TRANSITION SERVICES AGREEMENT
Dated as of August 8, 2023
by and between
GENOME DX THERAPEUTICS INC.
and
MERIDIAN PRECISION DIAGNOSTICS, INC.
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TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "Agreement") is entered into as of August 8, 2023 (the "Effective Date"), by and between Genome Dx Therapeutics Inc., a Delaware corporation ("Service Provider" or "Seller"), and Meridian Precision Diagnostics, Inc., a Delaware corporation ("Service Recipient" or "Buyer"). Service Provider and Service Recipient are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Service Provider and Service Recipient entered into that certain Asset Purchase Agreement, dated as of May 11, 2023 (the "APA"), pursuant to which Service Provider agreed to sell, assign, transfer, convey, and deliver to Service Recipient, and Service Recipient agreed to purchase, acquire, and accept from Service Provider, substantially all of the assets, properties, rights, and interests related to the OncuPath™ companion diagnostics assay line (the "OncuPath Business") for total consideration of One Hundred Forty Million Dollars ($140,000,000), subject to the terms and conditions set forth in the APA;
WHEREAS, the closing of the transactions contemplated by the APA (the "Closing") occurred on the date hereof (the "Closing Date");
WHEREAS, in connection with the Closing, seventy-eight (78) employees of Service Provider who were primarily dedicated to the OncuPath Business have accepted offers of employment from Service Recipient and have transferred to Service Recipient's employment as of the Closing Date (the "Transferred Employees");
WHEREAS, Service Recipient requires certain transitional support services from Service Provider in connection with information technology infrastructure, facilities management, and human resources and payroll functions in order to facilitate an orderly and efficient transition of the OncuPath Business to Service Recipient's independent operations;
WHEREAS, Service Provider is willing to provide, or cause to be provided, such transitional support services to Service Recipient on the terms and subject to the conditions set forth in this Agreement, as contemplated by Section 7.12 of the APA; and
WHEREAS, capitalized terms used and not otherwise defined in this Agreement shall have the respective meanings ascribed to such terms in the APA.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations, and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
ARTICLE I — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below:
Section 1.1 "APA" means that certain Asset Purchase Agreement, dated as of May 11, 2023, by and between Service Provider and Service Recipient, as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
Section 1.2 "Business Day" means any day other than a Saturday, Sunday, or any day on which banks in San Diego, California or Durham, North Carolina are authorized or required by applicable law to be closed.
Section 1.3 "Closing Date" means August 8, 2023.
Section 1.4 "Facilities" means, collectively, (a) the OncuPath reference laboratory and research and development facility located at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121 and (b) the manufacturing and kitting space located at 925 Industrial Court, Carlsbad, California 92010.
Section 1.5 "Force Majeure Event" has the meaning set forth in Section 9.4 of this Agreement.
Section 1.6 "Maximum Service Period" means the period of nine (9) months following the Closing Date, expiring on and including May 8, 2024.
Section 1.7 "OncuPath Business" has the meaning ascribed to such term in the APA.
Section 1.8 "Schedule A" means Schedule A attached hereto and incorporated herein by reference, as may be amended from time to time in accordance with the terms of this Agreement.
Section 1.9 "Service Charges" means the fees payable by Service Recipient to Service Provider for the Services, calculated at Service Provider's actual, documented cost of providing such Services plus a markup of five percent (5%) (i.e., cost plus 5%), as more particularly described in Article III.
Section 1.10 "Service Commencement Date" means August 8, 2023, which is the Closing Date.
Section 1.11 "Service Level" means, with respect to each Service, the standard of service described in Section 2.3 and the applicable portions of Schedule A.
Section 1.12 "Service Period" means, with respect to each Service, the period commencing on the Service Commencement Date and ending on the earliest to occur of (a) the expiration of the maximum term set forth for such Service on Schedule A, (b) the date on which such Service is terminated in accordance with Article VI, and (c) the last day of the Maximum Service Period.
Section 1.13 "Services" means the transition services described on Schedule A, together with any additional services added to Schedule A pursuant to Section 2.4, in each case as provided by or on behalf of Service Provider to Service Recipient during the applicable Service Period.
Section 1.14 "Third-Party Costs" means all fees, expenses, and charges payable to third-party vendors, contractors, service providers, or licensors that are incurred by Service Provider directly in connection with the delivery of Services hereunder.
Section 1.15 "Transferred Employees" means the seventy-eight (78) former employees of Service Provider who accepted offers of employment from Service Recipient and transferred to Service Recipient's employment in connection with the transactions contemplated by the APA, as identified on Schedule 7.5(a) of the APA.
Section 1.16 "Transition Services Coordinator" means, with respect to each Party, the individual designated by such Party in accordance with Section 2.1 to serve as the primary point of contact for all matters relating to the provision and receipt of Services under this Agreement.
ARTICLE II — SERVICES
Section 2.1 — Provision of Services.
(a) Commencing on the Service Commencement Date and continuing during each applicable Service Period, Service Provider shall provide, or cause to be provided, to Service Recipient the Services described on Schedule A attached hereto. The Services shall be provided in accordance with the terms and conditions of this Agreement and in a professional and workmanlike manner. Service Provider shall allocate sufficient resources and personnel as are reasonably necessary to perform the Services in accordance with the applicable Service Levels.
