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Exhibit 10.15
MASTER STRATEGIC RELATIONSHIP AGREEMENT
dated as of
September 2, 1997
between
SMITHKLINE XXXXXXX CORPORATION,
INCYTE PHARMACEUTICALS, INC.
and
DIADEXUS, LLC
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TABLE OF CONTENTS
Page
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ARTICLE 1. CERTAIN DEFINITIONS....................... 1
1.1. Certain Definitions........................ 1
ARTICLE 2. THE TRANSACTIONS.......................... 7
2.1. Formation of LLC, Etc. .................... 7
2.2. Excluded Liabilities....................... 8
ARTICLE 3. TRANSITIONAL MATTERS...................... 8
3.1. Certain Tax Matters........................ 8
3.2. Exemption Certificate...................... 8
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF INCYTE.. 8
4.1. Corporate Organization and Authority....... 8
4.2. No Conflict................................ 9
4.3. Approvals and Consents..................... 9
4.4. Litigation................................. 9
4.5. Broker's and Finder's Fees................. 9
4.6. Full Disclosure............................ 9
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SB...... 10
5.1. Corporate Organization and Authority....... 10
5.2. No Conflict................................ 10
5.3. Approvals and Consents..................... 10
5.4. Title to Assets............................ 11
5.5. Litigation................................. 11
5.6. Compliance with Applicable Laws............ 11
5.7. SB Employees............................... 11
5.8. Broker's and Finder's Fees................. 11
5.9. Full Disclosure............................ 11
ARTICLE 6. COVENANTS OF THE PARTIES.................. 12
6.1. Additional Cash Contributions.............. 12
6.2. Merger of the LLC into C Corporation....... 12
6.3. Coordination of Financial Reporting........ 14
6.4. Additional Financing....................... 15
ARTICLE 7. EMPLOYEES AND EMPLOYEE BENEFITS........... 15
7.1. Offers of Employment....................... 15
7.2. Benefits................................... 15
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Page
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7.3. Severance Pay.............................. 15
7.4. Relocation Expenses........................ 16
7.5. Wages, Benefits, Etc. ..................... 16
7.6. Payment of Claims.......................... 16
7.7. Secondment of Employees.................... 16
7.8. Continuing Employees....................... 17
ARTICLE 8. CLOSING PROCEDURE........................... 17
8.1. Closing Date and Place..................... 17
ARTICLE 9. INDEMNIFICATION............................. 17
9.1. Indemnification............................ 17
9.2. Procedure for Indemnification.............. 19
ARTICLE 10. MISCELLANEOUS............................... 20
10.1. Survival................................... 20
10.2. No Commitments............................. 21
10.3. Assignments................................ 21
10.4. Confidentiality............................ 22
10.5. Intentionally Omitted...................... 23
10.6. Observance of Separate Entity Formalities.. 23
10.7. Certain Dissolution Matters................ 24
10.8. Further Actions............................ 25
10.9. No Trademark Rights........................ 25
10.10. Entire Agreement of the Parties;
Amendments................................ 25
10.11. Severability............................... 25
10.12. Captions................................... 25
10.13. Applicable Law............................. 26
10.14. Disclaimer................................. 26
10.15. Notices and Deliveries..................... 26
10.16. Counterparts............................... 27
10.17. Construction of Agreement.................. 27
10.18. Expenses................................... 28
10.19. Force Majeure.............................. 28
10.20. Affiliate Performance...................... 28
10.21. Dispute Resolution......................... 28
10.22. Relationship Between Parties............... 29
10.23. Third Party Beneficiaries.................. 29
10.24. Certain Transfer Matters................... 29
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MASTER STRATEGIC RELATIONSHIP AGREEMENT
THIS MASTER STRATEGIC RELATIONSHIP AGREEMENT (the "Agreement"), dated as
of September 2, 1997, among SMITHKLINE XXXXXXX CORPORATION, a Pennsylvania
corporation ("SB"), INCYTE PHARMACEUTICALS, INC., a Delaware corporation
("Incyte"), and DIADEXUS, LLC, a Delaware limited liability company (the "LLC").
RECITALS
A. SB is a Pennsylvania corporation with a principal place of business
located at 000 Xxxxxxxxx Xxxx, Xxxx xx Xxxxxxx, Xxxxxxxxxxxx.
B. Incyte is a Delaware corporation with a principal place of business
located at 0000 Xxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx.
C. Incyte and SB wish to form a limited liability company under the laws
of the State of Delaware (the "LLC"), the sole initial members of which will be
SB and Incyte. Incyte and SB will contribute certain cash and assets and will
agree to manage the operations of the LLC on the terms and conditions
hereinafter provided and as set forth in the LLC Operating Agreement.
NOW, THEREFORE, in consideration of their mutual promises and
obligations and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE 1.
CERTAIN DEFINITIONS
1.1. CERTAIN DEFINITIONS.
As used in this Agreement, the terms below shall have the meanings set
forth.
"Agreement" means this Master Strategic Relationship Agreement,
including all Schedules hereto, as modified, amended or extended in accordance
with the terms hereof from time to time.
"agreement" shall mean with respect to any Person any contract,
agreement, arrangement, commitment, covenant, lease, license, note, bond,
indenture, mortgage, deed of trust, lien, instrument or other understanding,
whether written or oral, to which such Person is a party or by which its
properties or assets may be subject or affected or under which it or its
business, properties or assets receive benefits.
"Applicable Law" means any statute, law, enactment, ordinance, common
law, rule or regulation of any Governmental Authority and any judgment, decree,
injunction, mandate, administrative or executive order or other order (whether
temporary, preliminary or permanent)
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entered or imposed by a Governmental Authority that is applicable to Incyte, SB,
the LLC or any Incyte Affiliate, SB Affiliate or LLC Affiliate, as the case may
be.
"Bankruptcy" shall mean with respect to any Person (A) the entry by a
court having jurisdiction in the premises of (i) a decree or order for relief in
respect of such Person in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law or
(ii) a decree or order adjudging such Person a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of such Person under any Applicable
Law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of such Person or of any substantial part
of such Person's property, or ordering the winding up or liquidation of the
affairs of such Person and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
90 consecutive days or (B) the commencement by such Person of a voluntary case
or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by such Person to the entry
of a decree or order for relief in respect of such Person in an involuntary case
or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by such Person of a
petition or answer or consent seeking reorganization or relief under any
Applicable Law, or the consent by such Person to the filing of such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of such Person or of any
substantial part of such Person's property, or the making by such Person of an
assignment for the benefit of creditors, or the admission by such Party in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate or other action by such Person in furtherance of any such
action.
"Business" means the business of discovering, developing, manufacturing
and marketing molecular diagnostic Tests (as defined in the IP Agreements), and
doing all things necessary or related to these purposes as may be determined
from time to time by the LLC in accordance with the LLC Operating Agreement.
"Business Day" means any day other than Saturday, Sunday or a day on
which banking institutions in San Francisco, California and New York, New York
are required or authorized to be closed.
"Change of Control" means with respect to either Incyte or SB the
occurrence of any of the following events:
(a) all or substantially all of the assets of the Incyte or
SB, as the case may be, are sold, leased, exchanged or
otherwise transferred to any other Person or group of
Persons acting in concert as a partnership or other
group (a "Group of Persons") other than an Affiliate of
Incyte or SB;
(b) the Ultimate Parent Company of Incyte or SB, as the case
may be, is merged or consolidated with or into another
entity with the effect that the
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existing equity holders hold less than 50% of the
combined voting power of the then outstanding securities
ordinarily (and apart from rights arising under special
circumstances) having the right to vote in the election
of directors (or in the election of persons serving in a
similar capacity) of the surviving entity of such merger
or the entity resulting from such consolidation;
(c) a change in the composition of the board of directors of
the Ultimate Parent Company of Incyte or SB, as the case
may be, as a result of which during any period of two
consecutive years, individuals who at the beginning of
such period constitute such Ultimate Parent Company's
Board of Directors (together with any new director whose
election by such Ultimate Parent Company's Board of
Directors or whose nomination for election by such
Ultimate Parent Company's stockholders was approved by a
vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of
such period or whose election or nomination for election
was previously so approved) cease for any reason to
constitute a majority of the directors in office at the
end of such period;
(d) a Person or Group of Persons shall, as a result of a
tender or exchange offer, open market purchases, merger,
privately negotiated purchases or otherwise, have
become, directly or indirectly, the beneficial owner
(within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of the securities of
the Ultimate Parent Company of Incyte or SB, as the case
may be, representing 50% or more of the combined voting
power of the then outstanding securities of such
Ultimate Parent Company ordinarily (and apart from
rights arising under special circumstances) having the
right to vote in the election of directors.
