Exhibit 10.1

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

COLLABORATIVE RESEARCH & LICENSE AGREEMENT

Dated August 13, 2007

Between

ICAGEN, INC.

and

PFIZER INC

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

Section 1

   Definitions    1

Section 2

   Collaborative Research Program    8

Section 3

   Licenses    14

Section 4

   Funding    16

Section 5

   Stock Purchase    22

Section 6

   Treatment of Confidential Information    22

Section 7

   Intellectual Property Rights    25

Section 8

   Acquisition of Rights from Third Parties    27

Section 9

   Legal Action    27

Section 10

   Term, Termination & Disengagement    28

Section 11

   Representations & Warranties    32

Section 12

   Indemnification    34

Section 13

   Notices    35

Section 14

   Miscellaneous    36

Exhibit A

   Permitted Disclosures   

Exhibit B

   Stock Purchase Agreement   

--------------------------------------------------------------------------------

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

This COLLABORATIVE RESEARCH & LICENSE AGREEMENT is entered into as of August 13,
2007 (the “Effective Date”) by and between PFIZER INC, a Delaware corporation,
having an office at 235 East 42nd Street, New York, New York 10017 (“Pfizer”),
and ICAGEN, INC. (“Icagen”), a Delaware corporation, having an office at 4222
Emperor Boulevard, Suite 350, Durham, North Carolina 27703.

WHEREAS, Icagen has expertise in the discovery, research, and development of ion
channels and ion channel modulators that may be useful as therapeutics; and

WHEREAS, Icagen is a biotechnology company that has research programs directed
to the identification of modulators of the Research Targets (as defined below);
and

WHEREAS, Pfizer is a major pharmaceutical company that has the capability to
undertake research for the discovery and evaluation of agents for treatment of
disease and also the capability for clinical analysis, manufacturing and
marketing of such agents; and

WHEREAS, the parties plan to collaborate to identify one or more drug candidates
suitable for development and commercialization as pharmaceutical products; and

WHEREAS, Pfizer desires to obtain and Icagen is willing to grant an exclusive
license under Icagen's right, title and interest in the Patent Rights and
Technology so that Pfizer can manufacture, use, sell, offer for sale and import
the Products.

NOW, THEREFORE, the parties agree as follows:

1. DEFINITIONS.

Wherever used in this Agreement, the terms defined in this Section 1 shall have
the following specified meanings:

1.1 “[**] Royalty-Bearing Product” means any Compound or Product that is not
developed for a Research Target Indication and contains (a) a Pfizer Compound
Developed In The Research Program or (b) a Joint Compound.

1.2 “Affiliate” means, with respect to Pfizer or Icagen (as applicable), any
corporation or other legal entity owning, directly or indirectly, [**] percent
([**]%) or more of the voting

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capital shares or similar voting securities of Pfizer or Icagen; or any
corporation or other legal entity [**] percent ([**]%) or more of the voting
capital shares or similar voting rights of which is owned, directly or
indirectly, by Pfizer or Icagen; or any corporation or other legal entity [**]
percent ([**]%) or more of the voting capital shares or similar voting rights of
which is owned, directly or indirectly, by a corporation or other legal entity
which owns, directly or indirectly, [**] percent ([**]%) or more of the voting
capital shares or similar voting securities of Pfizer or Icagen; or any
corporation or other legal entity the board of which is controlled by Pfizer or
Icagen.

1.3 “Area” means research, development or commercialization with respect to
modulators of the Research Targets.

1.4 “Candidate Compound” or “CAN” means a Compound that is formally endorsed by
the appropriate Pfizer governance body as having met the requirements for
advancement into clinical development and designated as a Candidate Compound in
accordance with Section 2.8.

1.5 “Combination Product” means any human pharmaceutical product in which one or
more active pharmaceutical ingredients that are not Compounds are either
(i) physically, chemically or otherwise combined or mixed with the Compound to
produce a single entity for commercial distribution or (ii) packaged together
with the Compound in a single package or unit for commercial distribution.

1.6 “Commercially Reasonable Efforts” means, with respect to a Research Program
obligation, Compound or Product, those efforts and resources that the party
required to make such efforts generally uses (as applicable in the context used
in this Agreement) in researching, developing, seeking regulatory approvals,
manufacturing, promoting, detailing and marketing its other pharmaceutical
products that are comparable to the applicable Compound(s) or Product(s), or in
carrying out its other research programs relating to such comparable products,
taking into account product labeling or anticipated labeling, market potential,
past performance (if any), economic return potential, medical and clinical
considerations, the present and future regulatory environment, and competitive
market conditions in the therapeutic area, all as measured by the facts and
circumstances at the time such efforts are due, but without taking into account
any payment obligations to the other party under this Agreement and, with
respect to Pfizer’s efforts and resources, without taking into account
considerations relating to Excluded Pfizer Compounds.

1.7 “Commitment Year” means a twelve-month period commencing on the Effective
Date or any anniversary of the Effective Date during the Research Term.

1.8 “Compound” means a Pfizer Compound, Icagen Compound or Joint Compound.

1.9 “Controlled” means the legal authority or right of a party hereto, whether
direct or through Affiliates controlled by such party, to grant a license or
sublicense of intellectual property rights to the other party hereto, or to
provide compounds or biological material to or otherwise disclose proprietary or
trade secret information to such other party, without breaching the terms of any
agreement with a third party, infringing the intellectual property rights of a
third party, or misappropriating the proprietary or trade secret information of
a third party.

 

2

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1.10 “Cover”, “Covering” or “Covered” means, with respect to a Compound, a
Product or Technology, that, in the absence of a license granted under a Valid
Claim, the making, use, offering for sale, sale, or importation of the Compound
or Product or the practice of the Technology would infringe such Valid Claim or,
in the case of Valid Claims that have not yet issued, would infringe such Valid
Claim after issuance.

1.11 “Developed In The Research Program” means generated, identified or created
in the Research Program. With respect to Research Compounds, any Compound
designated as such during the [**] months following the Research Term shall be
considered to have been Developed In The Research Program. For clarity, Patent
Rights and Technology will not be deemed to have been Developed In The Research
Program to the extent that such Patent Rights and Technology are claimed or
disclosed in the patents, patent applications, patent disclosures or notebooks
of the relevant party as of the Effective Date.

1.12 “Excluded Pfizer Compounds” means compounds excluded pursuant to Sections
2.3(b)(ii), 2.3(b)(iii), 2.3(b)(iv), 2.3(b)(v), or 2.3(b)(vi).

1.13 “Excluded Research Target 3 Compounds” means the compounds Controlled by
Pfizer that are within the existing Pfizer Research Target 3 research program
and identified in the Research Plan as Excluded Research Target 3 Compounds.

1.14 “FTE” means the time and work output equal to one full time employee who is
proficient in the performance of the duties assigned to such employee pursuant
to the Research Plan.

1.15 “Full Royalty-Bearing Product” means any Compound or Product that contains
(a) a Candidate Compound that is developed for a Research Target Indication or a
non-Research Target Indication, or (b) a Pfizer Compound Developed in the
Research Program that is developed for a Research Target Indication, or (c) a
Joint Compound that is developed for a Research Target Indication.

1.16 “Generic Product” means, with respect to a Product in any country, a
product that is a “pharmaceutical equivalent” (as that term is used in the
Approved Drug Products with Therapeutic Equivalence Evaluations published by the
FDA Center for Drug Evaluation and Research or any successor publication).
Notwithstanding the foregoing, Generic Products shall not include products that
Pfizer or any of Pfizer’s Affiliates or sublicensees have authorized or
otherwise permitted to become available.

1.17 “Icagen Compound” means any synthetic or natural chemical compound or
biological material that is introduced into the Research Program and is:

 

  (a) Covered by Icagen Patent Rights or otherwise Controlled by Icagen; or

 

  (b) any salt, ester, amide, complex, chelate, hydrate, stereoisomer,
crystalline or amorphous form, prodrug, metabolite or metabolic precursor of any
of the compounds or materials described in the preamble above.

For the avoidance of doubt, virtual screening of Icagen’s compound file does not
constitute the introduction of such compounds into the Research Program and the
results of such screening and associated intellectual property shall belong to
Icagen regardless of whether the

 

3

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algorithm used to screen the Icagen compound file is provided by Icagen or
Pfizer; provided that, if the compounds identified in the virtual screen are
screened in an assay in the Research Program such compounds shall be considered
Icagen Compounds introduced into the Research Program.

1.18 “Icagen Confidential Information” means all information Controlled by
Icagen and regarding Icagen’s technology, products, business or objectives or
regarding the Compounds or Products that is disclosed by Icagen to Pfizer
pursuant to this Agreement to the extent that such information is not (i) as of
the date of disclosure to Pfizer, known to Pfizer other than by virtue of a
prior confidential disclosure to Pfizer by Icagen; or (ii) disclosed in
published literature, or otherwise generally known to the public through no
fault or omission of Pfizer; or (iii) obtained from a third party free from any
obligation of confidentiality to Icagen; or (iv) independently developed by
Pfizer without using Icagen Confidential Information.

1.19 “Icagen Patent Rights” means all Patent Rights, other than Joint Patent
Rights, Controlled by Icagen and Covering Icagen Technology including Icagen
Compounds and, without limitation, the Patent Rights listed in the Research
Plan.

1.20 “Icagen Technology” means Technology Controlled by Icagen that:

 

  (a) was developed by employees of or consultants to Icagen alone in the course
of the Research Program, or

 

  (b) (x) in the case of Compounds, is introduced into the Research Program and
(y) in the case of Technology other than Compounds, relates to a Research
Compound, Candidate Compound or Product, and, in either case, is or was:

 

  (i) developed by employees of or consultants to Icagen alone or jointly with
third parties, either prior to the Effective Date, at any time during the
Research Term; or

 

  (ii) acquired by purchase, license, assignment or other means from third
parties by Icagen, either prior to the Effective Date, at any time during the
Research Term.

1.21 “Joint Compound” means any (a) synthetic or natural chemical compound or
biological material other than an Icagen Compound or a Pfizer Compound that is
Covered by Joint Patent Rights or (b) salt, ester, amide, complex, chelate,
hydrate, stereoisomer, crystalline or amorphous form, prodrug, metabolite or
metabolic precursor of any compound or material described in the foregoing
clause (a).

1.22 “Joint Patent Rights” means all Patent Rights jointly Controlled by the
parties and Covering Joint Technology including Joint Compounds.

1.23 “Joint Technology” means Technology other than Icagen Technology or Pfizer
Technology that is:

 

  (a) developed by employees of or consultants to Pfizer and Icagen jointly with
each other in the performance of the Research Program; or

 

4

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  (b) acquired by purchase, license, assignment or other means from third
parties by Icagen and Pfizer jointly with each other as part of the conduct of
the Research Program.

1.24 “NDA” means a New Drug Application or other application for authority to
market a Product filed with the U.S. FDA.

1.25 “Net Sales” means:

 

  (a) with respect to a Product that is not a Combination Product, the gross
amount invoiced by Pfizer, its Affiliates and its sublicensees on sales of such
Product to third parties, less (i) bad debts related to such Product and
(ii) sales returns and allowances actually paid, granted or accrued with respect
to invoiced amounts, including trade, quantity and cash discounts and any other
adjustments, including, those granted on account of price adjustments, billing
errors, rejected goods, damaged or defective goods, recalls, returns, rebates,
chargeback rebates, reimbursements or similar payments granted or given to
wholesalers or other distributors, buying groups, health care insurance carriers
or other institutions, adjustments arising from consumer discount programs or
other similar programs, customs or excise duties, sales tax, consumption tax,
value added tax, and other taxes (except income taxes) or duties relating to
sales, and including allowances, discounts, adjustments, rebates, reimbursements
and similar payments in respect of sales to the United States government, any
state government or any foreign government, or to any other governmental
authority, or with respect to any government-subsidized program or managed care
organization, and (iii) freight and shipping insurance (to the extent that
Pfizer bears the cost of freight and shipping insurance for a Product); and

 

  (b)

with respect to a Combination Product, (x) if Pfizer and/or its Affiliates
and/or any third party separately sells in such country during such year when it
sells such Combination Product both (1) the Product(s) contained in such
Combination Product as single chemical entity(-ies), and (2) the other products
contained in such Combination Product containing active ingredient(s) as single
entity(-ies), the Net Sales attributable to such Combination Product during such
year shall be calculated by multiplying actual Net Sales of such Combination
Product by the fraction A/(A+B) where: A is Pfizer’s (or its Affiliates’ or
third parties’, as applicable) average Net Sales price per daily dose during
such year for the Product(s) in such Combination Product in such country and B
is the sum of the average of Pfizer’s (or its Affiliates’ or third parties’, as
applicable) Net Sales price per daily dose during such year in such country, for
the other product(s) containing active ingredient(s) in such Combination
Product; (y) if Pfizer and/or its Affiliates and/or any third party separately
sells, in such country during such year when it sells such Combination Product,
the Product(s) contained in such Combination Product as single chemical
entity(-ies) but do not separately sell, in such country, other product(s)
containing active ingredient(s) that are also contained in such Combination
Product, the Net Sales attributable to such Combination Product during such year
shall be calculated by multiplying the Net Sales of such Combination Product by
the fraction A/C where: A is Pfizer’s (or its

 

5

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Affiliates’ or third parties’, as applicable) average Net Sales price per daily
dose during such year for the Product(s) in such Combination Product in such
country, and C is Pfizer’s (or its Affiliates’ or third parties’, as applicable)
average Net Sales price per daily dose during such year for the Combination
Product in such country; and (z) if Pfizer and/or its Affiliates and/or third
parties does not separately sell, in such country during such year when it sells
such Combination Product, the Product(s) contained in such Combination Product
as single chemical entity(-ies), the Net Sales attributable to such Combination
Product shall be D/(D+E) where: D is the fair market value of the portion of the
Combination Product that contains the Product(s) and E is the fair market value
of the portion of the Combination Product that contains the other active
ingredient(s) included in such Combination Product, as such fair market values
are determined by mutual agreement of the parties. If the parties are unable to
agree upon such fair market values, the parties shall jointly appoint a third
party expert to determine such matter or, in the absence of agreement regarding
the appointment of a third party expert, submit such matter to binding
arbitration for resolution by a single arbitrator pursuant to the commercial
arbitration rules of the American Arbitration Association.

Net Sales shall be determined from books and records maintained in accordance
with generally accepted accounting principles in the United States (“US GAAP”),
as consistently applied by Pfizer with respect to sales of all its
pharmaceutical products.

1.26 “[**]” means [**].

1.27 “Patent Rights” means patents, and patent applications that have been
pending less than [**] years, whether domestic or foreign, including all
continuations, continuations-in-part, divisionals, and renewals, and letters of
patent granted thereon, and all reissues, re-examination and extensions thereof.

1.28 “Pfizer Compound” means any synthetic or natural chemical compound or
biological material that is introduced into the Research Program and is:

 

  (a) Covered by Pfizer Patent Rights or otherwise Controlled by Pfizer; or

 

  (b) any salt, ester, amide, complex, chelate, hydrate, stereoisomer,
crystalline or amorphous form, prodrug, metabolite or metabolic precursor of any
of the compounds or materials described in the preamble above.

For the avoidance of doubt, virtual screening of Pfizer’s compound file does not
constitute the introduction of such compounds into the Research Program and the
results of such screening and associated intellectual property shall belong to
Pfizer regardless of whether the algorithm used to screen the Pfizer compound
file is provided by Pfizer or Icagen; provided that, if the compounds identified
in the virtual screen are screened in an assay in the Research Program such
compounds shall be considered Pfizer Compounds introduced into the Research
Program.

1.29 “Pfizer Confidential Information” means all information Controlled by
Pfizer and regarding Pfizer’s technology, products, business or objectives or
regarding the Compounds

 

6

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or Products that is disclosed by Pfizer to Icagen pursuant to this Agreement to
the extent that such information is not (i) known, as of the date of disclosure
to Icagen, to Icagen other than by virtue of a prior confidential disclosure to
Icagen by Pfizer; or (ii) disclosed in published literature, or otherwise
generally known to the public through no fault or omission of Icagen; or
(iii) obtained from a third party free from any obligation of confidentiality to
Pfizer; or (iv) independently developed by Icagen without using Pfizer
Confidential Information.

1.30 “Pfizer Patent Rights” means all Patent Rights, other than Joint Patent
Rights, Controlled by Pfizer and Covering Pfizer Technology including Pfizer
Compounds.

1.31 “Pfizer Technology” means Technology Controlled by Pfizer that:

 

  (a) was developed by employees of or consultants to Pfizer alone in the course
of the Research Program, or

 

  (b) (x) in the case of Compounds, is introduced into the Research Program and
(y) in the case of Technology other than Compounds, relates to a Research
Compound, Candidate Compound or Product, and, in either case, is or was:

 

  (i) developed by employees of or consultants to Pfizer alone or jointly with
third parties, either prior to the Effective Date, at any time during the
Research Term; or

 

  (ii) acquired by purchase, license, assignment or other means from third
parties by Pfizer, either prior to the Effective Date, at any time during the
Research Term.

1.32 “Phase I Trial” means a clinical trial that generally provides for the
first introduction into humans of a Product with the primary purpose of
determining safety, metabolism and pharmacokinetic properties and clinical
pharmacology of the Product, and is generally consistent with U.S. 21 C.F.R.
§312.21(a) or any foreign counterpart thereof.

1.33 “Phase II Trial” means a clinical trial generally consistent with U.S. 21
C.F.R. §312.21(b) or any foreign counterpart thereof.

1.34 “Phase III Trial” means a clinical trial generally consistent with U.S. 21
C.F.R. §312.21(c) or any foreign counterpart thereof.

1.35 “Product” means any pharmaceutical product (including a Combination
Product), in all dosage forms and formulations, that contains a Compound, and is
Covered by a Valid Claim.

1.36 “Research Compound” means a Compound that has been selected by the Joint
Research Committee as evidenced by meeting minutes, based on having met the
criteria therefor set forth in the Research Plan, for further investigation.

1.37 “Research Plan” means the written plan describing the research in the Area
to be carried out during each Commitment Year by Pfizer and Icagen pursuant to
this Agreement.

 

7

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1.38 “Research Program” means the collaborative research program in the Area to
be conducted by Pfizer and Icagen during the Research Term pursuant to the
Research Plan and this Agreement.

1.39 “Research Target(s)” means any (or all) as the context requires of the ion
channel targets identified in the Research Plan as “Research Target 1”,
“Research Target 2” and “Research Target 3”.

1.40 “Research Target Indication(s)” means an indication for which the
modulation of a Research Target by the relevant Compound is or would reasonably
be expected to be material to the expected therapeutic effect of such Compound.

1.41 “Research Term” means the period beginning on the Effective Date and ending
on the date on which the Research Program terminates, including any extensions
thereto that are mutually agreed by the parties pursuant to Section 2.1.

1.42 “Technology” means and includes all materials, compounds, technology,
technical information, intellectual property, know-how, expertise and trade
secrets.

1.43 “Term” means the period commencing on the Effective Date and ending as set
forth in Section 10.1.

1.44 “Valid Claim” means a claim within Icagen Patent Rights, Pfizer Patent
Rights or Joint Patent Rights so long as such claim shall not have been
(a) abandoned by either Pfizer (in the case of Pfizer Patent Rights) or Icagen
(in the case of Icagen Patent Rights) or both (in the case of Joint Patent
Rights) or (b) held invalid in a final decision rendered by a tribunal of
competent jurisdiction from which no appeal has been or can be taken.

2. COLLABORATIVE RESEARCH PROGRAM.

2.1 Purpose. Throughout the Research Term, Icagen and Pfizer shall conduct the
Research Program to discover and develop Products. The Research Term shall begin
on the Effective Date and, unless terminated earlier in accordance with
Section 10.3, continue for two years. The Research Term may be extended upon
mutual agreement of the parties. Pfizer shall notify Icagen at least [**] days
prior to the end of the then-current Research Term whether Pfizer desires to
extend the Research Term and, if Pfizer so notifies Icagen that Pfizer does
desire to extend the Research Term, the parties shall discuss whether and on
what terms they would be willing to agree to such extension, including without
limitation the Research Targets with respect to which the parties will continue
to conduct research during such extension.