(b) The Services are limited in scope to those services historically provided by Service Provider (or its employees, contractors, or agents) to or in support of the OncuPath Business in the ordinary course of business during the twelve (12) months immediately preceding the Closing Date. Nothing in this Agreement shall be construed to require Service Provider to provide services that were not so provided or to expand the scope, volume, or nature of any Service beyond the level historically provided.
(c) The Services shall be provided from Service Provider's corporate headquarters located at 10250 Science Center Drive, Suite 600, San Diego, California 92121, and at the Facilities, as applicable to the particular category of Service. Service Provider may, at its discretion, perform certain Services from other locations, provided that such change of location does not materially affect the quality, timeliness, or availability of the applicable Service.
(d) Within five (5) Business Days following the Closing Date, Service Provider shall designate in writing an individual to serve as its Transition Services Coordinator. The initial Transition Services Coordinator for Service Provider shall be a member of Service Provider's operations or finance team with appropriate authority and knowledge of the Services. Service Recipient shall designate in writing its own Transition Services Coordinator within the same timeframe. Each Party's Transition Services Coordinator shall serve as the primary point of contact for all day-to-day matters relating to the provision and receipt of the Services, including coordination of service delivery, resolution of operational issues, and communication regarding Service Level performance. Either Party may replace its Transition Services Coordinator at any time by providing written notice to the other Party.
(e) The Transition Services Coordinators shall meet (in person or by videoconference) no less frequently than biweekly during the first three (3) months of the Service Period, and monthly thereafter, to review the status of the Services, discuss any issues or concerns, and coordinate transition planning activities.
Section 2.2 — Standard of Service.
(a) Service Provider shall perform the Services in a manner substantially consistent with the nature, quality, and timeliness of the same or similar services as were provided to or in support of the OncuPath Business by Service Provider during the twelve (12) months immediately preceding the Closing Date. Service Provider shall not, without the prior written consent of Service Recipient, materially reduce or diminish the level of any Service below the level historically provided.
(b) Service Provider shall use commercially reasonable efforts to provide the Services in accordance with the Service Levels set forth on Schedule A and as further described in Section 2.3 of this Agreement. In no event shall Service Provider be required to provide the Services at a level that exceeds the level historically provided to the OncuPath Business.
(c) Notwithstanding any other provision of this Agreement, Service Provider shall not be required to (i) hire additional employees or independent contractors, (ii) maintain the employment of any specific employee or group of employees, (iii) purchase, lease, or license any additional equipment, hardware, software, or technology, or (iv) make any capital expenditures or incur any extraordinary costs, in each case solely for the purpose of providing the Services, unless Service Recipient agrees in writing in advance to bear all such additional costs and expenses (including any applicable markup). To the extent Service Recipient agrees to bear such costs, the Parties shall memorialize such agreement in a written amendment to this Agreement or Schedule A.
(d) Service Provider shall provide the Services using the same or substantially similar tools, systems, processes, and methodologies as were used to provide such services to the OncuPath Business prior to the Closing Date. Service Provider shall notify Service Recipient in writing at least fifteen (15) days in advance of any planned material changes to such tools, systems, processes, or methodologies that could reasonably be expected to affect the delivery of the Services.
Section 2.3 — Service Levels.
(a) The Service Levels for each category of Service are as specified on Schedule A and as further set forth in this Section 2.3. Service Provider shall use commercially reasonable efforts to meet or exceed the applicable Service Levels for each Service throughout the applicable Service Period.
(b) Information Technology Services. With respect to the information technology Services described in Category 1 of Schedule A:
(i) System Availability. Service Provider shall maintain a target system availability of ninety-nine and one-half percent (99.5%) uptime for network infrastructure, servers, and shared IT systems, measured on a monthly basis. System availability shall be calculated based on total available minutes during the applicable month, excluding scheduled maintenance windows of which Service Recipient has been given at least forty-eight (48) hours' prior notice.
(ii) Support Response Times. Service Provider shall respond to critical support tickets (defined as incidents that render a system or application wholly unavailable or materially impair critical business operations) within four (4) Business Hours of submission. Non-critical support tickets (all other incidents) shall receive an initial response within two (2) Business Days of submission. For purposes of this Section, "respond" means acknowledging receipt of the ticket and providing an initial assessment or estimated resolution timeline.
(iii) Scheduled Maintenance. Service Provider shall schedule routine maintenance during non-business hours (weekdays between 10:00 PM and 6:00 AM Pacific Time or on weekends) to the extent practicable, and shall provide Service Recipient with at least forty-eight (48) hours' advance notice of any scheduled maintenance that may affect the availability of Services.
(c) Facilities Services. With respect to the facilities Services described in Category 2 of Schedule A:
(i) Service Provider shall maintain the shared infrastructure, common areas, utilities, and security systems at the Facilities in a manner consistent with the standards and practices in effect during the twelve (12) months immediately preceding the Closing Date.
(ii) Building access shall be provided on a twenty-four (24) hours per day, seven (7) days per week basis through existing badge and access control systems.
(iii) Service Provider shall coordinate with Service Recipient to ensure the orderly transfer of facility management responsibilities, including utility account transfers, lease assignments, and vendor transitions.
(d) Human Resources and Payroll Services. With respect to the HR and payroll Services described in Category 3 of Schedule A:
(i) Payroll Processing Accuracy. Service Provider shall maintain a payroll processing accuracy target of ninety-nine and nine-tenths percent (99.9%), calculated as the percentage of individual payroll transactions processed without error during each payroll cycle.
