the extent that such
Valuation Report concludes that (x) VENDOR’s assets are greater than VENDOR’s
liabilities at fair value (or fair market value); (y) VENDOR has sufficient
capital to operate its business; and (z) VENDOR has the ability to pay its debts
as they mature, the following shall occur: (xx) all Affirmative Covenants (as
defined in Section 2.C.) and Negative Covenants (as defined in Section 2.D.)
shall terminate, (yy) all reporting obligations set forth in Section 3.C. shall
terminate, and (zz) all future Subsidy Payments set forth in Section 3.A. and
the associated Subsidy Payment credit mechanism set forth in Section 3.F. will
be converted into a take or pay arrangement as further described in Section 3.E.

 

E.         Take or Pay Conversion Mechanism Upon Provision of Valuation Report
Showing Solvency

 

Upon SANOFI’s receipt of a Valuation Report from VENDOR that meets the criteria
set forth in Section 3.D. (“Valuation Report Effective Date”) all future Subsidy
Payments set forth in Section 3.A. will convert to a take or pay mechanism with
an end of year true-up as further described herein. SANOFI will not make any
future Subsidy Payments after the Valuation Report Effective Date. For all
Services completed after the Valuation Report Effective Date, VENDOR will submit
an Invoice in accordance with Section 3.G. and SANOFI shall pay such Invoice in
accordance with such Section, subject to the application of any Carry-Forward
(as defined in Section 3.F.), if any. At the end of each subsequent timeframe
set forth in the table below, the dollar total of all Invoices submitted during
the applicable timeframe shall be subtracted from (i) the full year take or pay
total, or in the event of a partial year (ii) the corresponding number of months
remaining in the applicable timeframe multiplied by the monthly take or pay
total. In the event the dollar total of all Invoices submitted during the
applicable timeframe (after application of any Carry-Forward) is less than the
applicable take or pay total, VENDOR shall submit an Invoice for such shortfall
and SANOFI shall pay such Invoice in accordance with Section 3.G.

 

 - 12 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

The take or pay totals for each year or partial year after the second
anniversary of the Effective Date is as follows:

 

  Timeframe (each a 12 month period) Full Year Take or Pay Total Monthly Take or
Pay Total   7/15/2018-7/14/2019 $3,000,000.00 $250,000.00   7/15/2019-7/14/2020
$2,000,000.00 $166,667.00   7/15/2020-7/14/2021 $1,000,000.00 $83,333.00

 

By way of example of the mechanism set forth in this Section:

 

A Valuation Report that meets the criteria set forth in Section 3.D. is supplied
by VENDOR to SANOFI on 8/1/2020 (the Valuation Report Effective Date). The
Subsidy Payment Mechanism set forth in Section 3.A. is immediately terminated
and the take or pay mechanism set forth in this Section is instituted. As a
result, SANOFI will not make a Subsidy Payment of $83,333.00 to VENDOR on
8/15/2020. Instead, as there are eleven (11) months remaining in the timeframe
spanning 8/1/2020-7/14/2021, the monthly take or pay total ($83,333.00) will be
multiplied by eleven (11) months ($83,333.00 x 11) to determine the take or pay
total amount (in this case $916,663.00) for the timeframe at issue. The Invoice
totals for all Services during this timeframe totaled $300,000.00. As the
Invoice totals ($300,000.00) is less than the applicable take or pay total
amount ($916,663,000.00), the shortfall amount ($616,663.00) will be Invoiced by
VENDOR to SANOFI on or after 7/15/2021 and SANOFI shall pay such amount in
accordance with Section 3.G.

 

F.         Subsidy Payment credit against the Monthly Direct Service Costs.

 

Unless and until the take or pay conversion mechanism in instituted in
accordance with Section 3.E., in each month throughout the Term, the Subsidy
Payment made by SANOFI for a particular month (as set forth in Section 3.A.)
shall be credited against all Direct Service Costs for which VENDOR has issued
an Invoice (in accordance with the requirements set forth in Section 3.G.) for
the time period beginning on such Subsidy Payment due date and ending on the day
prior to the next Subsidy Payment due date (collectively, all Direct Service
Costs invoiced for a particular month are referred to as the “Monthly Direct
Service Costs”) and solely for purposes of this Section 3.F. the Invoice for
such time period is referred to as the “Applicable Invoice”. An example of the
foregoing is as follows:

 

9/15/2016: SANOFI pays Subsidy Payment of $416,667.00

 

9/15/2016-10/14/2016: SANOFI obtains credit against the 9/15/2016 Subsidy
Payment for Services completed by VENDOR during the 9/15/2016-10/14/2016
timeframe. The Invoice covering this time period is the Applicable Invoice for
the 9/15/2016 Subsidy Payment.

 

 - 13 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

Subsidy Payments made by SANOFI are subject to the following.

 

(i)       Excess Amount Carry-Forwards. In the event the Subsidy Payment is
greater than the Monthly Direct Service Costs applied against the applicable
Subsidy Payment, no Monthly Direct Service Costs payment will be due from SANOFI
to VENDOR, and the difference between the Subsidy Payment and the Monthly Direct
Service Costs on the Applicable Invoice (the “Carry-Forward”) will be carried
forward into successive months throughout the Term and into the Term Extension
(if applicable). For clarity, the Carry-Forward does not expire but instead
continues to carry forward in successive months until the full amount of the
credit has been applied. Notwithstanding the non-expiration of the
Carry-Forward, the Carry-Forward is capped at all times at two million dollars
($2,000,000.00) during the Term. In the event the take or pay conversion
mechanism in instituted in accordance with Section 3.E., the Carry-Forward, if
any, will continue to carry forward in successive months until the full amount
of the credit has been applied.

 

For example purposes only, a simulation of the implementation of the hereinabove
provision is provided herein (all amounts included below are in USD):

  

Month Subsidy Payment (made on the 15th  of the Month) MSA---Monthly Direct
Service Costs (on the Applicable Invoice) Subsidy Payment + Remaining
Carry-Forward (if any) minus Monthly Direct Service Costs (on the Applicable
Invoice). Positive amount values indicate a carry-forward. Negative amount
values indicate a payment due from SANOFI. Carry-Forward (if any) to be applied
to successive Months On Effective Date 1,916,667 NA 1,916,667 1,916,667 July
2016 0 200,000 0 + 1,916,667 – 200,000 = 1,716,667 1,716,667 August 2016 416,667
200,000 416,667 + 1,716,667 – 200,000 = 1,933,334 1,933,334 September 2016
416,667 350,000 416,667 + 1,933,334 - 350,000 =  2,000,001  2,000,000 October
2016 416,667 600,000 416,667 + 2,000,000 – 600,000 = 1,816,667 1,816,667
November 2016 416,667 2,300,000 416,667 + 1,816,667 – 2,300,000 =  -66,666
(Sanofi would pay 66,666 as the Monthly Direct Service Costs on the Applicable
Invoice exceeds the Subsidy Payment plus the Carry-Forward balance). 0 December
2016 416,667 300,000 416,667 + 0 – 300,000 116,667

 

 - 14 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

(ii)      Immediately following the Term,

 

(a)       In the event there is no Term Extension (as defined in Section 4.A.),
the current Carry-Forward, if any, will be applied against the Monthly Direct
Service Costs for the final month of the Term. To the extent that any
Carry-Forward remains after such application for the final month of the Term,
such remaining Carry-Forward will be extinguished.

 

(b)       In the event there is a Term Extension and after application of the
current Carry-Forward against the Monthly Direct Service Costs for the final
month of the Term a Carry-Forward amount remains, up to a maximum of one million
dollars ($1,000,000.00) of such Carry-Forward will continue into each month of
the first year of the Term Extension until it is fully exhausted. To the extent
that any Carry-Forward remains after such application for the final month of the
first year of the Term Extension, such remaining Carry-Forward will be
extinguished.

 

G.         Invoicing and Payment of the Service Fee. VENDOR must submit an
invoice to SANOFI on a monthly basis for (i) each Subsidy Payment, and (ii) for
fully completed Services performed under this Agreement which shall reference
all applicable Work Order or Purchase Order number(s) (each, an "Invoice").
Within ten (10) days after each Subsidy Payment is made, VENDOR shall submit an
Invoice, for Services completed in the applicable timeframe as described in
Section 3.F. In the event of a take or pay conversion in accordance with Section
3.C, VENDOR shall immediately discontinue submitting Invoices for Subsidy
Payments and submit Invoices for Services completed within thirty (30) days
after the end of each month for the remainder of the Term, subject to Section
3.E. For purposes of this Section, “Services completed” shall mean the provision
of a final comprehensive report or the provision of all deliverables as
described in the applicable Work Order or Purchase Order. Each Invoice shall be
addressed to SANOFI to the address set forth in the Work Order or Purchase
Order. Additionally, each Invoice shall be accompanied by receipts or other such
supporting data as may be reasonably required by SANOFI. No payment by SANOFI
may occur unless an appropriate Invoice has been issued in accordance with this
Agreement. Any amount to be paid pursuant to an approved Invoice shall be paid
by SANOFI within sixty (60) days after receipt by SANOFI by bank wire transfer
in immediately available funds to an account designated by VENDOR. In the event
there is a disputed charge, SANOFI will withhold payment for the disputed
portion of the Invoice pending resolution of the dispute as described in Section
3.J below. All sums payable under this Agreement shall be paid in US dollars.

 

H.         Use of Subsidy Payments. Beginning on the Effective Date and ending
on the second anniversary of the Effective Date, VENDOR shall use the Subsidy
Payments exclusively for the operations of the Tucson Site subject to the
distribution of Permissible Dividends. For purposes of this Section and subject
to the additional requirements and restrictions set forth herein, a maximum of
twenty percent (20%) of each Subsidy Payment (such amount a “Permissible
Dividend”) may be used by VENDOR for purposes not related to the operation of
the Tucson Site. Notwithstanding anything contained in this Section, two million
dollars ($2,000,000.00) of the Subsidy Payment paid by SANOFI on the Effective
Date shall be deemed a Permissible Dividend and shall not be subject to the
above described twenty percent (20%) limitation. Subject to VENDOR’s compliance
with the Covenants set forth in Sections 2.C., D., and E., and the reporting
obligations set forth in Section 3.C., VENDOR may (i) dividend a maximum of five
percent (5%) of each Subsidy Payment during the first two (2) years of the Term
without restrictions as to how such amounts are used by VENDOR, and (ii) during
the first two (2) years propose to SANOFI to dividend up to an additional
fifteen percent (15%) of each Subsidy Payment to use in furtherance of the
Tucson business, which SANOFI shall consider approving in good faith (each such
approved amount an “Additional Dividend for Tucson Projects”).

 

 - 15 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

I.          VENDOR's Responsibility. All terms and payments of compensation,
benefits, and any other condition of engagement for any Personnel shall be
solely a matter between VENDOR and such Personnel. VENDOR shall indemnify,
defend, and hold harmless SANOFI from any third party claim that arises out of
VENDOR's failure to comply with this Section 3.F.