"Closing" shall have the meaning set forth in Section 8.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrances" means any claims, charges, liens, mortgages, security
interests, pledges, restrictions, rights of first refusal, options, easements,
encroachments or other encumbrances.
"Equipment" means the equipment listed on Schedule 1.1 (a), that is
owned by SB, and which the parties have agreed shall be contributed to the LLC
and used in conducting the Business. All items of the Equipment have as of the
date hereof the book value indicated on such Schedule and shall be contributed
to the LLC. Title for such Equipment shall pass to the LLC on the date of the
formation of the LLC and SB shall bear the cost of shipping such Equipment to
the LLC's facilities in California and the risk of loss until delivery of such
Equipment at the LLC's facilities in California.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"Governmental Authority" means the government of the United States,
United Kingdom or other foreign nation or any state or political subdivision of
any of the foregoing and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Governmental Consents" means, with respect to any party, such
approvals, permits, authorizations, registrations, waivers or consents of
Governmental Authorities as are necessary or appropriate to be obtained by such
party in order to permit the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and any rules or regulations promulgated thereunder.
"Incyte Affiliate": shall mean any corporation, firm, partnership or
other entity (other than the LLC), whether de jure or de facto, which directly
or indirectly owns, is owned by or is under common ownership with Incyte to the
extent of at least fifty percent (50%) of the equity (or such lesser percentage
which is the maximum allowed to be owned by a foreign corporation in a
particular jurisdiction) having the power to vote on or direct the affairs of
the entity, and any person, firm, partnership, corporation or other entity
actually controlled by, controlling or under common control with Incyte.
"Incyte's knowledge" or other similar phrases means to the actual
knowledge, after reasonable investigation, of Incyte's officers who have had
substantive responsibilities with respect to the matter described.
"Indemnified Party" shall have the meaning set forth in Section 9.2.
"Indemnitor" shall have the meaning as set forth in Section 9.2.
"Intercompany Services Agreement" shall mean that certain Intercompany
Services Agreement referred to in Section 2.1, as the same may be amended from
time to time.
"Interests" shall have the meaning as defined in the LLC Operating
Agreement.
"IP Agreements" shall mean, collectively (i) the Collaborative
LifeSeq(R) Agreement (the "LifeSeq(R) Agreement") between Incyte and the LLC;
(ii) the Collaboration and License Agreement (the "Collaboration and License
Agreement") by and among SB, SmithKline Xxxxxxx p.l.c., Incyte and the LLC; and
(iii) the Collaborative PathoSeq(TM) Database Agreement (the "PathoSeq(TM)
Agreement", and together with the LifeSeq(R) Agreement, collectively the "Incyte
Database Agreements") between Incyte and the LLC, in each case entered into on
the date hereof, and as the same may be amended from time to time.
"Legal Proceeding" means any actions, suits, claims or proceedings.
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"Liabilities" means any debt, obligation, duty or liability of any
nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, implied, derivative or secondary liability).
"LLC Affiliate" shall mean any corporation, firm, partnership, or other
legal entity, which is directly or indirectly owned or under common ownership by
the LLC to the extent of which the common stock or other equity ownership
thereof is one hundred percent (100%) owned by the LLC; provided however, that
where local laws require a minimum percentage of local ownership, the status of
the LLC Affiliate will be established if the LLC directly or indirectly owns or
controls one hundred percent (100%) of the maximum ownership percentage that
may, under such local laws, be owned or controlled by foreign interests.
"LLC Operating Agreement" means that certain Operating Agreement for
DiaDexus, LLC, entered into among Incyte, SB and the other parties thereto as of
the date hereof, as the same may be amended from time to time.
"LLC Option Plan" means the Incentive Plan to be adopted by the LLC.
"Losses" means all assessments, losses, damages, costs, expenses,
liabilities, judgments, awards, fines, sanctions, penalties, charges, and
amounts paid in settlement including reasonable costs, fees and expenses of
attorneys, experts, accountants, appraisers, consultants, witnesses,
investigators and any other agents and shall include all such costs, fees and
expenses incurred by an Indemnified Party in successfully enforcing its right to
indemnification hereunder.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition, results of operations or prospects of the
Business or the LLC.
"Person" means any individual, partnership, joint venture, corporation,
trust or unincorporated organization, any other business entity and any
Governmental Authority.
"Related Agreements" shall mean the LLC Operating Agreement, the IP
Agreements, the Intercompany Services Agreement and all other written agreements
entered into in connection with the transactions contemplated by this Agreement,
as the same may be amended from time to time.
"Reporting Entity" shall have the meaning set forth in Section 6.3.
"SB Affiliate" shall mean any corporation, firm, partnership or other
entity (other than the LLC), whether de jure or de facto, which directly or
indirectly owns, is owned by or is under common ownership with SB to the extent
of at least fifty percent (50%) of the equity (or such lesser percentage which
is the maximum allowed to be owned by a foreign corporation in a particular
jurisdiction) having the power to vote on or direct the affairs of the entity,
and any person, firm, partnership, corporation or other entity actually
controlled by, controlling or under common control with SB.
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"SB Employees" means the individuals who are full-time employees of SB
who are listed with their respective titles on Schedule 1.1(b), each of whom
shall be offered full-time employment with the LLC in accordance with Article 7
hereof.
"SB's knowledge" or other similar phrases means to the actual knowledge,
after reasonable investigation, of SB's officers who have had substantive
responsibilities with respect to the matter described.
"Taxes" means taxes, duties, levies and other assessments imposed by any
Governmental Authority or by any other tax authority, including income, gross
receipts, net proceeds, ad valorem, turnover, real and personal property
(tangible and intangible), sales, use, franchise, excise, value added, stamp,
leasing, lease, user, transfer, fuel, excess profits, occupational and interest
equalization, windfall profits, severance and employees' income withholding and
Social Security taxes, including all applicable penalties and interest.
"Tax Return" means any report, return, document or other information
required to be filed with or supplied to a tax authority in connection with
Taxes.
"Transferring Employees" means those of the SB Employees that accept
employment with the LLC.
"Ultimate Parent Company" shall mean with respect to Incyte or SB, that
entity that has beneficial ownership (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of voting securities representing
50% or more of the combined voting power of the then outstanding securities
having the right generally to vote in the election of directors (apart from
rights to vote in the election of directors arising under special circumstances)
of Incyte or SB, as the case may be, or if there is no such entity, then Incyte
or SB, as the case may be. As of the date of this Agreement, the Ultimate Parent
Company for SB is SB plc.
"Unreimbursed LLC Liability" shall mean a Liability of the LLC that is
for any reason paid by either of Incyte, or SB, or any Incyte Affiliate or SB
Affiliate, which Liability is not for any reason subsequently reimbursed to the
party that has paid it unless and solely to the extent that such Liability is
by the terms of this Agreement or any Related Agreement assumed by the paying
party.
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ARTICLE 2.
THE TRANSACTIONS
2.1. FORMATION OF LLC, ETC.
Subject to the terms and conditions set forth in this Agreement, at the
Closing, the following actions shall be taken concurrently with the execution of
this Agreement with respect to the formation of the LLC:
(a) Incyte and SB shall execute and deliver the LLC Operating
Agreement with such changes as each of them shall agree are consistent with the
terms of this Agreement and file all such certificates and filings as may be
required to be filed with the Secretary of State for the State of Delaware. SB
and Incyte shall receive 4,400,000 Series A Preferred Units and 4,400,000 Series
B Preferred Units, respectively, of the LLC upon its formation in consideration
for which they shall each make their respective contributions to the LLC
contemplated by this Section 2.1 and by Sections 6.1 (a) and 6.1(b);
(b) Incyte shall make an initial contribution to the LLC of cash
in an aggregate amount equal to $4 million;
(c) SB shall make an initial contribution to the LLC (i) of cash
in an aggregate amount equal to (A) $4 million less (B) the book value reflected
on Schedule 1.1 (a) of the Equipment to be contributed to the LLC, and (ii) of
that Equipment listed on Schedule 1.1(a);
(d) Incyte and SB shall deposit the full amount of additional
cash contributions required by Sections 6.1(a) and (b) into separate escrow
accounts pursuant to Section 6.1(d);
(e) the LLC, SB and Incyte shall execute and deliver those of the
IP Agreements to which each of them is a party with such changes as each of the
applicable parties shall agree are consistent with the terms of this Agreement;
(f) the LLC, SB and Incyte shall execute and deliver an
Intercompany Services Agreement (the "Intercompany Services Agreement") (which
agreement among other things entitles Incyte and SB to receive payment for
providing certain services that may be performed by each of them from time to
time for the benefit of the LLC with respect to tax, accounting and other
specified operational matters for which the LLC requests support from time to
time), with such changes as SB and Incyte shall agree are consistent with the
terms of this Agreement; and .