(ii) Payroll Timeliness. Payroll runs shall be completed and direct deposits initiated by the applicable pay dates in accordance with Service Provider's existing payroll calendar (bi-weekly), and in compliance with all applicable federal and state wage payment laws.
(iii) Benefits Administration. Benefits enrollment, claims processing, and employee inquiries shall be administered in accordance with the terms of the applicable plan documents and within the timelines specified therein, consistent with Service Provider's pre-Closing administration standards.
(e) Service Level Reporting. Service Provider shall provide Service Recipient with a monthly written report summarizing Service Level performance across all categories of Services, including any instances of failure to meet applicable Service Levels and the steps being taken to remediate such failures. Such reports shall be delivered to Service Recipient's Transition Services Coordinator within fifteen (15) days following the end of each calendar month.
Section 2.4 — Additional Services.
(a) From time to time during the term of this Agreement, Service Recipient may request that Service Provider provide additional transition services not listed on Schedule A by delivering a written request to Service Provider's Transition Services Coordinator. Each such request shall describe in reasonable detail the nature and scope of the additional services requested, the proposed duration, and any applicable requirements or specifications.
(b) Service Provider shall consider each such request in good faith and shall respond in writing within ten (10) Business Days of receipt, indicating whether Service Provider is willing to provide the requested additional services and, if so, proposing the scope, duration, Service Level, and pricing (at Service Provider's actual cost plus a markup of five percent (5%), consistent with the pricing methodology set forth in Section 3.1) for such additional services.
(c) Service Provider shall have no obligation to provide any additional services requested by Service Recipient. If Service Provider declines a request for additional services, Service Provider shall provide a reasonable explanation for its decision.
(d) If Service Provider agrees to provide additional services, the Parties shall execute a written amendment to this Agreement (or an addendum to Schedule A) reflecting the agreed-upon scope, duration, Service Level, and pricing of such additional services prior to the commencement of such services. No additional services shall be deemed to have been agreed upon unless and until such written amendment or addendum has been executed by both Parties.
Section 2.5 — Exclusions.
Notwithstanding any other provision of this Agreement, Service Provider shall not be obligated to provide any Service (or any portion thereof) that would:
(a) violate any applicable law, statute, regulation, rule, order, or governmental directive, including any requirements under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), the Health Information Technology for Economic and Clinical Health Act ("HITECH"), the Clinical Laboratory Improvement Amendments ("CLIA"), or any analogous state or local law;
(b) result in a breach or violation of any contractual obligation, license agreement, or other binding commitment of Service Provider to any third party, including any restrictions under third-party software license agreements, vendor contracts, or lease arrangements;
(c) unreasonably interfere with, disrupt, or impair Service Provider's retained business operations, including the development, commercialization, and operation of the GenoStrat™ liquid biopsy platform and any other diagnostic products or services offered by Service Provider; or
(d) require the disclosure of any information that is subject to attorney-client privilege, work product doctrine, or any other legal privilege or immunity, or that constitutes trade secrets of Service Provider unrelated to the OncuPath Business.
In the event that Service Provider determines that the provision of any Service would trigger any of the foregoing exclusions, Service Provider shall promptly notify Service Recipient in writing and the Parties shall cooperate in good faith to identify a commercially reasonable alternative means of providing the functional equivalent of such Service.
ARTICLE III — SERVICE CHARGES AND PAYMENT
Section 3.1 — Service Charges.
(a) In consideration for the provision of the Services, Service Recipient shall pay to Service Provider the Service Charges for all Services provided hereunder. The Service Charges for each Service shall be calculated at Service Provider's actual, documented cost of providing the applicable Service, plus a markup of five percent (5%).
(b) For purposes of calculating Service Charges, "actual, documented cost" shall include the following cost components:
(i) Direct Labor Costs. Salary, wages, and benefits burden (including employer-paid taxes, health insurance, retirement contributions, and other benefit costs) of Service Provider personnel allocated to the performance of Services, prorated based on the actual time spent by each such individual on Service-related activities. Service Provider shall maintain contemporaneous time records sufficient to support such proration.
(ii) Third-Party Costs. All fees, expenses, and charges payable to third-party vendors, contractors, or service providers that are incurred by Service Provider directly in connection with the provision of Services, including third-party software license fees, hosting charges, maintenance fees, and outsourced service costs.
(iii) Allocable Overhead. A reasonable allocation of overhead costs directly attributable to the provision of Services, including facilities costs (rent, utilities, maintenance), depreciation of equipment used in providing Services, software license fees for internally used applications, and other infrastructure costs. Overhead shall be allocated using a methodology consistent with Service Provider's historical cost allocation practices.
(iv) Out-of-Pocket Expenses. Reasonable and documented out-of-pocket expenses incurred by Service Provider in connection with the provision of Services, including travel expenses (to the extent pre-approved by Service Recipient), shipping and courier costs, and similar direct expenditures.
(c) Notwithstanding the foregoing, the five percent (5%) markup shall not apply to Third-Party Costs, which shall be passed through to Service Recipient at actual cost without any markup, premium, or administrative fee. All other cost components shall be subject to the five percent (5%) markup.