 

J.          Invoice Disputes. If SANOFI identifies items in an Invoice which are
disputed ("Disputed Charges"), SANOFI will notify VENDOR in writing within
thirty (30) days after receiving the Invoice ("Disputed Charges Notice"). VENDOR
must respond to each Disputed Charges Notice within fourteen (14) days following
receipt of such Disputed Charges Notice. This written communication between the
Parties concerning Disputed Charges will continue until the Disputed Charges are
no longer disputed (i.e., upon SANOFI's written notice that it will pay the
Disputed Charges in full; upon payment of the Disputed Charges in full; upon
written agreement of the Parties that SANOFI will pay and VENDOR will accept a
lesser amount in payment of the Disputed Charges than that originally invoiced;
or upon VENDOR's written notice to SANOFI that the Disputed Charges have been
deleted).

 

4.TERM & TERMINATION

 

A.         Term. For all Services, the term of this Agreement shall commence as
of the Effective Date and, if not earlier terminated in accordance with this
Agreement, shall remain in full force and effect until: (i) five (5) years after
the Effective Date; or (ii) upon termination or expiration without renewal of
the last Work Order or Purchase Order still in effect at the end of five (5)
years after the Effective Date, whichever is longer (the "Term"). In addition,
(i) SANOFI in its sole discretion may extend the Term for up to an additional
five (5) years with regards to Services related to SANOFI’s Library of Compounds
by notifying VENDOR in accordance with Section 10.B, or (ii) the Parties may
mutually agree to extend the Term for an additional five (5) years with regard
to all Services under this Agreement, at any time prior to the expiration of the
Term (either extension (i) or (ii), a “Term Extension”). In the event of a Term
Extension, the Parties will negotiate in good faith the terms and conditions for
such Term Extension, including pricing.

 

B.         Termination Date. Unless earlier terminated as set forth herein or
otherwise agreed to by the Parties in writing, the termination date of this
Agreement shall be either the last day of the Term as set forth in Section 4.A,
or the date on which all Work Orders or Purchase Orders are earlier terminated
in accordance with Section 4.C below (the "Termination Date"). The termination
date of a Work Order or Purchase Order shall be either the last day of the term
as set forth in a Work Order or Purchase Order, or the date on which such Work
Order or Purchase Order is earlier terminated in accordance with Section 4.C
below (the "Work Order or Purchase Order Termination Date").

 

 - 16 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

C.         Termination.

 

i.         By VENDOR. In addition to any other remedies provided herein or
available at law or equity, VENDOR may terminate:

 

a.         any Work Order or Purchase Order in the event of a material breach by
SANOFI, which breach is not cured within thirty (30) days following SANOFI's
receipt of written notice of breach from VENDOR.

 

b.         the Agreement at any time during the Term Extension for convenience
by giving SANOFI one (1) year prior written notice of termination at any time
during the Term Extension. In such event, VENDOR shall be responsible for all
costs associated with the Property Transfer (as defined in Section 4.B. of
Exhibit B), including reimbursing SANOFI for all reasonable documented
out-of-pocket and personnel costs (including reasonable overhead) with no
mark-up.

 

ii.        By SANOFI. In addition to any other remedies provided herein or
available at law or equity, SANOFI may terminate:

 

a.         any Work Order or Purchase Order (x) in the event of material breach
by VENDOR, which breach is not cured within thirty (30) days following VENDOR's
receipt of written notice of breach from SANOFI, or (xx) immediately in the
event SANOFI becomes aware of a threatened or actual debarment, exclusion or
disqualification as further described in Section 2.B.ii above and the affected
employee is not replaced within five (5) days of the VENDOR’s receipt of notice
of such debarment, exclusion or disqualification

 

b.         in the case of Services relating to the SANOFI’s Library of
Compounds, as set forth Exhibit B.

 

c.         any Work Order and/or Purchase Order for convenience by giving VENDOR
thirty (30) days prior written notice of termination.

 

d.         To the extent that the Agreement has not been terminated pursuant to
Section 4(C)(iii), this Agreement immediately in its entirety if, at any time,
(i) VENDOR shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver or
trustee of VENDOR or of its assets, or (ii) VENDOR proposes a written agreement
of composition or extension of its debts, or (iii) VENDOR shall be served with
an involuntary petition against it, filed in any insolvency proceeding, and such
petition shall not be dismissed within sixty (60) days after the filing thereof,
or (iv) VENDOR shall propose or be a party to any dissolution or liquidation, or
(v) VENDOR shall make an assignment for the benefit of creditors, or (vi) in
accordance with Section 10. E.

 

iii.       By SANOFI. In addition to any other remedies provided herein or
available at law or equity:

 

a.         in the event of non-compliance with reporting obligations set forth
in Section 3.C., or if an audit of VENDOR reveals a ten percent (10%) or greater
deviation from the prior Reporting Certificate, SANOFI shall have the option, in
its sole discretion, to: (i) terminate this Agreement (including Exhibit B to
this Agreement with respect to the Library of Compounds Services), the Hit
Discovery Services Agreement Combichem, and the Hit Discovery Services Agreement
Tucson Core Collection, Phenotypic (MOA) Collection, 10kFragment Collection and
SASC1, and (ii) exercise all its rights under the Deed of Trust (as such term is
used in the APA);

 

 - 17 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

b.         in the event of non-compliance with the employee covenants set forth
in Section 7.5 in the APA there shall be an automatic termination of the
remaining unpaid Subsidy Payments and the remaining unpaid take or pay payments
set forth in Section 3 of this Agreement;

 

c.         in the event of non-compliance with the covenants set forth in
Section 2.C and 2.D (other than the covenant set forth in Section 2.D.i.) of
this Agreement or the provisions of Section 10.J. of this Agreement SANOFI shall
have the option to (i) terminate this Agreement, (including Exhibit B to this
Agreement with respect to the Library of Compounds Services), the Hit Discovery
Services Agreement Combichem, and the Hit Discovery Services Agreement Tucson
Core Collection, Phenotypic (MOA) Collection, 10kFragment Collection and SASC1,
and (ii) exercise all its rights under the Deed of Trust (as such term is used
in the APA);

 

d.         in the event of non-compliance with the maintenance covenants set
forth in Section 2.E: (i) this Agreement (including Exhibit B to this Agreement
with respect to the Library of Compounds Services), the Hit Discovery Services
Agreement Combichem, and the Hit Discovery Services Agreement Tucson Core
Collection, Phenotypic (MOA) Collection, 10kFragment Collection and SASC1shall
automatically terminate, and (ii) exercise all its rights under the Deed of
Trust (as such term is used in the APA); and

 

e.         in the event of non-compliance with the provisions of Section 2.D.i.
of this Agreement with respect to Permissible Dividends there shall be an
automatic termination of the remaining unpaid Subsidy Payments and the remaining
unpaid take or pay payments set forth in Section 3 of this Agreement.

 

iv.       Effect of Termination. In the event of early termination of any Work
Order or Purchase Order or this Agreement, SANOFI's liability for payment to
VENDOR under this Agreement shall be limited to payment for satisfactory
completed Services or prorated portions thereof received by SANOFI and other
pre-approved, non-cancelable expenses or obligations incurred by VENDOR prior to
the Work Order or Purchase Order Termination Date. Notwithstanding any provision
to the contrary, if the basis for termination of a Work Order or Purchase Order
is due to the negligence of, or material breach by VENDOR or any Personnel, the
amount due VENDOR under this Section 4.C.iii shall be subject to good faith
negotiation taking into account the cause and effect of such negligence or
breach on SANOFI. In the event of early termination of this Agreement, SANOFI’s
shall have no liability for, and shall not make any Subsidy Payments that have
not come due pursuant to the terms of the Agreement prior to the effective date
of termination. Conversely, in such event of early termination, VENDOR shall
have no claim to, and shall not receive Subsidy Payments that have not come due
pursuant to the terms of the Agreement prior to the effective date of
termination. For the Services relating to SANOFI”s Library of Compounds,
additional consequences of termination are set forth in Exhibit B.

 

 - 18 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

5.CONFIDENTIAL INFORMATION

 

A.         SANOFI Confidential Information. VENDOR acknowledges and agrees that
any data, documents, materials or information of any type whatsoever, in
whatever form or medium, whether or not marked as "confidential" and/or
"proprietary," and which could reasonably be expected to be valuable to SANOFI,
including but not limited to, any information concerning or relating to the
property, products, research, technology, and business and affairs of SANOFI or
its Affiliates (as defined herein), that is learned, created by, disclosed to or
becomes known by VENDOR pursuant to this Agreement constitutes the confidential
information of SANOFI (collectively, "SANOFI Confidential Information"). As used
in this Agreement, "Affiliate(s)" shall mean any person or entity directly or
indirectly controlling, controlled by, or under common control with a Party, and
for this purpose, "control," "controlling" and "controlled by" shall mean the
ownership and control of more than fifty percent (50%) of the outstanding voting
securities or interest in capital or profits of any person or entity, or the
right to direct or control the management or affairs of any person or entity by
contract or similar arrangement.

 

B.         VENDOR Confidential Information. SANOFI acknowledges and agrees that
any data, documents, materials or information of any type whatsoever, in
whatever form or medium, whether or not marked as "confidential" and/or
"proprietary," and which could reasonably be expected to be valuable to VENDOR,
including but not limited to, any information concerning or relating to the
property, products, research, technology, and business and affairs of VENDOR or
its Affiliates, that is learned, created by, disclosed to or becomes known by
SANOFI pursuant to this Agreement constitutes the confidential information of
VENDOR (collectively, "VENDOR Confidential Information").

 

C.         Restrictions on Use of Confidential Information. Except as otherwise
expressly provided herein, the Party receiving Confidential Information
(“Receiving Party”) from the other Party (“Disclosing Party”) shall (i) hold
such Confidential Information in strict confidence; (ii) not disclose such
Confidential Information to any third party, except to Affiliates, agents and
subcontractors who "need to know;" provided, however, that such agents and
contractors agree in writing to abide by the confidentiality provisions set
forth herein; (iii) use such Confidential Information only as necessary in
furtherance of the Services and not for any other purpose; (iv) upon termination
or expiration of this Agreement, destroy or return to the Disclosing Party, at
the Disclosing Party's option, all tangible Confidential Information in its
possession and in the possession of any Affiliates, agents and subcontractors;
and (v) protect Confidential Information received from disclosure with at least
that degree of care used by the Receiving Party in dealing with its own
confidential information of a similar nature and shall take reasonable steps to
minimize the risk of an unauthorized disclosure of Confidential Information.

 

D.         Exceptions to Confidential Information. Notwithstanding the
foregoing, Confidential Information shall not include information which: (i) is
or hereafter becomes generally available to the public other than by reason of
any breach hereof; (ii) was already known to the Receiving Party prior to the
date of disclosure; (iii) is disclosed to the Receiving Party by a third party
who has the right to disclose such information without any obligations of
confidentiality; (iv) is developed by or on behalf of the Receiving Party
independently, without reliance on Confidential Information received hereunder,
as demonstrated by written records; or (v) is otherwise required to be disclosed
by the Receiving Party in order to comply with applicable legal requirements of
a public authority, law, rule of court or regulation, provided that (a) the
Receiving Party promptly notifies the Disclosing Party of the obligation to
disclose in order to allow the Disclosing Party to object or seek a protective
order; (b) the Receiving Party only discloses the minimum amount of Confidential
Information that is necessary to comply with the required disclosure; and (c)
such information remains Confidential Information for all other purposes.