(g) the LLC, SB and Incyte shall execute and deliver a copy of
this Agreement.
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2.2. EXCLUDED LIABILITIES.
The LLC shall not be deemed to have assumed or be responsible for, and
shall not assume or be responsible for, any Liabilities of SB, any SB
Affiliates, Incyte or any Incyte Affiliates.
ARTICLE 3.
TRANSITIONAL MATTERS
3.1. CERTAIN TAX MATTERS.
After the Closing, SB, Incyte and the LLC will provide any and all
information reasonably required by the other parties for the purpose of
fulfilling the other parties' foreign, federal and state tax reporting
obligations with respect to the Equipment or with respect to any other pertinent
tax matter (whether for the periods before or after the Closing) for which any
other party may reasonably require such information.
3.2. EXEMPTION CERTIFICATE.
In connection with the contribution of the Equipment to the LLC, the LLC
shall provide to SB a completed Pennsylvania Exemption Certificate, Form XXX-
0000XX, evidencing its eligibility to make tax-free purchases of machines,
equipment, parts, and supplies used or consumed directly in manufacturing or
processing operations.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF INCYTE
Incyte hereby represents and warrants to SB that:
4.1. CORPORATE ORGANIZATION AND AUTHORITY.
(a) Incyte is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Delaware. Incyte is qualified to
do business and is in good standing under the laws of the State of California.
(b) Subject to obtaining any Governmental Consents required to be
obtained by Incyte, Incyte has the right, power and authority and has taken all
action necessary in order to execute, deliver and perform its obligations under
this Agreement and the LLC Operating Agreement and to consummate the
transactions contemplated hereby and thereby. This Agreement and the LLC
Operating Agreement are legal, valid and binding agreements of Incyte,
enforceable against Incyte in accordance with their respective terms, except as
limited by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and similar laws affecting the rights of creditors generally and by
the availability of equitable remedies.
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4.2. NO CONFLICT.
The execution, delivery and performance of this Agreement and the LLC
Operating Agreement by Incyte does not, and the consummation of the transactions
contemplated hereby and thereby will not (i) violate, conflict with or result in
a breach of any provision of its Certificate of Incorporation or Bylaws or (ii)
conflict with, violate or constitute a breach or contravention of, or default
under, any Applicable Law to which Incyte is subject or (iii) conflict with,
violate or constitute a breach of, or default under, or otherwise give rise to
any right of termination, cancellation or acceleration on the part of, or
otherwise require the consent of any Person under, any agreement or instrument
to which Incyte is subject or is a party or by which Incyte is otherwise bound.
4.3. APPROVALS AND CONSENTS.
Except to the extent that filings may be required under the HSR Act in
connection with any merger of the LLC contemplated under Section 6.2, there are
no Governmental Consents required to be obtained by Incyte from any other Person
in connection with the execution, delivery and performance of this Agreement or
the LLC Operating Agreement by Incyte and the consummation by Incyte of the
transactions contemplated hereby and thereby other than Governmental Consents
which have been previously obtained. Neither Incyte nor any of the Incyte
Affiliates has received any indication from any federal, state or other
governmental agency that such agency would refuse to grant or issue any
Governmental Consent required to be obtained by SB, Incyte or any Incyte
Affiliates or SB Affiliates in connection with the transactions contemplated by
this Agreement and the LLC Operating Agreement.
4.4. LITIGATION.
There are no Legal Proceedings pending or, to Incyte's knowledge,
threatened, or, to Incyte's knowledge, any investigations pending or threatened,
against or involving Incyte (i) relating to the formation of the LLC, or (ii)
that challenge, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the transactions contemplated by
this Agreement or the LLC Operating Agreement.
4.5. BROKER'S AND FINDER'S FEES.
Neither Incyte nor any of the Incyte Affiliates, nor anyone acting on
its behalf has paid or become obligated to pay any fee or commission to any
broker, finder, intermediary, financial advisor or other Person (other than
legal and accounting advisors) in connection with the transactions contemplated
hereby, and no Person or entity is entitled to receive from any of them any such
fee or commission which SB or any of the SB Affiliates would become obligated to
pay.
4.6. FULL DISCLOSURE.
No representation or warranty by Incyte in this Agreement, in any
Related Agreement, any Schedule hereto or thereto, or any statement, list or
certificate furnished or to be furnished by
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Incyte pursuant to this Agreement or any Related Agreement as of the date hereof
(i) is materially inaccurate, or (ii) contains any untrue statement of
material fact, or (iii) omits to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading in
light of the circumstances in which made.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF SB
SB hereby represents and warrants to Incyte that:
5.1. CORPORATE ORGANIZATION AND AUTHORITY.
(a) SB is a corporation, duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. SB has the
requisite corporate power and corporate authority to own the Equipment held by
it.
(b) Subject to obtaining any Governmental Consents required to be
obtained by SB, SB has the requisite right, power and authority and has taken
all action necessary in order to execute, deliver and perform this Agreement and
the LLC Operating Agreement and to consummate the transactions contemplated
hereby and thereby. This Agreement and the LLC Operating Agreement are legal,
valid and binding agreements of SB enforceable against SB in accordance with
their respective terms, except as limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and similar laws affecting
creditors generally and by the availability of equitable remedies.
5.2. NO CONFLICT.
The execution, delivery and performance of this Agreement and the LLC
Operating Agreement by SB does not, and the consummation of the transactions
contemplated hereby and thereby will not, (i) violate, conflict with or result
in a breach of any provision of SB's Articles of Incorporation or Bylaws, (ii)
conflict with, violate or constitute a breach or contravention of, or default
under, any Applicable Law to which SB or any of the Equipment is subject, or
(iii) conflict with, violate or constitute a breach of, or default under, or
otherwise give rise to any right of termination, cancellation or acceleration
of, or otherwise require the consent of any Person under, any agreement or
instrument to which SB or any of the Equipment is subject or is a party or by
which SB or any of the Equipment is otherwise bound.
5.3. APPROVALS AND CONSENTS.
Except to the extent that filings may be required under the HSR Act in
connection with any merger of the LLC contemplated under Section 6.2, there are
no Governmental Consents required to be obtained by SB from any other Person in
connection with the execution, delivery and performance of this Agreement and
the LLC Operating Agreement by SB and the consummation by SB of the transactions
contemplated hereby and thereby other than
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Governmental Consents which have been previously obtained. Neither SB nor any of
the SB Affiliates has received any indication from any federal, state or other
governmental agency that such agency would refuse to grant or issue any
Governmental Consent required to be obtained by SB, Incyte or any
Incyte Affiliates or SB Affiliates in connection with the transactions
contemplated by this Agreement and the LLC Operating Agreement.
5.4. TITLE TO ASSETS.
SB has and shall transfer to the LLC good and marketable title to the
Equipment free and clear of all Encumbrances.
5.5. LITIGATION.
There are no Legal Proceedings pending or, to SB's knowledge,
threatened, or, to SB's knowledge, any investigations pending or threatened,
against or involving SB, (i) relating to the formation of the LLC or the
Equipment, or (ii) that challenge, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the transactions
contemplated by this Agreement or the LLC Operating Agreement.
5.6. COMPLIANCE WITH APPLICABLE LAWS.
SB is in compliance with all Applicable Laws relating to each of the
Equipment, except for failures to comply which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
5.7. SB EMPLOYEES.
Schedule 1.1(b) contains a true and complete list of each of the SB
Employees, together with the job title of each such SB Employee.
5.8. BROKER'S AND FINDER'S FEES.
Neither SB nor any of the SB Affiliates, nor anyone acting on their
behalf, has paid or become obligated to pay any fee or commission to any broker,
finder, intermediary, financial advisor or other Person (other than legal and
accounting advisors) in connection with the transactions contemplated hereby and
no Person or entity is entitled to receive from any of them any such fee or
commission which Incyte or any of the Incyte Affiliates would become obligated
to pay.
5.9. FULL DISCLOSURE.
No representation or warranty by SB in this Agreement, in any Related
Agreement, any Schedule hereto or thereto, or any statement, list or certificate
furnished or to be furnished by SB pursuant to this Agreement or any Related
Agreement as of the date hereof (i) is materially inaccurate, or (ii) contains
any untrue statement of material fact, or (iii) omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading in light of the circumstances in which made.
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ARTICLE 6.
COVENANTS OF THE PARTIES
6.1. ADDITIONAL CASH CONTRIBUTIONS.
(a) SB Additional Contributions.