(d) Service Provider shall maintain books and records sufficient to document all costs incurred in connection with the provision of the Services, and shall retain such records for a period of not less than two (2) years following the expiration or termination of this Agreement. Upon reasonable written request (and not more than once per calendar quarter), Service Recipient shall have the right to review and audit such records during normal business hours to verify the accuracy of Service Charges invoiced hereunder, subject to reasonable confidentiality protections.
Section 3.2 — Invoicing.
(a) Service Provider shall deliver to Service Recipient monthly invoices for Service Charges within fifteen (15) days following the end of each calendar month during the Service Period (or any portion thereof during which Services are provided). Each invoice shall cover the Service Charges accrued during the immediately preceding calendar month.
(b) Each invoice shall contain reasonable supporting detail sufficient to enable Service Recipient to verify the amounts invoiced, including:
(i) a description of each Service performed during the applicable period;
(ii) the number of hours incurred by Service Provider personnel in connection with each Service, together with the applicable billing rates;
(iii) a breakdown of cost components (direct labor, Third-Party Costs, allocable overhead, and out-of-pocket expenses) for each Service;
(iv) the calculation of the five percent (5%) markup applied to each applicable cost component; and
(v) a summary of total charges by Service category and a grand total for the invoice period.
(c) Invoices shall be delivered to Service Recipient by email (in PDF format) and by first-class mail to the following address, or such other address as Service Recipient may designate by written notice in accordance with Section 9.3:
Angela Rossi, Chief Financial Officer Meridian Precision Diagnostics, Inc. 2400 Meridian Parkway, Suite 300 Durham, NC 27713
Email: a.rossi@meridianprecision.com
Section 3.3 — Payment Terms.
(a) Service Recipient shall pay all undisputed amounts set forth on each invoice within thirty (30) days following Service Recipient's receipt of the applicable invoice. All payments shall be made by wire transfer of immediately available funds to an account designated by Service Provider in writing.
(b) Any undisputed amounts not paid when due shall accrue interest from the date such payment was due until the date of actual payment at a rate equal to the lesser of (i) one percent (1%) per month (compounded monthly) and (ii) the maximum rate permitted by applicable law. The accrual of interest under this Section shall be in addition to, and not in lieu of, any other rights or remedies available to Service Provider under this Agreement or at law.
(c) Service Recipient may dispute any item on an invoice in good faith by providing written notice to Service Provider within fifteen (15) days following Service Recipient's receipt of the applicable invoice. Such written notice shall specify in reasonable detail the nature of the dispute, the amount disputed, and the basis for the dispute. The undisputed portions of any invoice shall remain due and payable in accordance with Section 3.3(a) regardless of any pending dispute. The Parties shall negotiate in good faith to resolve any invoice dispute within thirty (30) days following Service Provider's receipt of the dispute notice. If the Parties are unable to resolve the dispute within such thirty (30) day period, the dispute shall be resolved in accordance with the dispute resolution procedures set forth in Section 9.2.
(d) In the event that a dispute is resolved in whole or in part in favor of Service Provider, Service Recipient shall pay the previously disputed amount (or applicable portion thereof) within ten (10) Business Days following resolution, together with interest accrued thereon from the original due date at the rate set forth in Section 3.3(b). In the event that a dispute is resolved in whole or in part in favor of Service Recipient, Service Provider shall issue a credit to Service Recipient in the amount of the overpayment, which credit shall be applied against the next invoice (or, if no further invoices are expected, refunded to Service Recipient within thirty (30) days).
Section 3.4 — Taxes.
(a) All Service Charges set forth in this Agreement are exclusive of all applicable sales, use, value-added, goods and services, excise, and similar transaction taxes (collectively, "Transaction Taxes"). Service Recipient shall be responsible for and shall pay all Transaction Taxes imposed on or with respect to the Services provided hereunder, to the extent applicable.
(b) Service Provider shall be solely responsible for all income, franchise, and similar taxes imposed on Service Provider as a result of the receipt of Service Charges under this Agreement.
(c) Each Party shall cooperate with the other Party in good faith to minimize any applicable Transaction Taxes and shall provide such documentation and information as may be reasonably requested by the other Party in connection with any tax filing, exemption, or refund claim.
ARTICLE IV — PERSONNEL AND RESOURCES
Section 4.1 — Service Provider Personnel.
(a) Service Provider shall make available qualified personnel with sufficient skill, training, and experience to perform the Services in accordance with the terms of this Agreement and the applicable Service Levels. Service Provider shall retain sole and exclusive discretion over the selection, assignment, supervision, compensation, and direction of individual personnel assigned to perform the Services; provided, however, that all such personnel shall possess qualifications and experience reasonably appropriate for the Services to which they are assigned.
(b) All Service Provider personnel performing Services under this Agreement shall remain employees (or independent contractors, as applicable) of Service Provider at all times during the performance of such Services. Nothing in this Agreement shall be construed to create any employment relationship, agency relationship, partnership, joint venture, or fiduciary relationship between Service Recipient and any employee, agent, or contractor of Service Provider. Service Provider shall be solely responsible for all compensation, benefits, employment taxes, workers' compensation insurance, and other employment-related obligations with respect to its personnel providing Services hereunder.
(c) Service Recipient shall not, directly or indirectly, solicit for employment any employee of Service Provider who is primarily involved in the delivery of Services under this Agreement during the term of this Agreement and for a period of six (6) months following the termination or expiration of this Agreement, without the prior written consent of Service Provider; provided that general solicitations of employment not specifically directed at such employees (including job postings on public websites) shall not be considered a breach of this Section 4.1(c).