2.2 Research Plan. The Research Plan for the first Commitment Year has been
approved by Pfizer and Icagen as of the date of this Agreement. For each
Commitment Year after the first year, the Research Plan shall be prepared by the
Joint Research Committee for submission to and approval by Pfizer and Icagen no
later than sixty (60) days before the end of the prior Commitment Year.

2.3 Exclusivity.

 

  (a)

Icagen Exclusivity. During the Research Term and for six (6) months thereafter,
Icagen agrees that neither it nor any of its Affiliates that it controls shall
conduct

 

8

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research itself or sponsor any other research, or engage in any research
sponsored by any third party, in the Area, without Pfizer’s consent; provided
that, if at any time during the Research Term or during the six (6) months
immediately following the Research Term Pfizer ceases to conduct research and
development on Compounds that modulate any Research Target, Pfizer shall notify
Icagen of such cessation and thereafter the foregoing prohibition shall not
apply to such Research Target.

 

  (b) Pfizer Exclusivity. During the Research Term and for six (6) months
thereafter, Pfizer agrees that neither it nor any of its Affiliates shall
conduct research itself or sponsor any other research, or engage in any research
sponsored by any third party, in the Area, without Icagen’s consent; provided
that, subject to Section 3.3, the exclusivity provisions herein shall not apply
to:

 

  (i) research activities of Pfizer or any of its Affiliates (including
sponsored research) in the event that an Affiliate of Icagen, that is not
controlled by Icagen, conducts research itself or sponsors any other research,
or engages in any research sponsored by any third party, in the Area; or

 

  (ii) the Excluded Research Target 3 Compounds and the research activities of
Pfizer or any of its Affiliates (including sponsored research) with respect
thereto; or

 

  (iii) compounds that Pfizer or any of its Affiliates licenses or acquires from
a third party that are in a Phase II Trial or further advanced in development;
or

 

  (iv) compounds acquired by Pfizer or any of its Affiliates from a third party
through an acquisition by Pfizer or any of its Affiliates of all or
substantially all of the assets of such third party, an acquisition of more than
fifty percent (50%) of the shares or other equity interests of such third party
or a merger or consolidation of such third party or an affiliate of such third
party with or into Pfizer or any of its Affiliates; or

 

  (v) compounds licensed or acquired by Pfizer or any of its Affiliates, that at
the time of license or acquisition (x) are not yet in a Phase II Trial or later
development but (y) are at least one stage of development more advanced than any
Compound or Product under this Agreement and have reached a stage of development
equivalent to Candidate Compound status or later (e.g., if the most-advanced
Compound under this Agreement is a Candidate Compound, then the in-licensed
compound must be at least at the Phase I Trial stage); or

 

  (vi) non-small molecule compounds.

Each of the foregoing exclusions may be claimed jointly or independently.

 

9

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  (c) Consequences of Breach. If Pfizer or any of its Affiliates conducts,
sponsors or engages in any research in breach of the exclusivity obligations set
forth in Section 2.3(b) above, then Pfizer’s sole and exclusive liability and
Icagen’s sole and exclusive remedy for such breach shall be that (i) any
compounds and products arising from such research shall be deemed to be
Compounds and Products for all purposes under this Agreement with prospective
effect from the date of such breach, including without limitation for purposes
of Pfizer’s milestone and royalty payment obligations hereunder and (ii) from
and after such breach, Icagen shall have no further obligation under
Section 2.3(a) above. For the avoidance of doubt, a breach by Pfizer or any of
its Affiliates of the exclusivity obligations set forth in Section 2.3(b) above
shall not constitute an Event of Termination.

2.4 Joint Research Committee.

 

  (a) Purpose. Pfizer and Icagen shall establish a joint research committee (the
“Joint Research Committee”):

 

  (i) to review and evaluate progress under the Research Plan;

 

  (ii) to prepare the Research Plan for each Commitment Year;

 

  (iii) to approve any budgets or resource allocation;

 

  (iv) to approve and reject Research Compounds for or from the Research
Program;

 

  (v) to identify and recommend CANs for acceptance by Pfizer; and

 

  (vi) to coordinate and monitor publication of research results obtained and
the exchange of information and materials that relate to the Research Program.

 

  (b) Membership. Pfizer and Icagen each shall appoint, in its sole discretion,
three members to the Joint Research Committee. Substitutes may be appointed at
any time. The members initially shall be:

 

  (i) Pfizer Appointees: [**]

 

  (ii) Icagen Appointees: [**]

 

  (c) Chair. The Joint Research Committee shall be chaired by two
co-chairpersons, one appointed by Pfizer and the other appointed by Icagen.

 

  (d) Meetings. The Joint Research Committee shall meet at least quarterly
during the Research Term and thereafter as needed for the purpose described in
Section 2.8(b), at places and on dates selected by each party in turn.
Representatives of Pfizer or Icagen or both, in addition to members of the Joint
Research Committee, may attend such meetings at the invitation of either party.

 

10

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  (e) Minutes. The Joint Research Committee shall keep accurate minutes of its
deliberations which record all proposed decisions and all actions recommended or
taken. Drafts of the minutes shall be delivered to all Joint Research Committee
members within ten (10) business days after each meeting. The party hosting the
meeting shall be responsible for the preparation and circulation of the draft
minutes. Draft minutes shall be edited by the co-chairpersons and shall be
issued in final form only with their approval and agreement.

 

  (f) Decisions. All decisions of the Joint Research Committee shall be made by
consensus; provided that the Joint Research Committee may not amend this
Agreement or increase Pfizer’s or Icagen’s obligations hereunder without the
consent of Pfizer or Icagen (as applicable). If the Joint Research Committee is
unable to reach any decision by consensus, either party may, by notice to the
other party, escalate the matter to the President of Icagen and the Global Head
of Research of Pfizer for resolution, and in the event of any such escalation,
such escalation officers shall promptly meet and discuss the matter in an effort
to reach a mutually agreeable resolution.

 

  (g) Expenses. Pfizer and Icagen shall each bear all expenses of their
respective members related to their participation on the Joint Research
Committee.

 

  (h) Dissolution. Unless otherwise agreed by the parties, the Joint Research
Committee shall dissolve upon the completion of its responsibilities pursuant to
Section 2.8(b).

2.5 Reports and Materials.

 

  (a) Reports. During the Research Term, Pfizer and Icagen each shall furnish to
the Joint Research Committee:

 

  (i) summary written reports within thirty (30) days after the end of each
three-month period commencing on the Effective Date, describing its progress
under the Research Plan; and

 

  (ii) comprehensive written reports within thirty (30) days after the end of
each Commitment Year, describing in detail the work accomplished by it under the
Research Plan during the Commitment Year and discussing and evaluating the
results of such work.

 

  (b) Materials. Icagen and Pfizer shall, during the Research Term, as a matter
of course as described in the Research Plan, or upon each other’s written or
oral request, furnish to the other samples of biochemical, biological or
synthetic chemical materials that are part of Pfizer Technology, Icagen
Technology or Joint Technology and that (i) are necessary or useful for the
other party to carry out its responsibilities under the Research Plan or
(ii) are generated in the Research Program. To the extent that the quantities of
materials requested by either party exceed the quantities set forth in the
Research Plan, the requesting party shall reimburse the other party for the
reasonable costs of such materials if they are furnished.

 

11

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  (c) Post-Research Term Reports. After the Research Term, Pfizer shall furnish
to Icagen semi-annual written reports summarizing in reasonable detail Pfizer’s
development and commercialization activities with respect to Compounds and
Products and material developments with respect thereto, which reports shall,
without limiting the foregoing, include: progress on research and development,
status and results of clinical trials, status of applications for regulatory
approvals, a summary of manufacturing, marketing and sales activities for the
prior six-month period, as well as plans therefor for the subsequent
twelve-month period. The post-Research Term reports delivered by Pfizer to
Icagen hereunder will be considered Pfizer Confidential Information.

2.6 Laboratory Facility and Personnel. Icagen shall provide suitable laboratory
facilities, equipment and personnel for the work to be done by Icagen in
carrying out the Research Program.

2.7 Commercially Reasonable Efforts. Pfizer and Icagen each shall use
Commercially Reasonable Efforts to achieve the objectives of the Research
Program and Research Plan, including without limitation by using Commercially
Reasonable Efforts to provide for screening in the Research Program all small
molecule compounds Controlled by such party (other than, in the case of Pfizer,
the Excluded Pfizer Compounds) that such party believes have potential to
modulate a Research Target and by using Commercially Reasonable Efforts to
identify Research Compounds and Candidate Compounds. In addition:

 

  (a) Pfizer shall use Commercially Reasonable Efforts to develop and
commercialize Candidate Compounds and Products containing Candidate Compounds
throughout the Term; and

 

  (b) Pfizer’s license rights pursuant to Section 3.4 shall terminate with
respect to any Candidate Compound with respect to which Pfizer ceases to
exercise such Commercially Reasonable Efforts and the consequences set forth in
Section 10.4(c) shall apply to such Candidate Compound unless (i) Pfizer is
using Commercially Reasonable Efforts to develop a Compound that is more
advanced than such Candidate Compound or that is a back-up for such Candidate
Compound and (ii) upon such cessation, Pfizer notifies Icagen in writing of such
back-up or more advanced Compounds, provided that such back-up or more advanced
Compounds shall be subject to the milestone payment and royalty provisions of
this Agreement as if the Compounds were Research Compounds, Candidate Compounds
or Products; and

 

  (c) after the Research Term, Icagen shall use Commercially Reasonable Efforts,
as reasonably requested by Pfizer and at Pfizer’s expense, to provide to Pfizer
or any Affiliate or sublicensee of Pfizer any agreed technical assistance
reasonably necessary to enable Pfizer or such Affiliate or sublicensee to
manufacture, use, sell, offer for sale or import any Product for which Pfizer
retains its license rights under Section 3.4.

2.8 Identification of Research Compounds and Candidate Compounds.

 

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  (a) Within [**] days after the results of the initial screening of a Compound
are presented to the Joint Research Committee, the Joint Research Committee
shall determine whether such Compound meets the criteria for further study set
forth in the Research Plan and either designate such Compound as a Research
Compound or a Compound that is henceforth eliminated from the Research Program.
In any event, any Compound that is not so designated as a Research Compound
during the Research Term and for [**] months thereafter shall thereupon cease to
be subject to the Research Program, provided that any Compound designated as a
Research Compound during the [**] month period following the Research Term
shall, for all purposes under this Agreement, be deemed to be a Compound
designated as a Research Compound in the Research Program. With respect to any
such Compound that ceases to be subject to the Research Program (i) that is a
Pfizer Compound, Icagen shall have no rights therein pursuant to this Agreement
except as otherwise set forth in Sections 2.8(c), 3.2 and 4, (ii) that is an
Icagen Compound, Pfizer shall have no rights therein pursuant to this Agreement
except as otherwise set forth in Section 3.2 and (iii) that is a Joint Compound,
the parties shall have the rights therein set forth in Section 3.2, provided
that Pfizer shall have the right to pursue development of such Joint Compound in
accordance with Section 2.8(c) (in which case all of the provisions of this
Agreement shall apply to such Joint Compound as if such Joint Compound had never
been eliminated from the Research Program) or to license the rights to such
Joint Compound in accordance with Section 3.5.

 

  (b) On at least a [**] basis during the Research Term and on an as needed
basis during the [**] years immediately following the Research Term, the Joint
Research Committee shall review the development status of each Research Compound
and shall eliminate from the Research Program any Research Compound that the
Joint Research Committee determines does not demonstrate potential to become a
Candidate Compound or otherwise is inappropriate to continue to develop. In
making any such determination and in designating Candidate Compounds, the
parties and the Joint Research Committee shall be guided by the [**] set forth
in the Research Plan. All eliminated Research Compounds shall cease to be
subject to the Research Program. With respect to any such Research Compound that
ceases to be subject to the Research Program (i) that is a Pfizer Compound,
Icagen shall have no rights therein pursuant to this Agreement except as
otherwise set forth in Sections 2.8(c), 3.2 and 4, (ii) that is an Icagen
Compound, Pfizer shall have no rights therein pursuant to this Agreement except
as otherwise set forth in Section 3.2 and (iii) that is a Joint Compound, the
parties shall have the rights therein set forth in Section 3.2, provided that
Pfizer shall have the right to pursue development of such Joint Compound in
accordance with Section 2.8(c) (in which case all of the provisions of this
Agreement shall apply to such Joint Compound as if such Joint Compound had never
been eliminated from the Research Program) or to license the rights to such
Joint Compound in accordance with Section 3.5.

 

  (c)

Pfizer shall determine whether to prepare a [**] attached to the Research Plan)
as to any Research Compound, and the appropriate governance body within Pfizer

 

13

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shall determine whether any Research Compound that is the subject of such a
Notice shall be designated a Candidate Compound. Subject to the expiration of
Pfizer’s right to designate Icagen Compounds as Candidate Compounds as set forth
in Section 2.8(d), any Compound, other than an Icagen Compound or a Pfizer
Compound introduced into the Research Program and subsequently eliminated from
the Research Program in accordance with Section 2.8(a) or 2.8(b) above, that is
clinically developed by Pfizer or any of its Affiliates or sublicensees for a
Research Target Indication at any time after the Effective Date and as to which,
at the time of commencement of the first Phase I Trial of such Compound, the
modulation of a Research Target by such Compound is or would reasonably be
expected to be material to its therapeutic effect, shall be deemed to be a
Candidate Compound. Pfizer shall notify Icagen of any such designation (or
initiation of clinical trials) within [**] days of the date that such event
occurs.

 

  (d) Notwithstanding anything in this Agreement to the contrary, Pfizer shall
have no rights pursuant to this Agreement to any Icagen Compound that is
eliminated from the Research Program pursuant to Section 2.8(a) or 2.8(b) or is
not designated by Pfizer as a Candidate Compound within [**] years after the end
of the Research Program, except as provided in Section 3.2. Nothing in this
Section 2.8 shall be construed as limiting in any way the other terms of this
Agreement, including but not limited to, the provisions of Section 2.3 and
Section 7.1.

3. LICENSES; COMPOUND OWNERSHIP AND RIGHTS.

3.1 Ownership. All Icagen Confidential Information, Icagen Technology and Icagen
Patent Rights shall be owned by Icagen. All Pfizer Confidential Information,
Pfizer Technology and Pfizer Patent Rights shall be owned by Pfizer. All Joint
Technology and Joint Patent Rights shall be owned jointly by Icagen and Pfizer.
Subject to Sections 2.7(b) and 3.5 and without limiting the rights provided to
Pfizer under clause (i) of Section 3.4(a), in any country in which the use of
Joint Patent Rights requires the consent of all owners, each of Icagen and
Pfizer will grant such consent upon written request of the other.

3.2 Grants of Research Licenses. Icagen and Pfizer each grants to the other a
nonexclusive, irrevocable, worldwide, royalty-free, perpetual license, including
the right to grant sublicenses to Affiliates, (a) under Patent Rights and
Technology Controlled by such party to make and use Compounds developed in or
introduced into the Research Program solely for research purposes, and (b) under
Patent Rights and Technology Controlled by such party and Developed In The
Research Program solely for research purposes. For clarity, this Section 3.2
does not grant either party any right or license under or with respect to Patent
Rights or Technology Controlled by the other party to develop, sell or
manufacture for sale any Compound or Technology.

3.3 Excluded Pfizer Compounds. Icagen acknowledges that the Excluded Pfizer
Compounds are excluded in their entirety from this Agreement and shall not be
deemed Compounds, Research Compounds, Candidate Compounds or Products subject to
the terms of this Agreement. Except for limited testing of Excluded Research
Target 3 Compounds approved by the Joint Research Committee, with Icagen’s
express consent, Pfizer shall not introduce any

 

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of the Excluded Pfizer Compounds into the Research Program. In the event that
Pfizer introduces Excluded Research Target 3 Compounds into the Research Program
in accordance with the immediately preceding sentence, Pfizer shall not disclose
to Icagen the compound structures of such Excluded Research Target 3 Compounds
without Icagen’s prior written consent.

3.4 Grant of Commercial License.

 

  (a) License Grant. Subject to the terms and conditions of this Agreement,
Icagen hereby grants to Pfizer as of the Effective Date (i) an exclusive (even
as to Icagen), worldwide license, including the right to grant sublicenses in
accordance with Section 3.4(f), to manufacture, use, sell, offer for sale and
import Products under all of Icagen's right, title and interest in the Icagen
Patent Rights, Joint Patent Rights, Joint Technology and Icagen Technology, and
(ii) a non-exclusive, worldwide license, including the right to grant
sublicenses in accordance with Section 3.4(f), to manufacture, use, sell, offer
for sale and import pharmaceutical products (other than Products) under all
Icagen Patent Rights and Icagen Technology Developed In The Research Program,
provided that any such pharmaceutical product manufactured, used, sold, offered
for sale or imported pursuant to this clause (ii) shall require payment by
Pfizer to Icagen of [**] percent ([**]%) of the milestone and royalty payments
specified in Section 4 of this Agreement payable with respect to Candidate
Compounds and Full Royalty-Bearing Products but will not otherwise be subject to
the provisions of this Agreement applicable to Candidate Compounds and Products.
Notwithstanding the foregoing, Pfizer shall not have any license pursuant to
this Section 3.4(a) with respect to Products containing Compounds as to which
Pfizer’s rights have lapsed pursuant to Section 2.8.

 

  (b) Term of License. The term of the grant set forth in Section 3.4(a) shall
commence on the Effective Date and shall terminate on the date of the last to
expire of the licensed Patent Rights.

 

  (c) Paid-Up License. With respect to each Product, Pfizer shall have a fully
paid-up perpetual, royalty-free license under the Icagen Technology and the
Joint Technology to manufacture, use, sell, offer for sale and import of such
Product, on a country-by-country basis, after the expiration (but not the early
termination pursuant to Section 10.3) of the Term applicable to such Product in
such country.

 

  (d) Retained Rights. The license granted by Icagen in Section 3.4(a) is
subject to a retained right of Icagen to perform Icagen’s obligations and
exercise Icagen’s rights under this Agreement.

 

  (e) [**].

 

  (f)

Sublicensing. Any sublicense granted by Pfizer must be granted pursuant to a
written agreement that subjects the sublicensee to all relevant restrictions,
limitations and obligations in this Agreement. Pfizer shall be responsible for
failure by its sublicensees to comply, and Pfizer guarantees to Icagen the
compliance by each of its sublicensees, with all relevant restrictions,
limitations

 

15

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and obligations in this Agreement. In the event of a material default by any
sublicensee that is not an Affiliate of Pfizer under a sublicense agreement,
Pfizer will inform Icagen and take such action, after consultation with Icagen,
that in Pfizer’s reasonable business judgment is required to address such
default. Pfizer shall provide Icagen with a copy of each sublicense agreement,
in final executed form, that Pfizer enters into in accordance with this
Section 3.4(f) with sublicensees that are not Affiliates of Pfizer not later
than thirty (30) days after the execution of such sublicense agreement; provided
that, subject to the applicable requirements of the [**] licensor of copies of
sublicense agreements, Pfizer may redact the financial terms from such copies.

3.5 Rights to Joint Compounds. After the expiration of the Research Term and
[**] months thereafter, Icagen may request that Pfizer grant Icagen a license to
develop and commercialize specified Joint Compounds. The granting of any license
to Icagen under this Section 3.5 shall be in Pfizer’s sole discretion and on
terms and conditions to be negotiated in good faith. Notwithstanding anything to
the contrary in this Agreement, and for the avoidance of doubt notwithstanding
anything to the contrary in Section 3.1 or Section 6.1(a),Pfizer’s development
and commercialization of any Joint Compound shall require payment by Pfizer to
Icagen of royalties and milestones pursuant to Section 4.

4. FUNDING.

4.1 Technology Access and License Fee. In consideration of the licenses granted
in Sections 3.2 and 3.4, the exclusivity granted by Icagen in Section 2.3 and
Icagen’s related technical knowledge and expertise, Pfizer shall pay to Icagen
the following one-time technology access and license fees upon execution of this
Agreement:

 

a. Technology Access and License Fee with respect to Research Target 1:

   $ [ **]

b. Technology Access and License Fee with respect to Research Target 2:

   $ [ **]

c. Technology Access and License Fee with respect to Research Target 3:

   $ [ **]

Total:

   $ 12,000,000  

4.2 Research Funding. The annual research funding for each year of the Research
Term shall be $5,500,000 (five million five hundred thousand US Dollars), which
shall be payable by Pfizer to Icagen in equal quarterly installments in advance
for research and development activities scheduled to be performed by [**] FTEs
at Icagen during each three (3) month quarterly period.