 

 - 19 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

E.         Restricted Period. These restrictions upon disclosure and use of
Confidential Information shall continue during the Term and shall extend beyond
the Term for a period of ten (10) years, provided, however, with respect to any
Confidential Information that constitutes a trade secret (as determined under
applicable law), such restrictions on disclosure and/or use shall survive the
Termination Date for as long as such Confidential Information remains a trade
secret but, in no event, shall such restrictions on disclosure and/or use cease
prior to the expiration of ten (10) years following the Termination Date.

 

6.WORK PRODUCT

 

A.        Inventions. VENDOR agrees that except for VENDOR Property any
inventions, works of authorship, other intellectual property and/or scientific
information or documentation that are conceived, developed, originated, fixed or
reduced to practice by VENDOR or any Personnel, including any subcontractor or
third party providers hired by VENDOR, resulting from VENDOR's engagement by
SANOFI (collectively, "Inventions"), shall be the sole and complete property of
SANOFI or any of its Affiliates, and shall be treated as Confidential
Information. VENDOR shall fully disclose to SANOFI all Inventions conceived or
reduced to practice by VENDOR or any Personnel. VENDOR hereby assigns and
conveys to SANOFI or any of its Affiliates, at no cost to SANOFI, VENDOR's
entire right, title and interest to any and all resulting Inventions. VENDOR
agrees to execute and cause any Personnel to execute, as applicable, all
applications or registrations for patents and copyrights, and any other
instruments deemed necessary or helpful for SANOFI or its Affiliates to secure
and enforce its rights hereunder. VENDOR shall also obtain the agreement of each
subcontractor, member of the Personnel or third party provider to the foregoing.

 

Notwithstanding the foregoing, SANOFI acknowledges that VENDOR may conceive,
develop, originate, fix or reduce to practice certain inventions, processes,
know-how, trade secrets, improvements, other intellectual property and assets
which may include, but is not limited to, analytical methods, procedures and
techniques, computer technical expertise, software, and technical and conceptual
expertise in the area of drug development, all of which have been: (1)
independently developed by VENDOR outside of this Agreement, or (2) developed by
VENDOR in connection with the performance of the Services under this Agreement
without the benefit or use of any SANOFI Confidential Information and which
relate to VENDOR's business, or (3) developed by VENDOR in connection with the
performance of the Services under this Agreement and relating to generally
applicable technology, methodology, or processes (other than technology,
methodology, or processes specifically developed for and funded by SANOFI)
(collectively "VENDOR Property"). SANOFI agrees that VENDOR Property shall
remain the sole and complete property of VENDOR. Except as otherwise set forth
in this Agreement or in a Work Order, VENDOR does not convey nor does SANOFI
obtain any rights in VENDOR Property; provided, however, that any improvements
or modifications to VENDOR Property which are developed solely for, and paid for
by SANOFI in connection with the performance of the Services, shall be the
property of SANOFI, and further provided that to the extent that such VENDOR
Property is incorporated into any deliverables under any Work Order or Purchase
Order, SANOFI and its Affiliates are granted a fully paid nonexclusive license
to use such VENDOR Property for its business purposes.

 

 - 20 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

B.         Use of SANOFI Materials. VENDOR will only use materials provided by
or on behalf of SANOFI consistent with and as contemplated by this Agreement and
will not undertake any actions which would jeopardize the copyright, trademark,
tradename and other intellectual property rights of SANOFI or its Affiliates in
any such materials. SANOFI represents that it has the right to use all materials
it provides to VENDOR as contemplated by the Work Order and such use as
contemplated will not infringe any third party rights.

 

7.INSURANCE

 

VENDOR shall procure and maintain throughout the Term insurance coverage with
respect to the conduct of its business and the performance of Services against
loss from such risks and in such amounts as is customary for well-insured
companies engaged in similar businesses. VENDOR shall, at SANOFI’s request, have
VENDOR’s insurance carrier or carriers furnish to SANOFI certificates of
insurance, or if self-insured, documentation stating that all insurance required
under this Agreement is in force. Such certificates or documentation shall
indicate the expiration dates for such coverages and any deductible and/or
self-insured retention and shall stipulate that the insurance shall not be
canceled while this Agreement is in effect without thirty (30) days prior
written notice to SANOFI.

 

SANOFI will maintain during the Term, a program of insurance or self-insurance
at levels sufficient to satisfy its obligations as set forth in this Agreement.

  

8.INDEMNIFICATION

 

A.         By VENDOR. VENDOR shall indemnify, protect, defend and hold SANOFI
and its Affiliates, and their respective employees, officers, directors,
attorneys, agents, representatives, successors and assigns (each, a "SANOFI
Indemnified Party") harmless from and against all causes of action, liabilities,
damages, penalties, costs, expenses, fines, claims, losses, suits, demands,
liens, and all expenses of any kind or nature whatsoever (including, without
limitation, reasonable attorneys' fees) (collectively, "Losses") that may be
incurred by, made, charged, or instituted against a SANOFI Indemnified Party,
and which arise out of, result from or are based on (i) the breach of this
Agreement by VENDOR; (ii) the negligence or willful misconduct of a VENDOR
Indemnified Party (as defined below); or (iii) the making or use of VENDOR
Property or VENDOR's methods or materials, except to the extent that such Losses
are attributable to the negligence, wrongful act or omission, or willful
misconduct of any SANOFI Indemnified Party.

 

B.         By SANOFI. SANOFI shall indemnify, protect, defend and hold VENDOR
and its Affiliates, employees, officers, directors, attorneys, agents,
representatives, successors and assigns (each, a "VENDOR Indemnified Party")
harmless from and against all Losses that may be incurred by, made, charged, or
instituted against a VENDOR Indemnified Party, and which arise out of, result
from or are based on (i) the breach of this Agreement by SANOFI; (ii) the
negligence or willful misconduct of a SANOFI Indemnified Party; or (iii)
VENDOR's use of SANOFI's materials as directed by SANOFI, except to the extent
that such Losses are attributable to the negligence, wrongful act or omission,
or willful misconduct of any VENDOR Indemnified Party.

 

 - 21 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

C.         Notification of Claims. The Party wishing to seek indemnification
hereunder (the "Indemnified Party") shall notify the Party against whom
indemnification is sought (the "Indemnifying Party") in writing of any asserted
claim within fourteen (14) days of either discovery of the occurrence upon which
the claim may be based or learning of the claim, whichever occurs first. Failure
to provide such notice, which substantially prejudices the Indemnifying Party's
ability to defend such claim or action, may invalidate any obligation of
indemnification. The Indemnified Party must authorize and permit the
Indemnifying Party to exercise sole control of the defense and disposition of
any claim or action, including all decisions related to litigation, appeal or
settlement, provided, however, that the Indemnifying Party shall not settle any
claims or action that would be deemed to confess wrongdoing on the part of the
Indemnified Party without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld. Notwithstanding the foregoing,
the Indemnified Party shall nevertheless be entitled to retain separate counsel
at its own cost to participate in such matter; however, the Indemnifying Party
shall have sole case management authority. Each Party hereto shall cooperate
with the other in every reasonable way to facilitate the defense of any such
claim.

 

D.         Limitation of Liability. Neither Party shall be liable to the other
Party for any consequential, special, incidental or indirect damages or lost
profits arising out of the activities contemplated hereunder or resulting from
breach by the other Party of its obligations under this Agreement, even if a
Party has been advised of the possibility of such damages. VENDOR shall have no
liability whatsoever to SANOFI or any designee whether in contract or tort, for
any loss or damage arising out of any development, exploitation, use or other
activity by SANOFI relating to the deliverables provided to SANOFI by VENDOR
hereunder, unless due to the negligence or willful misconduct of VENDOR or
VENDOR’s material breach of this Agreement or the applicable Work Order or
Purchase Order. Except in the case of indemnification obligations or damages
resulting from a breach of confidentiality or VENDOR’s willful misconduct or
negligence, VENDOR’s total liability to SANOFI in respect of any matters arising
out of or in connection with this Agreement and/or the applicable Work Order or
Purchase Order, whether based upon warranty, contract, tort or otherwise, shall
be limited to direct damages not to exceed three (3) times the total amount to
be paid to VENDOR under the applicable Work Order or Purchase Order. This
Section 8.D. shall not operate to include or limit any liability which VENDOR is
prohibited by law from excluding or limiting, including liability for death or
personal injury. Nothing contained herein, including the liability cap, is
intended to limit or restrict a Party’s liability to a third party for claims
made by such third party for infringement of intellectual property rights.

  

9.INDEPENDENT CONTRACTOR

 

VENDOR's relationship with SANOFI under this Agreement shall be that of an
independent contractor. VENDOR shall exercise its own discretion on the method
and manner of performing the Services and SANOFI will not exercise control over
VENDOR or its employees except insofar as may be reasonably necessary to ensure
performance and compliance with this Agreement. The employees, methods, and
equipment used by VENDOR shall at all times be under VENDOR's exclusive
direction and control. Nothing in this Agreement shall be construed to designate
VENDOR, or any of its employees or agents, as employees, agents, joint ventures
or partners of SANOFI. VENDOR is wholly responsible for withholding and payment
of all federal, state and local income and other payroll taxes with respect to
its employees, including contributions from them as required by law.

  

 - 22 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

10.MISCELLANEOUS

 

A.        Publicity/Use of Name. VENDOR shall not disclose the fact of, terms
of, or subject matter of this Agreement to any third party without the prior
written consent of SANOFI other than as required by law, rule or regulation.
VENDOR will not use the name or logo of SANOFI or its Affiliates in advertising
promotions or other commercial materials without SANOFI's prior written consent.
To the extent SANOFI has approved a particular disclosure, VENDOR may reissue or
reuse the contents of such disclosure without obtaining SANOFI’s prior written
consent for such subsequent disclosure.