Section 4.2 — Cooperation.
(a) Each Party shall designate a Transition Services Coordinator in accordance with Section 2.1(d) and shall provide such other personnel and resources as are reasonably necessary to facilitate the orderly transition of the OncuPath Business and the provision and receipt of Services hereunder.
(b) Service Recipient shall provide Service Provider with reasonable and timely access to the Facilities, systems, data, information, and personnel of Service Recipient as may be necessary or appropriate for Service Provider to perform the Services. Service Recipient shall respond promptly to reasonable requests from Service Provider for information, approvals, or decisions that are necessary for the performance of the Services.
(c) Service Recipient shall cooperate in good faith to transition off the Services as expeditiously as practicable and shall use commercially reasonable efforts to establish independent capabilities and systems to replace the Services during the applicable Service Periods. Service Recipient acknowledges that the Services are transitional in nature and are intended to provide temporary support while Service Recipient develops its own infrastructure, systems, and capabilities.
(d) Each Party shall promptly notify the other Party's Transition Services Coordinator of any circumstances, events, or developments that could reasonably be expected to materially affect the provision or receipt of Services, including changes in business operations, personnel, systems, or facilities.
Section 4.3 — Key Transferring Personnel.
(a) The Parties acknowledge and agree that certain key personnel who were instrumental in the operation of the OncuPath Business, including Dr. Lara Okonkwo (Vice President, OncuPath Research and Development), Samuel Briggs (Director, OncuPath Commercial Operations), and Yuki Tanabe (Head of Regulatory Affairs, OncuPath), have transferred to the employment of Service Recipient as of the Closing Date as Transferred Employees.
(b) During the first sixty (60) days of the Service Period (the "Knowledge Transfer Period"), Service Provider shall facilitate reasonable knowledge-transfer sessions between its retained personnel and the Transferred Employees identified in Section 4.3(a), as well as any other Transferred Employees reasonably identified by Service Recipient. Such knowledge-transfer sessions shall be designed to ensure the effective transfer of institutional knowledge, operational processes, vendor relationships, ongoing project status, and other information necessary for the continued operation of the OncuPath Business. Service Provider shall make its retained personnel available for such sessions during normal business hours at mutually agreed-upon times.
(c) The Parties shall cooperate in good faith to develop a knowledge-transfer plan within ten (10) Business Days following the Closing Date, which plan shall identify the key subject matter areas, participating personnel, scheduling, and deliverables for the knowledge-transfer sessions. The costs of Service Provider personnel time devoted to knowledge-transfer sessions shall be included in the Service Charges.
ARTICLE V — CONFIDENTIALITY AND DATA PROTECTION
Section 5.1 — Confidential Information.
(a) Each Party (the "Receiving Party") shall maintain the confidentiality of all confidential and proprietary information of the other Party (the "Disclosing Party") that is received, accessed, or otherwise obtained in connection with the performance or receipt of Services under this Agreement, in accordance with the confidentiality provisions set forth in Article IX of the APA, which are hereby incorporated by reference and shall apply mutatis mutandis to this Agreement and the Services provided hereunder.
(b) Without limiting the generality of the foregoing, each Party shall: (i) use the confidential information of the other Party solely for the purpose of performing its obligations or exercising its rights under this Agreement; (ii) restrict access to such confidential information to those employees, agents, contractors, and advisors who have a need to know such information in connection with the Services and who are bound by confidentiality obligations no less protective than those set forth herein; and (iii) not disclose such confidential information to any third party without the prior written consent of the Disclosing Party, except as required by applicable law, regulation, or legal process.
(c) Service Provider shall implement and maintain appropriate administrative, technical, and physical safeguards designed to protect Service Recipient's confidential information and data that is processed, stored, transmitted, or otherwise handled by Service Provider in the course of providing Services. Such safeguards shall be no less protective than those employed by Service Provider to protect its own confidential information of similar sensitivity.
Section 5.2 — Data Security.
(a) Service Provider shall maintain data security measures, policies, and procedures at a level at least consistent with those that were in effect with respect to the OncuPath Business during the twelve (12) months immediately preceding the Closing Date. Such measures shall include, without limitation, access controls, encryption of data in transit and at rest, network security monitoring, vulnerability management, and incident response capabilities.
(b) In the event of any actual or reasonably suspected data breach, unauthorized access, or security incident affecting Service Recipient's data or confidential information in Service Provider's possession or control (each, a "Security Incident"), Service Provider shall: (i) notify Service Recipient in writing within forty-eight (48) hours of Service Provider's discovery of such Security Incident; (ii) promptly investigate the nature, scope, and cause of the Security Incident and take all commercially reasonable steps to contain and remediate the Security Incident; (iii) provide Service Recipient with periodic updates on the investigation and remediation efforts; and (iv) cooperate fully with Service Recipient in connection with any notification obligations, regulatory inquiries, or other actions required in response to the Security Incident.
(c) Service Provider shall not transfer, store, or process Service Recipient's data outside of the continental United States without the prior written consent of Service Recipient.
Section 5.3 — Regulatory Compliance.
