Exhibit 10.10

CONFIDENTIAL TREATMENT REQUESTED

 

 

 

AGREEMENT AND PLAN OF MERGER

among

DARé BIOSCIENCE, INC.,

DARé merger sub, inc.,

pear tree pharmaceuticals, inc.,

and

fred mermelstein and stephen c. rocamboli,

as Holders’ Representatives

April 30, 2018

 

 

 

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

TABLE OF CONTENTS

ARTICLE I: DEFINITIONS

1

 

 

 

 

 

Section 1.1

Defined Terms

1

 

 

 

 

ARTICLE II: THE MERGER AND EFFECT OF THE MERGER

10

 

 

 

 

 

Section 2.1

The Merger

10

 

Section 2.2

Closing

10

 

Section 2.3

Effective Time

10

 

Section 2.4

Effects of the Merger

10

 

Section 2.5

Charter Documents of Surviving Corporation.

10

 

Section 2.6

Management of the Surviving Corporation.

10

 

Section 2.7

Effect of the Merger on Capital Stock

11

 

Section 2.8

Delivery of Closing Merger Consideration Calculation

12

 

Section 2.9

Payments At and After Closing.

12

 

Section 2.10

Non-Conversion.

13

 

Section 2.11

Exchange of Certificates.

14

 

Section 2.12

Adjustments

15

 

Section 2.13

Aggregate Consideration.

15

 

Section 2.14

Contingent Consideration

15

 

Section 2.15

Diligent Efforts

22

 

 

ARTICLE III: REPRESENTATIONS AND WARRANTIES OF THE COMPANY

22

 

 

 

 

 

Section 3.1

Organizational Matters.

22

 

Section 3.2

Authority; Noncontravention; Voting Requirements.

23

 

Section 3.3

Capitalization.

24

 

Section 3.4

No Consents or Approvals

25

 

Section 3.5

Financial Matters.

25

 

Section 3.6

Absence of Certain Changes or Events

26

 

Section 3.7

Legal Proceedings

26

 

Section 3.8

Compliance with Laws; Permits

26

 

Section 3.9

Taxes

26

 

Section 3.10

Employee Benefits and Labor Matters

28

 

Section 3.11

Environmental Matters

29

 

Section 3.12

Contracts

29

 

Section 3.13

License Agreements

30

 

Section 3.14

Real Property

30

 

Section 3.15

Intellectual Property

31

 

Section 3.16

Insurance

31

 

Section 3.17

Related Party/Affiliate Transactions

32

 

Section 3.18

No Untrue Statements

32

 

Section 3.19

Brokers and Other Advisors

32

 

 

ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

32

 

 

 

 

 

Section 4.1

Organization, Standing and Corporate Power

32

 

Section 4.2

Authority; Noncontravention.

32

 

Section 4.3

Governmental Approvals

33

 

Section 4.4

Ownership and Operations of Merger Sub

33

 

Section 4.5

Availability of Funds

33

 

Section 4.6

Brokers and Other Advisors

33

 

 

i

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

ARTICLE V: ADDITIONAL COVENANTS AND AGREEMENTS

33

 

 

 

 

 

Section 5.1

Conduct of Business

33

 

Section 5.2

Company Stockholder Approval, Joinders, Etc

36

 

Section 5.3

Commercially Reasonable Efforts

36

 

Section 5.4

Public Announcements

37

 

Section 5.5

Access to Information

37

 

Section 5.6

Confidentiality.

37

 

Section 5.7

Notification of Certain Matters

37

 

Section 5.8

Tax Matters

38

 

Section 5.9

Support Agreements

40

 

Section 5.10

Employee Matters

40

 

Section 5.11

Restrictive Covenant Agreements

41

 

Section 5.12

No Negotiations, Etc

41

 

Section 5.13

Release of Claims

41

 

Section 5.14

No Challenge to IP Rights

42

 

 

 

ARTICLE VI: CONDITIONS TO CLOSING

42

 

 

 

 

 

Section 6.1

Conditions to Obligations of Parent and Merger Sub

42

 

Section 6.2

Conditions to Obligation of the Company

44

 

Section 6.3

Frustration of Closing Conditions

45

 

 

 

ARTICLE VII: TERMINATION

45

 

 

 

 

 

Section 7.1

Termination

45

 

Section 7.2

Effect of Termination

46

 

 

 

ARTICLE VIII: SURVIVAL AND INDEMNIFICATION

46

 

 

 

 

 

Section 8.1

Survival

46

 

Section 8.2

Indemnification.

46

 

Section 8.3

Claims for Indemnification; Resolution of Conflicts.