 

B.         Notice. Any notices, consents or other communications required or
permitted under this Agreement must be in writing and shall be deemed to have
been duly given as of the date it is (i) delivered by hand; (ii) sent by
registered or certified mail, postage prepaid, return receipt requested; or
(iii) delivered by overnight courier, to the other Party at the address as set
forth below, or to such other address or addresses as may be designated in
writing by notice given to the other Party pursuant to this Section:

 

  If to VENDOR: Icagen-T, Inc.     2090 E. Innovation Park Drive     Oro Valley,
Arizona 8575     Attn.: Richie Cunningham         With a copy to: Gracin &
Marlow, LLP     The Chrysler Building     405 Lexington Avenue, 26th Floor    
New York, New York 10174           Attention: Leslie Marlow, Esq.         If to
SANOFI: Sanofi US     640 Memorial Drive     Cambridge, MA 02139     Attn:
Strategy & Innovation Group         With a copy to: Sanofi US Services Inc.    
55 Corporate Drive     Bridgewater, NJ 08807     Attn: Vice President & General
Counsel,     US R&D Division           Facsimile: 908-981-7831         And: As
set forth in the Work Order or Purchase Order

 

 - 23 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

C.         Dispute Resolution. Any dispute, controversy or claim arising out of
or relating to this Agreement which the Parties are unable to amicably settle
themselves shall first be submitted to the ESC for resolution. The ESC shall
have thirty (30) days to attempt to resolve the dispute and will set forth any
resolution in writing. Should the ESC fail to resolve the dispute within that
period of time, it shall be finally settled by arbitration by the American
Arbitration Association, under the US Arbitration Rules then in effect by three
(3) arbitrators appointed in accordance with the aforementioned rules. The
arbitration shall take place in New York or in such other venue as the Parties
may mutually agree.

 

D.         No Conflict. In the event there is a conflict between the terms and
conditions of this Agreement and any Work Order or Purchase Order or other
document attached hereto or thereto, the terms and conditions contained in this
Agreement shall prevail, except in the case of Exhibit B, in which case Exhibit
B shall control in the event of a conflict. No terms of any subsequent Invoice
or Purchase Order will add to, modify or supercede the terms of this Agreement.

 

E.         Force Majeure. Neither Party will be responsible for any failure or
delay in performance of this Agreement if the failure or delay is due to an
event beyond the reasonable control and without the fault or negligence of the
Party seeking to excuse performance, including without limitation, acts of God,
acts of terrorism, war, labor disputes and strikes, fire, flood, riot, and
unforeseen delays in third-party provided transportation or communications (a
"Force Majeure Event"). Any Party seeking to excuse or delay performance due to
a Force Majeure Event under this Section 10.E. will provide detailed written
notice to the other Party of the nature and anticipated duration of the delay. A
Party claiming the benefit of a Force Majeure Event shall use reasonable efforts
to avoid or overcome the causes affecting performance and diligently fulfill all
outstanding obligations within sixty (60) days. In the event that any such Force
Majeure Event continues for in excess of sixty (60) days, either Party shall
have the right to terminate this Agreement upon thirty (30) days’ advance notice
to the other Party, provided that, if the Force Majeure Event ceases within such
thirty (30) day notice period, this Agreement shall remain in full force and
effect upon prior written notice to the other Party.

 

F.         Section Headings. The Section headings of this Agreement are for the
convenience of the Parties only and in no way alter, modify, amend, limit, or
restrict the contractual obligations of the Parties.

 

G.         Audit Rights. During the Term and for three (3) years thereafter,
SANOFI or its designated representative and any governmental agent which
regulates SANOFI may, during business hours and upon reasonable advance notice
to VENDOR once every six (6) months at mutually agreed to times (i) inspect and
audit all books, data, records and work products of VENDOR that relate solely to
the Services; (ii) confer with Personnel for the purpose of determining VENDOR's
compliance with the terms of this Agreement; and (iii) audit VENDOR's supporting
documentation for expenses and charges for which VENDOR has received
reimbursement from SANOFI. VENDOR will retain all applicable books and records
for three (3) years following the Termination Date. In addition, with respect to
the covenants set forth in Sections 2.C, D., and E of this Agreement, SANOFI or
its designated representative shall have the right to audit VENDOR’s compliance
with such covenants during normal business hours and upon reasonable notice to
VENDOR.

 

 - 24 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

H.         Severability; Waiver. The invalidity or unenforceability of any term
or provision of this Agreement shall not affect the validity or enforceability
of any other term or provision of this Agreement. Waiver by either Party or the
failure by either Party to claim a breach of any provision of this Agreement
shall not be deemed to constitute a waiver or estoppel with respect to any
subsequent breach of any provision hereof.

 

I.         Entire Agreement; Amendment. This Agreement, the Work Orders or
Purchase Orders and any schedules and exhibits attached hereto and thereto,
constitute the entire understanding and agreement between the Parties with
respect to the subject matter covered herein and supercedes any and all prior
agreements, understandings, covenants, promises, warranties and representations,
oral or written, express or implied, between the Parties that relates to the
subject matter hereof. This Agreement and any Work Order may not be amended or
supplemented in any way except in writing, dated and signed by authorized
representatives of both Parties.

 

J.         Change of Control. VENDOR may not assign or transfer this Agreement,
by operation of law or otherwise, or any part hereof without the express written
consent of SANOFI, which may be withheld in its sole and absolute discretion.
SANOFI may assign or transfer its rights and obligations under this Agreement to
any of its Affiliates without the consent of VENDOR.   For purposes of
clarification, this Agreement may not be assigned or transferred by VENDOR
pursuant to a change of control transaction (“Change of Control”), including,
without limitation the sale of all or substantially all of its assets or
business to which this Agreement relates, sale or transfer of beneficial
ownership or voting rights of any of the stock of VENDOR, or pledge or
hypothecation of the shares of VENDOR, as well as a reorganization, merger,
acquisition, or consolidation of VENDOR with another entity.  This Agreement,
however, may be assigned or transferred by SANOFI in connection with a Change of
Control transaction.  Any and all assignments not made in accordance with this
Section will be void.

 

K.         Subcontractors. VENDOR shall obtain SANOFI's prior written consent
before using any subcontractors to perform Services under a Work Order or
Purchase Order other than to an Affiliate. If written consent to use
subcontractors is given by SANOFI, VENDOR shall be responsible for ensuring that
each subcontractor executes an agreement with VENDOR, which agreement shall
contain terms and conditions that are consistent with and at least as
restrictive as those contained in this Agreement. Notwithstanding the foregoing,
VENDOR shall at all times be liable for the performance of any subcontractor(s).

 

L.         Compliance with SANOFI Policies. VENDOR agrees to use commercially
reasonable efforts to comply with all SANOFI policies applicable to the Services
which have been provided by SANOFI to VENDOR in writing.

 

M.        Governing Law. This Agreement and all claims relating to or arising
out of this Agreement, or the breach thereof, whether based in contract, tort or
otherwise, shall be governed and construed in accordance with the laws of the
State of Delaware, without regard to its conflict of laws, rules or principles.

 

 - 25 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

N.         Remedies Cumulative. No right or remedy in this Agreement conferred
upon or reserved to a Party to this Agreement is intended to be exclusive of any
other right or remedy. Remedies provided for in this Agreement shall be
cumulative and in addition to, and not in lieu of, any other remedies available
to either Party at law, in equity or otherwise.

 

O.        Binding Effect. This Agreement shall be binding upon and inure to the
benefit of each Party and their respective Affiliates, successors, legal
representatives and permitted assigns.

 

P.         Survival. All provisions of this Agreement which may reasonably be
interpreted or construed as surviving termination shall survive, including
without limitation Sections 3.F., 3.G., 3.J., 4.C (iv), 5, 6, 8 and 10 and any
aspect of Exhibit B to the extent reasonably required to preserve SANOFI’s
rights thereunder, including with respect to the return to SANOFI of SANOFI’s
Library of Compounds and Related Data (each as defined therein).

 

[Signature page follows.]

 

 - 26 - 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their
respective duly authorized representatives as of the Effective Date.

  

SANOFI:

  

By: ___________________________

 

Name: _________________________

 

Title: __________________________

VENDOR:

 

By: ____________________________

 

Name: __________________________

 

Title: ___________________________

 

 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.

 

EXHIBIT A

 

SERVICES

 

[*****]

 

                                                                               
                                                                               
                   

 

 

 

 

EXHIBIT B

 

LIBRARY OF COMPOUNDS SERVICES

 

 

Additional Terms Specific to Library of Compounds Services

 

DEFINED TERMS

 

A.“Hit Discovery Services Agreements” means the (i) Hit Discovery Services
Agreement – Combichem dated _________, 2016, and (ii) Hit Discovery Services
Agreement – SASC1 dated _________, 2016 between the Parties.

 

B.“Master Services Agreement” means the Master Services Agreement dated
_________, 2016 between the Parties.

 

C.“Related Data” means any information relating to: (i) SANOFI’s Library of
Compounds provided by or on behalf of SANOFI or its Affiliates to VENDOR,
including, but not limited to compound barcoding information and compound
weights, (ii) any other associated information provided by SANOFI or its
Affiliates to VENDOR (or available to VENDOR at the Tucson Site), and (iii)
other information generated under the Master Services Agreement or applicable
Work Order (including, but not limited to inventory tracking, ordering, and
shipping tracking information). For clarity, SANOFI has no obligation to share
any compound structures with VENDOR except as otherwise specified in the Hit
Discovery Services Agreements, but if any such structures are disclosed, they
shall constitute Related Data.

 

D.“SANOFI’s Library of Compounds” means those compounds set forth on Annex 1
attached hereto and incorporated herein. SANOFI’s Library of Compounds is
composed of the following five (5) libraries: (i) Combichem, (ii) Tucson Core
Collection, (iii) Phenotypic (MOA) Collection, (iv)10kFragment Collection and
(v) SASC1.

 

E.“Transitional Services Agreement” means that agreement dated _________, 2016
between the Parties. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings ascribed to such terms in the Master Services
Agreement.

 

2.CUSTODIAL RELATIONSHIP

 

A.Property of SANOFI. VENDOR acknowledges and agrees that SANOFI retains all
right, title and interest in and to (i) the physical quantities of compounds
contained in SANOFI’s Library of Compounds; (ii) any and all Related Data and
intellectual property rights in or with respect to SANOFI’s Library of Compounds
and Related Data, and (iii) all SANOFI research and development equipment assets
(“SANOFI R&D Equipment Assets”) set forth on Annex 2 attached hereto and
incorporated herein. VENDOR further acknowledges and agrees that SANOFI’s
ownership and all rights held by SANOFI as specified above shall not be affected
by VENDOR’s performance of the Services or any other activities with respect to
SANOFI’s Library of Compounds.

 

 

 

B.New Compounds. VENDOR agrees that nothing generated under this Exhibit B with
respect to any compound(s) in SANOFI’s Library of Compounds shall be considered
VENDOR Property (as defined in Section 6.A of the Master Services Agreement)
unless otherwise agreed between the Parties pursuant to the Hit Discovery
Services Agreements.

 

C.Custodial Relationship. VENDOR shall have full custodial responsibility for
SANOFI’s Library of Compounds, Related Data, and SANOFI R&D Equipment Assets
unless otherwise terminated under Section 5 of this Exhibit B.

 

D.No Encumbrances/Cooperation By VENDOR. VENDOR shall not impose or permit to be
imposed upon SANOFI’s Library of Compounds or SANOFI R&D Equipment Assets any
security interests, mortgages, liens, restrictions or encumbrances. VENDOR
agrees to cooperate with SANOFI in executing any such documents that SANOFI
might require to place all third parties on notice that SANOFI’s Library of
Compounds, Related Data, and SANOFI R&D Equipment Assets are the property of
SANOFI.

