Exhibit 10.1

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

ASSET PURCHASE AGREEMENT

between

SANOFI US SERVICES INC.

and

ICAGEN-T, INC.

dated June 27, 2016

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

Table of Contents

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

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

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

ASSET PURCHASE AGREEMENT

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

Recitals

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Just Cause ” [*****]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Icagen-T, Inc.

2090 E. Innovation Park Drive

Oro Valley, Arizona 85755

Attention: Richard Cunningham, President & CEO

with a copy to:

Leslie Marlow, Esq.

Gracin & Marlow, LLP

The Chrysler Building 

405 Lexington Avenue, 26 ^th Floor

New York, New York 10174

Sanofi US Services Inc.

c/o Sanofi

54 rue La Boétie
75008 Paris
France
Attention: General Counsel

with a copy to:

Carol Stern, Esq.

McCarter & English, LLP 

100 Mulberry Street

Newark, New Jersey 07102

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

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

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

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

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

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

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

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

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

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

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

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

Exhibit A

MASTER SERVICES AGREEMENT

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

RECITALS :

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I.           Key Performance Indicators .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ii.        it shall provide no loans to its Affiliates;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

C.          Reporting Obligations .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Subsidy Payments made by SANOFI are subject to the following.

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

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