(i) Subject to Section 6.1(c), on January 15, 1998,
SB shall make a second contribution to the LLC
of cash in an aggregate amount equal to $7
million.
(ii) Subject to Section 6.1(c), on July 15, 1998, SB
shall make a third contribution to the LLC of
cash in an aggregate amount equal to $4 million.
(b) Incyte Additional Contributions.
(i) Subject to Section 6.1(c), on January 15, 1998,
Incyte shall make a second contribution to the
LLC of cash in an aggregate amount equal to $2
million.
(ii) Subject to Section 6.1(c), on July 15, 1998,
Incyte shall make a third contribution to the
LLC of cash in an aggregate amount equal to $4
million.
(c) Termination of Contribution Obligations. If the LLC obtains
financing from parties other than SB and Incyte, or as SB and Incyte may
otherwise agree, the obligations of SB and Incyte set forth in Sections 6.1(a)
and (b), respectively, shall be reduced, and/or prior contributions shall be
returned, to the extent SB and Incyte so agree.
(d) Escrow of Funds or Security for Payment. Upon formation of
the LLC, all of the cash contribution payments set forth in Sections 6.1(a) and
(b) shall be deposited into separate escrow accounts on terms satisfactory to
each of Incyte and SB that provide for the unconditional release of such funds
to the LLC on the dates specified above unless the parties shall otherwise
agree. All funds in each escrow account shall be segregated and interest earned
on any funds so deposited shall be for the account of, and shall be returned to,
whichever of Incyte or SB deposited the funds earning such interest. Upon any
termination of contribution obligations pursuant to Section 6.1(c), all
remaining funds in each escrow account together with applicable interest shall
be returned to the contributing party with respect to such escrow account.
6.2. MERGER OF THE LLC INTO C CORPORATION.
(a) Timing. The LLC shall merge into a "C" corporation (the "C
Corporation") upon the earliest to occur of the following: (i) the eighteen (18)
month
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anniversary of the formation of the LLC; (ii) the LLC's cash balance (which
shall be deemed to include cash, cash equivalents and marketable securities) is
below $2 million after all SB and Incyte contributions have been made pursuant
to Section 6.1; or (iii) at such other time as Incyte and SB may agree; provided
that such merger in the case of (ii) above shall not be required until January
1, 1999 unless SB and Incyte otherwise agree. In any such case such merger shall
be accomplished by means of the following unless otherwise agreed by SB and
Incyte:
(i) The parties shall incorporate the C Corporation
pursuant to the laws of the State of Delaware,
by adopting a Certificate of Incorporation
substantially in the form attached hereto as
Part I of Schedule 6.2(a) and Bylaws
substantially in the form attached as Part II of
Schedule 6.2(a).
(ii) The C Corporation, Incyte and SB shall execute
an Investors' Rights Agreement substantially in
the form attached hereto as Part III of Schedule
6.2(a).
(iii) Upon such merger, the C Corporation shall issue
to SB (A) a number of shares of its Series A
Preferred Stock equal to the number of Series A
Preferred Units (as defined in the LLC Operating
Agreement) held by SB and (B) 100 shares of its
Common Stock as consideration for SB's Interests
in the LLC.
(iv) Upon such merger, the C Corporation shall issue
to Incyte (A) a number of shares of its Series B
Preferred Stock equal to the number of Series B
Preferred Units (as defined in the LLC Operating
Agreement) held by Incyte and (B) 100 shares of
its Common Stock as consideration for Incyte's
Interests in the LLC.
(v) Pursuant to the merger, the C Corporation shall
issue replacement options to the employees of
the LLC who hold options pursuant to the LLC
Option Plan (the "LLC Options"). Such
replacement options shall entitle the holder
thereof to acquire shares of the C Corporation's
Common Stock pursuant to a C Corporation stock
option plan to be adopted by the C Corporation
at the time of the merger (the "C Corporation
Options"). The C Corporation stock option plan
shall have substantially the same provisions (as
determined by the Board of Directors of the C
Corporation) as the LLC Option Plan and the
economic terms of the replacement C Corporation
Options shall be substantially similar to the
economic terms of the LLC Options including the
exercise price of such replacement C Corporation
Options and the extent of vesting thereof.
(b) The terms and conditions contained in Sections 1.1, 2.2, 3.1
and 3.2 and those contained in Articles 4, 5, 6, 7, 9 and 10 (other than Section
10.7(a)) of this Agreement
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shall survive the merger and shall be applicable to the C Corporation after the
merger with references to the LLC in such provisions being thereafter deemed to
refer to the C Corporation.
6.3. COORDINATION OF FINANCIAL REPORTING.
For so long as either Incyte, SB or any relevant Incyte Affiliate or SB
Affiliate reports the LLC's financial results (any such reporting entity, a
"Reporting Entity") on a consolidated basis, on an equity basis or otherwise on
a basis pursuant to which a portion of the results of operations of the LLC
appear in the financial results of operations of a Reporting Entity, then:
(a) The LLC will have its independent auditors perform annual audits of
the LLC financial statements. The independent auditors' annual audit will
include a review of the financial information the LLC submits to any Reporting
Entity on an annual basis and a statement to any Reporting Entity that they have
performed such review, which will include a detail of any and all financial
reporting issues noted. The LLC shall use its best efforts to have its
independent auditors complete any audit of the LLC's annual financial statements
and deliver final financial statements (without notes) to the Reporting Entities
within 10 Business Days of the end of the applicable fiscal year and deliver its
final audit report complete with notes within 30 Business Days of the end of
such fiscal year. The LLC will keep any Reporting Entity informed as to the
timing and issues relating to such financial statements on an ongoing basis.
(b) Without the prior consent of any relevant Reporting Entity, the LLC
will not change its fiscal year end.
(c) The LLC shall provide each Reporting Entity with all financial and
other related information reasonably requested by such Reporting Entity and any
corresponding auditors or Governmental Authority (including information deemed
reasonably necessary by any such entity to any obligations under Applicable Law)
on a timetable to be agreed upon and made a part of this Agreement as may be
agreed to from time to time by the parties hereto.
(d) The LLC shall employ an audit firm that is one of the six largest
independent auditing firms (based on audit employees) in the United States to
perform an annual independent audit of its financial statements; provided that
the LLC shall use a firm which is reasonably satisfactory to Incyte and SB.
(e) Representatives of Incyte or SB may, at the request and expense of
Incyte or SB, as the case may be, perform financial reviews of the LLC, on an
approximately quarterly basis, at a mutually convenient time at the LLC's
executive offices, for the purpose of reviewing the following:
(i) bank reconciliations and cash investments;
(ii) payroll and employee benefits;
(iii) travel and entertainment expenses;
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(iv) contracts; and
(v) other financial information reasonably requested by
Incyte or SB as the case may be.
6.4. ADDITIONAL FINANCING.
The parties agree that it may become necessary for the LLC to obtain
third-party financing, which may take the form of an initial public offering. In
such event, the parties agree to cooperate in the pursuit of such third-party
financing, it being understood that any decision to complete a particular
financing shall be made by the parties in their discretion in accordance with
the terms of the LLC Operating Agreement.
ARTICLE 7.
EMPLOYEES AND EMPLOYEE BENEFITS
7.1. OFFERS OF EMPLOYMENT.
Within sixty (60) days after the Closing, designated representatives of
the LLC shall have been given the opportunity by SB to interview all of the SB
Employees and offers of employment shall be given by the LLC to all of the SB
Employees. Offers to the SB Employees shall provide for employment commencing on
a date or dates determined by the parties. The LLC will promptly notify each
party of acceptance of any such offer by any such SB Employee that becomes a
Transferring Employee. SB shall be responsible for advising its Transferring
Employees of the details of any offers and for answering any questions relating
thereto.
7.2. BENEFITS.
Upon commencement of employment, Transferring Employees shall be
eligible to participate in the employee benefit plans and other fringe benefits
of the LLC (subject to the terms and conditions of such plans and benefits) on
the same basis as such plans and benefits are offered to new employees of the
LLC with comparable positions with the LLC. For purposes of this Section 7.2,
"employee benefit plans and other fringe benefits" includes, without limitation,
qualified retirement plans, retirement and post retirement welfare benefits,
health insurance benefits (medical, dental and vision), disability, life and
accident insurance, sickness benefits, and vacation as determined by the LLC.
7.3. SEVERANCE PAY.
SB shall be responsible for severance pay and similar obligations, if
any, that become payable under XX xxxxxxxxx policies as the same shall be
established from time to time to any SB Employee who is not a Transferring
Employee.
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7.4. RELOCATION EXPENSES.