 

3.VENDOR’S RESPONSIBILITIES

 

A.Services. VENDOR shall perform the Services related to SANOFI’s Library of
Compounds described in Exhibit A to the Master Services Agreement using the
SANOFI R&D Equipment Assets and VENDOR’s equipment, data management and IT
infrastructure, including the applicable Transferred Assets as defined in the
Asset Purchase Agreement. VENDOR shall be fully responsible for any and all
costs, including equipment maintenance, repair and replacement, with respect to
SANOFI’s Library of Compounds and Related Data which is entrusted to VENDOR at
all times unless and until returned to SANOFI as set forth in Section 5.
VENDOR’s responsibility for equipment maintenance and repair also includes
responsibility for SANOFI R&D Equipment Assets. To the extent that any SANOFI
R&D Equipment Assets are unable to be repaired and are subsequently replaced
with new equipment purchased by VENDOR, such replacement equipment shall be the
property of VENDOR. VENDOR shall promptly notify the Library Operations
Committee in the event that any SANOFI R&D Equipment Assets cannot be repaired
and are subsequently being removed from service.

 

B.Transition of Services. Services or information technology (“IT”) systems
necessary for the successful transition of SANOFI’s Library of Compounds from
SANOFI to VENDOR are addressed in the Transitional Services Agreement. In
addition, during such transition period the Parties shall cooperate in good
faith to ensure that such IT tools (e.g. chem lab notebook) and infrastructure
(e.g. server(s)) are made available or developed to support such transition of
SANOFI’s Library of Compounds hereunder.

 

 2 

 

 

C.Degree of Care. VENDOR shall be responsible for maintaining the custody of
SANOFI’s Library of Compounds, all Related Data and SANOFI R&D Equipment Assets
with the same degree of care that VENDOR would use to protect its own similar
property and in no event less than a reasonable degree of care.

 

D.Confidentiality. VENDOR is responsible for maintaining the confidentiality and
trade secret status of, and enforcing the restricted use obligations with
respect to, any and all Related Data as Confidential Information in accordance
with Section 5 of the Master Services Agreement and shall appropriately mark as
confidential all Related Data.

 

E.Physical Access, Security, and Separation. VENDOR shall limit and restrict
access to SANOFI’s Library of Compounds and Related Data to VENDOR’s employees,
Affiliates and contractors who have a need for such access to perform the
Services. SANOFI’s Library of Compounds and Related Data shall be contained
within a physical area with limited and restricted access to only such VENDOR’s
employees, Affiliates and contractors. Furthermore, VENDOR shall (i) keep
Related Data separate (via a dedicated database and/or server) from any other
data of VENDOR, its Affiliates, or any third party and maintain identification
(unique barcode not used for any other third party and a valid link between the
barcode ID and the SANOFI compound ID contained within the Mosaic Database (as
defined in Section 3.J. below)) on SANOFI’s Library of Compounds and Related
Data that designates it as the property of SANOFI; (ii) keep electronic records
detailing the compound inventory contained in SANOFI’s Library of Compounds at
any given time; (iii) keep SANOFI’s Library of Compounds and Related Data in a
suitable place for storage, safe from loss or damage, including but not limited
to damage from fire or temperature and humidity fluctuations; (iv) store
SANOFI’s Library of Compounds and Related Data in compliance with current SOPs
(as such term is defined in Section 3.L. below) and ensure continuous
temperature monitoring of SANOFI’s Library of Compounds; and (v) allow SANOFI
and its representatives access to inspect those areas of the Tucson Site where
SANOFI’s Library of Compounds, Related Data and SANOFI R&D Equipment Assets are
located and VENDOR’s books and records at any time during reasonable business
hours with sufficient advance notice solely to ensure that VENDOR is complying
with the terms of this Section 3.E. and cooperating and assisting with any such
activity. VENDOR shall conduct its activities under this Section 3.E. using the
same degree of care that VENDOR would use to protect its own compound libraries
and compound libraries of third parties, and corresponding related data for such
libraries, and in no event less than a reasonable degree of care. Obligations of
VENDOR set forth in this Section will not be expected to exceed or otherwise be
materially different from the conditions or procedures in place at the Tucson
Site as of the Effective Date.

 

F.Access/Reporting Requirements. The audit and other related rights set forth in
Section 10.G. of the Master Services Agreement cover the Services described in
this Exhibit B and include a right of access to all applicable (i) records
generated by the quality management system, (ii) internal audit reports, (iii)
equipment validation and maintenance logs, and (iv) any and all other books and
records relating to SANOFI’s Library of Compounds and Related Data, in each case
affecting or otherwise relating to the Services.

 

G.New Compounds/Storage Forms. Upon advance agreement of VENDOR, such agreement
not to be unreasonably withheld, SANOFI may add one (1) or more compounds to
SANOFI’s Library of Compounds and associated Related Data at any time throughout
the Term upon two (2) weeks’ prior written notice to VENDOR. If SANOFI desires
to add such compounds and Related Data on less than two (2) weeks’ advance
notice, VENDOR shall act in good faith to accommodate SANOFI’s request. As of
the Effective Date, compounds contained within SANOFI’s Library of Compounds
fall into three (3) storage forms as follows: (i) solid form, (ii) liquid form
(2D barcoded storage tubes), and (iii) plates (e.g. custom plates, EC50 plates,
and combination plates). Immediately upon such addition, the Parties hereby
agree to replace Annex 1 with an updated version of such Annex containing the
additional compounds.

 

 3 

 

 

H.Restrictions and Exclusion of Warranties. For the avoidance of doubt, and
without limiting in any way the generality of the provisions of this Exhibit B,
no compound or any part of any compound contained in SANOFI’s Library of
Compounds shall be administered to humans or animals. Compounds contained within
or added to SANOFI’s Library of Compounds and any and all Related Data are
provided to VENDOR “AS IS” with no warranties, express or implied, including any
warranty of merchantability, noninfringement, and fitness for a particular
purpose.

 

I.Intellectual Property/Transfer Restrictions. VENDOR shall not attempt to
access or determine the chemical structure(s) of any compound contained in
SANOFI’s Library of Compounds or make any chemical or biological modifications
or derivatives of any compound in SANOFI’s Library of Compounds, without
SANOFI’s prior written permission or as agreed under the Hit Discovery Services
Agreements. VENDOR shall not, and shall ensure that no other person or entity to
which VENDOR provides access to any compound in SANOFI’s Library of Compounds or
any Related Data does not sell, transfer or send any such compounds or any
Related Data to any third party or to any facility other than the Tucson Site
(i) without the prior written permission of SANOFI, (ii) unless agreed under the
Hit Discovery Services Agreements, or (iii) unless specified in an applicable
Work Order.

 

J.IT Database/Security/Firewall/Audits. As of the Effective Date, SANOFI’s
Library of Compounds is managed using Titian’s Mosaic database (“Mosaic
Database”). VENDOR shall be responsible for entering into a service agreement
with Titian (Mosaic Database vendor), for services including, but not limited
to, online support, onsite maintenance and software updates/upgrades. In order
to maintain the appropriate level of Services, VENDOR shall not switch to a
different sample management database or implement a software upgrade without
obtaining SANOFI’s advance written approval, such approval not to be
unreasonably withheld. VENDOR is responsible for updating and creating data
backups of Related Data in real-time and for maintaining the integrity and
security of all Related Data. VENDOR shall maintain all Related Data on a server
dedicated to SANOFI’s Library of Compounds. In addition, at all times, VENDOR
shall ensure that sufficient electronic firewalls are in place to segregate
Related Data from all other VENDOR data or other information owned by VENDOR or
its Affiliates or any third party data or other information relating to any
other compounds (not contained within SANOFI’s Library of Compounds) or any
other matter. VENDOR shall also ensure that Related Data can only be accessed
and used locally at the Tucson Site, by Tucson-based employees only, including
by secure remote access. On a regular basis, but in no event less frequently
than on an annual basis, VENDOR shall conduct backup testing to validate the
integrity of database and data restoration processes.

 

K.Library Operations Committee. Within ten (10) days after the Effective Date,
the Parties shall assemble a cross-functional library operations committee
(“Library Operations Committee”) consisting of two (2) employees from each
Party. Such representatives may be changed from time to time in the sole
discretion of the Party seeking to make such replacement upon advance written
notice to the other Party. Each member of the Library Operations Committee shall
have experience with all operational aspects of managing a compound library for
pharmaceutical research purposes. The Library Operations Committee shall review
and approve a complete set of standard operating procedures (“SOPs) and prepare
a Transition and Removal Plan (as such term is defined in Section 4.C. below).
In addition, the Library Operations Committee shall develop a charter to include
the team’s scope of responsibility, frequency of meetings, governance, and
dispute resolution.

 

 4 

 

 

L.Standard Operating Procedures. VENDOR shall implement SOPs covering all
aspects of storage, maintenance and management of SANOFI’s Library of Compounds
and Related Data, including performing the obligations under this Exhibit B and
any Work Order, including, but not limited to, inventory, compound acceptance
and storage, plate replication, quality control processing, analytical methods
and validation, maintenance and support operations, backup systems for Related
Data, access control governance, audits, and control of records. VENDOR shall
implement the SOPs within ninety (90) days after the Effective Date. VENDOR
shall be responsible for drafting all SOPs and the Library Operations Committee
shall review and unanimously approve all SOPs prior to implementation and use by
VENDOR. The approval of such SOPs shall not be unreasonably withheld by SANOFI’s
representatives on the Library Operations Committee.    

Between the Effective Date and the date of approval by the Library Operations
Committee of the new SOPs described immediately above, SANOFI’s Library of
Compounds and Related Data shall be stored, maintained and managed by VENDOR in
accordance with SANOFI’s SOPs, the list of which is attached hereto as Annex 3
(“SOPs Supplied by SANOFI Covering SANOFI’s Library of Compounds”) to this
Exhibit B. VENDOR hereby acknowledges that it has received full copies of all
SOPs Supplied by SANOFI Covering SANOFI’s Library of Compounds listed on Annex 3
which are currently in effect at the Tucson Site and used for the management of
SANOFI’s Library of Compounds. Should for any reason whatsoever the Parties fail
to agree on the terms and conditions of any new SOP within the above referenced
ninety (90) day period following the Effective Date, the corresponding SOP
Supplied by SANOFI Covering SANOFI’s Library of Compounds listed in Annex 3
shall continue to apply to the applicable subject matter, until such time that
the new SOP is approved for use by the Library Operations Committee. Within
sixty (60) days after the Effective Date, SANOFI shall provide protocols for
each chemical sublibrary contained within the Combichem library.

 

Throughout the Term with respect to the Services relating to SANOFI’s Library of
Compounds, each of the Parties will be entitled to request from time to time the
modification of any of the then applicable SOPs. In such case, such Party will
provide the other Party notice of such potential change and consider the other
Party’s input, if any, in good faith. No change to any of the applicable SOPs
shall be implemented by either Party without obtaining approval from the Library
Operations Committee and the current SOP shall continue to control such
activities until such time that the revised SOP is so approved.