(a) Each Party shall comply with all applicable federal, state, and local laws, rules, and regulations in connection with its performance of its obligations and exercise of its rights under this Agreement, including, to the extent applicable to the Services involving protected health information ("PHI") as defined under HIPAA, the requirements of HIPAA, HITECH, and the regulations promulgated thereunder at 45 C.F.R. Parts 160 and 164.
(b) To the extent that Service Provider receives, accesses, creates, maintains, or transmits PHI on behalf of Service Recipient in the course of providing Services, Service Provider shall comply with the terms and conditions of the Business Associate Agreement entered into between the Parties as Exhibit F to the APA (the "BAA"), or, if no BAA has been executed, the Parties shall promptly negotiate and execute a BAA that complies with the requirements of 45 C.F.R. § 164.504(e).
(c) Each Party shall promptly notify the other Party of any regulatory inquiry, investigation, audit, or enforcement action by any governmental authority that relates to or could reasonably be expected to affect the Services or the handling of data in connection with the Services.
ARTICLE VI — TERM AND TERMINATION
Section 6.1 — Term.
This Agreement shall be effective as of the Closing Date and shall remain in full force and effect until the earlier of (a) the expiration of the Maximum Service Period (May 8, 2024, being nine (9) months after the Closing Date) and (b) the date on which all Services have been terminated in accordance with this Article VI or have expired in accordance with their respective individual Service Periods as set forth on Schedule A. Notwithstanding the foregoing, the provisions of this Agreement that by their nature are intended to survive termination or expiration shall survive in accordance with Section 6.5.
Section 6.2 — Early Termination by Service Recipient.
(a) Service Recipient may terminate any individual Service, in whole or in part, upon not less than thirty (30) days' prior written notice to Service Provider, which notice shall specify the Service(s) to be terminated and the effective date of such termination. For the avoidance of doubt, the termination of any individual Service shall not affect the continued provision of any other Service under this Agreement.
(b) Service Recipient may terminate this Agreement in its entirety upon not less than thirty (30) days' prior written notice to Service Provider. Upon such termination, all Services shall cease as of the effective date of termination specified in the notice.
(c) Upon any early termination of a Service or of this Agreement by Service Recipient pursuant to this Section 6.2, Service Recipient shall pay to Service Provider all Service Charges that have accrued through the effective date of such termination, including any Third-Party Costs that have been committed or incurred by Service Provider and that are non-cancelable or non-refundable as of the date of the termination notice.
Section 6.3 — Termination by Service Provider.
(a) Service Provider may terminate any individual Service or this Agreement in its entirety upon sixty (60) days' prior written notice to Service Recipient if Service Recipient fails to pay undisputed Service Charges within thirty (30) days after the applicable due date, and such failure continues unremedied for a period of fifteen (15) days after Service Provider delivers written notice thereof to Service Recipient specifying the amount of the unpaid charges and the applicable invoice(s).
(b) Service Provider may terminate any individual Service or this Agreement in its entirety immediately upon written notice to Service Recipient if Service Recipient's use of the Services violates applicable law or creates a material risk of civil or criminal liability for Service Provider, in each case as reasonably determined by Service Provider.
Section 6.4 — Termination for Cause.
Either Party may terminate this Agreement immediately upon written notice to the other Party if:
(a) the other Party (i) commences a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization, or similar law, (ii) becomes the subject of an involuntary case or proceeding under any such law that is not dismissed within sixty (60) days, (iii) makes a general assignment for the benefit of creditors, (iv) has a receiver, trustee, or liquidator appointed for substantially all of its assets, or (v) admits in writing its inability to pay its debts as they become due; or
(b) the other Party materially breaches any provision of this Agreement and fails to cure such breach within thirty (30) days after receipt of written notice from the non-breaching Party specifying the nature of the breach in reasonable detail. For purposes of this Section 6.4(b), a "material breach" shall include, without limitation, any repeated or persistent failure by Service Provider to meet the Service Levels for a material Service over two (2) or more consecutive months after receiving written notice thereof, or any unauthorized disclosure or use of confidential information in violation of Article V.
Section 6.5 — Effect of Termination.
(a) Upon the termination or expiration of any Service (whether through expiration of the applicable Service Period, early termination, or termination for cause), Service Provider shall cooperate in good faith with Service Recipient to effect an orderly transition of such Service to Service Recipient or to a third-party service provider designated by Service Recipient. Such transition assistance shall include the transfer of data, documentation, access credentials, and other materials reasonably necessary for Service Recipient to assume responsibility for such Service, and shall be provided for a period of up to fifteen (15) days following the effective date of termination or expiration at no additional charge (other than Third-Party Costs and direct out-of-pocket expenses).
(b) Within thirty (30) days following the termination or expiration of the last Service provided hereunder (or, with respect to any individual Service, within thirty (30) days following the termination or expiration of such Service), Service Provider shall, at Service Recipient's election as communicated in writing: (i) return to Service Recipient all of Service Recipient's confidential information, data, records, and materials in Service Provider's possession or control relating to such Service, in the format and media reasonably requested by Service Recipient; or (ii) destroy all such information, data, records, and materials and provide Service Recipient with a written certification of such destruction signed by an authorized officer of Service Provider. Notwithstanding the foregoing, Service Provider may retain copies of Service Recipient's data to the extent required by applicable law or regulatory requirements, subject to the ongoing confidentiality obligations set forth in this Agreement.