49

 

Section 8.4

Holders’ Representatives.

52

 

 

 

ARTICLE IX: GENERAL PROVISIONS

53

 

 

 

 

 

Section 9.1

Interpretation

53

 

Section 9.2

Notices

54

 

Section 9.3

Assignment and Succession

55

 

Section 9.4

Amendment or Supplement

56

 

Section 9.5

Waivers

56

 

Section 9.6

Entire Agreement

56

 

Section 9.7

No Third-Party Beneficiaries

56

 

Section 9.8

Remedies Cumulative

56

 

Section 9.9

Specific Performance.

56

 

Section 9.10

Severability

57

 

Section 9.11

Costs and Expenses

57

 

Section 9.12

Counterparts

57

 

Section 9.13

Governing Law.

57

 

Section 9.14

Exclusive Jurisdiction; Venue; Service of Process

57

 

Section 9.15

JURY TRIAL

57

 

Section 9.16

Legal Representation

58

 

 

ii

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is dated as of April 30,
2018, by and among Daré Bioscience, Inc., a Delaware corporation (“Parent”),
Daré Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Pear Tree
Pharmaceuticals, Inc., a Delaware corporation (the “Company”) and Fred
Mermelstein and Stephen C. Rocamboli, as Holders’ Representatives.  Each of
Parent, Merger Sub, the Company and Holders’ Representatives may be individually
referred to herein as a “Party” and collectively referred to herein as the
“Parties.”

RECITALS

WHEREAS, the Company, Parent and Merger Sub intend to effect a merger of Merger
Sub with and into the Company (the “Merger”) in accordance with this Agreement
and the General Corporation Law of the State of Delaware (the “DGCL”), whereupon
consummation of the Merger, Merger Sub shall cease to exist and the Company
shall become a Subsidiary of Parent;

WHEREAS, the board of directors of the Company has approved, adopted and
declared advisable this Agreement and the transactions contemplated hereby,
including the Merger, and resolved to recommend the adoption of this Agreement
and the transactions contemplated by this Agreement to its stockholders, in
accordance with the DGCL and upon the terms and subject to the conditions set
forth herein;

WHEREAS, the respective board of directors of Parent and Merger Sub have each
approved, adopted and declared advisable this Agreement and the transactions
contemplated hereby, including the Merger, in accordance with the DGCL and upon
the terms and subject to the conditions set forth herein;

WHEREAS, concurrently with the execution and delivery of this Agreement, each of
the Holders is executing and delivering a joinder agreement in the form of
Exhibit A attached hereto (each a “Joinder” and collectively the “Joinders”)
making each such Holder subject to certain obligations described therein; and  

WHEREAS, immediately following the execution of this Agreement, the Stockholders
shall adopt this Agreement and approve the Merger, pursuant to a written consent
(each a “Written Consent” and collectively, the “Written Consents”).

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
representations, warranties and agreements contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and intending to be legally bound hereby, the Parties agree as
follows:

ARTICLE I:  DEFINITIONS

Section 1.1        Defined Terms.  The following terms shall have the following
meanings in this Agreement:

“Accounting Firm” has the meaning as set forth in Section 5.8.1.

“Accounting Methodology” means in accordance with GAAP and otherwise consistent
with the accounting methods, practices and procedures used to prepare the
Unaudited Financial Statements.  

“Action” means any claim, controversy, suit, action or cause of action,
litigation, arbitration, investigation, opposition, interference, audit,
hearing, demand, assessment, complaint, citation, proceeding, order or other
legal proceeding (whether sounding in contract or tort or otherwise, whether
civil, criminal, administrative or otherwise and whether brought at law or in
equity or under arbitration or administrative regulation) and any written notice
of violation, notice of potential responsibility or any notice alleging
liability.

1

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly, controls, or is controlled by, or is under common control with,
such Person.  For this purpose, “control” (including, with its correlative
meanings, “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a Person, whether through the ownership of securities
or partnership or other ownership interests, by contract or otherwise.

“Aggregate Preferred Per Share Consideration” means the product of (i) the
Preferred Per Share Consideration and (ii) the number of shares of Company
Preferred Stock outstanding as of immediately prior to the Effective Time.

“Aggregate Preferred Share Preference” means the lower of (i) the Closing Merger
Consideration and (ii) product of (x) the preference per share of the Preferred
Stock in accordance with the Company Charter and (y) the number of shares of
Company Preferred Stock outstanding as of immediately prior to the Effective
Time.  

“Base Merger Closing Consideration” means $75,000.