 

  M. Personnel. Subject to Section 1.B. of the Master Services Agreement, at all
times throughout the Term, VENDOR shall maintain a level of Personnel expertise
for all Services relating to SANOFI’s Library of Compounds comparable to the
level of such expertise existing as of the Effective Date.

 

N.Compliance. VENDOR shall comply with all regulations, laws and quality
standards (e.g. ISO-9001/2) applicable to the access, management, maintenance,
and use of chemical compound libraries for pharmaceutical research purposes, and
associated data at the Tucson Site.

 

 5 

 

 

  4. DEFAULT AND REMEDIES

 

A.Event Of Default. In addition to the termination and remedies provisions set
forth in Section 4 the Master Services Agreement regarding termination, Vendor
shall be in default upon the occurrence of any of the following: (i) any
material breach by VENDOR of any of the provisions of this Exhibit B; (ii) the
commencement by VENDOR of a voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar law now
or hereafter in effect or of any other case or proceeding to be adjudicated a
bankrupt or insolvent; (iii) the entry by a court of any decree or order for
relief in respect of the VENDOR in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect or a decree or order adjudging VENDOR a
bankrupt or insolvent; (iv) the entry of an order appointing a custodian,
receiver, liquidator, assignee, trustee or other similar official of the VENDOR
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs; (v) the entry of any judgment in an amount greater
than fifty thousand dollars ($50,000) against VENDOR that remains unpaid after
thirty (30) days; (vi) the making by the VENDOR of an assignment for the benefit
of creditors; (vii) the failure of VENDOR to pay its debts as they become due in
the ordinary course; and (viii) any other breach that could impair VENDOR’s
obligations under Section 3.L of this Exhibit B (each an “Event of Default”).
   

B.Remedies Upon Event of Default/Removal of SANOFI’s Library of Compounds and
Related Data. Upon an Event of Default, without limiting any other rights or
remedies that may be available to SANOFI (whether under the Master Services
Agreement, this Exhibit B, as a matter of law or otherwise), SANOFI, shall have
the option, in its sole discretion, to remove any or all of the compounds
included in SANOFI’s Library of Compounds, Related Data, and SANOFI R&D
Equipment Assets for which VENDOR acts as custodian and transfer any or all such
material and equipment to a site and electronic system of its choice (the
“Property Transfer”). If SANOFI elects the Property Transfer, VENDOR shall
provide all necessary cooperation and assistance to SANOFI to effectuate such
removal in accordance with the Transition and Removal Plan (as defined in
Section 4.C) on a timely basis and SANOFI will reimburse VENDOR for all
reasonable documented external, out-of-pocket and personnel costs (including
reasonable overhead) with no mark-up.    

C.Transition and Removal Plan. To effectuate Section 4.B and 5.A., the Parties
agree that as soon as practicable after the Effective Date (and in no event
later than three (3) months after the Effective Date), the Library Operations
Committee will jointly prepare in good faith a plan for the orderly transition
of the compounds included in SANOFI’s Library of Compounds and Related Data, and
SANOFI R&D Equipment Assets to SANOFI or its designee (the “Transition and
Removal Plan”).    

D.Irreparable Harm/Attorneys’ Fees. The Parties acknowledge that SANOFI will
suffer irreparable harm upon an Event of Default. As a result, VENDOR agrees
that SANOFI shall be entitled, in addition to any other right and remedy it may
have, at law or equity, upon an Event of Default, to a temporary restraining
order and/or injunction, without the posting of a bond or other security, or
with the posting of a minimal bond or security where required by applicable law,
enjoining or restraining VENDOR from any violation of Section 4.C and VENDOR
hereby consents to the issuance of such injunction. If SANOFI institutes any
such action against VENDOR, to enforce any terms or provisions of Section 4.C,
then the party that prevails in such action shall be entitled to receive from
the opposing party (or parties) in the action the prevailing party’s reasonable
attorneys’ fees incurred in such action and all costs and expenses incurred in
connection therewith in accordance with this Section 4.D.

  

 6 

 

 

5.MISCELLANEOUS

 

A.Tucson Site Closure/Change of Control/Termination of the Master Services
Agreement/Breach.    

Without prejudice to any other provision of the Master Services Agreement, and
to any right of SANOFI’s under any such provision, in the event (i) VENDOR has
initiated a process for the closing down of the Tucson Site, (ii) VENDOR
attempts to transfer its interest in the Tucson site to a non-Affiliate third
party, (iii) VENDOR or any of its Affiliates, enters into any agreement or
series of agreements the effect of which (at the closing of the transaction)
would result in the party to the Master Services Agreement becoming an entity
that is not an Affiliate of VENDOR, (iv) early termination of the Master
Services Agreement with respect to the Services relating to SANOFI’s Library of
Compounds, (v) any material breach by VENDOR of any provisions of this Exhibit
B, (vi) VENDOR terminates the Master Services Agreement during the Term
Extension for convenience, (vii) SANOFI’s decision to not extend the Term in
accordance with Section 4.A. of the Master Services Agreement, or (viii) Term
expiration, SANOFI may initiate the Property Transfer immediately upon written
notice to VENDOR. In such event, VENDOR shall provide all necessary cooperation
and assistance to SANOFI to effectuate such removal in accordance with the
Transition and Removal Plan on a timely basis and to transfer such compounds and
Related Data to a site and electronic system selected by SANOFI. Responsibility
for costs associated with Property Transfer will be apportioned as follows:    

Events (i) through (vi): VENDOR shall be solely responsible for all costs
associated with the Property Transfer, including reimbursing SANOFI for all
reasonable documented out-of-pocket and personnel costs (including reasonable
overhead) with no mark-up. Notwithstanding the foregoing, all costs associated
with such Property Transfer is capped at three million dollars ($3,000,000).    

Events (vii) and (viii): SANOFI shall be solely responsible for all costs
associated costs associated with the Property Transfer, including reimbursing
VENDOR for all reasonable documented out-of-pocket and personnel costs
(including reasonable overhead) with no mark-up.

 

  B. Transfer of Title to SANOFI R&D Equipment Assets by SANOFI to VENDOR.
Solely in the event of (i) Term expiration, or (ii) Term Extension, SANOFI shall
transfer all right, title and interest in SANOFI R&D Equipment Assets to VENDOR.
For purposes of clarity, in the event that the Master Services Agreement remains
effective for the entire five (5) year initial Term, or SANOFI invokes its right
to a Term Extension pursuant to Section 4.A. of the Master Services Agreement,
SANOFI shall transfer all right, title and interest in SANOFI R&D Equipment
Assets from SANOFI to VENDOR at no cost to VENDOR.

 

 7 

 

 

Annex 1

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annex 2

SANOFI R&D Equipment Assets

[*****]

 

                                                                               
                                                                               
                                                                               
                                                                               
                                             

  

 

 

Annex 3

[*****]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT C

 

KPI SCORECARD

  

Service KPI Scorecard

 

Service Package # KPI KPI Target Q1 2017 Q2 2017 S4: Assay Transfer Type A:
standard (e.g. homogenous cell-free assay) Max time for assay development 3
months 100% 100%                                                                
                                                       

 

 

 

_____________________________________________________________________________________________

[ex10i_001.jpg] Meets or Exceeds
                                                            [ex10i_002.jpg]
Below Expectations

 

 

 

EXHIBIT D

 

FORM OF

 

COMPLIANCE CERTIFICATE

 

 

 

Date: _________, 20__

 

This certificate is given by ICAGEN-T, INC., a Delaware corporation (the
“Company”), pursuant to Section 3.C of that certain Master Services Agreement
dated as of June [__], 2016 between the Company and Sanofi US Services Inc., as
such agreement may have been amended, restated, supplemented or otherwise
modified from time to time (the “Agreement”). Capitalized terms used herein
without definition shall have the meanings set forth in the Agreement.

 

The undersigned is executing this certificate as the Chief Financial Officer of
the Company and, as such, is duly authorized to execute and deliver this
certificate on behalf of the Company. By executing this certificate, the
undersigned hereby certifies that:

 

(a)the financial statements delivered with this certificate in accordance with
Section 3.C of the Agreement fairly present in all material respects the results
of operations and financial condition of the Company as of the dates of such
financial statements;

 

(b)he has reviewed the terms of the Agreement and has made, or caused to be made
under his supervision, a review in reasonable detail of the transactions and
conditions of the Company during the accounting period covered by such financial
statements;

 

(c)such review has not disclosed the existence during or at the end of such
accounting period, and he has no knowledge of the existence as of the date
hereof, of any condition or event that constitutes an event of default under the
Agreement or any exhibit thereto, except as set forth in Exhibit A hereto which
includes a description of the nature and period of existence of such default and
what action the Company has taken, is undertaking and proposes to take with
respect thereto;

 

(d)the Company is in compliance with the covenants contained in Section 2.B,
2.C, and 2.D of the Agreement;

 

  (e) the Company is in compliance with the maintenance covenants in Section 2.E
of the Agreement, as indicated below and as demonstrated on the attached
worksheets, except as set forth or described in Exhibit A;

 

(i) Minimum Cash Balance is $ _____.

 

(ii) Current Ratio is _____:1.00. 

 

(iii) Minimum Net Worth is $_________.

  

 

 

IN WITNESS WHEREOF, the Company has caused this Certificate to be executed by
its Chief Financial Officer this [__] day of [___________], 20[___].

  

  ICAGEN-T, INC.         By:           Name:    Its: Chief Financial Officer

 

 

 

Exhibit A

 

Events of Default

 

[Insert]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance Covenant Calculation Worksheet

 

to

 

Compliance Certificate

 

dated ______________, 20__

 

[Insert]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B

 

When recorded, return to:

 

Icagen, Inc.

4222 Emperor Boulevard, Suite 350

Durham, North Carolina 27703

Attn: Richie Cunningham, President

 

SPECIAL WARRANTY DEED
WITH REVERTER

  

For Ten Dollars ($10.00) and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Sanofi US Services Inc., a
Delaware corporation formerly known as and who took title as sanofi-aventis U.S.
Inc. ("Grantor"), hereby grants, sells and conveys to Icagen-T, Inc., a Delaware
corporation ("Grantee"), that real property located in Pima County, Arizona, and
legally described in Exhibit "A" attached hereto and incorporated herein by this
reference, together with all rights, interests, privileges and easements
appurtenant thereto and any and all buildings and improvements located thereon
("Property").

 

SUBJECT TO: current real estate taxes, assessments and any other liens arising
therefrom, all reservations in patents, deed restrictions, if any, all
easements, rights-of-way, covenants, conditions, restrictions, encroachments,
liens, encumbrances, obligations and liabilities as may appear of record, and
any and all other matters that can be determined by a visual inspection or a
complete and accurate survey of the Property.

 

Grantor hereby warrants title to the Property and binds itself and its
successors to warrant and defend the title, as against all acts of the Grantor
herein and no other. No other warranties, express or implied, are given by
Grantor by reason of this conveyance.