(c) The following provisions shall survive the termination or expiration of this Agreement for any reason: Section 3.1 through Section 3.4 (with respect to payment of accrued and unpaid Service Charges), Article V (Confidentiality and Data Protection), Article VII (Limitation of Liability), Article VIII (Indemnification), Section 9.1 (Governing Law), Section 9.2 (Dispute Resolution), and Section 9.8 (Entire Agreement), together with any other provisions that by their nature are intended to survive termination.
ARTICLE VII — LIMITATION OF LIABILITY
Section 7.1 — Limitation of Liability of Service Provider.
(a) SERVICE PROVIDER'S AGGREGATE LIABILITY TO SERVICE RECIPIENT UNDER THIS AGREEMENT, WHETHER ARISING IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR OTHERWISE, SHALL NOT EXCEED THE TOTAL AMOUNT OF SERVICE CHARGES ACTUALLY PAID OR PAYABLE BY SERVICE RECIPIENT TO SERVICE PROVIDER UNDER THIS AGREEMENT.
(b) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS, LOST REVENUE, LOSS OF BUSINESS OPPORTUNITY, LOSS OF DATA, DIMINUTION IN VALUE, OR COST OF REPLACEMENT SERVICES, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER, WHETHER BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER LEGAL OR EQUITABLE THEORY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR COULD HAVE FORESEEN SUCH DAMAGES.
(c) The limitations set forth in this Section 7.1 shall not apply to (i) either Party's obligations under Article VIII (Indemnification), (ii) either Party's breach of its confidentiality obligations under Article V, or (iii) either Party's fraud, willful misconduct, or intentional misrepresentation.
Section 7.2 — Standard of Care.
Service Provider shall not be liable for any failure to perform the Services, or any degradation in the Service Levels, to the extent such failure or degradation is caused by or attributable to: (a) acts or omissions of Service Recipient, its employees, agents, contractors, or representatives, including the failure of Service Recipient to perform its cooperation obligations under Section 4.2; (b) Force Majeure Events as described in Section 9.4; or (c) the failure, malfunction, or unavailability of third-party systems, software, networks, or services that are beyond Service Provider's reasonable control, provided that Service Provider has used commercially reasonable efforts to select and manage such third-party providers. Service Provider shall promptly notify Service Recipient of any circumstances described in this Section 7.2 that are expected to affect the delivery of Services.
Section 7.3 — Sole Remedy.
Except in cases of Service Provider's fraud or willful misconduct, the remedies set forth in this Agreement (including the right to terminate Services, withhold disputed payments, and seek indemnification in accordance with Article VIII) shall constitute Service Recipient's sole and exclusive remedies for any failure by Service Provider to perform the Services in accordance with this Agreement or the applicable Service Levels. Service Recipient acknowledges and agrees that the Services are transitional in nature, are being provided on a cost-plus basis, and that the limitations and exclusions of liability set forth in this Article VII are an essential element of the bargain between the Parties.
ARTICLE VIII — INDEMNIFICATION
Section 8.1 — Indemnification by Service Provider.
Service Provider shall indemnify, defend, and hold harmless Service Recipient and its directors, officers, employees, agents, successors, and permitted assigns (collectively, the "Service Recipient Indemnified Parties") from and against any and all third-party claims, actions, suits, proceedings, losses, damages, liabilities, judgments, settlements, penalties, fines, costs, and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Losses") arising out of or resulting from Service Provider's gross negligence or willful misconduct in connection with the provision of Services under this Agreement.
Section 8.2 — Indemnification by Service Recipient.
Service Recipient shall indemnify, defend, and hold harmless Service Provider and its directors, officers, employees, agents, successors, and permitted assigns (collectively, the "Service Provider Indemnified Parties") from and against any and all Losses arising out of or resulting from: (a) Service Recipient's use of the Services in violation of applicable law; (b) Service Recipient's gross negligence or willful misconduct in connection with the receipt of Services or Service Recipient's performance of its obligations under this Agreement; or (c) any breach by Service Recipient of its representations, warranties, covenants, or obligations under this Agreement.
Section 8.3 — Indemnification Procedures.
(a) Notice of Claim. The Party seeking indemnification (the "Indemnified Party") shall provide prompt written notice to the Party from whom indemnification is sought (the "Indemnifying Party") of any claim, action, suit, or proceeding for which indemnification is sought under this Article VIII (each, a "Claim"), describing in reasonable detail the nature of the Claim, the facts giving rise thereto, and the amount of Losses claimed (to the extent then known or reasonably estimable). The failure to provide timely notice shall not relieve the Indemnifying Party of its indemnification obligations except to the extent that the Indemnifying Party is materially prejudiced by such failure.
(b) Assumption of Defense. The Indemnifying Party shall have the right, but not the obligation, to assume the defense of any Claim upon written notice to the Indemnified Party within thirty (30) days of receipt of the notice of Claim. If the Indemnifying Party assumes the defense, it shall have sole control over the defense and settlement of the Claim, including the selection of counsel (which counsel shall be reasonably acceptable to the Indemnified Party); provided, however, that the Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement that (i) imposes any obligation (other than the payment of money, which shall be paid by the Indemnifying Party) on the Indemnified Party, (ii) does not include an unconditional release of the Indemnified Party from all liability with respect to the Claim, or (iii) includes any admission of liability or wrongdoing by the Indemnified Party, in each case without the prior written consent of the Indemnified Party (not to be unreasonably withheld, conditioned, or delayed).