SB shall be responsible for any relocation expenses that are offered to
Transferring Employees accepting employment with the LLC that are offered to
such Transferring Employees.
7.5. WAGES, BENEFITS, ETC.
(a) SB shall be responsible for timely payment as required by
Applicable Law of all wages, salaries, bonuses, if any, vacation benefits, and
other compensation and benefits accrued by its Transferring Employees with
respect to service completed on or prior to such Transferring Employee's last
date of employment by SB.
(b) To the extent of commitments that are made to Transferring
Employees in the LLC's offers of employment, the LLC shall credit such
Transferring Employees for their length of service with SB or any SB Affiliates
for all purposes under any 401(k) and vacation plans to be provided by the LLC
to such Transferring Employees.
(c) The LLC shall assume liability for severance pay and similar
obligations payable to any Transferring Employee who is terminated by the LLC
after the date employment commences with the LLC. Such payment shall be made
pursuant to the LLC's severance policy and the LLC shall compute severance pay
by giving all Transferring Employees full credit for all years of service since
their date of last hire with SB.
7.6. PAYMENT OF CLAIMS.
All medical, dental, vision, health, sick pay, salary continuation and
disability claims incurred by Transferring Employees with respect to the period
ending on or prior to the last date of employment by SB shall be determined
under SB's benefit plans, and the LLC shall not assume liability with respect to
such claims. All medical, dental, vision, health, sick pay, salary continuation
and disability claims incurred with respect to the period after the Transferring
Employee's employment commences with the LLC shall be determined under the LLC's
benefit plans and neither SB nor Incyte shall assume liability with respect to
such claims (except, in the case of SB, for any claims that may be available
under SB's health plan by virtue of Section 4980B of the Code), but only to the
extent that such provision makes continuation of SB's health plan applicable to
any Transferring Employee after the last date of employment by SB. For all
medical, dental, vision, health, sick pay, salary continuation and disability
claims incurred with respect to any period of time during which a Transferring
Employee is covered under the LLC's benefit plans as well as SB's benefit plans,
the LLC's plans shall be primary.
7.7. SECONDMENT OF EMPLOYEES.
SB may allow certain SB Employees to commence performing services for
the LLC prior to commencement of employment by the LLC. Any such secondment of
employees to the LLC by SB shall be on terms and conditions to be agreed by the
LLC and SB.
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7.8. Continuing Employees.
Notwithstanding any terms of this Article 7 to the contrary, no
Transferring Employees shall be third party beneficiaries of this Article 7 and
the LLC shall have the sole right to enforce any terms of this Article 7 against
SB and SB shall have the sole right to enforce any terms of this Article 7
against the LLC.
ARTICLE 8.
CLOSING PROCEDURE
8.1. Closing Date and Place.
The closing for the transactions provided for herein (the "Closing")
will be held at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx concurrently with the execution of this Agreement or at
such other location and/or time as the parties may agree.
ARTICLE 9.
INDEMNIFICATION
9.1. Indemnification.
(a) Subject to Section 10.1, Incyte shall indemnify and hold
harmless the LLC, SB and each of SB's Affiliates from and against any and all
Losses resulting from any claim, demand, action or other proceeding which any
of them may suffer, incur or sustain to the extent arising out of or
attributable to (i) any material breach of any representation or warranty made
by Incyte in Article 4 of this Agreement, (ii) any material breach of any
agreement to be performed by Incyte pursuant to this Agreement, (iii) any
actual or alleged Liability of Incyte that relates to the Business or the LLC
(other than a Liability or Loss for which SB owes Incyte a duty of
indemnification under Section 9.1(b) or any of the Related Agreements or a
Liability that is otherwise the responsibility of SB by the terms of this
Agreement or the Related Agreements), for the period on or prior to the Closing
and (iv) one-half of any Unreimbursed LLC Liability. No covenant or agreement
of Incyte relating to the representations and warranties made by Incyte, or any
other disclosure of information by Incyte to SB (including any alleged
non-disclosure, incomplete disclosure, inaccurate disclosure, misleading
disclosure or other similar problem), shall constitute the basis for a claim by
the LLC, SB or any SB Affiliate under any provision of this Agreement (or
otherwise) except under Subsection 9.1(a)(i). The foregoing is not intended to
limit the covenant obligations of the parties under this Agreement or the
remedies available to any party for breach of a covenant so long as, and to the
extent that, the claim for breach is not based upon alleged non-disclosure,
incomplete disclosure, misleading disclosure, or other similar problems.
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(b) Subject to Section 10.1, SB shall indemnify and hold
harmless, the LLC, Incyte and each of Incyte's Affiliates from and against any
and all Losses resulting from any claim, demand, action or other proceeding
which any of them may suffer, incur or sustain to the extent arising out of or
attributable to (i) any material breach of any representation or warranty made
by SB in Article 5 of this Agreement, (ii) any material breach of any agreement
to be performed by SB pursuant to this Agreement, (iii) any actual or alleged
Liability of SB that relates to the Business, the LLC or the Equipment (other
than a Liability or Loss for which Incyte owes SB a duty of indemnification
under Section 9.1(a) or any of the Related Agreements or a Liability that is
otherwise the responsibility of Incyte by the terms of this Agreement or the
Related Agreements), for the period on or prior to the Closing, and (iv)
one-half of any Unreimbursed LLC Liability. No covenant or agreement of SB
relating to the representations and warranties made by SB, or any other
disclosure of information by SB to Incyte (including any alleged non-disclosure,
incomplete disclosure, inaccurate disclosure, misleading disclosure or other
similar problem), shall constitute the basis for a claim by the LLC, Incyte or
arty Incyte Affiliate under any provision of this Agreement (or otherwise)
except under Subsection 9.1(b)(i). The foregoing is not intended to limit the
covenant obligations of the parties under this Agreement or the remedies
available to any party for breach of a covenant so long as, and to the extent
that, the claim for breach is not based upon alleged non-disclosure, incomplete
disclosure, misleading disclosure, or other similar problem.
(c) Subject to Section 10.1, the LLC shall indemnify and hold
harmless, each of Incyte, SB and their respective Affiliates from and against
any and all Losses resulting from any claim demand, action or other proceeding
which any of them may suffer, incur or sustain to the extent arising out of or
attributable to (i) any material breach of any representation or warranty made
by the LLC, (ii) any material breach of any agreement to be performed by the LLC
pursuant to this Agreement, and (iii) any actual or alleged Liability of the LLC
(other than a Liability or Loss for which Incyte or SB owes the LLC a duty of
indemnification under Section 9.1(a) or Section 9.1(b), respectively, or under
any of the Related Agreements or a Liability that is otherwise the
responsibility of Incyte or SB, as the case may be, by the terms of this
Agreement or the Related Agreements).
(d) No investigation by an Indemnified Party (defined below) at
or prior to the Closing shall relieve any Indemnitor (defined below) of any
liability hereunder. The waiver of any condition based on the accuracy of any
representation or warranty, or based upon the performance of or compliance with
any covenant or obligation, will exclude the right to indemnification,
reimbursement or other remedy based upon such representation, warranty, covenant
and obligation (to the extent so waived), and each party to this Agreement shall
be required to disclose all known breaches of representations and warranties of
the other as of the date hereof in a certificate to be delivered at the Closing.
(e) The indemnification remedies provided to the parties under
this Article 9 are intended to be cumulative to any other available remedies
except that any claim for indemnification within the terms of any IP Agreement
shall be governed solely by such IP Agreements and may not be asserted under
this Agreement.
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9.2. PROCEDURE FOR INDEMNIFICATION.
(a) If there is asserted any third party claim, demand, action or
other proceeding and in the judgment of the party hereto that is entitled to
indemnification under this Agreement (the "Indemnified Party") such claim,
demand, action or other proceeding may give rise to any Losses indemnifiable
pursuant to this Article 9, or if the Indemnified Party determines the existence
of the foregoing, whether or not the same shall have been asserted, such
Indemnified Party shall give the party from whom indemnity is sought (the
"Indemnitor") written notice within thirty (30) Business Days of the assertion
of the claim, demand, action or other proceeding or, if earlier, within ten (10)
Business Days of receipt of notice of the filing of any lawsuit based upon such
assertion, or, with respect to a claim not yet asserted against the Indemnified
Party, promptly upon the determination by an executive officer of the
Indemnified Party of the existence of the same.