4.3 Additional Research Funding. Pfizer shall provide up to a further $[**]US
Dollars) per annum to fund additional FTEs at Icagen or elsewhere (for example,
a contract research

 

16

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organization) if required by the Research Plan and agreed by the Joint Research
Committee. Payments will be made in advance in equal quarterly installments.

4.4 Development Milestone Payments. Pfizer shall pay Icagen, on the completion
of each development event set forth below by Pfizer or any of its Affiliates or
sublicensees (“Development Event”), (i) the payment listed opposite such
Development Event with respect to Full Royalty-Bearing Products, or (ii) [**]
percent ([**]%) of the payment listed opposite such Development Event with
respect to [**] Royalty-Bearing Products. For the sake of clarity, should both
clause (i) and clause (ii) above be applicable to a Compound or Product, Icagen
shall be entitled to receive the greater of the applicable payments, but in no
circumstances shall Icagen receive payment under both clauses (i) and (ii) in
respect of the same Compound or Product. Except as otherwise set forth below for
Development Events (a), (b), (c), (d), (e), (f) and (g), Pfizer shall be
obligated to make a payment with respect to each Compound or Product that is the
subject of the Development Event:

 

Development Event

   Amount

a. Designation* of a CAN by Pfizer for each of the first three Candidate
Compounds

   $ [**]

b. Commencement (dosing of first subject) of a Phase I Trial in any country for
the first Candidate Compound targeting Research Target 1

   $ [**]

c. Commencement (dosing of first subject) of a Phase I Trial in any country for
the first Candidate Compound targeting Research Target 2

   $ [**]

d. Commencement (dosing of first subject) of a Phase I Trial in any country for
the first Candidate Compound targeting Research Target 3

   $ [**]

e. Commencement (dosing of first patient) of a Phase II Trial in any country for
the first Candidate Compound targeting Research Target 1

   $ [**]

f. Commencement (dosing of first patient) of a Phase II Trial in any country for
the first Candidate Compound targeting Research Target 2

   $ [**]

g. Commencement (dosing of first patient) of a Phase II Trial in any country for
the first Candidate Compound targeting Research Target 3

   $ [**]

h. Commencement (dosing of first patient) of the first Phase III Trial for each
Candidate Compound

   $ [**]

i. NDA filing in USA for each Product

   $ [**]

j. NDA approval in USA for each Product

   $ [**]

 

17

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k. Approval of an application for marketing authorization by EMEA (or by the
applicable regulatory authority in the first of the United Kingdom, France,
Spain, Italy or Germany if EMEA approval is not sought) for each Product

   $ [**]

l. Approval of an application for marketing authorization by the applicable
regulatory authority in Japan for each Product

   $ [**]

--------------------------------------------------------------------------------

* Includes a deemed designation as set forth in Section 2.8(c).

  

Pfizer shall promptly notify Icagen of each achievement of a Development Event
and, within thirty (30) days after each such achievement, pay to Icagen the
corresponding milestone payment amount.

4.5 Sales Milestones. Pfizer shall pay Icagen, on achievement of each
commercialization event set forth below (“Commercialization Event”), the payment
listed opposite such Commercialization Event with respect to each Product.
Pfizer shall be obligated to make each such payment only once with respect to
each Product that is the subject of the Commercialization Event. All payments
made by Pfizer pursuant to this Section 4.5 with respect to a Product shall be
credited fully against future sums due to Icagen pursuant to Section 4.6 of this
Agreement with respect to Net Sales of such Product; provided that such
crediting does not reduce any particular future payment pursuant to Section 4.6
by more than [**]% of the amount otherwise due:

 

Commercialization Event

   Amount

a. First twelve-calendar-month period in which aggregate annual sales of such
Product exceed $[**]

   $ [**]

b. First twelve-calendar-month period in which aggregate annual sales of such
Product exceed $[**]

   $ [**]

c. First twelve-calendar-month period in which aggregate annual sales of such
Product exceed $[**]

   $ [**]

Pfizer shall promptly notify Icagen of each achievement of a Commercialization
Event and, within sixty (60) days after each such achievement, pay to Icagen the
corresponding milestone payment amount.

4.6 Royalty.

 

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  (a) Pfizer shall pay Icagen a royalty based on the Net Sales of each Full
Royalty-Bearing Product and each [**] Royalty-Bearing Product. Except as
otherwise set forth in Sections 4.6(b) and 4.6(c), such royalty shall be paid on
a country-by-country basis from the date of the first commercial sale (the date
of the invoice of Pfizer or any Affiliate or sublicensee of Pfizer with respect
to such sale) of such Product in each such country until the expiration of the
last Valid Claim within the Icagen Patent Rights, Pfizer Patent Rights or Joint
Patent Rights to expire with respect to such Product in such country.

 

  (b) If the manufacture and sale of a Product takes place in countries where
there are no Icagen Patent Rights, Pfizer Patent Rights or Joint Patent Rights
Covering such Product but Icagen Patent Rights, Pfizer Patent Rights or Joint
Patent Rights Covering the Product exist in the U.S., Pfizer will pay to Icagen
a royalty on the Net Sales of such Product in each such country for the period
from the first commercial sale of such Product in such country until the earlier
of (i) ten (10) years after the first commercial sale of such Product in such
country or (ii) the expiration of the last to expire Valid Claim within the
Icagen Patent Rights, Pfizer Patent Rights or Joint Patent Rights Covering the
Product in the U.S.

 

  (c) Notwithstanding Sections 4.6(a) and 4.6(b) above, Pfizer will pay no
royalty on Net Sales of any Product in any country during any calendar quarter
in which a Generic Product (with respect to such Product) launched by a third
party accounts for more than [**] percent ([**]%) of the combined unit sales of
the Product and such Generic Product in such country in such calendar quarter.

4.7 Royalty Rates. The royalty payable (or to be paid) on each Full
Royalty-Bearing Product each calendar year shall be based on increments of
worldwide Net Sales with respect to such Full Royalty-Bearing Product according
to the following schedule. The corresponding royalty payable (or to be paid) on
each [**] Royalty-Bearing Product, will be [**] percent ([**]%) of that
specified in the following schedule:

 

Annual Net Sales

   Royalty
Rate
(%)  

Less than $[**]

   [**] %

[**]

  

Greater than $[**]

   [**] %

By way of example only, if the Net Sales of a Full Royalty-Bearing Product were
$[**], subject to any adjustments permitted under this Agreement, a royalty of
[**]% would be due in respect of the first $[**] of Net Sales, with the
remaining $[**] of Net Sales being subject to a royalty of [**]%. By way of
further example only, if the Net Sales of a [**] Royalty-Bearing Product were
$[**], subject to any adjustments permitted under this Agreement, a royalty of
[**]% would be due in respect of the first $[**] of Net Sales, with the
remaining $[**] of Net Sales being subject to a royalty of [**]%.

4.8 Royalty Reduction. If Pfizer's manufacture, use or sale of a Product
(excluding any portion of a Combination Product comprising active ingredient(s)
other than Compounds) in any country would, in the reasonable opinion of Pfizer,
infringe a claim in an issued, unexpired

 

19

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patent or in a published patent application owned by a third party, Pfizer may
deduct [**] percent ([**]%) of any royalty payment that Pfizer is required to
pay to such third party from the royalty that would otherwise be payable to
Icagen with respect to such Product in such country, provided that the total
royalty amount payable to Icagen with respect to such Product in such country
for any calendar quarter is never reduced by more than [**]% in this manner.
Notwithstanding the foregoing provisions of this Section 4.8, [**].

4.9 [**] Payments. If [**] is required to make license royalty or milestone
payments pursuant to the [**] as a consequence of [**] will reimburse [**] for
such payments, in the case of royalty payments, up to a maximum of [**] percent
([**]%) of Net Sales and, in the case of milestone payments, only payments made
by [**] pursuant to [**] as a result of [**] receipt of milestone payments under
Sections 4.4 and 4.5 hereof resulting from [**], of each Development Event or
Commercialization Event, up to a maximum of [**] percent ([**]%) of each such
[**] milestone payment.

4.10 Animal Health Products. The parties acknowledge that the royalty rates set
forth in Section 4.7 and the milestone payments set forth in Sections 4.4 and
4.5 are based on the expectation that Products will be administered to human
patients. If Pfizer identifies or develops a Product which represents a
commercial opportunity in the area of animal health, the parties will negotiate,
as mutually agreed, a new royalty rate and milestone schedule for such Product
applicable to the animal field to account for development costs and changes in
the cost of goods, selling price and projected annual Net Sales. It is
understood, however, that the royalty rate specified in Section 4.7 and the
milestones set forth in Sections 4.4 and 4.5 shall be modified only as Pfizer
and Icagen agree.

4.11 Royalty Payment Dates. Royalties shall be paid by Pfizer on Net Sales
within sixty (60) days after the end of each calendar quarter in which such Net
Sales are made. Such payments shall be accompanied by a statement showing the
Net Sales of each Product by Pfizer or any Affiliate or sublicensee of Pfizer in
each country, the applicable royalty rate for such Product, and a calculation of
the amount of royalty due, including any offsets.

4.12 Royalty Accounting. The Net Sales used for computing the royalties payable
to Icagen by Pfizer shall be computed and paid in US dollars by wire transfer in
immediately available funds to a U.S. account designated by Icagen, or by other
mutually acceptable means. For purposes of determining the amount of royalties
due, the amount of Net Sales in any foreign currency shall be computed by
(a) converting such amount into U.S. dollars at the prevailing commercial rate
of exchange for purchasing dollars with such foreign currency as published in
The Wall Street Journal for the close of the last business day of the calendar
quarter for which the relevant royalty payment is to be made by Pfizer and
(b) deducting the amount of any governmental tax, duty, charge, or other fee
actually paid in respect of such conversion into, and remittance of U.S.
dollars.

4.13 Other Payments. Unless otherwise specified in this Agreement, payments
pursuant to this Agreement other than royalty payments shall be paid by Pfizer
in U.S. currency by wire transfer in immediately available funds to an account
designated by Icagen, or by other mutually acceptable means within sixty
(60) days of Pfizer’s receipt of an invoice from Icagen.

4.14 Taxes. It is understood and agreed between the parties that any payments
made under this Agreement are inclusive of any value added or similar tax
imposed upon such

 

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payments. In addition, in the event any such payments made by either party to
the other party become subject to withholding taxes under the laws or
regulations of any jurisdiction (including any applicable international tax
conventions), the paying party shall deduct and withhold the amount of such
taxes for the account of the other party to the extent required by applicable
laws or regulations, such amounts payable to such other party shall be reduced
by the amount of taxes deducted and withheld, and the paying party shall pay the
amounts of such taxes to the proper governmental authority in a timely manner
and promptly transmit to such other party an official tax certificate or other
evidence of such tax obligations together with proof of payment from the
relevant governmental authority of all amounts deducted and withheld sufficient
to enable such other party to claim such payment of taxes. Any such withholding
taxes required under applicable laws or regulations to be paid or withheld shall
be an expense of, and borne solely by, such other party. The paying party will
provide the other party with reasonable assistance to enable such other party to
reduce the amount of such taxes or recover such taxes as permitted by applicable
laws or regulations. Notwithstanding the foregoing, if any payments made by a
party to the other party under this Agreement become subject to withholding
taxes as a consequence of this Agreement having been assigned to such paying
party (e.g., if the paying party is the assignee of an original party to this
Agreement and payments made by companies in such paying party’s jurisdiction do
not enjoy the benefits of tax treaty(-ies) that are applicable to payments made
by companies in the jurisdiction of such paying party’s assignor), then the
paying party shall pay to the other party such additional amounts as are
necessary so that such other party receives the amounts that such other party
would have received if such payments were not subject to such withholding taxes.

4.15 Record-keeping by Icagen. Icagen shall keep (a) for [**] years from the
conclusion of each calendar year during the Research Term complete and accurate
records of its efforts under the Research Program and its provision of FTEs
required pursuant to the Research Plan and (b) for [**] years from the date of
each payment of any royalties pursuant to Section 4.9 complete and accurate
records of such payments. The records shall conform to good accounting
principles as applied to a similar company similarly situated. Pfizer shall have
the right at its own expense during the relevant [**] year period to appoint an
independent certified public accountant reasonably acceptable to Icagen to
inspect said records to verify such provision of FTEs pursuant to the Research
Plan and such royalty payments pursuant to Section 4.9. Upon reasonable notice
by Pfizer, Icagen shall make its records available for inspection by the
independent certified public accountant during regular business hours at the
place or places where such records are customarily kept, to verify the accuracy
of the expenditures of efforts. This right of inspection shall not be exercised
[**] in any calendar year and not [**] with respect to records covering any
specific period of time. All information concerning such expenditures of efforts
and royalty payments, and all information learned in the course of any audit or
inspection, shall be deemed to be Icagen Confidential Information, except to the
extent that it is necessary for Pfizer to reveal the information in order to
enforce any rights it may have pursuant to this Agreement or if disclosure is
required by law. The failure of Pfizer to request verification of any
expenditures of efforts prior to the end of the relevant [**] year period shall
be considered acceptance by Pfizer of the accuracy of such expenditures of
efforts, and Icagen shall have no obligation to maintain any records pertaining
to such expenditures of efforts beyond such [**] year period. If Icagen’s
provision of FTEs over any calendar year was less, on average over the course of
the calendar year, than [**] percent ([**]%) of the FTEs funded by Pfizer
pursuant to

 

21

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Sections 4.2 and 4.3, Icagen shall reimburse Pfizer for any overpayment of FTE
funding and for the cost of such audit.

4.16 Record-keeping by Pfizer. Pfizer shall, and shall require its Affiliates
and sublicensees to, keep for [**] years from the date of each payment of
royalties under this Agreement complete and accurate records, on a
country-by-country basis, of gross sales by Pfizer, its Affiliates and
sublicensees, and deductions from gross sales taken in determining Net Sales, of
each Product in such country in sufficient detail to allow the accruing
royalties to be determined accurately. Icagen shall have the right for a period
of [**] years after the end of the calendar year for which any royalty report or
statement is received with respect to royalties due and payable to appoint at
its expense an independent certified public accountant reasonably acceptable to
Pfizer to inspect the relevant records of Pfizer to verify such report or
statement. Pfizer shall make its records available for inspection by such
independent certified public accountant during regular business hours at such
place or places where such records are customarily kept, upon reasonable notice
from Icagen, to verify the accuracy of the reports and payments. Such inspection
right shall not be exercised [**] in any calendar year nor [**] with respect to
sales in any given period. All information learned in the course of any audit or
inspection shall be deemed to be Pfizer Confidential Information, except to the
extent that it is necessary for Icagen to reveal the information in order to
enforce any rights it may have pursuant to this Agreement or if disclosure is
required by law or regulation or the rules of any stock exchange. The failure of
Icagen to request verification of any report or statement during said [**] year
period shall be considered acceptance of the accuracy of such report, and Pfizer
shall have no obligation to maintain records pertaining to such report or
statement beyond said [**] year period. Any underpayment determined by such
audit or inspection shall promptly be paid by Pfizer, plus interest at the
interest rate set forth in Section 4.17, from the date of any such underpayment.
If Pfizer has underpaid amounts due under this Agreement by more than [**]
percent ([**]%) over any reporting period, Pfizer shall also reimburse Icagen
for the cost of such audit.

4.17 Late Payments. All payments under this Agreement shall bear interest from
the date due until paid at a rate equal to the prime rate of Citibank, NA as
announced on the date such payment was due plus [**] percent ([**]%), compounded
on a calendar quarterly basis. In addition, Pfizer shall reimburse Icagen for
all reasonable costs and expenses, including without limitation reasonable
attorneys’ fees and legal expenses, incurred in the collection of late payments.

5. STOCK PURCHASE. On the date hereof, Pfizer and Icagen are entering into a
Stock Purchase Agreement substantially in the form attached hereto as Exhibit B.

6. TREATMENT OF CONFIDENTIAL INFORMATION.

6.1 Confidentiality.

 

  (a)

Except as otherwise provided herein, Pfizer and Icagen will, during the term of
this Agreement and for [**] years thereafter, keep confidential and not use for
any purpose other than the research, development, manufacture and
commercialization of Compounds and Products and the seeking of patent protection
and regulatory approvals for Compounds and Products in accordance with this
Agreement, and will cause its Affiliates to keep confidential and not use

 

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for any purpose other than the research, development, manufacture and
commercialization of Compounds and Products and the seeking of patent protection
and regulatory approvals for Compounds and Products in accordance with this
Agreement, any Icagen Confidential Information (in the case of Pfizer and its
Affiliates) or Pfizer Confidential Information (in the case of Icagen and its
Affiliates), as the case may be. For the purposes of this Section 6 it is
understood that Joint Technology shall be deemed Confidential Information of
both parties such that neither party may use or disclose such Confidential
Information except to the extent provided herein with respect to the licenses
granted each party with respect to Joint Technology; provided that each party
shall have the right, subject to such party’s obligations under Section 2.3 and
Section 4, to use, disclose and otherwise exploit, either alone or with third
parties, Joint Technology (other than Joint Compounds), including such Joint
Technology that is Covered by Joint Patent Rights, for research, development and
commercialization activities outside the Research Program without any duty to
account to the other party.

 

  (b) Pfizer and Icagen each agree that any disclosure of the other’s
Confidential Information to any officer, employee or agent of (including without
limitation any contract research organization employed by) such receiving party
or of any of its Affiliates shall be made only if and to the extent necessary to
carry out its responsibilities under this Agreement and shall be limited to the
maximum extent possible consistent with such responsibilities (i.e., shall only
be disclosed to those officers, employees and agents who have a need to know the
Confidential Information in furtherance of the purposes of this Agreement). Each
party shall take such action, and shall cause its Affiliates to take such
action, to preserve the confidentiality of the other party’s Confidential
Information as required under Section 6.1(a) as it would customarily take to
preserve the confidentiality of its own Confidential Information. Each party,
upon the other’s request, will return all the Confidential Information,
including all remaining biological, synthetic chemical and biochemical
materials, disclosed or transferred to such party by such other party pursuant
to this Agreement, including all copies and extracts of documents, within sixty
(60) days of such request after expiration or termination of this Agreement,
except for (i) one (1) copy of any such copies and extracts of documents, which
may be kept solely for the purpose of monitoring such party’s compliance with
and complying with continuing obligations under this Agreement and (ii) any
copies or materials necessary for such party to exercise its rights with respect
to Compounds and Products, including without limitation those set forth in
Section 3.2, that survive expiration or termination of this Agreement.

 

  (c) Icagen and Pfizer each represent to the other that all of its employees,
and any consultants to such party, participating in the Research Program who
shall have access to Pfizer Technology, Icagen Technology, Joint Technology,
Pfizer Confidential Information or Icagen Confidential Information are bound by
agreement or other legal obligation to maintain such information in confidence.

 

  (d)

Neither Icagen nor Pfizer shall disclose or transfer any information or material
to the other party hereunder if such disclosure or transfer would violate any
duty or

 

23

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obligation to any third party, including any duty of confidentiality to any
third party.

6.2 Publication. Notwithstanding any matter set forth in this Agreement to the
contrary, results obtained in the course of the Research Program may only be
submitted for publication following scientific review by the Joint Research
Committee and subsequent written approval by both Icagen and Pfizer. Written
approval or disapproval of the proposed publication shall be provided by both
Pfizer and Icagen within thirty (30) days for a manuscript, within fourteen
(14) days for an abstract for presentation at, or inclusion in the proceedings
of, a scientific meeting, and within fourteen (14) days for a transcript of an
oral presentation to be given at a scientific meeting.