 

FURTHER SUBJECT TO the following conditions and restrictions:

 

1.            Reverter. Subject to the provisions of Section 2 below, title to
all the Property shall revert to Grantor or the then assignee of Grantor's
rights hereunder upon the first to occur of the following (each, a "Reversion
Triggering Event"):

 

(a)           any effort by Grantee to sell the Property to a third party during
the five (5) year period after this Special Warranty Deed with Reverter is
recorded (for purposes of this Section 1(a), "effort by Grantee to sell the
Property" shall mean Grantee entering into a legally binding listing agreement,
purchase agreement or option agreement with a third party with respect to the
Property); or

 

 

 

 

(b)           any lease by Grantee of any portion of the improvements on the
Property in excess of the necessary space required by Grantee to perform certain
services under that certain Master Services Agreement dated __________ ___, 2016
by and between Grantor and Grantee (the "MSA"). A Reversion Triggering Event
will not be deemed to have occurred under this Section 1(b) unless (i) a default
has occurred under the MSA for failure by Grantee to provide services required
under the MSA on account of a failure of Grantee to have adequate space in the
unleased portions of the improvements on the Property and such default is
continuing beyond any applicable notice and/or cure period, or (ii) a default
has occurred under Section 4.2(c) of that certain Asset Purchase Agreement dated
June 27, 2016 by and between Grantor and Grantee (the "APA") such that leased
space in the improvements are not separately demised and secured from the space
in which Grantee performs the services under the MSA.

 

2.           Procedure Upon Reversion Triggering Event. At Grantor's sole
election, which shall be waived if not made in writing within 180 days following
the occurrence of a Reversion Triggering Event, upon the occurrence of a
Reversion Triggering Event, Grantor may send a written notice of violation (the
"Violation Notice") to Grantee. If Grantee disagrees with the Violation Notice,
then, within thirty (30) days after receipt of the Violation Notice, Grantee
shall submit to Grantor or the then assignee of Grantor's rights hereunder a
written notice of disagreement, in which event the governing law and dispute
resolution provisions in Section 12.11 of the APA shall apply. If Grantee does
not submit a written objection within the time set forth above, or upon
resolution of the dispute in favor of Grantor or the then assignee of Grantor's
rights hereunder, then Grantor or the then assignee of Grantor's rights
hereunder may record a notice of exercise of reverter or other document as may
be deemed necessary by Grantor or the then assignee of Grantor's rights
hereunder. Upon the recording of such instrument, title to the Property shall
vest in Grantor or the then assignee of Grantor's rights hereunder subject to
all matters then of record and any and all other matters that can be determined
by a visual inspection or a complete and accurate survey of the Property, except
that within thirty (30) days after Grantee has received written notice of such
recordation, Grantee shall satisfy and take commercially reasonably efforts to
cause the release and reconveyance of any encumbrances securing loans or
evidencing liens or security interests created by Grantee (but excluding the
Deed of Trust and Assignment of Rents executed by Grantee for the benefit of
Grantor and recorded simultaneously herewith). All notices required hereunder
shall be delivered in the manner set forth in Section 12.3 of the APA. Grantee
shall execute any document reasonably required to give effect to this provision.

 

3.           Covenants Running with Land. The foregoing conditions and
restrictions shall be deemed covenants running with the land and binding upon
Grantee and its successors and assigns.

 

4.           Reverter Period. The reversion right herein shall automatically
expire and be of no further force and effect without the need of any further
documentation upon the date that is five (5) years after the date this Special
Warranty Deed With Reverter is recorded with the County Recorder of Pima County,
Arizona. In addition, Grantee shall have the right to pay Grantor the sum of
Five Million and no/xx Dollars ($5,000,000) and, upon delivery of such payment
in immediately available funds, all reversion rights under this Special Warranty
Deed with Reverter shall expire and the Property shall become wholly clear of
the reversion right and Grantor agrees to execute, acknowledge and deliver a
recordable instrument confirming the expiration of the reversion right in due
form, at Grantee's cost, within fifteen (15) days after such payment is made to
Grantor. For the avoidance of doubt, the payment by Grantee to Grantor of the
sum of Five Million and no/xx Dollars ($5,000,000) to terminate all reversion
rights under this Special Warranty Deed with Reverter shall be deemed to have
been made if and when Grantee shall make the payment to terminate that certain
Deed of Trust of even date herewith.

 

 2 

 

 

5.           Successors and Assigns. Any assignee of Grantee's rights hereunder
is hereby given notice of the terms hereof. By accepting any transfer of
Grantee's rights hereunder, such assignee agrees to be bound by the terms of
this Special Warranty Deed With Reverter as if executed and delivered by such
assignee.

 

6.           Miscellaneous. Any provision or provisions of this Special Warranty
Deed With Reverter which shall be invalid, void or illegal shall in no way
affect, impair or invalidate any other provision hereof, and all of the
remaining provisions hereof shall nevertheless remain in full force and effect,
and such invalid, void or illegal provision shall be deemed to be severed from
the terms of this Special Warranty Deed With Reverter.

 

[signature page follows]

 

 3 

 

 

DATED as of this _____ day of __________, 2016.

  

  "GRANTOR"       Sanofi US Services Inc., a Delaware corporation formerly known
as and who took title as sanofi-aventis U.S. Inc.         By:               
Name:     Its:  

 

STATE OF NEW JERSEY )   ) ss. COUNTY OF SOMERSET )

 

On this _____ day of __________, 2016, before me, the undersigned officer,
personally appeared _____________________________________________________ who
acknowledged him/herself to be the ________________________________________ of
Sanofi US Services Inc., a Delaware corporation formerly known as and who took
title as sanofi-aventis U.S. Inc., and s/he, in such capacity, being authorized
so to do, executed the foregoing instrument for the purposes therein contained
on behalf of that entity.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

    NOTARY SEAL: Notary Public of New Jersey

 

 4 

 

 

EXHIBIT A

 

LEGAL DESCRIPTION

 

LOTS 9 AND 10 OF RANCHO VISTOSO NEIGHBORHOOD 3, ACCORDING TO THE PLAT OF RECORD
IN THE OFFICE OF THE COUNTY RECORDER OF PIMA COUNTY, ARIZONA, RECORDED IN BOOK
56 OF MAPS, PAGE 65 AND MINOR PLAT CHANGE RECORDED AS DOCKET 13222, PAGE 196.

 

5

 

 

Exhibit C

 

When recorded, return to:

GAMMAGE & BURNHAM, PLC

Two North Central Avenue

15th Floor

Phoenix, Arizona 85004

 

DEED OF TRUST AND ASSIGNMENT OF RENTS

 

TRUSTOR:   Icagen-T, Inc.       TRUSTOR'S MAILING   2090 E. Innovation Park
Drive ADDRESS:   Oro Valley, Arizona 85755       BENEFICIARY:   Sanofi US
Services Inc.       BENEFICIARY'S MAILING   55 Corporate Drive ADDRESS:  
Bridgewater, New Jersey 08807     Attn: Vice President & General Counsel,    
                US R&D Division       TRUSTEE:   Patricia E. Nolan     Two North
Central Avenue     15th Floor     Phoenix, Arizona 85004

 

PROPERTY in Pima County, State of Arizona, described as:

 

See attached Exhibit A

 

THIS DEED OF TRUST is made between the Trustor, Trustee and Beneficiary named
above. Trustor irrevocably grants and conveys to Trustee in trust, with power of
sale, the above-described Property and all buildings, improvements and fixtures
located thereon or hereinafter erected thereon, together with the leases, rents,
issues, profits, or income thereof (collectively, the "Property Income");
subject, however, to the right, power and authority hereinafter given to and
conferred upon Beneficiary to collect and apply such Property Income; and
subject to all covenants, conditions, restrictions, rights-of-way and easements
of record.

 

 

 

THIS DEED OF TRUST IS MADE FOR THE PURPOSE OF SECURING: (a) performance of each
agreement of Trustor herein contained; (b) performance of Trustor's obligations
under that certain Asset Purchase Agreement dated June 27, 2016 by and between
Trustor and Beneficiary (the "APA"), as such might be amended or modified after
the date hereof; and (c) performance of Trustor's obligations under that certain
Master Services Agreement dated __________ ___, 2016 by and between Trustor and
Beneficiary (the "Master Services Agreement"), as such might be amended or
modified after the date hereof including, without limitation, Section 4.C.iii of
the Master Services Agreement. Other than as set forth herein, the aggregate of
all obligations secured by this Deed of Trust shall not exceed Five Million and
no/xx Dollars ($5,000,000). Notwithstanding anything to the contrary contained
in this Deed of Trust, the APA or the Master Services Agreement, this Deed of
Trust shall automatically terminate and be of no further force and effect upon
the date that is five (5) years after the date this Deed of Trust is recorded
with the County Recorder of Pima County, Arizona. In addition, Trustor shall
have the right to pay to Beneficiary the sum of Five Million and no/xx Dollars
($5,000,000) and, upon delivery of such payment in immediately available funds
(or the expiration of the five (5) year period referred to, above), all rights
under this Deed of Trust shall terminate and the Property shall become wholly
clear of the liens, security interests, conveyances and assignments evidenced
hereby, which shall be reconveyed of record by Beneficiary in due form, at
Trustor's cost, and within fifteen (15) days after such payment is made to
Beneficiary (or the expiration of the five (5) year period referred to, above).
For the avoidance of doubt, the payment by Trustor to Beneficiary of the sum of
Five Million and no/xx Dollars ($5,000,000) to terminate this Deed of Trust
shall be deemed to have been made if and when the Trustor shall make the payment
to terminate the reversion rights under that certain Special Warranty Deed with
Reverter of even date herewith.

 

TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:

 

1.        To keep the Property in good condition and repair; not to remove or
demolish any building thereon; to complete or restore promptly and in good and
workmanlike manner any building which may be constructed, damaged or destroyed
thereon and to pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws affecting the Property or requiring
any alterations or improvements to be made thereon; not to commit or permit
waste thereof; not to commit, suffer or permit any act upon the Property in
violation of law; and do all other acts which from the character or use of the
Property may be reasonably necessary.

 

2.        To provide, maintain and deliver to Beneficiary fire and casualty
insurance policies satisfactory to and with loss payable to Beneficiary. The
amount collected under any fire or other casualty insurance policy may be
applied by Beneficiary toward payment of the obligations secured hereby;
provided, however, that all such insurance proceeds shall not be applied toward
such obligations but instead will be made available to Trustor for the repair
and restoration of the Property if all of the following conditions are met:

 

(i)         Trustor shall have delivered written notice to Beneficiary of
Trustor's intention to commence repairs and restoration within fifteen (15) days
following the adjustment or settlement of any claim or claims under any
insurance policies;

 

 2 

 

 

(ii)        No default by Trustor hereunder, under the APA or under the Master
Services Agreement shall have occurred and be continuing;

 

(iii)       All insurance proceeds shall have been deposited with a third party
escrow agent ("Escrow Agent") that is acceptable to Trustor and Beneficiary, in
their reasonable discretion, and Escrow Agent will be instructed to disburse
such insurance proceeds in accordance with the provisions of this Section 2;

 

(iv)       Within fifteen (15) days after the deposit of such insurance proceeds
with Escrow Agent, Trustor shall have remitted to Escrow Agent an amount
necessary (as reasonably determined by a third party architect or general
contractor engaged by Trustor), if any, to pay the difference between (A) the
estimated cost of restoration and repair of the damaged improvements, and (B)
the amount of insurance proceeds deposited with Escrow Agent in respect of such
damage and destruction;

 

(v)       Trustor shall have delivered to Beneficiary (A) a budget of all costs
of repair and restoration of the damaged improvements, and (B) a construction
contract for such repair and restoration work in form and content and with a
third party contractor reasonably acceptable to Beneficiary; and

 

(vi)      All applicable governmental authorities shall have approved the final
plans and specifications for repair and restoration of the damaged improvements.