“Base Merger Consideration” means the sum of the Base Merger Closing
Consideration plus the Based Merger Delayed Consideration.

“Base Merger Delayed Consideration” means $75,000.

“Business Day” means any day other than a Saturday, Sunday or any other day on
which banking institutions in San Diego, California are authorized or required
by Law or order to remain closed.

“Cap Amount” means an amount equal to (i) the Company Transaction Expenses plus
(ii) the Parent Transaction Expenses plus (iii) the Company Debt.

“CERCLA” is defined within the definition of “Environmental Laws” below.

“Certificate” means a certificate representing shares of the Company Capital
Stock.

“Change of Control Payment” means (a) any bonus, severance or other payment that
is created, accelerated, accrues or becomes payable by the Company to any
present or former director, stockholder, Employee or Consultant, including
pursuant to an employment agreement, Plan or any other Contract, including any
Taxes payable on or triggered by any such payment and (b) without duplication of
any other amounts included within the definition of Company Transaction
Expenses, any other payment, expense or fee that accrues or becomes payable by
the Company to any Governmental Authority or other Person under any Law or
Contract, including in connection with the making of any filings, the giving of
any notices or the obtaining of any consents, authorizations or approvals, in
each case of each of (a) and (b) as a result of, in connection with the
execution and delivery of the Agreement or any other Transaction Agreement or
the consummation of the Transactions (including the Merger).

“Charter Documents” means, with respect to any entity, the articles of
incorporation and bylaws or similar organizational documents of such entity.

“Clinical Data” means the Company’s clinical data generated by Dr. Janet A.
Chollet as described in her clinical study report entitled “Observations of the
Use of a Vaginal Suppository Containing Tamoxifen to Treat Menopause Patients
with Moderate to Severe Vulvar and Vaginal Atrophy” dated December 12, 2008,
inclusive of supportive documentation and records.

“Closing Cash” means the fair market value of all cash and cash equivalents held
by the Company as of the Closing (before taking into account the consummation of
the Merger), determined in accordance with the Accounting Methodology.

2

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

“Closing Consideration Payment” has the meaning set forth in Section 2.14.3.

“Closing Merger Consideration” means an amount equal to sum of the Base Merger
Closing Consideration plus (i) the Closing Cash minus (ii) the Company Debt
minus (iii) the Company Transactions Expenses minus (iv) any amounts payable
under the Management Incentive Plan minus (v) the Holders’ Representatives
Expenses Amount.  For purposes of this definition, the foregoing clauses
(i) through (v) and the individual elements thereof, as applicable, shall be
determined in accordance with the Accounting Methodology.

“Code” means the United States Internal Revenue Code, as amended.

“Common Per Share Consideration” means the quotient of (i) the Closing Merger
Consideration minus the Aggregate Preferred Share Preference divided by (ii) the
Fully Diluted Shares of Capital Stock.

“Company Capital Stock” means the outstanding shares of the Company Common Stock
and the outstanding shares of Company Preferred Stock.

“Company Charter” means the amended and restated certificate of incorporation of
the Company as in effect on the date hereof, as the same may have been amended
from time to time.

“Company Common Stock” means the common stock of the Company, par value $0.001
per share.

“Company Debt” means, as at any time with respect to the Company, without
duplication, all Liabilities, including all obligations with respect to
principal, accrued and unpaid interest, penalties, premiums and any other fees,
expenses and breakage costs on and other payment obligations arising under any
(a) indebtedness for borrowed money (including amounts outstanding under
overdraft facilities), (b) indebtedness issued in exchange for or in
substitution for borrowed money, (c) obligations for the deferred purchase price
of property, goods or services, (d) obligations evidenced by any note, bond,
debenture, guarantee or other debt security or similar instrument or Contract,
including, without limitation, any obligations owed to Stockholders, (e) all
liabilities under capitalized leases, (f) all obligations, contingent or
otherwise, in respect of letters of credit and banker’s acceptance or similar
credit transactions, (g) obligations under Contracts relating to interest rate
protection or other hedging arrangements, to the extent payable if such Contact
is terminated at Closing, (h) guarantees of the types of obligations described
in sub clauses (a) though (g) above, and (i) all unpaid Pre-Closing Taxes, in
each case, incurred by or otherwise outstanding in the name of the Company on or
prior to the Closing Date.

“Company Intellectual Property Rights” means all Intellectual Property Rights
owned by the Company or used by the Company in connection with the business of
the Company as currently conducted.