6.3 Publicity. The parties recognize that each party may from time to time
desire to issue press releases and make other public statements or disclosures
regarding the subject matter of this Agreement. In such event, the party
desiring to issue a press release or make a public statement or disclosure shall
provide the other party with a copy of the proposed press release, statement or
disclosure for review and approval in advance, which advance approval shall not
be unreasonably withheld, conditioned or delayed. No other public statement or
disclosure concerning the existence or terms of this Agreement shall be made,
either directly or indirectly, by either party hereto, without first obtaining
the written approval of the other party. Once any public statement or disclosure
has been approved in accordance with this Section 6.3, then either party may
appropriately communicate information contained in such permitted statement or
disclosure. Notwithstanding the foregoing provisions of this Section 6.3, a
party may (a) disclose the existence, terms and subject matter of this Agreement
where required, as reasonably determined by the disclosing party, by applicable
law or regulation, by applicable stock exchange rule or by order of a court or
other legal process, (b) disclose the existence and terms of this Agreement
under obligations of confidentiality to agents, advisors, contractors,
investors, acquirors and sublicensees, and to potential agents, advisors,
contractors, investors, acquirors and sublicensees, in connection with such
party’s activities hereunder and in connection with such party’s financing or
strategic activities and (c) publicly announce any of the matters set forth in
Exhibit A, provided that such announcements do not entail disclosure of
non-public technical or scientific information (which, for clarity, excludes
clinical trial results) and the announcing party provides the other party with a
copy of the proposed text of such announcement sufficiently in advance of the
scheduled release or publication thereof to afford such other party a reasonable
opportunity to review and comment upon the proposed text, and provided further
that, subject to the announcing party’s obligations to comply with requirements
imposed by applicable law or regulation, by applicable stock exchange rule or by
order of a court or other legal process, the announcing party shall use
reasonable efforts to provide the other party with an advance draft of any such
public announcement in order to provide such other party with an opportunity to
review such draft and provide comments thereon to the announcing party prior to
such public announcement.

6.4 Disclosure of Inventions. Each party shall promptly inform the other about
all inventions that are conceived, made or developed in the course of carrying
out the Research Program by employees of, or consultants to, either of them
solely, or jointly with employees of, or consultants to the other.

 

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6.5 Disclosure Required by Law. If either party is requested to disclose the
other's Confidential Information in connection with a legal or administrative
proceeding or is otherwise required by law, regulation or legal process to
disclose the other's Confidential Information, such party will if practicable
give the other party prompt notice of such request. The party whose Confidential
Information is subject to such request or requirement may seek, at its expense,
an appropriate protective order or other remedy or waive compliance with the
provisions of this Agreement. If such party seeks a protective order or other
remedy, the other party will cooperate as reasonably requested by the party
seeking such order or other remedy. If the party seeking such order or other
remedy fails to obtain a protective order or waive compliance with the relevant
provisions of this Agreement, the other party will disclose only that portion of
Confidential information that its legal counsel reasonably determines such party
is required to disclose.

6.6 Clinical Trial Register. Each party acknowledges and agrees that the other
party may publish the protocols and results of clinical studies conducted by
such other party with Compounds on its clinical trial register or a government
sponsored clearinghouse such as www.clinicaltrials.gov or other publicly
available websites such as www.clinicalstudyresults.org and that such
publication will not be a breach of the confidentiality and publications
obligations provided in this Section 6. The foregoing does not give a party the
right to make such disclosures in respect of clinical trials sponsored by the
other party.

6.7 Use of Materials. Pfizer and Icagen recognize that the biological, synthetic
chemical and biochemical materials that are part of Pfizer Technology, Icagen
Technology or Joint Technology, represent commercial assets. The use by a party
of such materials Controlled by the other party is limited to activities to be
performed under this Agreement or otherwise permitted under Section 3.2. Both
parties acknowledge that such materials are for laboratory use only and are not
for consumption by, or treatment of, humans or non-laboratory animals. Both
parties will use these materials in compliance with all applicable federal,
state and local laws, regulations and ordinances.

7. INTELLECTUAL PROPERTY RIGHTS. The following provisions relate to the filing,
prosecution and maintenance of Icagen and Joint Patent Rights during the term of
this Agreement:

7.1 Filing, Prosecution and Maintenance by Icagen. With respect to Icagen Patent
Rights, as between Icagen and Pfizer, Icagen shall have the exclusive right:

 

  (a) to file applications for letters patent on any invention included in such
Patent Rights; provided, however, that Icagen shall consult with Pfizer
regarding countries in which such patent applications should be filed and shall
file patent applications in those countries where Pfizer requests that Icagen
file such applications; and, further provided, that Icagen, at its option, may
file in countries where Pfizer does not request that Icagen file such
applications;

 

  (b) to take all reasonable steps to prosecute all pending and new patent
applications included within such Patent Rights with counsel selected by Icagen
in its sole discretion, but after considering in good faith Pfizer’s views with
respect to such counsel;

 

25

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  (c) to respond to oppositions, interferences, nullity actions,
re-examinations, revocation actions and similar proceedings filed by third
parties against the grant of letters patent for such applications;

 

  (d) to maintain in force any letters patent included in such Patent Rights by
duly filing all necessary papers and paying any fees required by the patent laws
of the particular country in which such letters patent were granted; and

 

  (e) and obligation to notify Pfizer in a timely manner of any decision not to
file an application or to abandon a pending application or an issued patent
included in such Patent Rights. Thereafter, subject to any limitations imposed
on Icagen by any third party agreement, Pfizer shall have the option, at its
expense, of filing and/or continuing to prosecute any such patent application or
of keeping the issued patent in force.

Pfizer shall have the right to file, on behalf of and as an agent for Icagen,
all applications and take all actions necessary to obtain patent extensions
pursuant to 35 U.S.C. Section 156 and foreign counterparts for Patent Rights
described in this Section 7.1 licensed to Pfizer that are available based on
regulatory approvals of Products for which Pfizer retains its license rights
under Section 3.4; provided that, with respect to all patent extensions for such
Products, Pfizer shall consult with Icagen and its counsel as to the patent to
be chosen for extension and Pfizer shall base its selection of the patent for
extension solely on the best commercial interest of the Product. Icagen will
execute such further documents and take such further actions as may be requested
by Pfizer in this regard at Pfizer’s expense.

7.2 Copies of Documents. Each party shall provide or cause to be provided to the
other party (or the other party’s designee), prior to filing, copies of all
patent applications and substantive correspondence with patent offices that such
party has prepared for filing pursuant to Section 7.1 or 7.4, for the purpose of
obtaining substantive comment of the other party’s patent counsel. Each party
shall also provide to the other party copies of all documents relating to
prosecution of all such patent applications in a timely manner.

7.3 Reimbursement of Costs for Filing, Prosecuting and Maintaining Patent
Rights. Within [**] days of receipt of invoices from Icagen, Pfizer shall
reimburse Icagen for all the costs of Icagen’s performance of the duties set
forth in Section 7.1 with respect to patent applications and patents in
countries where Pfizer requests that patent applications and patents be filed,
prosecuted and maintained except that in the event Pfizer objects to Icagen’s
choice of patent counsel in Section 7.1(b) in good faith, including provision of
legal services at reasonable fees consistent with Pfizer practice, and after
considering Pfizer’s views Icagen selects such patent counsel, Pfizer shall only
be obliged to reimburse [**] percent ([**]%) of the costs incurred by Icagen in
using such patent counsel. Such reimbursement shall be in addition to payments
under Section 4. However, Pfizer may, upon [**] days notice, request that Icagen
discontinue the performance of duties set forth in Section 7.1 with respect to
given patent applications and patents in any country. Icagen shall pay the costs
of Icagen’s performance of the duties set forth in Section 7.1 in those
countries in which Pfizer does not request that Icagen perform such duties, but
in which Icagen, at its option, elects to do so; provided that if Pfizer elects
not to pay for Icagen’s performance of the duties set forth in Section 7.1, with
respect to patent applications and patents in any country, such patent
applications and patents shall be

 

26

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solely owned by Icagen and shall be excluded from the Icagen Patent Rights and
Pfizer’s licenses thereunder.

7.4 Filing, Prosecution and Maintenance by Pfizer. With respect to Joint Patent
Rights, Pfizer shall have those rights and duties ascribed to Icagen and Icagen
shall have those rights and duties ascribed to Pfizer in Section 7.1 (but not
the duties ascribed to Pfizer in Section 7.3), and Pfizer shall conduct such
duties with in-house counsel of Pfizer or with counsel selected by Pfizer in its
sole discretion, but after considering in good faith Icagen’s views with respect
to such counsel.

8. ACQUISITION OF RIGHTS FROM THIRD PARTIES. During the Research Term, Icagen
and Pfizer shall each promptly notify each other of all material opportunities
to acquire in any manner from third parties, technology or patents or
information which may be useful in or may relate to the Research Program that
come to the attention of such party; provided that Pfizer shall not be obligated
to notify Icagen of any third party technology that relates to the Excluded
Pfizer Compounds. Icagen and Pfizer shall decide if such rights should be
acquired in connection with the Research Program and, if so, whether by Icagen,
Pfizer or both. If acquired, such rights shall become part of the Confidential
Information, Technology or Patent Rights, whichever is appropriate, of the
acquiring party or parties.

9. LEGAL ACTION.

9.1 Actual or Threatened Infringement. When information comes to the attention
of Pfizer to the effect that any Icagen Patent Rights, Pfizer Patent Rights or
Joint Patent Rights relating to a Candidate Compound or Product has been or is
threatened to be unlawfully infringed, Pfizer shall have the first right at its
expense to take such action as it may deem necessary to prosecute or prevent
such unlawful infringement, including the right to bring or defend any suit,
action or proceeding involving any such infringement. Pfizer shall notify Icagen
promptly of the receipt of any such information and of the commencement of any
such suit, action or proceeding. If Pfizer determines that it is necessary or
desirable for Icagen to join any such suit, action or proceeding, Icagen shall,
at Pfizer's expense, execute all papers and perform such other acts as may be
reasonably required to permit Pfizer to commence such action, suit or proceeding
in which case Pfizer shall indemnify and hold Icagen free, clear and harmless
from any and all damages and costs and expenses of litigation, including
attorneys fees. If Pfizer brings a suit, it shall have the right first to
reimburse itself out of any sums recovered in such suit or in its settlement for
all costs and expenses, including attorney's fees, related to such suit or
settlement, and any remainder shall be paid [**] percent ([**]%) to Icagen and
[**] percent ([**]%) to Pfizer. If Pfizer does not, within [**] days after
giving notice to Icagen of the above-described information (or within [**] days
after any paragraph IV certification under 21 C.F.R. Part 314 by a third party
to the effect that any Icagen Patent Right, Pfizer Patent Right or Joint Patent
Right is invalid, unenforceable or otherwise not infringed by a generic version
of a Product), notify Icagen of Pfizer's intent to bring suit against any
infringer, Icagen shall have the right to bring suit for such alleged
infringement, but it shall not be obligated to do so. If Icagen determines that
it is necessary or desirable for Pfizer to join any such suit, action or
proceeding, Pfizer shall, at Icagen's expense, execute all papers and perform
such other acts as may be reasonably required to permit Icagen to commence such
action, suit or proceeding in which case Icagen shall indemnify and hold Pfizer
free, clear and harmless from any and all damages and costs and expenses of
litigation, including attorneys fees. If Icagen brings a suit, it shall have the

 

27

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right first to reimburse itself out of any sums recovered in such suit or in its
settlement for all costs and expenses, including attorney's fees, related to
such suit or settlement, and any remainder shall be paid [**] percent ([**]%) to
Pfizer and [**] percent ([**]%) to Icagen. Each party shall always have the
right to be represented by counsel of its own selection and at its own expense
in (but not to control) any suit instituted by the other for infringement under
the terms of this Section 9.1. If a party having the right to bring a suit,
action or proceeding under this Section 9.1 lacks standing and the other party
has standing to bring such suit, action or proceeding, then such other party
shall do so at the request and expense of the party having such right and
subject to the foregoing indemnity and hold harmless provisions of this
Section 9.1.

9.2 Defense of Infringement Claims. Icagen will cooperate as reasonably
requested by Pfizer and at Pfizer's expense in the defense of any suit, action
or proceeding against Pfizer or any Affiliate or sublicensee of Pfizer alleging
the infringement of the intellectual property rights of a third party by reason
of the use of Icagen Patent Rights, Pfizer Patent Rights or Joint Patent Rights
in the manufacture, use, offer for sale, sale or importation of the Product.
Pfizer shall give Icagen prompt written notice of the commencement of any such
suit, action or proceeding or claim of infringement and will furnish Icagen a
copy of each communication relating to the alleged infringement.

9.3 Hold Harmless. Icagen agrees to defend, indemnify and hold harmless Pfizer
and any Affiliate or sublicensee of Pfizer, from and against any loss or expense
arising from any claim of a third party that the third party has been granted
rights by Icagen inconsistent with, or that Icagen did not have the right to
grant to Pfizer, the rights and licenses granted by Icagen hereunder.

10. TERM, TERMINATION AND DISENGAGEMENT.

10.1 Term. Unless sooner terminated or extended, this Agreement shall expire on
the later of (a) the end of the Research Term; or (b) the last obligation to pay
a royalty in respect of a Product on a Product-by-Product and country-by-country
basis.

10.2 Events of Termination. The following events shall constitute events of
termination (“Events of Termination”):

 

  (a) any material written representation or warranty by Icagen or Pfizer made
in this Agreement shall prove to have been incorrect in any material respect
when made.

 

  (b) Icagen or Pfizer shall fail in any material respect to perform or observe
any term, covenant or understanding contained in this Agreement, and any such
failure shall remain un-remedied for sixty (60) days after written notice to the
failing party.

 

  (c) on a Candidate-by-Candidate or Product-by-Product basis, as the case may
be, a written notification by Pfizer to Icagen at any time after the end of the
Research Term that Pfizer no longer intends to develop or commercialize
specified Candidate Compounds or Products.

10.3 Termination. Upon the occurrence of any Event of Termination in Sections
10.2(a) or 10.2(b), the party not responsible may, by notice to the other party,
terminate this Agreement. A notice of discontinuation by Pfizer under
Section 10.2(c) shall not terminate this

 

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Agreement, but the Candidate Compounds or Products specified in such notice
shall be subject to the consequences set forth in Section 10.4(c).

10.4 Effect of Termination.

 

  (a) Termination of this Agreement for any reason under Section 10.2(a) or
10.2(b) shall be without prejudice to:

 

  (i) the rights and obligations of the parties under any provisions of this
Agreement that by their terms provide for performance by either party subsequent
to termination;

 

  (ii) Icagen’s right to receive all payments accrued under Sections 4 and 7; or

 

  (iii) In the case of termination under Section 10.2(a) or 10.2(b), any
remedies that either party may otherwise have based on the other party’s breach
of this Agreement.

The obligations and rights of the parties under the following provisions of this
Agreement, and under any other provision of this Agreement that by its terms
survives expiration or termination, shall survive expiration or termination of
this Agreement: Sections 2.3(c), 2.8(c) (second sentence), 3.1, 3.2, 3.4(c),
3.4(e), 3.5, 4.9, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 6, 7.3, 7.4, 9.3, 10, 12,
13 and 14.

 

  (b) Upon termination of this Agreement by Pfizer pursuant to Sections 10.2(a)
or 10.2(b), (i) the Research Program shall terminate and Pfizer shall not be
obligated to make any further payment to Icagen under Sections 4.2 or 4.3 and
(ii) the licenses granted by Icagen to Pfizer under Section 3.4 shall remain
intact subject to all post-Research Term rights and obligations of the parties
pursuant to this Agreement (as if this Agreement had remained in full force and
effect).

 

  (c) Upon termination of this Agreement by Icagen pursuant to Sections 10.2(a)
or 10.2(b), the following shall apply to [**], and upon a termination of
Pfizer’s rights with respect to [**] pursuant to Sections 2.7 or 10.2(c), the
following shall apply to such [**]:

 

  (i) the licenses granted by Icagen to Pfizer under Section 3.4 shall
automatically terminate and revert to Icagen;

 

  (ii)

Pfizer shall, and it hereby does, grant to Icagen an exclusive (even as to
Pfizer), worldwide fully-paid license, under the Pfizer Patent Rights and Pfizer
Technology and Pfizer’s interest in the Joint Patent Rights and Joint
Technology, with the right to grant sublicenses, to make, have made, use, offer
for sale, sell and import the [**]; provided that such license shall terminate
as to any [**] if Icagen, together with its Affiliates and sublicensees, fails
to exercise Commercially Reasonable Efforts to develop and commercialize [**]
provided further that any such termination of Icagen’s license with respect to
such [**] containing such [**] shall be subject to the same notice and

 

29

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opportunity for cure process set forth in Section 10.2(b) for terminations of
this Agreement to which Section 10.2(b) applies. The foregoing license is
limited to those Pfizer Patent Rights and Pfizer’s interest in the Joint Patent
Rights Covering the [**] at its time of termination and to Pfizer Technology and
Pfizer’s interest in Joint Technology embodied in the [**] at its time of
termination. For purposes of clarity, all other rights to Pfizer Patent Rights,
Pfizer Technology and Pfizer’s interest in the Joint Patent Rights and Joint
Technology shall be retained by Pfizer, including Pfizer’s right to make, have
made, use, offer for sale, sell and import compounds and products other than the
applicable [**];

 

  (iii) With respect to [**] referenced under Section 10.4(c)(ii), Pfizer shall
have the first right to enforce Pfizer Patent Rights and Joint Patent Rights
against such infringement, subject to the following conditions: (A) Icagen shall
have the right to participate in (but not control) any such enforcement action
by Pfizer through counsel of its choosing, (B) any damages or settlement
recovery from any such infringement suit shall, after Pfizer reimburses itself
for all costs and expenses, including attorney’s fees, related to such suit or
settlement, be paid to Icagen, and (C) Pfizer shall not settle any such suit
without Icagen’s prior written consent, which shall not be unreasonably
withheld, delayed or conditioned, (D) if Pfizer does not, within [**] days after
being notified by Icagen of an infringement of Pfizer Patent Rights and Joint
Patent Rights for which Pfizer has the first right to enforce (or within [**]
days after any paragraph IV certification under 21 C.F.R. Part 314 by a third
party to the effect that such Pfizer Patent Rights and Joint Patent Rights are
invalid, unenforceable or otherwise not infringed by a generic version of the
applicable [**]), bring suit against any infringer, Icagen shall have the right
to bring suit for such alleged infringement;

 

  (iv) If Pfizer requests that Icagen assume responsibility for the filing,
prosecution and maintenance of Pfizer Patent Rights and/or Joint Patent Rights
that Cover any such [**], Icagen shall assume such responsibilities at Icagen’s
expense; provided that Icagen may elect not to assume or to discontinue
performance of such responsibilities with respect to particular Pfizer Patent
Rights and/or Joint Patent Rights, in which event the license granted to Icagen
in Section 10.4(c)(ii) above shall terminate as to such Pfizer Patent Rights
and/or Joint Patent Rights;

 

  (v) Pfizer shall as soon as reasonably practicable:

 

  (A)

when an IND has already been filed by Pfizer, provide all assistance reasonably
requested by Icagen in establishing Icagen as sponsor of clinical trials of such
[**], including,

 

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if necessary, transferring INDs (and their foreign equivalents) to Icagen, and

 

  (B) transfer ownership of all NDA applications and approvals to Icagen in
accordance with 21 C.F.R. § 314.72 (and their foreign equivalents in accordance
with applicable foreign regulations) relating to such [**], and

 

  (C) deliver to Icagen copies of all governmental or regulatory filings and
approvals (including all INDs and NDAs (and their foreign equivalents)), and all
correspondence with the FDA (and its foreign equivalents) relating to such [**],
and

 

  (D) deliver to Icagen a copy of the clinical human experience database and
copies of any regulatory submissions and any correspondence with the FDA (and
its foreign equivalents) relating to such [**], and

 

  (E) deliver to Icagen copies of audited preclinical study reports and the
audited in vivo animal study data referenced in such reports (including ADME in
vivo data) used for regulatory submissions and correspondence relating to such
[**]; and

 

  (F) deliver to Icagen copies of audited reports relating to drug substance and
drug product including Certificates of Analysis, polymorphs, starting materials,
impurities, release criteria, formulation and the like; and

 

  (G) with respect to [**], deliver to Icagen copies of the foregoing without
regard to whether such reports, referenced data and other information have been
audited or used for regulatory submissions, unless such reports, referenced data
and information are in draft format and only if such reports, referenced data
and other information are reasonably required for future regulatory submissions
and correspondence;

and Pfizer shall, and hereby does, grant to Icagen, its Affiliates and licensees
the right to use all of the foregoing in connection with the development and
commercialization of such [**];

 

  (vi)

If as of the date of the notice of termination or discontinuation, as the case
may be, Pfizer or a Pfizer Affiliate has successfully engaged in the manufacture
of any such [**], or has established a third party supplier of any such [**]
which has successfully engaged in the manufacture of any such [**], Pfizer or
such Affiliate shall, if requested by Icagen and at Icagen’s expense, use
Commercially Reasonable Efforts to [**] as follows: (A) in the case of [**],
until the

 

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later to occur of (x) [**], or (y) [**], (B) in the case of [**], for such time
[**] or (C) in the case of [**];

 

  (vii) Nothing in this Section 10.4(c) shall obligate Pfizer to (x) initiate
further studies or complete any ongoing study or report in respect of such [**]
beyond the date of termination or discontinuation, or (y) provide any Chemistry
Manufacturing and Control procedures or other related documents [**];

 

  (viii) Icagen will not develop or commercialize any [**] reverting to Icagen
under this Section 10.4(c) the development of which was terminated by Pfizer
because of either (x) action by the U.S. Food and Drug Administration, or other
regulatory body, requiring termination of such development or (y) a reasonable,
good faith determination by Pfizer, and written communication of such
determination to Icagen, that the [**] is unsafe for further development in any
patient population for which Icagen would otherwise develop such [**].