(c) Cooperation. The Indemnified Party shall cooperate with the Indemnifying Party in the defense of any Claim, including by providing access to relevant records, documents, information, and personnel. The Indemnified Party shall have the right to participate in the defense of any Claim at its own expense with counsel of its own choosing.
(d) Consistency with APA. The indemnification procedures set forth in this Section 8.3 are intended to be substantially consistent with the indemnification procedures set forth in Article X of the APA, and to the extent any procedural matter is not addressed in this Section 8.3, the corresponding provision of the APA shall apply mutatis mutandis.
ARTICLE IX — GENERAL PROVISIONS
Section 9.1 — Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provisions or rules (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
Section 9.2 — Dispute Resolution.
(a) Informal Resolution. Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or invalidity thereof (each, a "Dispute"), shall first be referred to the Transition Services Coordinators of the respective Parties for resolution. The Transition Services Coordinators shall meet (in person or by videoconference) within five (5) Business Days of referral and shall attempt in good faith to resolve the Dispute within fifteen (15) Business Days of such referral.
(b) Escalation. If the Transition Services Coordinators are unable to resolve the Dispute within the fifteen (15) Business Day period described in Section 9.2(a), the Dispute shall be escalated to senior officers of the respective Parties for resolution. For Service Provider, the designated senior officer shall be Martin Kowalski, Chief Financial Officer (or his or her successor or designee). For Service Recipient, the designated senior officer shall be Angela Rossi, Chief Financial Officer (or her successor or designee). The senior officers shall meet (in person or by videoconference) within ten (10) Business Days of escalation and shall attempt in good faith to resolve the Dispute within an additional fifteen (15) Business Days following such escalation.
(c) Binding Arbitration. If the senior officers are unable to resolve the Dispute within the time period described in Section 9.2(b), the Dispute shall be submitted to and finally resolved by binding arbitration in accordance with the dispute resolution provisions set forth in Section 11.14 of the APA, which provisions are hereby incorporated by reference and shall apply mutatis mutandis.
(d) Continued Performance. During the pendency of any Dispute, Service Provider shall continue to perform the Services and Service Recipient shall continue to pay all undisputed Service Charges, in each case in accordance with the terms of this Agreement, unless and until this Agreement is terminated in accordance with Article VI.
Section 9.3 — Notices.
All notices, requests, consents, claims, demands, waivers, and other communications required or permitted under this Agreement (each, a "Notice") shall be in writing and shall be deemed to have been duly given, made, and received when delivered in accordance with the notice provisions set forth in Section 11.1 of the APA to the following addresses (or to such other address as may be designated by a Party by Notice given in accordance with this Section):
If to Service Provider:
Genome Dx Therapeutics Inc. 10250 Science Center Drive, Suite 600 San Diego, CA 92121
Attention: Rebecca Chiang, General Counsel
Email: r.chiang@genomedx.com
with a copy (which shall not constitute Notice) to:
Calderwood & Harkness LLP 555 South Hope Street, Suite 4400 Los Angeles, CA 90071
Attention: James Prentice
Email: j.prentice@calderwoodharkness.com
If to Service Recipient:
Meridian Precision Diagnostics, Inc. 2400 Meridian Parkway, Suite 300 Durham, NC 27713
Attention: David Pruitt, General Counsel
Email: d.pruitt@meridianprecision.com
with a copy (which shall not constitute Notice) to:
Whitfield Sayer & Gregg LLP 200 South Tryon Street, Suite 2800 Charlotte, NC 28202
Attention: Jonathan Whitfield
Email: j.whitfield@wsglaw.com
Section 9.4 — Force Majeure.
(a) Neither Party shall be liable for any failure or delay in the performance of any obligation under this Agreement (other than any obligation to make payments) to the extent such failure or delay is caused by or results from events or circumstances beyond the reasonable control of the affected Party (each, a "Force Majeure Event"), including natural disasters (earthquakes, floods, hurricanes, tornadoes), epidemics, pandemics, acts of God, acts of government or governmental agencies (including embargoes, sanctions, and regulatory changes), war, armed conflict, terrorism, civil unrest, fire, explosion, labor disputes or strikes (other than those involving the affected Party's own employees), power failures or outages, telecommunications failures, cyberattacks (provided the affected Party has maintained commercially reasonable cybersecurity measures), or other events of similar nature or force.
(b) The Party affected by a Force Majeure Event shall provide prompt written notice to the other Party describing the nature and expected duration of the Force Majeure Event, and shall use commercially reasonable efforts to mitigate the impact of the Force Majeure Event and to resume performance of its obligations as soon as reasonably practicable.
(c) If a Force Majeure Event continues for more than sixty (60) consecutive days and materially impairs the performance of one or more Services, either Party may terminate the affected Service(s) upon fifteen (15) days' prior written notice to the other Party, without liability for such termination (other than payment of Service Charges accrued through the effective date of termination).
Section 9.5 — Independent Contractor Relationship.
The relationship between Service Provider and Service Recipient under this Agreement is that of independent contractor and customer. Nothing in this Agreement shall be construed to create or imply any employer-employee relationship, partnership, joint venture, agency, or fiduciary relationship between the Parties. Neither Party shall have the authority to bind the other Party or to assume or create any obligation or responsibility, express or implied, on behalf of the other Party.