(b) With respect to any claim, demand, action or other proceeding
asserted by a third party, the Indemnified Party shall give the Indemnitor a
reasonable opportunity of assuming the defense of such claim, demand, action or
other proceeding using counsel reasonably acceptable to the Indemnified Party;
provided, however, that the Indemnified Party shall have the right to
participate in such defense, except that if the Indemnified Party retains
separate counsel, other than in the event of a conflict of interest requiring
the retention of separate counsel, the Indemnified Party shall assume and pay
the fees and expenses of the separate counsel. If the Indemnitor fails to assume
the defense or to contest in good faith any such claim, demand, action or other
proceeding the Indemnified Party shall have the right to defend, settle or pay
the same and pursue its remedies against the Indemnitor hereunder.
(c) Failure by the Indemnified Party to give timely notice
pursuant to this Section shall not relieve the Indemnitor of its obligations,
except to the extent that the Indemnitor is actually and materially prejudiced
by such failure to give timely notice. No settlement or adjustment shall be made
without the Indemnified Party's prior written consent, which consent shall not
be unreasonably withheld or delayed.
(d) The Indemnified Party shall, in connection with a claim,
demand, action or other proceeding asserted by a third party, cooperate with the
Indemnitor in any defense which the Indemnitor assumes as described above;
provided that, the Indemnitor shall hold the Indemnified Party harmless from all
of its out-of-pocket expenses, including attorneys' fees and expenses, incurred
in connection with the Indemnified Party's cooperation. The Indemnified Party
shall cooperate with the Indemnitor in all reasonable respects in connection
with such defense including by providing, to the extent relevant to such claim
(i) prompt access to computer systems, compilations, historical data and other
information related to the LLC; (ii) copies of all books and records related to
the LLC; (iii) access to relevant personnel related to the LLC; and (iv)
generating records, data, compilations and other required support related to the
LLC that is necessary to assist the Indemnitor in reducing its indemnification
obligation. No settlement or adjustment shall be made without Indemnitor's prior
written consent, which consent shall not be unreasonably withheld or delayed.
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(e) Notwithstanding anything contained elsewhere in this Section
9.2, if an offer of compromise is received by the Indemnitor with respect to a
third party claim, demand, action or other proceeding related to any of the
Losses pursuant to this Article 9, the Indemnitor may notify the Indemnified
Party in writing of the Indemnitor's willingness to compromise or settle such
claim, demand, action or other proceeding on the basis set forth in such notice
at the sole expense of the Indemnitor, and with no further Losses or Liability
to, or other continuing obligation on the part of, the Indemnified Party or with
respect to the Business or the Equipment, except as set forth below in this
paragraph. If the Indemnified Party declines to accept such compromise or
settlement, the Indemnified Party may assume control and continue to contest
such claim, demand, action or other proceeding free of any participation by the
Indemnitor, at the Indemnified Party's sole expense. In such event, the
obligation of the Indemnitor to the Indemnified Party with respect to such
claim, demand, action or other proceeding shall be equal to the lesser of: (i)
the amount of the offer of compromise or settlement which the Indemnified Party
declined to accept and the amount of any expenses incurred prior to such offer
of compromise or settlement, and (ii) the actual Losses of the Indemnified Party
as a result of the Indemnified Party's continuing to contest such claim, demand,
action or other proceeding. The Indemnitor shall, in connection with such
continued contest of the relevant claim, demand, action or other proceeding,
cooperate with the Indemnified Party in such continued contest; provided that,
the Indemnified Party shall hold the Indemnitor harmless from all of its out-of
pocket expenses, including reasonable attorneys' fees and expenses, incurred in
connection with the Indernnitor's cooperation after the offer of compromise or
settlement had been made. The Indemnitor shall cooperate with the Indemnified
Party in all reasonable respects in connection with such continued defense
including by providing, to the extent relevant to such defense (i) prompt access
to computer systems, compilations, historical data and other information related
to the defense; (ii) copies of all books and records related to the defense;
(iii) access to relevant personnel related to the defense; and (iv) generating
records, data, compilations and other required support related to the defense
that is necessary to assist the Indemnified Party in reducing its Liability for
any Losses not covered by the indemnification.
(f) The Indemnitor shall, in connection with a claim, demand,
action or other proceeding asserted by a third party, keep the Indemnified Party
fully informed in connection with any defense which the Indemnitor assumes as
described above whether or not the Indemnified Party chooses to be represented
by separate counsel.
ARTICLE 10.
MISCELLANEOUS
10.1. SURVIVAL.
The parties' respective representations and warranties contained in this
Agreement shall survive after the Closing. Any claim for indemnification
pursuant to Section 9.1(a)(i) or 9.1(b)(i) in respect of breach of any
representations and warranties must be commenced in compliance with the
requirements contained in Section 9.1. EXCEPT AS SET FORTH IN THIS
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AGREEMENT, (A) NEITHER INCYTE NOR ANY OF ITS REPRESENTATIVES OR EMPLOYEES HAS
MADE OR MAKES ANY EXPRESS OR IMPLIED WARRANTY TO SB OR THE LLC AND (B) NEITHER
SB NOR ANY OF ITS REPRESENTATIVES OR EMPLOYEES HAS MADE OR MAKES ANY EXPRESS OR
IMPLIED WARRANTY TO INCYTE OR THE LLC. THE WARRANTIES SET FORTH IN THIS
AGREEMENT ARE IN LIEU OF, AND EXCLUDE, AND SB, INCYTE AND THE LLC EACH HEREBY
WAIVES, ANY OTHER WARRANTY FROM, OR IN CONNECTION WITH THE CONTRIBUTION OF THE
ASSETS HEREUNDER, OR THE USE OR PERFORMANCE THEREOF, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY
IMPLIED WARRANTY ARISING FROM COURSE OF DEALING OR USAGE OF TRADE.
10.2. NO COMMITMENTS.
No party shall incur any debts or make any commitments for the other,
except to the extent, if at all, specifically provided herein.
10.3. ASSIGNMENTS.
This Agreement shall be binding upon and inure to the benefit of the
successors in interest of the respective parties. Neither this Agreement nor any
interest hereunder shall be assigned or transferred, whether directly or
indirectly, including by operation of law ("Assign" or "Assignment"), by any
party without the prior express written consent of the other parties; provided,
however, that either Incyte or SB may Assign this Agreement or any of its rights
or obligations hereunder:
(a) To any of its direct or indirect subsidiaries, provided that
(i) Incyte or SB, as the case may be, shall own, directly or indirectly,
securities of such subsidiary that enable it to elect a majority of the
directors of such subsidiary and any minority interest in Such subsidiary shall
be widely held and no single holder of a minority interest shall own
beneficially (within the definition set forth in Rule 13d-3 of the Securities
Exchange Act of 1934) securities representing more than 10% of the securities of
such subsidiary entitled to vote generally for the election of directors or
other persons performing similar functions (a "Majority-Owned Subsidiary"), and
(ii) should such subsidiary no longer be a Majority-Owned Subsidiary, the rights
and obligations of such subsidiary pursuant to this Agreement and the LLC
Operating Agreement shall be transferred back to Incyte or SB, as the case may
be (or to another direct or indirect subsidiary of Incyte or SB, as the case may
be, to which such party could transfer the rights and obligations of such
subsidiary pursuant to this Agreement and the LLC Operating Agreement consistent
with the terms of this subsection (a));
(b) To an entity that owns 100% of the securities or other
ownership interests having ordinary voting power to elect the directors or other
persons performing similar functions of Incyte or SB, as the case may be; or
(c) To an entity of which the securities or other ownership
interests having ordinary voting power to elect the directors or other persons
performing similar functions are
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owned 100% by an entity that owns beneficially, directly or indirectly, 100% of
the securities or other ownership interest having ordinary voting power to elect
the directors or other persons performing similar functions of Incyte or SB as
the case may be.
Notwithstanding the foregoing, no party shall be prohibited from completing an
Assignment that occurs through (and as a direct result of) a Change of Control.
Any Assignment made pursuant to this Section shall be valid only if (A) the
assigning party remains liable under this Agreement and the LLC Operating
Agreement, and (B) the relevant subsidiary or other entity assumes in writing
all of the assigning party's obligations under this Agreement and the LLC
Operating Agreement. Any purported Assignment in violation of this Section 10.3
shall be void.