 

  (ix) Notwithstanding the foregoing, with respect to any Pfizer Technology that
Pfizer acquired from a third party and is required to license to Icagen
hereunder, (x) Pfizer shall only be required to grant Icagen rights to such
Pfizer Technology to the extent permitted under its agreement with such third
party, and (y) Icagen shall be responsible for all payments to such third party
under such third party agreement which become due after the termination date to
the extent such payments relate to the use of such Pfizer Technology with any
[**], and Icagen shall execute such documentation reasonably satisfactory to
Pfizer to such effect.

10.5 Bankruptcy. All rights granted under this Agreement are, for the purposes
of Article 365(n) of the U.S. Bankruptcy Code, licenses of rights to
“intellectual property” as defined under Article 101 of the U.S. Bankruptcy
Code. The parties agree that:

 

  (a) Rights and Elections. Each party, as licensee, will retain—and may fully
exercise—all of its rights and elections under the U.S. Bankruptcy Code, or
equivalent legislation in any other jurisdiction.

 

  (b) Delivery of Intellectual Property. In the event a bankruptcy proceeding is
commenced by or against a party under the U.S. Bankruptcy Code, the other party
will be entitled to a complete duplicate of (or complete access to, as
appropriate) the intellectual property and its embodiments licensed to such
other party under this Agreement. If such intellectual property and its
embodiments are not already in such other party’s possession, they must be
promptly delivered to such other party at such other party's request when the
bankruptcy proceeding is commenced, unless the party in bankruptcy elects to
continue to perform all of its obligations under this Agreement.

11. REPRESENTATIONS AND WARRANTIES.

 

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11.1 Icagen and Pfizer Representations and Warranties. Icagen and Pfizer each
represents and warrants to the other as follows:

 

  (a) It is a corporation duly organized, validly existing and is in good
standing under the laws of the State of Delaware.

 

  (b) It is in good standing as a foreign corporation in each jurisdiction in
which the conduct of its business or the ownership of its properties requires
such qualification and it has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform this Agreement.

 

  (c) The execution, delivery and performance by it of this Agreement have been
duly authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of its stockholders, (ii) violate any
provision of any law, rule, regulations, order, writ, judgment, injunctions,
decree, determination award presently in effect having applicability to it or
any provision of its certificate of incorporation or by-laws or (iii) result in
a breach of or constitute a default under any material agreement, mortgage,
lease, license, permit or other instrument or obligation to which it is a party
or by which it or its properties may be bound or affected.

 

  (d) This Agreement is a legal, valid and binding obligation enforceable
against it in accordance with its terms and conditions, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws, from time to time in effect, affecting
creditor’s rights generally.

 

  (e) It is not under any obligation to any person, or entity, contractual or
otherwise, that is conflicting or inconsistent in any respect with the terms of
this Agreement or that would impede the diligent and complete fulfillment of its
obligations.

 

  (f) It has good and marketable title to, or valid leases for, all of its
tangible properties, rights and assets necessary for the fulfillment of its
responsibilities under the Research Program, subject to no claim of any third
party other than the relevant lessors or licensors.

 

  (g) It has the right to grant the licenses granted pursuant to this Agreement,
and the licenses so granted do not conflict with or violate the terms of any
agreement between it and any third party.

11.2 Icagen Representations, Warranties and Covenants.

 

  (a) Icagen hereby represents and warrants to Pfizer that there are no adverse
proceedings, claims or actions pending, or, to the best of Icagen’s knowledge,
threatened, relating to the Icagen Technology, and, at the time of disclosure
and licensing thereof to Pfizer, Icagen shall, to the best of its knowledge,
have the full right, title and legal capacity to disclose and license the Icagen
Technology without violation the rights of any third party.

 

  (b) Throughout the Term, Icagen shall:

 

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  (i) Subject to Icagen’s right to assign this Agreement as set forth in
Section 14.7 (after which this Section 11.2(b)(i) shall apply to Icagen’s
assignee and not to Icagen), maintain and preserve its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified as a foreign corporation in good standing in each
jurisdiction in which such qualification is from time to time necessary or
desirable in view of its business and operations or the ownership of its
properties.

 

  (ii) Comply in all material respects with the requirements of all applicable
laws, rules, regulations and orders of any government authority to the extent
necessary to conduct the Research Program.

 

  (iii) Maintain and preserve its licenses [**], except to the extent that
Pfizer’s rights under this Agreement would not be adversely affected by not
doing so or that any failure to so maintain and preserve such licenses results
from acts or omissions by Pfizer or any of its Affiliates or sublicensees.

11.3 Covenants of Pfizer Other Than Reporting Requirements. Throughout the Term:

 

  (a) Subject to Pfizer’s right to assign this Agreement as set forth in
Section 14.7 (after which this Section 11.2(b)(i) shall apply to Pfizer’s
assignee and not to Pfizer), Pfizer shall maintain and preserve its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified as a foreign corporation in good
standing in each jurisdiction in which such qualification is from time to time
necessary or desirable in view of its business and operations or the ownership
of its properties.

 

  (b) Pfizer shall comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any government authority to
the extent necessary to conduct the Research Program.

 

  (c) If Pfizer grants a sublicense pursuant to Section 3.4, Pfizer shall
guarantee that any sublicensee fulfills all of Pfizer's obligations under this
Agreement; provided, however, that Pfizer shall not be relieved of its
obligations pursuant to this Agreement.

12. INDEMNIFICATION. Pfizer and Icagen will indemnify, defend and hold harmless
the other party and its Affiliates and their respective agents, directors,
officers and employees (collectively, “Indemnified Parties”) from and against
any and all damages, settlements, costs, legal fees and other expenses incurred
in connection with a claim by a third party against any such Indemnified Party
based on any breach by the indemnifying party or the indemnifying party’s
agents, employees, or officers related to its obligations under this Agreement;
provided, however, that such indemnification, defense and hold harmless
obligations shall not apply (i) if the claim is found to be based upon the gross
negligence, recklessness or wilful misconduct of the Indemnified Party; or
(ii) if the Indemnified Party fails to give the indemnifying party prompt notice
of any claim it receives and such failure materially prejudices the indemnifying
party with

 

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respect to any claim or action to which its obligation pursuant to this Section
applies. Notwithstanding anything to the contrary in the foregoing, each party
hereby expressly agrees to indemnify, defend and hold harmless the other party
(and all officers, directors, agents and Affiliates of the other party) from and
against any and all claims of a third party arising from clinical trials pursued
by the indemnifying party or its Affiliates or sublicensees or the making,
having made, use, offer for sale, sale or importation of Products by or on
behalf of the indemnifying party or its Affiliates or sublicensees, including
without limitation any such claims based on personal injury, death or other
product liability or infringement of third party intellectual property rights.
Icagen shall further indemnify, defend and hold harmless all Pfizer Indemnified
Parties from and against any and all damages, settlements, costs, legal fees and
other expenses incurred in connection with a claim by a third party with regard
to the use by Icagen of any information provided by Pfizer under Section 10.4(c)
or Icagen’s development and commercialization of any Candidate Compound or
Product reverting to Icagen under Section 10.4(c). The indemnifying party, in
its sole discretion, shall choose legal counsel, shall control the defense of
such claim or action and shall have the exclusive right to settle same on such
terms and conditions it deems advisable; provided that it shall not settle any
such claim or action in any manner that would impose any obligation or liability
on any Indemnified Party without the prior consent of such Indemnified Party.

IN NO EVENT SHALL ANY PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE UNDER
THIS AGREEMENT FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE,
INCLUDING LOSS OF PROFITS OR REVENUE, SUFFERED BY PFIZER, ICAGEN OR ANY OF THEIR
RESPECTIVE REPRESENTATIVES, EXCEPT (A) TO THE EXTENT OF ANY SUCH DAMAGES PAID TO
A THIRD PARTY IN CONNECTION WITH A THIRD PARTY CLAIM, AND (B) FOR PURPOSES OF
INDEMNIFICATION PURSUANT TO THIS SECTION 12, IN THE EVENT OF AN INTENTIONAL AND
WILLFUL BREACH IN BAD FAITH OF ANY REPRESENTATION, WARRANTY, COVENANT OR
AGREEMENT BY ICAGEN OR PFIZER (AS THE CASE MAY BE) CONTAINED IN THIS AGREEMENT;
PROVIDED THAT THIS SECTION SHALL NOT RELIEVE EITHER PARTY FROM ITS PAYMENT
OBLIGATIONS UNDER THIS AGREEMENT.

13. NOTICES. All notices shall be in writing mailed via certified mail, return
receipt requested, courier, or facsimile transmission addressed as follows, or
to such other address as may be designated by the receiving party from time to
time:

 

If to Pfizer:   Pfizer Global R&D Headquarters, 50 Pequot Avenue, New London,
CT 06320   Attn.: Executive Vice President, PGRD   Telefacsimile: (860) 715-7642
With a copy to:   General Counsel, PGRD   Telefacsimile: (860) 732-1843

 

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Invoices should be sent to the attention of [**] at the following address:
Pfizer Inc, NASS – A/P, PO Box 341804, Bartlett, TN 38184-1804.

 

If to Icagen:   Icagen, Inc., 4222 Emperor Boulevard, Suite 350, Durham, NC
27703   Attn: President   Telefacsimile: (919) 941-0813 With a copy to:  
WilmerHale, 60 State Street, Boston, MA 02109   Attn.: David E. Redlick, Esq.  
Telefacsimile: (617) 526-5000

Notices shall be deemed given as of the date received.

14. MISCELLANEOUS.

14.1 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective legal representatives, successors
and permitted assigns.

14.2 Headings. Paragraph headings are inserted for convenience of reference only
and do not form a part of this Agreement.

14.3 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.

14.4 Entire Agreement; Amendment; Waiver. This Agreement contains the complete
understanding of the parties with respect to the parties’ development and
commercialization of Compounds and Products and supersedes all prior
understandings and writings relating to such subject matter. In the event of any
conflict between the terms of this Agreement and the Research Plan, the terms of
this Agreement shall control. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party or
parties waiving compliance. The delay or failure of any party at any time or
times to require performance of any provisions shall in no manner affect the
rights at a later time to enforce the same. No waiver by any party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.

14.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York.

14.6 No Third Party Beneficiaries. No third party including any employee of any
party to this Agreement, shall have or acquire any rights by reason of this
Agreement. Nothing contained in this Agreement shall be deemed to constitute the
parties partners with each other or any third party.

 

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14.7 Assignment and Successors. This Agreement may not be assigned by either
party, except that each party may assign this Agreement and the rights and
interests of such party, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporation.

14.8 Performance by Affiliates. To the extent that this Agreement imposes
obligations on Affiliates of a party, such party agrees to cause its Affiliates
to perform such obligations.

14.9 Force Majeure. Neither Pfizer nor Icagen shall be liable for failure of
delay in performing obligations set forth in this Agreement, and neither shall
be deemed in breach of its obligations, if such failure or delay is due to
nature disasters or any causes reasonably beyond the control of Pfizer or
Icagen.

14.10 Severability. If any provision of this Agreement is or becomes invalid or
is ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the parties that the remainder of the
Agreement shall not be affected.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

 

PFIZER INC       ICAGEN, INC. By:  

/s/ John LaMattina

    By:  

/s/ P. Kay Wagoner

        P. Kay Wagoner, Ph.D. Title:   President, PGRD     Title:   President
and Chief Executive Officer Date:   08/13/07     Date:   August 13, 2007

 

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Exhibit A

Permitted Disclosures

 

  •  

Publication of filed patent applications as required by the appropriate patent
granting authority and issuance of patents

 

  •  

Filing and acceptance of filing of applications for regulatory approvals of
Products

 

  •  

Regulatory approvals of Products

 

  •  

Completion or initiation of clinical trials of Products and top line results
thereof

 

  •  

Completion of patient enrollment for Phase II Trials and Phase III Trials of
Products

 

  •  

Development, regulatory and commercialization milestone achievements and/or
payments under this Agreement

 

  •  

Presence and participation at scientific or financial forums, subject to the
provisions of Section 6.2

 

  •  

Announcement of data regarding Compounds and Products at scientific or financial
forums, subject to the provisions of Section 6.2

--------------------------------------------------------------------------------

Exhibit B

PURCHASE AGREEMENT

This PURCHASE AGREEMENT (the “Agreement”) is entered into as of August 13, 2007,
by and between ICAGEN, INC., a Delaware corporation having an office at 4222
Emperor Boulevard, Suite 350, Durham, North Carolina 27703 (the “Company”), and
PFIZER INC, a Delaware corporation having an office at 235 East 42nd Street, New
York, New York (“Pfizer”).

RECITALS

A. Concurrently with the execution and delivery of this Agreement, the Company
and Pfizer are entering into a collaboration relationship (the “Collaboration
Relationship”), as set forth in a Collaborative Research and License Agreement
of even date herewith between Pfizer and the Company (the “Collaboration
Agreement”) and other documents referred to in the Collaboration Agreement.

B. In connection with the various agreements setting forth the terms and
conditions of the Collaboration Relationship, Pfizer has agreed to purchase from
the Company, and the Company has agreed to issue and sell to Pfizer, upon the
terms and conditions stated in this Agreement, up to a maximum of $15,000,000 of
the Company’s common stock, par value $0.001 per share (the “Common Stock”).

C. As set forth herein, the Company has agreed to provide certain registration
rights with respect to the shares of Common Stock to be issued and sold pursuant
to this Agreement under the Securities Act of 1933, as amended (the “Securities
Act”).

D. The Company and Pfizer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by
Section 4(2) of the Securities Act.

E. In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and Pfizer hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF COMMON STOCK

1.1. Initial Purchase and Sale of Common Stock. At the First Closing (as defined
below) the Company will issue and sell to Pfizer, and Pfizer will purchase from
the Company, 2,688,172 shares of Common Stock. The aggregate number of shares of
Common Stock to be purchased at the First Closing is hereinafter referred to as
the “Initial Shares”. The purchase price for each Initial Share shall be $1.86,
which is the closing bid price of the Common Stock as reported on the Nasdaq
Global Market as the 4:00 p.m. Eastern Time closing bid price on the business
day preceding the execution of this Agreement, being August 10, 2007 (the
“Initial Purchase Price”).

1.2. Put Option. For a period beginning on the First Closing Date (as defined
below) and ending on the first to occur of (1) the date that is 18 months after
the First Closing Date, (2) the termination of the Collaboration Agreement and
(3) the termination of the Research Term

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(as defined in the Collaboration Agreement) (the “Put Period”), the Company
shall have the right and option, exercisable in its sole discretion, to issue
and sell to Pfizer, and Pfizer shall be required to purchase from the Company,
up to an additional $10,000,000 of Common Stock (the “Put Shares” and, together
with the Initial Shares, the “Shares”) pursuant to the terms of this Section 1.2
(the “Put Option”). The Company shall exercise the Put Option in a single
tranche, provided that, if the limitation set forth in paragraph (c) below
restricts the Company from exercising the Put Option for an aggregate purchase
price of $10,000,000 in a single tranche, the Company may exercise the Put
Option in two tranches, in which case the first tranche shall be exercisable for
the maximum number of Put Shares issuable subject to the limitation set forth in
paragraph (c) below and the second tranche shall be exercisable for the
remainder of the Put Period for the maximum number of Put Shares then issuable
at an aggregate purchase price equal to the difference between $10,000,000 and
the aggregate purchase price for the Put Shares issued in the first tranche,
subject to the limitation set forth in paragraph (c) below.

(a) Notice of Exercise of Put Option. The Company may elect to exercise the Put
Option, in whole or in part, by providing Pfizer with written notice of such
intent to exercise (the date of any such notice, a “Put Exercise Date”). Any
such notice (each, a “Put Exercise Notice”) shall include (i) the purchase price
of each Put Share to be acquired at such Subsequent Closing (as defined below),
which shall be equal to the closing bid price of the Common Stock as reported on
the Nasdaq Global Market as the 4:00 p.m. Eastern Time closing bid price on the
business day prior to the Put Exercise Date, (ii) the number of Put Shares to be
issued to and purchased by Pfizer at such Subsequent Closing, (iii) the
aggregate purchase price of the Put Shares to be acquired at such Subsequent
Closing and (iv) the anticipated Closing Date (as defined below) for such
Subsequent Closing.

(b) Restrictions on Exercise. The Company shall not exercise the Put Option
during any period beginning on the date on which the Company becomes aware of a
Material Development (as defined below) and ending upon the completion of the
second full trading day after the public announcement of such Material
Development (or such earlier date as the Company concludes that the matters
giving rise to such Material Development no longer constitute a Material
Development). For the purposes of this Agreement, “Material Development” means a
development that would have a material adverse effect upon the business, assets,
financial condition or results of operations of the Company. In this context, a
Material Development is not generally known to the public and is information
that a reasonable investor would consider important in making a decision to
purchase or sell Common Stock. In addition, the Company shall not exercise the
Put Option during any period when (i) the Company’s shares of Common Stock are
not listed on any U.S. national securities market or exchange, (ii) a stop order
or suspension of trading shall have been imposed by the Securities and Exchange
Commission (the “SEC”) or any other governmental body with respect to public
trading in the Common Stock, (iii) a bankruptcy proceeding has been commenced
against the Company and not dismissed within 90 days thereof or (iv) an Event of
Termination (as defined in the Collaboration Agreement) caused by Icagen
pursuant to Section 11.2(a) or 11.2(b) of the Collaboration Agreement has
occurred and remains unremedied following notice by Pfizer to Icagen, prior to
the applicable Put Exercise Date, of the existence of such Event of Termination.

(c) Exercise Limitation. In no event shall the Company be permitted to exercise
the Put Option to the extent that, upon such exercise, the number of Put Shares
issuable

 

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in such Subsequent Closing would cause the number of shares of Common Stock
beneficially owned by Pfizer to exceed 19.99% of the total number of shares of
Common Stock of the Company issued and outstanding as of the applicable Put
Exercise Date on a post-transaction basis. As used herein, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the rules thereunder (the “Exchange Act”).

1.3. Adjustment. The number of Initial Shares to be purchased by Pfizer at the
First Closing pursuant to Section 1.1 and the number of Put Shares to be
purchased by Pfizer at any Subsequent Closing pursuant to Section 1.2 shall be
proportionately adjusted for any subdivision or combination of Common Stock (by
stock split, reverse stock split, dividend, reorganization, recapitalization or
otherwise).

1.4. The Closings.

(a) The closing of the sale of the Initial Shares to Pfizer (the “First
Closing”) will take place on the fifth business day after the “Effective Date”
of the Collaboration Agreement, as defined therein, upon the delivery of the
following closing deliverables (the “First Closing Date”). At the First Closing:
(i) the Company shall deliver to Pfizer an opinion, dated as of the First
Closing Date, from Wilmer Cutler Pickering Hale and Dorr LLP, counsel to the
Company, in substantially the form attached hereto as Exhibit A; (ii) the
Company shall file or have filed with The Nasdaq Stock Market, Inc. (“Nasdaq”)
the Notification Form: Listing of Additional Shares with respect to the Shares
in accordance with the rules of Nasdaq; (iii) the Company shall deliver to
Pfizer a certificate of the Secretary of the Company, dated as of the First
Closing Date, certifying as to the incumbency and signatures of the officers
executing this Agreement and the resolutions of the Company’s Board of Directors
approving this Agreement and the transactions contemplated hereby; (iv) Pfizer
shall pay the aggregate Initial Purchase Price of $4,999,999.92 by wire transfer
of immediately available funds in accordance with wire instructions provided by
the Company to Pfizer prior to the First Closing; and (v) the Company shall
deliver to its transfer agent irrevocable instructions to issue to Pfizer one or
more stock certificates registered in the name of Pfizer evidencing the Initial
Shares.