 

In the event all of the foregoing conditions have been fulfilled, all proceeds
so applied to the reconstruction of the damaged improvements shall be disbursed
only as repairs or replacements are effected and as continuing expenses become
due and payable. After completion of the repair and restoration of the damaged
improvements to a condition substantially equivalent to that in effect
immediately prior to the casualty event and payment in full of all of the costs
of repair and restoration as evidenced by a certificate to such effect signed by
Trustor and verified by Trustor's architect or general contractor, as
applicable, any remaining proceeds shall be paid over by Escrow Agent to
Trustor. Not in limitation of the foregoing, the lien of this Deed of Trust
shall continue to encumber the repaired or replaced improvements in all respects
without any new or additional title exceptions or change in lien priority.

 

3.        To appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of Beneficiary or Trustee and to pay
all costs and expenses of Beneficiary and Trustee, including cost of evidence of
title and attorneys' fees in a reasonable sum, in any such action or proceeding
in which Beneficiary or Trustee may appear or be named and in any suit brought
by Beneficiary to foreclose this Deed of Trust.

 

4.        To pay, before delinquent, all taxes and assessments affecting the
Property, and to pay, when due, all encumbrances, charges and liens, with
interest, on said Property or any part thereof which appear to be prior or
superior hereto; all costs, fees and expenses of this Deed of Trust including,
without limiting the generality of the foregoing, the fees of Trustee for
issuance of any Deed of Partial Release and Partial Reconveyance or Deed of
Release and Full Reconveyance and all lawful charges, costs and expenses in the
event of reinstatement of, following default in, this Deed of Trust or the
obligations secured hereby.

 

 3 

 

 

If Trustor defaults under this Deed of Trust, the APA or the Master Services
Agreement and such default remains uncured beyond any applicable notice and/or
cure period, then Beneficiary or Trustee, without obligation to do so and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may make or do the same in such manner and to such extent as
either may deem necessary to protect the security hereof, Beneficiary or Trustee
being authorized to enter upon the Property for such purposes: appear in and
defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise
any encumbrance, charge or lien which in the judgment of either appears to be
prior or superior hereto; and, in exercising any such powers, pay necessary
expenses, employ counsel, and pay counsel's reasonable fees and costs.

 

5.        To pay promptly upon written demand from Beneficiary or Trustee all
sums expended by Beneficiary or Trustee pursuant to the provisions hereof,
together with interest from the date of expenditure at the highest rate as
allowed under Arizona law. Any amounts so paid by Beneficiary or Trustee shall
become part of the obligations secured by this Deed of Trust and a lien on the
Property or shall become immediately due and payable at option of Beneficiary or
Trustee. In either event, such amounts shall be in addition to the $5,000,000
aggregate of obligations secured hereby.

 

6.        To maintain, during the term of this Deed of Trust, in full force, at
its own expense, a policy or policies of comprehensive liability insurance,
including property damage, written by one or more insurance companies licensed
to do business in Arizona, which shall insure both Trustor and Beneficiary
against liability for injury to persons or property and for the death of any
person occurring in or about the Property.

 

7.        To not enter into any lease for any portion of the Property (except as
may be permitted pursuant to Section 4.2(c) of the APA), to not grant any mining
rights with regard to any portion of the Property, to not establish any wells on
the Property, and to not construct any improvements on the Property (except as
expressly permitted or required in this Deed of Trust) without, in each such
instance, the prior written consent of Beneficiary, which consent shall not be
unreasonably withheld, conditioned or delayed.

 

IT IS MUTUALLY AGREED:

 

8.        That any award of damages in connection with any condemnation, or any
such taking, or for injury to the Property by reason of public use or for
damages for private trespass or injury thereto shall be deposited with Escrow
Agent and released to Trustor to repair or restore any damage caused to the
Property by such condemnation or taking, subject to the same terms and
conditions applicable to casualty insurance proceeds in Section 2, above. After
completion of restoration of any such damage to the Property and payment in full
of all of the costs of restoration, as evidenced by a certificate to such effect
signed by Trustor and verified by Trustor's architect or general contractor, as
applicable, any remaining condemnation award shall be paid over by Escrow Agent
to Trustor.

 

 4 

 

 

9.        That time is of the essence of this Deed of Trust and that, by
accepting payment of any sum secured hereby after its due date, Beneficiary does
not waive its right either to require prompt payment when due of all other sums
so secured or to declare default for failure so to pay.

 

10.      That, at any time or from time to time, and without notice, upon
written request of Beneficiary, without liability therefor, without affecting
the personal liability of any person for performance of the obligations secured
hereby, without affecting the security hereof for the full amount secured hereby
on all property remaining subject hereto and without the necessity that any sum
representing the value or any portion thereof of the property affected by the
Trustee's action be credited on the indebtedness, the Trustee may: (a) release
and reconvey all or any part of the Property; (b) consent to the making and
recording, or either, of any map or plat of the Property or any part thereof;
(c) join in granting any easement thereon; and (d) join in or consent to any
extension agreement or any agreement subordinating the lien, encumbrance or
charge hereof.

 

11.      If all obligations secured by this Deed of Trust have been satisfied
and performed, then and only in that event, all rights under this Deed of Trust
shall terminate and the Property shall become wholly clear of the liens,
security interests, conveyances and assignments evidenced hereby, which shall be
promptly reconveyed of record by Beneficiary in due form at Trustor's cost. The
Property and all right, title and interest conveyed to Trustee shall be released
and conveyed, without covenant or warranty, express or implied. The recitals in
such reconveyance of any matters or facts shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as "the
person or persons legally entitled thereto".

 

12.      That, as additional security, Trustor hereby gives to and confers upon
Beneficiary the right, power and authority, during the continuance of this Deed
of Trust, to collect the Property Income, reserving to Trustor the right, so
long as no default by Trustor in the performance of any obligations secured
hereby, under the APA or under the Master Services Agreement has occurred and is
continuing, to collect and retain such Property Income as it becomes due and
payable. Upon and during the continuance of any such default, Beneficiary may at
any time, without notice, either in person, by agent or by a receiver to be
appointed by a court, and without regard to the adequacy of any security for the
indebtedness hereby secured, enter upon and take possession of the Property or
any part thereof, sue for or otherwise collect the Property Income in its own
name, including that past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including reasonable attorneys' fees, upon
any indebtedness secured hereby and in such order as Beneficiary may determine.
The entering upon and taking possession of the Property, the collection of the
Property Income and the application thereof as aforesaid, shall not cure or
waive any default or notice of Trustee's sale hereunder or invalidate any act
done pursuant to such notice.

 

13.      That, upon default by Trustor in the performance of any obligations
secured hereby, under the APA or under the Master Services Agreement,
Beneficiary shall deposit with Trustee this Deed of Trust and all documents
evidencing expenditures secured hereby.

 

 5 

 

 

Trustee shall record and give notice of Trustee's sale and shall sell the
Property at public auction, all in the manner required by applicable law. Any
persons, including Trustee or Beneficiary, may purchase at such sale. Trustee
shall deliver to such purchaser its deed conveying the Property so sold, but
without any covenant or warranty, express or implied. Trustor requests that a
copy of any notice of Trustee's sale hereunder be mailed to Trustor at its
address set forth above.

 

After deducting all costs, fees and expenses of Trustee of exercising the power
of sale conferred hereby, including cost of evidence of title in connection with
the Trustee's sale and reasonable attorneys' fees (it being agreed that all such
amounts shall be in addition to the $5,000,000 aggregate of obligations secured
hereby), Trustee shall apply the proceeds of the Trustee's sale in the manner
provided by applicable law. To the extent permitted by applicable law, an action
may be maintained by Beneficiary to recover a deficiency judgment for any
balance due hereunder.

 

In lieu of sale, pursuant to the power of sale conferred hereby, this Deed of
Trust may be foreclosed in the same manner provided by law for the foreclosure
of mortgages on real property. Beneficiary shall also have all other rights and
remedies available to it hereunder and at law or in equity. All rights and
remedies shall be cumulative.

 

14.      That Trustee may resign by mailing or delivering notice thereof to
Beneficiary and Trustor. Beneficiary may appoint a successor Trustee in the
manner prescribed by applicable law. A successor Trustee herein shall, without
conveyance from the predecessor Trustee, succeed to all the predecessor's title,
estate, rights, powers and duties.

 

15.      The term Beneficiary shall mean the owner and holder of the obligations
secured hereby, whether or not named as Beneficiary herein. In this Deed of
Trust, whenever the context so requires, the masculine gender includes the
feminine and neuter, and the singular number includes the plural.

 

16.      That Trustee accepts this trust when this Deed of Trust, duly executed
and acknowledged, is made a public record as provided by law. Trustee is not
obligated to notify any party hereto of a pending sale under any other deed of
trust or of any action or proceeding in which Trustor, Beneficiary or Trustee
shall be a party unless brought by Trustee.

 

17.      That the trust relationship created by this Deed of Trust is limited
solely to the creation and enforcement of a security interest in real property.
All of Trustee's duties, whether fiduciary or otherwise, are strictly limited to
those duties imposed by this instrument and A.R.S.§ 33-801 et seq. and no
additional duties, burdens or responsibilities are or shall be placed on
Trustee.

 

[balance of page intentionally left blank]

 

 6 

 

 

18.      That this Deed of Trust applies to, inures to the benefit of and binds
all parties hereto, their heirs, legatees, devisees, administrators, executors,
successors and assigns.

 

 

Icagen-T, Inc.,

 

a Delaware corporation

      DATED:  __________ ___, 2016 By:           Name:     Its:  

 

STATE OF ____________________ )      ) ss.   COUNTY OF __________________ )  

 

The foregoing instrument was acknowledged before me, the undersigned Notary
Public, this ____ day of ______________, 2016 by _______________________, the
________________ of Icagen-T, Inc., a Delaware corporation, being authorized to
do so.

 

               Notary Public

  

Notary

  Seal

 

 7 

 

 

EXHIBIT A

 

LEGAL DESCRIPTION

 

LOTS 9 AND 10 OF RANCHO VISTOSO NEIGHBORHOOD 3, ACCORDING TO THE PLAT OF RECORD
IN THE OFFICE OF THE COUNTY RECORDER OF PIMA COUNTY, ARIZONA, RECORDED IN BOOK
56 OF MAPS, PAGE 65 AND MINOR PLAT CHANGE RECORDED AS DOCKET 13222, PAGE 196.

 

 

 

8