10.4. CONFIDENTIALITY.
(a) Each party acknowledges that pursuant to this Agreement, the
LLC Operating Agreement, the Intercompany Services Agreement or otherwise in
connection with the relationships between the parties contemplated hereunder,
such party (the "Receiving Party") will receive from other parties or their
Affiliates disclosure of information that is proprietary, confidential and of
commercial value to the disclosing party (the "Disclosing Party"). For purposes
of this Section 10.4, "Confidential Information" shall mean technical and
business information belonging to the Disclosing Party which is disclosed
pursuant to this Agreement or the LLC Operating Agreement, including where
appropriate and without limitation, any information, business, financial and
scientific data and the like. Except to the extent expressly authorized by this
Agreement, each Receiving Party agrees that, until the dissolution and
winding-up of the LLC and for ten (10) years thereafter, it shall on its own
behalf, and shall cause any affiliated Reporting Entity to, keep confidential
and shall not publish or otherwise disclose and shall not use for any purpose
(except those expressly permitted under this Agreement) any Confidential
Information furnished to it by a Disclosing Party, and regardless of the medium
on which it is provided, pursuant to this Agreement or the LLC Operating
Agreement, including know-how, except to the extent that it can be established
by the Receiving Party by competent proof that such information:
(i) was already known to it, other than under an obligation
of confidentiality, at the time of disclosure by the Disclosing Party;
(ii) was generally known to the public or otherwise part of
the public domain at the time of its disclosure to the Receiving Party;
(iii) became generally available to the public or otherwise
part of the public domain after its disclosure other than through any act or
omission of it in breach of this Agreement or the LLC Operating Agreement;
(iv) was subsequently lawfully disclosed to it by a third
party; or
(v) was independently discovered or developed by it without
the use of the Disclosing Party's Confidential Information, as can be documented
by written records created at the time of such independent discovery or
development.
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(vi) Notwithstanding Section 10.4(a), the Receiving Party
may disclose the other party's Confidential Information to the extent such
disclosure is reasonably necessary in complying with Applicable Law; provided
however, that if a Receiving Party or a Receiving Party's affiliated Reporting
Entity, is required to make any disclosure of the Disclosing Party's
Confidential Information, the Receiving Party or such affiliated Reporting
Entity will give reasonable advance written notice to the Disclosing Party of
such disclosure requirement and will use its reasonable efforts to secure
confidential treatment of such information required to be disclosed.
(b) Notwithstanding Section 10.4(a), no party shall make any
public announcements or issue any press release concerning any aspect of the
Business, the relationship of the parties pursuant to this Agreement or any of
the Related Agreements or any other matter incidental to the foregoing including
any announcement that references the name of another party except (i) any
disclosure that has been agreed to by the parties, including routine or
recurring disclosures of agreed upon statements; (ii) disclosures required by
Applicable Law so long as the text of any such disclosure is provided to the
other parties for comment and review at least five (5) Business Days in advance
of disclosure; and (iii) disclosures of material financial information in a
press release that relates to a party's earnings or financial performance, so
long as the text of any such disclosure is provided to the other parties for
comment and review at least one (1) Business Day in advance of disclosure.
(c) The terms of Sections 10.4(a) and 10.4(b) shall not apply to
any matters covered by the confidentiality provisions contained in the IP
Agreements.
10.5. INTENTIONALLY OMITTED.
10.6. OBSERVANCE OF SEPARATE ENTITY FORMALITIES.
The LLC shall establish and comply with a set of financial, accounting
and corporate policies that (A) observe its character as a separate legal entity
from each of Incyte and SB, (B) are similar to those generally established by
companies comparable to the LLC, and (C) are reasonably satisfactory to Incyte
and SB. Areas to be addressed by these policies shall include (without
limitation):
(i) cash management policies and cash investment
guidelines which shall be on terms and conditions
established comparable to those that would apply in
an arms' length transaction, including that all
funds are accounted for separately unless otherwise
agreed to by the parties;
(ii) levels of authorization and approval by management
and the Board of Directors for purchases, contracts,
check signing, wire transfers and capital
commitments;
(iii) normal accounting procedures in accordance with
generally accepted accounting principles
consistently applied including
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accrual and recognition of expenses, depreciation,
revenue recognition; and
(iv) observing all other required formalities of law for
a limited liability company including holding any
required meetings of its managing board or other
governing body, as well as meetings of holders of
its membership interests in each case in accordance
with the LLC Operating Agreement.
10.7. CERTAIN DISSOLUTION MATTERS.
Upon the dissolution of the LLC pursuant to the LLC Operating Agreement,
the following additional terms and conditions shall govern to the extent
applicable in connection with the dissolution:
(a) Except as otherwise agreed to by Incyte and SB, to the extent
that the Collaboration and License Agreement has terminated pursuant to the
material breach or bankruptcy provisions of such Collaboration and License
Agreement, all DiaDexus IP (all terms in this Section 10.7 not defined in this
Agreement shall have the meanings set forth in the Collaboration and License
Agreement) with respect to such dissolution shall be distributed as follows:
(i) DiaDexus IP which is based on the use of or derived
by use of ML Diagnostic IP, provided such ML
Diagnostic IP was based on the use of or derived
from data or information obtained by SB pursuant to
the HGS Agreements, shall be returned to, and become
the property of, SB; and
(ii) Subject to the Incyte Database Agreements, all other
DiaDexus IP shall remain the property of the LLC and
shall be subject to Section 10.7(b).
(b) All other assets of the LLC, including DiaDexus IP governed by
Section 10.7(a)(ii), shall be governed by such dissolution procedures (i) in
accordance with the LLC Operating Agreement or as SB and Incyte may otherwise
agree are appropriate at the time; or (ii) as may otherwise be provided under
Applicable Law. Incyte and SB shall use their respective best efforts to reach
agreement on the distribution of all assets of the LLC, and any such agreement
will be given precedence, to the maximum extent permitted under Applicable Law,
over procedures that might otherwise apply under the Act (as defined in the LLC
Operating Agreement) or under any other Applicable Law. As between Incyte and
SB, each agrees to proceed in good faith in the event of any dissolution of the
LLC in order to fulfill the purposes of this Section 10.7 and the LLC Operating
Agreement and neither shall seek a dissolution of the LLC in accordance with the
material breach provisions of Section 9.1 of the LLC Operating Agreement in the
absence of a breach that is fundamental to the essential purposes or operation
of the LLC.
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(c) The terms and conditions contained in Sections 1.1, 3.1 and
6.3 and those contained in Articles 4, 5, 7, 9 and 10 of this Agreement shall
survive dissolution of the LLC (other than a merger governed by Section 6.2).
(d) The parties intend that the terms of Section 10.7(a) be and
hereby is incorporated by reference into and made a part of the Collaboration
and License Agreement.
10.8. FURTHER ACTIONS.
Each party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate
in order to carry out the purposes and intent of this Agreement.
10.9. NO TRADEMARK RIGHTS.
Except as otherwise provided herein, no right, express or implied, is
granted by this Agreement to use in any manner the names "SmithKline Xxxxxxx
Corporation," "Incyte Pharmaceuticals, Inc." or "DiaDexus, LLC", or any other
trade name or trademark of SB, Incyte or LLC or their Affiliates in connection
with the performance of this Agreement.
10.10. ENTIRE AGREEMENT OF THE PARTIES; AMENDMENTS.
This Agreement and the Related Agreements constitute and contain the
entire understanding and agreement of the parties and cancel and supersede any
and all prior negotiations, correspondence, representations, understandings and
agreements, whether verbal or written, between the parties respecting the
subject matter hereof. The terms of the LLC Operating Agreement will govern in
the event of any inconsistent terms of this Agreement. No waiver, modification
or amendment of any provision of this Agreement shall be valid or effective
unless made in writing and signed by a duly authorized officer of each of the
parties.
10.11. SEVERABILITY.
In the event any one or more of the provisions of this Agreement should
for any reason be held by any court or authority having jurisdiction over this
Agreement (including arbitrators) or any of the parties to be invalid, illegal
or unenforceable, such provision or provisions shall be validly reformed to as
nearly as possible approximate the intent of the parties and, if unreformable,
shall be divisible and deleted in such jurisdiction; elsewhere, this Agreement
shall not be affected so long as the parties are still able to realize the
principal benefits bargained for in this Agreement.
10.12. CAPTIONS.
The captions to this Agreement are for convenience only, and are to be of
no force or effect in construing or interpreting any of the provisions of this
Agreement.
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10.13. APPLICABLE LAW.
Notwithstanding the place where this Agreement may be executed by any of
the parties hereto, the parties expressly agree that all the terms and
provisions of this Agreement and the rights and liabilities of the parties
hereto shall be governed by and construed in accordance with the laws of the
State of Delaware.
10.1.1. DISCLAIMER.
EXCEPT AS EXPLICITLY STATED HEREIN NO PARTY WILL BE LIABLE FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY NATURE ARISING FROM SUCH PARTY'S
ACTIVITIES UNDER THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS LIMITATION SHALL
NOT LIMIT THE INDEMNIFICATION OBLIGATION OF SUCH PARTY UNDER ARTICLE 9 ABOVE FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES RECOVERED BY A THIRD PARTY.