(b) The closing of any sale of Put Shares to Pfizer (each, a “Subsequent
Closing”) will take place on the fifth business day after the date of the Put
Exercise Notice (a “Subsequent Closing Date”; each of the First Closing Date and
any Subsequent Closing Date being a “Closing Date” and collectively the “Closing
Dates”). At each Subsequent Closing: (i) Pfizer will pay the aggregate purchase
price of the Put Shares to be acquired at such Subsequent Closing as set forth
in the Put Exercise Notice by wire transfer of immediately available funds in
accordance with wire instructions previously provided by the Company to Pfizer
and (ii) the Company shall deliver to its transfer agent irrevocable
instructions to issue to Pfizer one or more stock certificates registered in the
name of Pfizer evidencing the Put Shares to be acquired at such Subsequent
Closing.

(c) Each Closing will be held at the offices of Wilmer Cutler Pickering Hale and
Dorr LLP, 60 State Street, Boston, Massachusetts 02109 or at such other time and
place or such other manner as shall be agreed upon by the Company and Pfizer.
The stock certificates

 

3

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evidencing Shares issued at each Closing shall bear an appropriate legend
referring to the fact that such Shares have not been registered under the
Securities Act.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Pfizer that, as of the date
hereof, except as set forth in those SEC Documents (as defined below) listed on
Exhibit B:

2.1. Subsidiaries. The Company has no direct or indirect subsidiaries.

2.2. Organization and Qualification. The Company is duly organized and validly
existing and is in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable). The Company has full corporate
power and authority to own, operate and occupy its properties and to conduct its
business as presently conducted and is registered or qualified to do business
and in good standing in each jurisdiction in which it owns or leases property or
transacts business, except where the failure to be so registered or qualified or
in good standing would not reasonably be expected to have a Material Adverse
Effect, and to the Company’s knowledge, no proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification. As used in this
Agreement, “Material Adverse Effect” means a material adverse effect upon the
business, assets, financial condition or results of operations of the Company.

2.3. Due Authorization. The Company has all requisite corporate power and
authority and has taken all requisite corporate action necessary to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly authorized and validly executed and delivered by the Company and,
assuming due authorization, execution and delivery by Pfizer, constitutes a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except (i) to the extent rights to indemnity and
contribution may be limited by state or federal securities laws or the public
policy underlying such laws, (ii) enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and
(iii) enforceability may be limited by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).

2.4. Non-Contravention. The execution and delivery by the Company of this
Agreement, the issuance and sale of the Common Stock to be sold by the Company
under this Agreement, and, subject to the Listed Exceptions (as defined below)
the performance by the Company of its obligations under this Agreement and the
consummation by the Company of the transactions contemplated hereby will not
(A) conflict with or constitute a violation of, or default (with or without the
giving of notice or the passage of time or both) under, (i) any bond, debenture,
note or other evidence of indebtedness, or under any lease, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument to
which the Company is a party or by which it or its properties are bound,
(ii) the Restated Certificate of Incorporation, as amended to date, or the
Amended and Restated Bylaws, as amended to date, of the Company, or

 

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(iii) any law, published regulation, ordinance or order of any court of
competent jurisdiction or governmental agency, arbitration panel or other
governmental authority or Nasdaq applicable to the Company or its properties,
except, in the case of clauses (i) and (iii) only, for such conflicts,
violations or defaults as would not reasonably be expected to have a Material
Adverse Effect, or (B) result in the creation or imposition of any lien,
encumbrance, security interest or similar restriction upon any of the properties
or assets of the Company or an acceleration of indebtedness pursuant to any
obligation, agreement or condition contained in any bond, debenture, note or
other evidence of indebtedness or any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company is
subject, except for such liens, encumbrances, security interests, restrictions
or acceleration of obligations as would not reasonably be expected to have a
Material Adverse Effect. No consent, approval, authorization or other order of,
or registration, qualification or filing with, any regulatory body,
administrative agency, self-regulatory organization, stock exchange or market,
or other governmental body in the United States is required for the execution
and delivery of this Agreement or the valid issuance and sale of the Common
Stock to be sold pursuant to this Agreement, except for the Company’s obligation
with respect to (a) compliance with the securities and blue sky laws in the
states in which the Shares are offered and/or sold, (b) the filing of the
Registration Statement (as defined below) with the SEC as contemplated by
ARTICLE V of this Agreement, (c) the filing of a Notice of Sale of Securities on
Form D with the SEC under Regulation D of the Securities Act, (d) all required
filings with Nasdaq and (e) those consents, approvals, orders or authorizations
of or registrations, qualifications, designations, declarations or filings with,
any federal, state, or local governmental authority on the part of the Company
that have been obtained and will be in effect as of the applicable Closing Date
(collectively, the “Listed Exceptions”), all of which Listed Exceptions the
Company has complied with or will comply with in a timely fashion.

2.5. Reporting Status. The Company has filed, within the meaning ascribed to
such term in General Instruction B to Form 8-K of the SEC rules, in a timely
manner all documents that the Company was required to file under the Exchange
Act, since February 8, 2005, the date of its initial public offering (the “SEC
Documents”). The SEC Documents complied as to form in all material respects as
of their respective filing dates with the applicable requirements of the
Exchange Act and the rules of the SEC thereunder. None of the SEC Documents as
of the respective filing dates thereof contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

2.6. Capitalization. The authorized capital stock of the Company as of July 31,
2007, consisted of 120,000,000 shares of Common Stock, of which 38,000,153
shares were issued and outstanding as of such date, and 10,000,000 shares of
blank check preferred stock, $0.001 par value per share, none of which have been
designated. Options to purchase an aggregate of 4,850,372 shares of Common
Stock, warrants to purchase an aggregate of 5,363,256 shares of Common Stock and
222,838 restricted stock units were outstanding as of July 31, 2007. Except as
disclosed in or contemplated by the SEC Documents, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into and
exercisable and exchangeable for, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights,

 

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convertible securities or obligations other than options granted under the
Company’s stock plans. The issued and outstanding shares of the Company’s
capital stock have been, and the Shares will be, when issued and paid for in
accordance with the Agreement, duly authorized and validly issued, fully paid
and nonassessable, and have been, and, with respect to the Shares (assuming the
accuracy of the representations and warranties of Pfizer in ARTICLE III), will
be, issued in compliance with all applicable federal and state securities laws,
and were not, and, with respect to the Shares, will not be, issued in violation
of or subject to any preemptive rights or other rights to subscribe for or
purchase securities. No holder of Common Stock is entitled to preemptive or
similar rights.

2.7. Legal Proceedings. Except as disclosed in the SEC Documents, as of the date
hereof there is no action, suit or proceeding before any court, governmental
agency or body, domestic or foreign, now pending or, to the actual knowledge of
the Company, threatened against the Company wherein an unfavorable decision,
ruling or finding would reasonably be expected to (i) materially adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement, or (ii) have a
Material Adverse Effect.

2.8. No Violations. The Company is not in violation of any material provision of
its Restated Certificate of Incorporation, as amended to date, or its Amended
and Restated Bylaws, as amended to date, or in violation of any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would be reasonably expected to
have a Material Adverse Effect, or is in default (and, to the Company’s
knowledge, there exists no condition which, with or without the passage of time
or giving of notice or both, would constitute a default) in any material respect
in the performance of any bond, debenture, note or any other evidence of
indebtedness in any indenture, mortgage, deed of trust or any other material
agreement or instrument to which the Company is a party or by which the Company
is bound or by which the properties of the Company are bound, which default
would be reasonably expected to have a Material Adverse Effect.

2.9. Governmental Permits, Etc. The Company possesses all necessary franchises,
licenses, certificates and other authorizations from any foreign, federal, state
or local government or governmental agency, department or body that are
currently necessary for the operation of its business as currently conducted,
except where such failure to possess would not reasonably be expected to have a
Material Adverse Effect.

2.10. Intellectual Property. The Company owns or possesses sufficient rights to
use all patents, trademarks, copyrights, licenses, inventions, trade secrets and
trade names that are currently necessary for the conduct of its business as now
conducted (the “Company Intellectual Property”), except where the failure to own
or possess would not reasonably be expected to have a Material Adverse Effect.
The Company has not received any written notice of, or have any actual knowledge
of, any infringement by the Company of intellectual property rights of any third
party that, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect, and the Company has not received any written
notice of any infringement by a third party of any Company Intellectual Property
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

 

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2.11. Financial Statements. The financial statements of the Company and the
related notes thereto included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2006 and originally filed with the SEC on March 6,
2007, as amended on April 27, 2007 (the “Company’s 10-K”), and the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and filed with
the SEC on August 7, 2007 (the “Company’s 10-Q”) present fairly, in all material
respects, the financial position of the Company as of the dates indicated and
the results of its operations and cash flows for the periods therein specified.
Except as set forth in such financial statements (or the notes thereto), and
except for the omission of footnotes or as otherwise permitted by the SEC’s
rules and instructions regarding unaudited interim financial statements, such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods therein specified.

2.12. Sarbanes-Oxley Act. The Company is in compliance in all material respects
with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules
and regulations promulgated in connection therewith, including Sections 302 and
906 thereof relating to certifications.

2.13. No Material Adverse Change. Since the date of the Company’s 10-Q, except
as described or referred to in the SEC Documents and except for cash
expenditures in the ordinary course of business, there has not been (i) any
change, event, circumstance or development that has resulted in a Material
Adverse Effect, (ii) any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company, or (iii) any loss or damage (whether
or not insured) to the physical property of the Company that has resulted in a
Material Adverse Effect.

2.14. No Manipulation of Stock. The Company has not taken and will not, in
violation of applicable law, take, any action designed to or that would
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.

2.15. Insurance. The Company carries, or is covered by, insurance of the types
and in the amounts that the Company reasonably believes is adequate for its
business as currently conducted and as is customary for similarly sized
companies engaged in similar businesses in similar industries.

2.16. Tax Matters. The Company has timely filed all material federal, state,
local and foreign income and franchise and other tax returns required to be
filed by any jurisdiction to which it is subject and has paid all taxes due in
accordance therewith, except where the failure to so timely file or pay would
not reasonably be expected to result in a Material Adverse Effect, and no tax
deficiency has been determined adversely to the Company which has had, nor does
the Company have any knowledge of any tax deficiency which, if determined
adversely to the Company, would reasonably be expected to have, a Material
Adverse Effect.

2.17. Investment Company. The Company is not an “investment company” within the
meaning of such term under the Investment Company Act of 1940 and the rules and
regulations of the SEC thereunder.

 

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2.18. No Registration, Integration, etc. Assuming the accuracy of the
representations and warranties made by, and compliance with the covenants of
Pfizer in ARTICLE III hereof, no registration of the Shares under the Securities
Act is required in connection with the offer and sale of the Shares by the
Company to Pfizer as contemplated by this Agreement. Neither the Company nor any
person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under any circumstances that would require registration of the Shares under the
Securities Act, including, without limitation, integration of the offering of
Shares with any prior offering under the Securities Act. The Company is
currently eligible to register the resale of Common Stock pursuant to a
registration statement on Form S-3 under the Securities Act.

2.19. Related Party Transactions. Except as set forth in the SEC Documents,
since January 1, 2007, no transaction has occurred between or among the Company,
on the other hand, and its affiliates, officers or directors or any affiliates
of any such officer or director, on the other hand, that is required to be
disclosed pursuant to Item 404 of Regulation S-K.

2.20. Nasdaq Continued Listing Requirements. The Company is as of the date
hereof in compliance with applicable Nasdaq continued listing requirements. As
of the date hereof there are no proceedings pending or, to the Company’s
knowledge, threatened against the Company relating to the continued listing of
the Common Stock on Nasdaq.

ARTICLE III

PFIZER REPRESENTATIONS, WARRANTIES AND COVENANTS

Pfizer represents, warrants, covenants and acknowledges to the Company, with
respect to itself and its purchase hereunder, that:

3.1. Securities Law Representations and Warranties.

(a) Pfizer (i) is an “accredited investor” as defined in Rule 501(a) of
Regulation D under the Securities Act, (ii) has the knowledge, sophistication
and experience necessary to make, and is qualified to make decisions with
respect to, investments in securities presenting an investment decision like
that involved in the purchase of investments in securities issued by the Company
and investments in comparable companies, (iii) can bear the economic risk of a
total loss of its investment in the Shares and (iv) has requested, received,
reviewed and considered all information it deemed relevant in making an informed
decision to purchase the Shares.

(b) Pfizer is acquiring the Shares in the ordinary course of its business and
for its own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof and has no
intention of selling or distributing any of such Shares or any arrangement or
understanding with any other persons regarding the sale or distribution of such
Shares except in accordance with the provisions of ARTICLE V and except as would
not result in a violation of the Securities Act.

(c) Pfizer was not organized for the specific purpose of acquiring the Shares.

 

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(d) Pfizer understands that its investment in the Shares involves a significant
degree of risk, including a risk of total loss of Pfizer’s investment, and
Pfizer has full cognizance of and understands all of the risk factors related to
Pfizer’s purchase of the Shares. Pfizer understands that the market price of the
Common Stock can be volatile and that no representation is being made as to the
future value of the Common Stock.

(e) Pfizer is organized under the laws of the State of Delaware and has a
principal office in the State of New York.

(f) Pfizer will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Shares except in compliance with the
Securities Act, applicable foreign and state securities laws and the respective
rules and regulations promulgated thereunder.

(g) Pfizer understands that the Shares are being offered and sold to it in
reliance on specific exemptions from the registration requirements of the United
States federal and state securities laws and that the Company is relying upon
the truth and accuracy of, and Pfizer’s compliance with, representations,
warranties, agreements, acknowledgements and understandings of Pfizer set forth
herein in order to determine the availability of such exemptions and the
eligibility of Pfizer to acquire the Shares.

(h) Pfizer understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any recommendation
or endorsement of the Shares or the fairness or suitability of an investment in
the Shares nor have such authorities passed upon or endorsed the merits of the
offering of the Shares pursuant to this Agreement.

(i) Pfizer acknowledges that the Company has represented that no action has been
or will be taken in any jurisdiction outside the United States by the Company
that would permit an offering of the Shares, or possession or distribution of
offering materials in connection with the issuance of the Shares, in any
jurisdiction outside the United States where action for that purpose is
required. If Pfizer is located or domiciled outside the United States, it agrees
to comply with all applicable laws and regulations in each foreign jurisdiction
in which it purchases, offers, sells or delivers Shares or has in its possession
or distributes any offering material, in all cases at its own expense.

(j) Pfizer understands that no disclosure or offering document will be provided
or prepared in connection with the offer and sale of the Shares.

(k) Pfizer acknowledges that the Company is required to file reports containing
certain business and financial information with the SEC pursuant to the
reporting requirements of the Exchange Act, and that Pfizer is able to obtain
copies of the SEC Documents filed through the date hereof.

(l) Pfizer has been furnished with all materials relating to the business,
financial condition, results of operations, properties, management, operations
and prospects of the Company and materials relating to the terms and conditions
of the offer and sale of the Shares that have been requested by Pfizer. Pfizer
has been afforded the opportunity to ask

 

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questions of the Company and has received answers from an authorized
representative of the Company that are satisfactory to Pfizer for purposes of
confirming Pfizer’s diligence and investigation of the Company. Neither such
inquiries nor any other investigation conducted by or on behalf of Pfizer or its
representatives or counsel shall modify, amend or affect Pfizer’s right to rely
on the Company’s representations and warranties contained herein.
Notwithstanding the foregoing, in entering into this Agreement, Pfizer
represents that it is relying solely on the representations, warranties,
covenants and agreements set forth in this Agreement, which document supersedes
and replaces any other written or oral information communicated to Pfizer.
Pfizer acknowledges that no third party has made or will make any representation
or warranty to Pfizer regarding the adequacy or completeness for Pfizer’s
purposes of the information Pfizer has requested.

(m) Pfizer has made its own assessment and is satisfied concerning the relevant
tax, legal and other economic considerations relevant to Pfizer’s investment in
the Shares and has independently evaluated the merits of its decision to
purchase Shares pursuant to this Agreement.

(n) Pfizer acknowledges that its decision to purchase Shares pursuant to this
Agreement has been made by Pfizer independently. Pfizer is not in any way acting
in concert with or as a group with any third party with respect to (i) the
purchase or ownership of the Shares or (ii) the other transactions contemplated
by this Agreement. Pfizer acknowledges that no third party has acted as agent
for Pfizer in connection with making its investment hereunder and that no third
party will be acting as agent of Pfizer in connection with monitoring its
investment in the Shares or enforcing its rights under this Agreement.

3.2. Legends. Pfizer understands that the Shares shall bear a legend in
substantially the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN EXEMPTION THEREFROM.

The foregoing legend shall be removed from the certificates representing the
Shares, and the Company shall deliver irrevocable instructions to the Company’s
transfer agent that a certificate without such legend shall be delivered to
Pfizer of such Shares, if (i) (A) the resale of such Shares are registered under
the Registration Statement contemplated by ARTICLE V, the Registration Statement
is effective for such transfer and a prospectus meeting the requirements of
Section 10 of the Securities Act is available with respect to such Shares or
(B) the Shares are eligible to be sold pursuant to Rule 144(k) of the Securities
Act or any successor rule and (ii) Pfizer delivers to the Company or its
transfer agent the legended certificate(s) for such shares and customary
representations with respect to the shares as reasonably requested by the
Company. If the Company is required to issue unlegended certificates pursuant to
this Section

 

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3.2, the Company shall use its reasonable best efforts to (i) cause its counsel
to deliver to the Company’s transfer agent one or more blanket opinions to the
effect that the removal of such legends in such circumstances may be effected
under the Securities Act and (ii) deliver or cause to be delivered to Pfizer or
its transferee a certificate representing such shares that is free from all
restrictive and other legends within five business days of the submission by
Pfizer of the legended certificates and the representations required for
consummation of such transaction.

3.3. Authorization; Enforcement; Validity. Pfizer has full right, power,
authority and capacity (corporate, statutory or otherwise) to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement. The making and performance of this Agreement by Pfizer and the
consummation by Pfizer of the transactions herein contemplated will not violate
any provision of the organizational documents of Pfizer or conflict with, result
in the breach or violation of, or constitute, either by itself or upon notice or
the passage of time or both, a default under any material agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which Pfizer is a party, or any statute or any authorization, judgment,
decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to Pfizer. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required on the part of
Pfizer for the execution and delivery of this Agreement or the consummation by
Pfizer of the transactions contemplated by this Agreement. There is not in
effect any order enjoining or restraining Pfizer from entering into or engaging
in any of the transactions contemplated by this Agreement. This Agreement
constitutes a valid and binding obligation of Pfizer enforceable against Pfizer
in accordance with its terms, except (i) to the extent rights to indemnity and
contribution may be limited by state or federal securities laws or the public
policy underlying such laws, (ii) enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and
(iii) enforceability may be limited by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).

3.4. Certain Trading Limitations. Pfizer (i) represents that on and from the
date Pfizer first began discussions with the Company regarding establishing the
Collaboration Relationship until the date hereof neither it nor anyone acting on
its behalf has, and (ii) covenants that for the period commencing on the date
hereof and ending on the later of (A) the first anniversary of the First Closing
Date and (B) the Subsequent Closing Date of the second tranche of the Put
Option, if the limitation set forth in Section 1.2(c) restricts the Company from
exercising the Put Option for an aggregate purchase price of $10,000,000 in a
single tranche, or the Subsequent Closing Date of the sole tranche of the Put
Option, if the Company is not so restricted by the limitation in Section 1.2(c)
(the date described in this clause (B) being hereinafter referred to as the
“Trading Limitation Date”), neither it nor anyone acting on its behalf will,
engage in any hedging or other transaction which is designed to or could
reasonably be expected to lead to or result in, or be characterized as, a sale,
an offer to sell, a solicitation of offers to buy, disposition of, loan, pledge
or grant of any right with respect to (collectively, a “Disposition”) the Common
Stock of the Company by Pfizer or any other person or entity; provided, however,
that (a) Dispositions will be permissible if the Collaboration Agreement or
Research Term (as defined in the Collaboration Agreement) is terminated and
(b) after the first anniversary of the First Closing Date, Pfizer shall

 

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be permitted to sell all of its Shares (along with an assignment of the
accompanying registration rights as contemplated by Section 6.13) in a single
private transaction exempt from registration under the Securities Act in
accordance with the other provisions of this Agreement. Such prohibited hedging
or other transactions would include without limitation effecting any short sale
or having in effect any short position (whether or not such sale or position is
“against the box” and regardless of when such position was entered into) or any
purchase, sale or grant of any right (including without limitation any put or
call option) with respect to the Common Stock of the Company or with respect to
any security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the Common Stock of
the Company. In addition, Pfizer covenants that for the period commencing on the
date hereof and ending on the Trading Limitation Date, neither it nor anyone
acting on its behalf will buy any Common Stock of the Company, without the prior
written consent of the Company, other than pursuant to Section 1.2 of this
Agreement.

3.5. No Sale of Shares. Pfizer hereby covenants with the Company not to make any
sale of the Shares without (i) complying with the provisions of this Agreement,
including Section 5.4 hereof, and (ii) satisfying the requirements of the
Securities Act and the rules and regulations promulgated thereunder, including,
without limitation, if applicable, causing the prospectus delivery requirement
under the Securities Act to be satisfied if Pfizer is notified by the Company
pursuant to Section 5.2(c) hereof that the conditions specified in Rule 172(c)
of the Securities Act were not satisfied and, as a result thereof, Pfizer is
required to deliver a Prospectus (as defined below) in connection with any
disposition of Registrable Securities (as defined below). Pfizer acknowledges
that there may occasionally be times when the Company determines that, subject
to the limitations of Section 5.5, it must suspend the use of the prospectus
forming a part of the Registration Statement until such time as an amendment to
the Registration Statement has been filed by the Company and declared effective
by the SEC, an appropriate report has been filed by the Company with the SEC
pursuant to the Exchange Act or until the Company has amended or supplemented
such prospectus. Pfizer hereby covenants that it will not sell any Shares
pursuant to the Registration Statement during the period commencing at the time
at which the Company gives Pfizer written notice of any Suspension, as defined
in Section 5.5, of the use of the Registration Statement and ending at the time
the Company gives Pfizer written notice that Pfizer may thereafter effect sales
pursuant to the Registration Statement.

3.6. Voting. Pfizer shall, and hereby does, constitute and appoint the President
and the Treasurer of the Company, and each of them, with full power of
substitution, as the proxies of Pfizer with respect to matters on which Pfizer
is entitled to vote as a holder of Common Stock, and hereby authorizes each of
them to represent and to vote (i) all of Pfizer’s Shares with respect to matters
other than a merger or acquisition of the Company, the disposition of all or
substantially all of the Company’s assets, or a change of control of the
Company, and (ii) if on the record date for any vote of Common Stock of the
Company Pfizer holds greater than 10% of the outstanding shares of Common Stock,
any of Pfizer’s Shares in excess of the number of shares equal to 10% of the
outstanding shares of Common Stock, with respect to matters related to a merger
or acquisition of the Company, the disposition of all or substantially all of
the Company’s assets, or a change of control of the Company, in the same manner
and in the same proportion as shares of Common Stock held by other shareholders
of the Company are voted on such matters. The proxy granted pursuant to the
immediately preceding sentence is given in consideration of the agreements and
covenants of the Company in connection with the

 

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transactions contemplated by this Agreement and the Collaboration Agreement and,
as such, is coupled with an interest and shall be irrevocable. Pfizer hereby
revokes any and all previous proxies with respect to voting such Shares and
shall not hereafter purport to grant any other proxy or power of attorney with
respect to voting any of the Shares, deposit any of the Shares into a voting
trust or enter into any agreement (other than this Agreement), arrangement or
understanding with any person, directly or indirectly, to vote, grant any proxy
or give instructions with respect to the voting of any of the Shares.
Notwithstanding the foregoing, if both (a) the Company issues Common Stock that
represents more than 10% of the then outstanding Common Stock of the Company to
a third party strategic investor in connection with a collaboration agreement
and (b) the voting rights granted to such third party contain fewer restrictions
than those contained in this Section 3.6, then Pfizer’s voting rights herein
shall be deemed to be automatically modified so as to make such rights no less
favorable to Pfizer than those granted to the third party strategic investor.

3.7. Registration Questionnaire. Pfizer shall provide the Company, at the time
it provides the Registration Request (as defined in Section 5.1), with a
completed Registration Questionnaire in the form attached hereto as Exhibit C
(the “Registration Questionnaire”) for use in preparation of the Registration
Statement, and the information contained in such completed Registration
Questionnaire shall be true and correct in all material respects as of the date
of the Registration Request and will be true and correct on the effective date
of the Registration Statement. Pfizer covenants that, upon the Company’s
reasonable written request, it will promptly notify the Company of any changes
in such information or other information as the Company may reasonably request
in connection with any registration referred to in ARTICLE V.

3.8. No Advice. Pfizer understands that nothing in this Agreement or any other
materials presented to Pfizer in connection with the purchase and sale of the
Shares constitutes legal, tax or investment advice. Pfizer has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the Shares.

3.9. Patriot Act. Pfizer represents and warrants to, and covenants with, the
Company that (i) Pfizer is in compliance with Executive Order 13224 and the
regulations administered by the U.S. Department of the Treasury (“Treasury”)
Office of Foreign Assets Control, (ii) Pfizer, its subsidiaries, affiliated
companies, officers, directors and partners, and to Pfizer’s knowledge, its
employees and agents, are not on the List of Specially Designated Nationals and
Blocked Persons (“SDN List”) maintained by Treasury and have not been designated
by Treasury as a financial institution of primary money laundering concern,
(iii) to Pfizer’s knowledge after reasonable investigation, all of the funds to
be used to acquire the Shares are derived from legitimate sources and are not
the product of illegal activities, and (iv) Pfizer is in compliance with all
other applicable U.S. anti-money laundering laws and regulations and has
implemented, if applicable, an anti-money laundering compliance program in
accordance with the requirements of the Bank Secrecy Act, as amended by the USA
PATRIOT Act, Pub. L. 107-56.

3.10. Broker-Dealer. Pfizer is not a registered broker-dealer, is not engaged in
the business of a broker-dealer and is not an affiliate of a registered
broker-dealer.

 

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3.11. General Solicitation. Pfizer is not purchasing the Shares as a result of
any advertisement, article, notice or other communication regarding such Shares
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.

3.12. Treatment of Non-Public Information. Pfizer agrees (a) to hold the
existence, terms and conditions of this Agreement, the Collaboration Agreement
and the transactions contemplated hereby and thereby in confidence and not to
disclose the same to any other person until such time as the Company files with
the SEC a Current Report on Form 8-K disclosing such matters or publicly
announces the same, and (b) to hold certain other matters disclosed to it by the
Company in confidence and not to disclose the same to any other person until
such time as the Company files with the SEC a report publicly disclosing such
information. Pfizer understands that the federal securities laws impose
restrictions on trading based on information regarding such matters.

3.13. SEC Reports. Pfizer has reviewed the Company’s 10-K, the Company’s 10-Q
and all subsequent filings made by the Company under the Exchange Act.

ARTICLE IV

COVENANTS

4.1. Certain Future Financings and Related Actions. Without the prior consent of
Pfizer, the Company shall not cause the sale of the Shares contemplated by this
Agreement to be integrated with future offerings by the Company in a manner that
would require the registration under the Securities Act of the sale of the
Shares to Pfizer.

4.2. Use of Proceeds. The Company intends to use the net proceeds from the sale
of the Shares contemplated by this Agreement for the funding of its research and
development programs described in the Company’s 10-K and the Company’s 10-Q and
otherwise for general corporate purposes.

4.3. Securities Law Compliance. Pfizer covenants and agrees that it will not
make any sale, transfer or other disposition of the Shares in violation of
federal or state securities laws.

4.4. Listing of Shares on Nasdaq. Promptly following the date hereof, the
Company shall take all necessary action to cause the Initial Shares to be listed
on the Nasdaq Global Market. Promptly following each Put Exercise Date, the
Company shall take all necessary action to cause the applicable Put Shares to be
listed on the Nasdaq Global Market no later than the applicable Subsequent
Closing Date. Further, if the Company applies to have its Common Stock or other
securities traded on any other principal stock exchange or market, it shall
include in such application the Shares and will take such other action as is
necessary to cause such Common Stock to be so listed.

4.5. Publicity. The parties recognize that each party may from time to time
desire to issue press releases and make other public statements or disclosures
regarding the subject matter of this Agreement. In such event, the party
desiring to issue a press release or make a public statement or disclosure shall
provide the other party with a copy of the proposed press release,

 

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statement or disclosure for review and prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing, a party may (a) disclose the existence and terms of this Agreement
under obligations of confidentiality to agents, advisors, contractors,
investors, acquirors and sublicensees, and to potential agents, advisors,
contractors, investors, acquirors and sublicensees, in connection with such
party’s activities hereunder or its financing or strategic activities and
(b) disclose the existence, terms and subject matter of this Agreement where
required, as reasonably determined by the disclosing party, by applicable law or
regulation, including without limitation the securities laws, by applicable
stock exchange or stock market rule or by order of a court or other legal
process; provided that, in the case of this clause (b) only, the announcing
party shall use reasonable efforts to provide the other party with a copy of the
proposed text of such announcement sufficiently in advance of the scheduled
release or publication thereof to afford such other party a reasonable
opportunity to review and comment upon the proposed text prior to such public
announcement; and provided, further, that, the failure of such other party or
its counsel to respond to such proposed announcement prior to the scheduled
release shall be deemed approval of same and no such review and comment shall
inhibit the announcing party from complying with applicable law or regulation,
including without limitation the securities laws, applicable stock exchange or
stock market rules or an order of a court or other legal process.

ARTICLE V

REGISTRATION OF SHARES; COMPLIANCE WITH THE SECURITIES ACT

5.1. Registration Right. At any time after the later of (a) the first
anniversary of the First Closing Date and (b) the Trading Limitation Date,
Pfizer may request, in writing, that the Company effect the registration on Form
S-3 (or such other form as may be required) (the “Registration Statement”) to
enable the resale by Pfizer on an immediate, delayed or continuous basis under
Rule 415 of the Securities Act of (i) the Shares and (ii) any shares of Common
Stock issued or issuable in respect of the Shares by virtue of any stock split,
stock dividend, recapitalization or similar event (the “Registrable Securities”;
such request, the “Registration Request”). Notwithstanding the foregoing, the
term Registrable Securities shall not include (A) any securities that have been
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with such registration
statement, (B) any securities that have been publicly sold pursuant to Rule 144
or (C) any securities that Pfizer may sell or transfer in compliance with Rule
144 under the Securities Act (or any other similar provisions then in force)
without any volume or manner of sale restrictions thereunder. The Company shall
not be required to effect more than one registration pursuant to this ARTICLE V.

5.2. Registration Procedures and Expenses. Following receipt of the Registration
Request, the Company shall:

(a) subject to receipt of necessary information from Pfizer, including the
information requested in the Registration Questionnaire, use its reasonable best
efforts to prepare and file the Registration Statement with the SEC on or prior
to the 30th calendar day following receipt of the Registration Request (the
“Filing Date”);

 

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(b) use its reasonable best efforts, subject to receipt of necessary information
from Pfizer, including the information requested in the Registration
Questionnaire, to cause the Registration Statement to become effective within 90
calendar days after the Filing Date, or within 120 calendar days after the
Filing Date if the SEC determines to review such Registration Statement;

(c) use its reasonable best efforts, subject to the provisions of Section 5.5
below, to (i) comply with all applicable rules and regulations of the SEC under
the Securities Act and the Exchange Act, including, without limitation, Rule 172
under the Securities Act, (ii) promptly prepare and file with the SEC such
amendments and supplements to the Registration Statement, (iii) promptly prepare
and file with the SEC the Prospectus, as defined below, including any supplement
or amendment thereof, used in connection therewith, (iv) promptly inform Pfizer
in writing if, at any time during the Registration Period (as defined below),
the Company becomes aware of the fact that it does not satisfy the conditions
specified in Rule 172(c) of the Securities Act and, as a result thereof, Pfizer
is required to deliver a Prospectus in connection with any disposition of
Registrable Securities, and (v) take all such other actions as may be reasonably
necessary to keep the Registration Statement current and effective, in each
case, for a period (the “Registration Period”) not exceeding the earliest of
(A) one year after the Filing Date, (B) the date on which all Registrable
Securities then held by Pfizer may be sold or transferred in compliance with
Rule 144 under the Securities Act (or any other similar provisions then in
force) without any volume or manner of sale restrictions thereunder, or (C) such
time as all Registrable Securities held by Pfizer have been sold (1) pursuant to
a registration statement, (2) to or through a broker or dealer or underwriter in
a public distribution or a public securities transaction or (3) in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale;

(d) during the Registration Period, promptly furnish to Pfizer with respect to
the Registrable Securities registered for the account of Pfizer under the
Registration Statement such reasonable number of copies of the Prospectus as
Pfizer may request, including any supplements to or amendments to the
Prospectus, in order to facilitate the public sale or other disposition of all
or any of the Registrable Securities by Pfizer;

(e) during the Registration Period, promptly take such action as may be
necessary to qualify, or obtain, an exemption for the Registrable Securities
under such of the state securities laws of United States jurisdictions as shall
be necessary to qualify, or obtain an exemption for, the sale of the Registrable
Securities in states specified in writing by Pfizer; provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented, subject itself to general taxation in any such jurisdiction or
provide any undertakings that cause the Company undue expense or burden;

(f) bear all expenses in connection with the procedures in paragraphs
(a) through (e) and (g) of this Section 5.2 and the registration of the
Registrable Securities pursuant to the Registration Statement, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings

 

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made with Nasdaq); (ii) fees and expenses of compliance with federal securities
and state “blue sky” or securities laws; (iii) expenses of printing or copying
(including printing certificates for the Registrable Securities and copying
Prospectuses); (iv) all application and filing fees, if any, in connection with
listing of the Registrable Securities with Nasdaq; and (v) all fees and
disbursements of counsel of the Company and independent certified public
accountants of the Company; provided, however, that Pfizer shall be responsible
for paying the underwriting commissions or brokerage fees, taxes of any kind
(including, without limitation, transfer taxes) applicable to any disposition,
sale or transfer of Pfizer’s Registrable Securities, and (except as set forth in
Section 5.5) fees and expenses, if any, of counsel or other advisors to Pfizer.
The Company shall, in any event, bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties);

(g) during the Registration Period, advise Pfizer promptly, but in any event
within two business days, by e-mail, fax or other type of communication, and, if
requested by such person, confirm such advice in writing: (i) after it shall
receive notice or obtain knowledge of the issuance of any stop order by the SEC
delaying or suspending the effectiveness of the Registration Statement or of the
initiation of any proceeding for that purpose, or any other order issued by any
state securities commission or other regulatory authority suspending the
qualification or exemption from qualification of such Registrable Securities
under state securities or “blue sky” laws; and it will, subject to the
provisions of Section 5.4 below, promptly use its reasonable best efforts to
prevent the issuance of any stop order or other order or to obtain its
withdrawal at the earliest possible moment if such stop order or other order
should be issued; (ii) when the Prospectus or any supplements to or amendments
of the Prospectus have been filed, and, with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective; and (iii) when the SEC notifies the Company whether there will be a
“review” of such Registration Statement and whenever the SEC comments in writing
on such Registration Statement (the Company shall provide true and complete
copies thereof and all written responses thereto to Pfizer that pertain to
Pfizer as Selling Stockholder or to the Plan of Distribution (as defined below),
but not information which the Company believes would constitute material and
non-public information);

(h) except if otherwise required pursuant to written comments received from the
SEC upon a review of such Registration Statement, include in the Registration
Statement the “Plan of Distribution” attached hereto as Exhibit D;

(i) neither the Company nor any of its securities holders may include securities
of the Company (other than the Shares) in any Registration Statement filed
pursuant to this Agreement unless (A) required under the terms of any
registration rights provisions set forth in any of the agreements listed as
exhibits to the Company’s 10-K or (B) otherwise agreed to by Pfizer, and the
Company shall not during the Registration Period enter into any agreement in
contravention of the foregoing;

(j) not less than three business days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto
(other than (i) Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and any similar or successor reports or other
documents incorporated by reference therein and (ii) any post-effective
amendment de-registering Shares at the end of the Registration Period),

 

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the Company shall furnish to Pfizer copies of the “Selling Stockholder” section
of such document, the “Plan of Distribution,” and any risk factor contained in
such document that addresses specifically this transaction or Pfizer, as
proposed to be filed (the date any such document is provided to Pfizer being
hereinafter referred to as the “Notice Date”), which documents will be subject
to the review and comment (but not approval) of Pfizer and its counsel; provided
that, the failure of Pfizer or its counsel to respond to such proposed documents
within two business days after the Notice Date shall be deemed approval of same;
and provided, further, that no such review and comment shall inhibit the Company
from filing the Registration Statement, any Prospectus or any such amendment or
supplement within five business days after the Notice Date or otherwise from
complying with its obligations hereunder;

(k) respond as promptly as practicable to any comments received from the SEC
with respect to each Registration Statement or any amendment thereto and, as
promptly as practicable, provide to Pfizer copies of all material correspondence
from and to the SEC relating to such Registration Statement that would not
result in the disclosure to Pfizer of material and non-public information
concerning the Company;

(l) comply in all material respects with the provisions of the Securities Act,
the Exchange Act and all rules of the SEC promulgated thereunder with respect to
the Registration Statement and the disposition of all Registrable Securities
covered by the Registration Statement; and

(m) upon any sale of Registrable Securities pursuant to the Registration
Statement for the account of Pfizer, cooperate with Pfizer to facilitate the
timely preparation and delivery of stock certificates representing such
Registrable Securities to be delivered to the transferee thereof pursuant to the
Registration Statement, which certificates shall be free of all restrictive
legends; provided, that the delivery of such certificates shall be subject to
the payment by Pfizer of any transfer taxes, if applicable.

5.3. Registration Defaults.

(a) If the Registration Statement (i) has not been filed within 30 calendar days
after receipt of the Registration Request, (ii) has not been declared effective
by the SEC within 90 calendar days after the Filing Date, if the SEC determines
not to review such Registration Statement, (iii) has not been declared effective
by the SEC within 120 calendar days after the Filing Date, if the SEC determines
to review such Registration Statement, or (iv) after such Registration Statement
is declared effective by the SEC, is suspended by the Company or ceases to
remain continuously effective as to all Registrable Securities for which it is
required to be effective, other than for the time periods permitted by the last
sentence of Section 5.4(c) (each such event referred to in clauses (i), (ii),
(iii) and (iv), a “Registration Default “), for any 30-day period or portion
thereof (a “Penalty Period “) during which the Registration Default remains
uncured (which initial 30-day period shall commence on the date of such
Registration Default), the Company shall promptly pay, in cash, to Pfizer 1% of
Pfizer’s aggregate purchase price for Pfizer’s Registrable Securities purchased
pursuant to this Agreement for each Penalty Period during which the Registration
Default remains uncured (a “Registration Penalty”); provided, however, that if
Pfizer fails to provide the Company with any information that is required to be
provided in the Registration Statement with respect to Pfizer, then the
commencement of the

 

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Penalty Period described above shall be extended until two business days
following the date of receipt by the Company of such required information from
Pfizer; provided further, that the amount payable to Pfizer hereunder for any
partial Penalty Period shall be prorated for the number of actual days during
such Penalty Period during which a Registration Default remains uncured; and
provided further that in no event shall the Company be required to pay to Pfizer
pursuant to this Section 5.3(a) an aggregate amount that exceeds 10% of the
aggregate purchase price paid by Pfizer for the Shares. Notwithstanding anything
to the contrary contained in this Section 5.3(a), in no event shall the Company
be liable to Pfizer for more than one Registration Penalty with respect to the
same Registrable Securities during any 30-day period, even if more than one
event giving rise to a Registration Penalty occurs during such 30-day period.
The payments provided for in this Section 5.3(a) shall constitute Pfizer’s
exclusive monetary remedy for any Registration Default, but shall not affect the
right of Pfizer to seek injunctive relief.