10.15. NOTICES AND DELIVERIES.
All notices, requests, demands, consents and other communications given
or required to be given under this Agreement and under the related documents
shall be in writing and delivered to the applicable party at the address
indicated below:
If to Incyte: Incyte Pharmaceuticals, Inc.
0000 Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Chief Executive Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
If to SB: SmithKline Xxxxxxx Corporation
709 Swedeland Road
X.X. Xxx 0000
Xxxx xx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
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and
SmithKline Xxxxxxx Corporation
Xxx Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the LLC: Address be provided by notice to Incyte and SB.
and
With a copy to: each of Incyte and SB.
or, as to each party at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. Any notices shall be in writing, including telegraphic or
facsimile communication, and may be sent by registered or certified mail, return
receipt requested, postage prepaid, by fax or by overnight delivery service.
Notice shall be effective upon actual receipt thereof.
10.16. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10.17. CONSTRUCTION OF AGREEMENT.
SB and Incyte have jointly participated in the negotiations and drafting
of this Agreement. In the event any ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by SB and Incyte and no rule of construction, presumption or burden of proof
shall arise favoring one party or the other concerning the interpretation of
ambiguous provisions or otherwise (including under California Civil Code 1654)
by virtue of one party's presumed authorship of this Agreement or any provision
hereof. The use of the terms "including" or "include" shall, in all cases, mean
"including, without limitation," and "include, without limitation,"
respectively. The use of the masculine, feminine or neuter gender herein shall,
as applicable, also refer to the other genders. The terms "material", "Material
Adverse Effect" and phrases of similar import shall be determined in terms of
the transactions contemplated by this Agreement and not in terms of the
resources of SB or Incyte. Except as the context otherwise requires, the use of
the singular form of any term shall also refer to the plural, and vice versa.
Unless the context otherwise requires, whenever the terms "hereto," "hereunder,"
"herein" or "hereof" are used in this Agreement, such terms shall be construed
as referring to this entire Agreement and references to "Articles," "Sections,"
"introduction," "recitals," "clauses," and "Schedules" shall be construed as
referring to those of this Agreement. Except where the context otherwise
requires such as by virtue of a reference to a specific Section
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or Article of this Agreement, references to this Agreement shall be deemed to
include references to the entire Agreement. All references in this Agreement to
fees or expenses or legal fees and expenses shall include allocated fees and
expenses of in-house counsel and legal staff.
10.18. EXPENSES.
Unless specifically provided otherwise in this Agreement, each party
shall bear and pay all costs and expenses which it incurs, or which may be
incurred on its behalf in connection with the preparation of this Agreement and
consummation of the transactions described herein, and the expenses, fees, and
costs necessary for obtaining any Governmental Consents. Nothing in this
provision shall alter the manner in which costs and expenses are allocated in
the LLC Operating Agreement or the Intercompany Services Agreements.
10.19. FORCE MAJEURE.
"Force Majeure" shall mean an Act of God, flood, fire, explosion,
earthquake, strike, lockout, casualty or accident, war, civil commotion, act of
public enemies, blockage or embargo, or any injunction, law, order,
proclamation, regulation, ordinance, demand or requirement of any government or
any subdivision, authority representative thereof, or any other cause
whatsoever, whether similar or dissimilar to those enumerated above, which are
beyond the reasonable control of such party, which the party affected has used
its reasonable best efforts to avoid, and which prevent, restrict or interfere
with the performance by a party of its obligations hereunder. The party affected
by Force Majeure shall give notice to the other party promptly in writing and
whereupon shall be excused from those obligations hereunder, to the extent of
such prevention, restriction or interference, provided that the affected party
shall use its commercially reasonable efforts to avoid or remove such cause(s)
of non-performance and shall continue performance whenever such cause(s) is
removed.
10.20. AFFILIATE PERFORMANCE.
To the extent that any LLC Affiliate has the right to receive any other
rights or benefits under this Agreement or otherwise is obligated to perform any
obligations under this Agreement, the LLC shall cause such LLC Affiliate to
perform in full, when due, all applicable obligations under this Agreement to
the same extent as if such LLC Affiliate were a party to this Agreement;
provided, however, that nothing in this Section 10.20 shall expand the rights or
benefits of the LLC or its LLC Affiliates, or the obligations of Incyte, or SB
beyond those otherwise expressly set forth in this Agreement. The LLC shall
guarantee timely performance in full by such LLC Affiliate of all such
obligations.
10.21. DISPUTE RESOLUTION.
(a) Any controversy or claim between the parties (other then a
claim for indemnification under any of the Related Agreements), arising out of
or relating to this Agreement or any of the Related Agreements, or the breach
thereof or misrepresentation thereunder including any disputes regarding rights
of the parties to terminate this Agreement or any Related Agreement, or whether
any such termination has been wrongfully undertaken, shall
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first be submitted for resolution to a committee consisting of the chief
executive officer of each of the parties involved in such dispute, whether they
include SB and Incyte or the LLC and either of SB and Incyte, or any combination
of the foregoing. If the committee is unable to resolve such controversy or
claim within twenty (20) days of the submission of such matter to the committee,
then the parties may have access to any remedies available under Applicable Law
or otherwise.
(b) The parties agree that termination of this Agreement or any
Related Agreement shall be available in accordance with the terms of such
agreement, but it is the intention of the parties that disputes shall be
resolved without termination of an agreement to the maximum extent possible.
10.22. RELATIONSHIP BETWEEN PARTIES.
(a) Nothing in this Agreement or in any of the Related Agreements
shall deem Incyte and SB to be involved in any joint venture or relationship as
general partners and each of them agrees to take no action inconsistent with the
characterization of the LLC as a limited liability company, or as a corporation
after the conversion, and the relationship between Incyte and SB shall be deemed
to be solely that of members in the LLC or stockholders in the corporation.
(b) Except to the extent expressly provided herein or in any
Related Agreement, neither this Agreement nor any of the Related Agreements
shall constitute an appointment of any of the parties hereto or thereto as the
legal representative or agent of any other party hereto or thereto, nor shall
any party hereto or thereto have any right or authority to assume, create or
incur in any manner any obligation or other Liability of any kind, express or
implied, against, or in the name or on behalf of, the other party hereto or
thereto.
10.23. THIRD PARTY BENEFICIARIES.
Except as otherwise agreed by SB and Incyte, the parties hereto intend
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any Person other than the parties hereto except to the extent
specifically provided herein. Without limiting the foregoing, (i) Article 7
shall not be construed as conferring any right, entitlement or benefit on any
employee of Incyte, SB or the LLC, and (ii) no Member in the LLC shall have any
interest through the LLC in the subject matter of this Agreement whether
derivatively or otherwise.
10.24. CERTAIN TRANSFER MATTERS.
No transfer of an Interest may be made except as contemplated by the LLC
Operating Agreement. No transfer of an Interest shall relieve the obligations of
Incyte or SB under this Agreement including the obligation to make capital
contributions to the LLC. The parties shall cause any transferee of Interests
other than an Incyte Affiliate or a SB Affiliate to be bound by the terms of
Sections 6.2, 10.4 and 10.7 and 10.22 of this Agreement (or substantially
comparable restrictions), but no such transferee shall have any rights under
this Agreement.
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IN WITNESS WHEREOF, the parties, through their authorized officers, have
executed this Agreement as of the date first written above.
SMITHKLINE XXXXXXX
CORPORATION
By: /s/ XXXXXX XXXXX
-------------------------------------
Its:
---------------------------------
INCYTE PHARMACEUTICALS, INC.
By: /s/ XXXXXX XXXXX
-------------------------------------
Its:
---------------------------------
DIADEXUS, LLC
By: /s/ X. XXXXXXX
-------------------------------------
Its: VP, CORPORATE DEVELOPMENT
---------------------------------
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Schedule 1.1(b) - SB Employees
NAME TITLE
Xxxxxxx, Xxxx, Dr. Director
Xxxxxx, Xxxxx, Dr. Sr. Investigator
Xxxxxxxxx, Xxxxxx, Dr. Sr. Investigator
Xxxxxx, Xxxxxxx, Dr. Sr. Investigator
Xxxxxxxxx, Xxxxxxx X., Dr. Investigator
Xxxx, Xxx Min Sr. Scientist
Xxxx-Xxxxxxxxxx, Xxxxx Assoc. Investigator
Xxxxxxxx, Xxxx X. Assoc. Investigator
Xxxxxxx, Xxxxxx Scientist
Xxxxx, Xxxxxxx Xxxx Scientist
Ling, Xxxxx X. Scientist
Xx Xx, Xxxxxxxx Scientist
Xxxxxxx, Xxxxxxx Vice President, Business Development