(b) Rule 415; Cutbacks. Notwithstanding the other provisions of this Agreement,
if at any time the SEC takes the position that some or all of the Registrable
Securities may not be included in the Registration Statement because (i) the
inclusion of such Registrable Securities violates the provisions of Rule 415
under the Securities Act as a result of the number of shares included in such
Registration Statement or (ii) the Registrable Securities cannot be sold as an
“at the market offering,” the Company shall (A) remove from the Registration
Statement such portion of the Registrable Securities (the “Cut Back Shares”)
and/or (B) agree to such restrictions and limitations on the registration and
resale of the Registrable Securities as the SEC may require to assure the
Company’s compliance with the requirements of Rule 415 (collectively, the “SEC
Restrictions”). No Registration Penalty shall accrue on any Cut Back Shares
until such time as the Company is able to effect the registration of the Cut
Back Shares in accordance with any SEC Restrictions (such date, the “Restriction
Termination Date”). From and after the Restriction Termination Date, all of the
provisions of this Section 5.3 (including the Registration Penalty provisions)
shall again be applicable to the Cut Back Shares; provided, however, that for
such purposes the date on which the Registration Request is received shall be
deemed to be the Restriction Termination Date.

5.4. Transfer of Securities; Suspension.

(a) Pfizer agrees that it will not effect any Disposition of the Registrable
Securities or its right to purchase the Registrable Securities that would
constitute a sale within the meaning of the Securities Act or any applicable
state securities laws, except as contemplated in the Registration Statement
referred to in Section 5.1 or in accordance with the Securities Act, and that,
upon the Company’s reasonable written request, it will promptly notify the
Company of any changes in the information set forth in the Registration
Statement or the Registration Questionnaire regarding Pfizer or its plan of
distribution or other information as the Company may reasonably request in
connection with any registration referred to in ARTICLE V. The Company shall not
be required to file the Registration Statement if Pfizer fails to complete or
update the Registration Questionnaire or provide the information requested in
the Registration Questionnaire in accordance with this Section 5.4.

(b) Except in the event that paragraph (c) below applies, the Company shall use
its reasonable best efforts to, at all times during the Registration Period,
promptly prepare and file from time to time with the SEC a post-effective
amendment to the Registration

 

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Statement, or a supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference or file any other
required document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading, and so that, as thereafter delivered to
purchasers of the Registrable Securities being sold thereunder, such Prospectus
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

(c) In the event of (i) any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to a Registration Statement or related
Prospectus or for additional information; (ii) the issuance by the SEC or any
other federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose; (iii) the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; (iv) the Company’s
election to delay the disclosure of material non-public information concerning
the Company, the disclosure of which at the time is not, in the good faith
judgment of the Board of Directors of the Company, in the best interest of the
Company; or (v) any event or circumstance which necessitates the making of any
changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that in the case
of the Prospectus, it will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, then
the Company shall deliver a notice in writing to Pfizer (a “Suspension Notice”)
to the effect of the foregoing and, upon receipt of such Suspension Notice,
Pfizer will refrain from selling any Registrable Securities pursuant to the
Registration Statement (a “Suspension”) until Pfizer’s receipt of copies of a
supplemented or amended Prospectus prepared and filed by the Company, or until
it is advised in writing by the Company that the current Prospectus may be used.
In the event of any Suspension pursuant to clause (i), (ii) or (iii) above, the
Company will use its reasonable best efforts, consistent with the best interests
of the Company and its stockholders, to cause the use of the Prospectus so
suspended to be resumed as soon as reasonably practicable after the delivery of
a Suspension Notice to Pfizer. The Company shall not disclose in any Suspension
Notice any material non-public information giving rise to such Suspension. No
Suspension shall exceed 30 consecutive days and, during any 365-day period,
Suspensions shall not exceed an aggregate of 90 days.

(d) Upon the written request of Pfizer in connection with Pfizer’s due diligence
requirements, if any, the Company shall make available for inspection by
(i) Pfizer and (ii) one firm of accountants or other agents retained by Pfizer
(collectively, the “Inspectors”), all pertinent financial and other records, and
pertinent corporate documents and properties of the Company (collectively, the
“Records”), as shall be reasonably deemed necessary by each Inspector, and cause
the Company’s officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each Inspector
shall agree

 

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to hold in strict confidence and shall not make any disclosure (except to
Pfizer) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors are
so notified, unless (A) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the Securities Act, (B) the release of such Records is ordered
pursuant to a final, non-appealable subpoena or order from a court or government
body of competent jurisdiction, or (C) the information in such Records has been
made generally available to the public other than by disclosure in violation of
this or any other document contemplated hereby. Pfizer agrees that it shall,
upon learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.

5.5. Indemnification. For the purpose of this Section 5.5, the term
“Registration Statement” shall include any preliminary or final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 5.1 and the term “Rules and Regulations” means
the rules and regulations promulgated under the Securities Act.

(a) Indemnification by the Company. The Company agrees to indemnify, defend and
hold harmless Pfizer, its officers, directors, agents, partners, members,
managers, trustees and employees, and each person, if any, who controls Pfizer
(or any of such other persons) within the meaning of the Securities Act, against
any losses, claims, damages, liabilities, costs or expenses to which Pfizer or
such other person may become subject (including, without limitation, reasonable
legal and other costs and expenses of preparing, investigating or defending, or,
if approved in accordance with Section 5.6, settling, compromising or paying
such losses, claims, damages, liabilities, costs or expenses) (collectively,
“Losses”), as incurred, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation insofar as such Losses arise out of
or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434 of
the Rules and Regulations, or the Prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, or filed as
part of the Registration Statement at the time of effectiveness if no Rule
424(b) filing is required (the “Prospectus”), or any amendment or supplement
thereto or (ii) the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the statements
in any of them, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such Loss arises out of or is based upon (A) an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Prospectus or any amendment or
supplement of the Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of Pfizer expressly for use in the Registration Statement or Prospectus
(including without limitation the information set forth in the Registration
Questionnaire) or to the extent that such information relates to Pfizer or
Pfizer’s proposed method of distribution, (B) the failure of Pfizer to comply
with the covenants and agreements contained in Section 3.5 or 5.4 of this
Agreement respecting

 

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resale of Registrable Securities, (C) the inaccuracy of any representations made
by Pfizer in this Agreement or (D) any untrue statement or omission of a
material fact in any Prospectus that is corrected in any subsequent Prospectus
that was delivered to Pfizer before the pertinent sale or sales by Pfizer;
provided, that (1) the Company has previously advised Pfizer in writing that the
Company does not meet the conditions for use of Rule 172 of the Securities Act
and that, as a result thereof, Pfizer is obligated to deliver the Prospectus in
connection with any sales under the Registration Statement and (2) that delivery
of such subsequent Prospectus would have prevented such Losses from occurring.

(b) Indemnification by Pfizer. Pfizer will indemnify, defend and hold harmless
the Company, each of its directors, each of its executive officers, including
such officers who sign the Registration Statement, and each person, if any, who
controls the Company within the meaning of the Securities Act, against any
Losses to which the Company, each of its directors, each of its executive
officers, including such officers who sign the Registration Statement, or such
controlling person may become subject, as incurred, under the Securities Act,
the Exchange Act, or any other federal or state statutory law or regulation
insofar as such Losses arise out of or are based upon (i) any failure on the
part of Pfizer to comply with the covenants and agreements contained in
Section 3.5 or 5.4 of this Agreement respecting the sale of the Registrable
Securities or (ii) any untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement to the
Registration Statement or Prospectus, or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or omission was made in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
Pfizer expressly for use therein (including without limitation the information
set forth in the Registration Questionnaire). The amount of any payment by
Pfizer under this ARTICLE V in respect of any Losses resulting from or arising
out of any indemnification or contribution claim shall in no event exceed the
net proceeds to Pfizer as a result of the sale of the Shares pursuant to the
Registration Statement.

5.6. Indemnification Procedure.

(a) Promptly after receipt by an indemnified party under this ARTICLE V of
notice of the threat or commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party under
this ARTICLE V, promptly notify the indemnifying party in writing of the claim;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise under the obligations to indemnify contained in this ARTICLE V to the
extent it is not prejudiced as a result of such failure.

(b) In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from the indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish to assume the defense thereof; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded,
based on the opinion of counsel reasonably satisfactory to the indemnifying
party,

 

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that there is a conflict of interest between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action,
the indemnified party or parties shall have the right to select separate counsel
to assume such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election to
assume the defense of such action, the indemnifying party will not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless:

(i) the indemnified party shall have employed such counsel in connection with
the assumption of legal defenses in accordance with the proviso to the preceding
sentence in Section 5.6(b) above (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel where counsel is reasonably necessary, approved by such
indemnifying party (such approval not to be unreasonably withheld) representing
all of the indemnified parties who are parties to such action), or

(ii) the indemnifying party shall not have counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.

The indemnified party shall use reasonable efforts to cooperate with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party that relates
to such action or claim. Following indemnification as provided for hereunder,
the indemnifying party shall be subrogated to all rights of the indemnified
party with respect to all third parties, firms or corporations relating to the
matter for which indemnification has been made.

(c) Settlement. The indemnifying party shall not be liable for any settlement of
any action, claim, suit, investigation, inquiry or proceeding (including,
without limitation, any shareholder or derivative action or arbitration
proceeding, whether commenced or threatened, with respect to which an
indemnified party is entitled to indemnification hereunder (collectively, a
“Proceeding”) effected without its written consent, which consent shall not be
unreasonably withheld. The indemnifying party shall not, without the prior
written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any Proceeding in respect of
which any indemnified party is a party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding.

(d) Contribution. If the indemnification provided for in this ARTICLE V is
required by its terms but is unavailable to an indemnified party (by reason of
public policy or otherwise), then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of any losses, claims, damages,
liabilities or expenses referred to in this Agreement, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions, statements or omissions that
resulted in such losses, claims,

 

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damages, liabilities or expenses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any losses,
claims, damages, liabilities or expenses shall be deemed to include, subject to
the limitations set forth in this Section 5.6, any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this ARTICLE V was available to
such party in accordance with its terms. The provisions set forth in paragraph
(a) of this Section 5.6 with respect to the notice of the threat or commencement
of any action shall apply if a claim for contribution is to be made under this
paragraph (d); provided, however, that no additional notice shall be required
with respect to any threat or action for which notice has been given under
paragraph (a) for purposes of indemnification.

(e) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this ARTICLE V were determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this ARTICLE V, Pfizer shall not be required
to contribute, in the aggregate, any amount in excess of the amount by which the
net proceeds from the sale of Registrable Securities by Pfizer exceeds the
amount of any damages that Pfizer has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
party to this Agreement guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the other party to this Agreement who was not guilty of such
fraudulent misrepresentation.

5.7. Termination of Conditions and Obligations. The restrictions imposed by
ARTICLE III or ARTICLE V upon the transferability of the Registrable Securities
shall cease and terminate as to any particular number of the Registrable
Securities upon the termination of the Registration Period with respect to such
Registrable Securities.

5.8. Rule 144. At all times prior to the second anniversary of any Closing Date
during which there are Registrable Securities outstanding which have not been
previously (a) sold to or through a broker or dealer or underwriter in a public
distribution, or (b) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(l)
thereof, in the case of either clause (a) or clause (b) in such a manner that,
upon the consummation of such sale, all transfer restrictions and restrictive
legends with respect to such securities are removed upon the consummation of
such sale, the Company shall use its reasonable best efforts to:

(i) comply with the requirements of Rule 144(c) under the Securities Act with
respect to current public information about the Company;

 

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(ii) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act (at any
time it is subject to such reporting requirements); and

(iii) furnish to any holder of Registrable Securities promptly after receipt of
a written request therefor (A) a written statement by the Company as to its
compliance with the requirements of said Rule 144(c), and the reporting
requirements of the Securities Act and the Exchange Act, (B) a copy of the most
recent annual or quarterly report of the Company, and (C) such other reports and
documents of the Company as such holder may reasonably request to avail itself
of any similar rule or regulation of the SEC allowing it to sell any such
securities without registration.

5.9. Registration of Other Securities. Notwithstanding anything contained herein
to the contrary and for the avoidance of doubt, the parties hereto acknowledge
that (a) the Company has granted registration rights to other security holders
and (b) any Registration Statement prepared, filed and made effective under this
ARTICLE V may also cover the resale of securities held by such security holders
to the extent that the Company has an obligation to register such securities
under any of the agreements listed as exhibits to the Company’s 10-K.

5.10. Withdrawal of Registration Statement. After the termination of the
Registration Period, the Company shall be entitled to withdraw the Registration
Statement, and Pfizer shall have no further right to offer or sell any of the
Shares pursuant to the Registration Statement.

ARTICLE VI

MISCELLANEOUS

6.1. Notices. Except as specifically permitted by Section 5.2(g), all notices,
requests, consents and other communications hereunder shall be in writing, shall
be mailed (a) if within the United States by first-class registered or certified
airmail, or nationally recognized overnight express courier, postage prepaid, or
by facsimile, or (b) if delivered from outside the United States, by
International Federal Express or similar carrier or facsimile, and shall be
deemed given (i) if delivered by first-class registered or certified mail
domestic, three business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express or similar carrier, two business days
after so mailed and (iv) if delivered by facsimile, upon electric confirmation
of receipt if sent during the normal business hours of the recipient and, if
not, on the next business day, and shall be delivered as addressed as follows:

if to the Company, to:

P. Kay Wagoner, Ph.D.

Icagen, Inc.

4222 Emperor Blvd., Suite 350

Durham, NC 27703

Tel: (919) 941-5206

 

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Fax: (919) 941-0813

Email: kwagoner@icagen.com

with a copy to:

Hal J. Leibowitz

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Tel: (617) 526-6461

Fax: (617) 526-5000

Email: hal.leibowitz@wilmerhale.com

if to Pfizer, to:

Pfizer Inc.

235 East 42nd St .

New York, NY 10017

Attn: General Counsel

Tel:

Fax: (858) 678-8275

Email:

with a copy to:

Chris Wiltshire

Pfizer Inc

10646 Science Center Drive (CB10)

San Diego, CA 92121

Tel: (858) 638-6203

Fax: (858) 678-8275

Email: chris.wiltshire@pfizer.com

or at such other address or addresses as may have been furnished to the other
party in writing in accordance with this Section 6.1.

6.2. Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and Pfizer. Any modification or
amendment effected in accordance with this Section 6.2 shall be binding upon the
holder of any Shares purchased under this Agreement at the time outstanding,
each future holder of such Shares, and the Company.

6.3. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.

6.4. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

 

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6.5. Certain Interpretations. Except where expressly stated otherwise in this
Agreement, the following rules of interpretation apply to this Agreement:
(a) definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms; (b) references to an agreement or
instrument mean such agreement or instrument as from time to time amended,
modified or supplemented; (c) references to a person or entity are also to its
successors and assigns; (d) references to an “Article”, “Section” or “Exhibit”
refer to an Article of, a Section of, or an Exhibit to, this Agreement; and
(e) words importing the masculine gender include the feminine or neuter and, in
each case, vice versa.

6.6. Survival of Representations, Warranties and Agreements. Notwithstanding any
investigation made by either party to this Agreement, except for the Company’s
obligations pursuant to Sections 5.5 and 5.6 hereof, all representations,
warranties, covenants and agreements made by the Company herein shall survive
the execution of this Agreement, the delivery to Pfizer of the Shares being
purchased and the payment therefor until the date that is 12 months after the
First Closing Date (at which time they shall expire and be of no further force
or effect).

6.7. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law.

6.8. Submission to Jurisdiction. Each of the parties to this Agreement
(a) consents to submit itself to the personal jurisdiction of any state or
federal court sitting in New York, New York in any action or proceeding arising
out of or relating to this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court, (c) agrees that it
shall not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (d) agrees not to bring any
action or proceeding arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement in any other court. Each of the
parties hereto waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of the other party with respect thereto. Either
party hereto may make service on the other party by sending or delivering a copy
of the process to the party to be served at the address and in the manner
provided for the giving of notices in Section 6.1. Nothing in this Section 6.8,
however, shall affect the right of either party to serve legal process in any
other manner permitted by law.

6.9. WAIVER OF JURY TRIAL. PFIZER AND THE COMPANY EACH HEREBY IRREVOCABLY WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF PFIZER OR
THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT.

6.10. Entire Agreement. This Agreement and the documents referenced herein
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than

 

27

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those set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the subject
matter hereof.

6.11. Finders Fees. Neither the Company nor Pfizer nor any affiliate thereof has
incurred any obligation that will result in the obligation of the other party to
pay any finder’s fee or commission in connection with this transaction.

6.12. Counterparts. This Agreement may be executed in two counterparts, each of
which shall constitute an original, but both of which, when taken together,
shall constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
party. Facsimile signatures shall be deemed originals for all purposes
hereunder.

6.13. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the parties hereto. This Agreement and the rights of Pfizer under
this Agreement may not be assigned by Pfizer without the prior written consent
of the Company. Notwithstanding the foregoing, Pfizer shall at any time be
entitled to assign its rights under this Agreement to an affiliate of Pfizer;
provided that Pfizer shall continue to be bound by the terms of this Agreement
and shall cause such affiliate to be bound by the terms of this Agreement.
Furthermore, Pfizer shall be entitled to assign its rights together with its
related obligations under ARTICLE V of this Agreement to a single transferee of
its Common Stock in accordance with Section 3.4 and, for the avoidance of doubt,
all references to Pfizer in ARTICLE V of this Agreement shall thereafter be
deemed to refer to such transferee.

6.14. Expenses. The Company and Pfizer shall each bear its own expenses in
connection with the preparation and negotiation of the Agreement.

6.15. Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, Pfizer and the Company
will be entitled to seek specific performance under this Agreement. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence.

6.16. Third Party Rights. Except as explicitly set forth in this Agreement,
nothing in this Agreement shall create or be deemed to create any rights in any
person or entity not a party to this Agreement.

6.17. No Waiver. It is agreed that a waiver by one party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.

6.18. Further Assurances. The parties agree to execute and deliver, at the
requesting party’s expense, all such further documents, agreements and
instruments and take such other and further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.

 

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6.19. No Strict Construction. The language used in this Agreement is deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against either party.

[SIGNATURE PAGES FOLLOW]

 

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SIGNATURE PAGE TO PURCHASE AGREEMENT

 

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IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to be duly
executed as of the date first written above.

 

  ICAGEN, INC. By:  

 

  (signature of authorized representative) Name:   P. Kay Wagoner, Ph.D. Title:
  President and Chief Executive Officer

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SIGNATURE PAGE TO PURCHASE AGREEMENT

 

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PFIZER INC

By:  

 

(signature of authorized representative)

Name:  

 

Title:  

 

Address:  

 

 

 

Contact Name:  

 

Telephone:  

 

Fax:  

 

Email:  

 

Tax I.D. or SSN:  

 

 

Address where Shares should be sent (if different from above):

 

Address:   Kathleen R. O’Connell  

Pfizer Inc

235 East 42nd St.

  Mail Stop 235/28/08   New York, NY 10017

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EXHIBIT A

Form of Opinion of Counsel

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EXHIBIT B

SEC Documents

The Company’s Annual Report on Form 10-K originally filed with the SEC on
March 6, 2007, as amended on April 27, 2007

The Company’s Current Report on Form 8-K filed with the SEC on April 4, 2007

The Company’s Definitive Proxy Statement filed with the SEC on April 30, 2007

The Company’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2007

The Company’s Current Report on Form 8-K filed with the SEC on June 22, 2007

The Company’s Current Report on Form 8-K filed with the SEC on July 2, 2007

Amendment No. 1 to the Company’s Registration Statement on Form 8-A filed with
the SEC on July 6, 2007

The Company’s Current Report on Form 8-K filed with the SEC on July 24, 2007

The “filed” portions of the Company’s Current Report on Form 8-K filed with the
SEC on August 3, 2007

The Company’s Quarterly Report on Form 10-Q filed with the SEC on August 7, 2007

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EXHIBIT C

Registration Questionnaire

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EXHIBIT D

Plan of Distribution