“Company Material Adverse Effect” means, with respect to the Company, any fact,
condition, event, change, circumstance or effect that, individually or in the
aggregate with all other facts, conditions, changes, circumstances and effects
with respect to which such defined term is used in this Agreement, is, or could
reasonably be expected to become, materially adverse to (a) the business,
assets, operations, results of operations or condition (financial or otherwise)
or prospects of the Company, or (b) the Company’s ability to, in a timely
manner, perform its obligations under the Transaction Agreements to which it is
a party, or to consummate the Transactions (including the Merger) under such
Transaction Agreements; provided, however, that any determination of whether
there has been a Material Adverse Effect pursuant to clause (b) above shall not
include any effect, change, event, occurrence or state of facts:  (i) that
generally affects the industry in which the Company operates so long as the
Company is not disproportionately affected thereby relative to other
participants in such industry, (ii) that results from general economic
conditions in any country where the Company’s business is conducted so long as
the Company is not disproportionately affected relative to the other companies
therein or (iii) that results from the taking of any action specifically
required to be taken by this Agreement.  

3

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

“Company Option” means an outstanding option granted pursuant to, or outside of,
any Company Option Plan and any other option or other right (including any
commitment to grant options or other rights) to purchase or otherwise acquire
Company Capital Stock, whether or not vested or exercisable.

“Company Option Plan” means the 2007 Stock Incentive Plan, as amended.

“Company Plans” means (a) ”employee benefit plans” (as defined in Section 3(3)
of ERISA, as amended), (b) the Pear Tree Pharmaceuticals, Inc. Management
Incentive and Carve-out Incentive Plan, dated February 13, 2017, as amended (the
“Management Incentive Plan”) (c) individual employment, consulting, change in
control, severance or other agreements or arrangements and (d) other benefit
plans, policies, agreements or arrangements, including bonus or other incentive
compensation, stock purchase, equity or equity-based compensation, deferred
compensation, profit sharing, change in control, severance, pension, retirement,
welfare, sick leave, vacation, loans, salary continuation, health, dental,
disability, flexible spending account, service award, fringe benefit, life
insurance and educational assistance plan, policies, agreements or arrangements,
whether written or oral, under which any Employee, Consultant or director of the
Company participates and which is maintained, contributed to or participated in
by the Company, or with respect to which the Company has or may have any
obligation or liability, contingent or otherwise.

“Company Preferred Stock” means the Series A Preferred Stock of the Company, par
value $0.001 per share.

“Company Technology” means any and all Technology that is owned by the Company
or used in connection with the business of the Company as currently conducted,
excluding Clinical Data.

“Company Transaction Expenses” means an amount equal to (ii) the aggregate fees
and expenses payable or reimbursable by the Company to third parties in
connection with negotiation, entering into and consummation of this Agreement
and the Transactions including the Merger, including the fees and expenses of
investment bankers, finders, consultants, attorneys, accountants and others
advisors engaged by the Company in connection with the Merger and (ii) all
Change of Control Payments.

“Confidentiality Agreement” means the agreement dated as of August 18, 2017,
between Parent and the Company as it may be amended from time to time.

“Consultant” means any individual consultant or independent contractor or
director (who is not an Employee) of the Company.

“Contingent Consideration” has the meaning set forth in Section 2.14.

“Contract” means any contract, loan or credit agreement, debenture, note,
guaranty, bond, mortgage, indenture, deed of trust, license, lease or other
agreement, arrangement or instrument (in each case, as applicable, whether
written or oral) that is legally binding.

“DGCL” means the General Corporation Law of the State of Delaware.

“Dissenting Shares” means shares of Company Capital Stock held by a holder who
has properly demanded and not effectively withdrawn or lost such holder’s
appraisal, dissenters’ or similar rights for such shares under the DGCL.

“DR Plans” means the Company’s disaster recovery and business continuity plans.

“Effective Date” means the date on which the Effective Time occurs.

“Employee” means an employee of the Company.

4

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

“Environmental Laws” means all Laws relating in any way to the environment,
preservation or reclamation of natural resources, the presence, management or
Release of, or exposure to, Hazardous Materials, or to human health and safety,
including the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. § 9601 et seq.) (“CERCLA”), the Hazardous Materials
Transportation Act (49 U.S.C. § 5101 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251
et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Safe Drinking Water
Act (42 U.S.C. § 300f et seq.), the Toxic Substances Control Act (15 U.S.C. §
2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
§ 136 et seq.) and the Occupational Safety and Health Act (29 U.S.C. § 651 et
seq.), each of their state and local counterparts or equivalents, each of their
foreign and international equivalents and any transfer of ownership notification
or approval statute, as each has been amended and the regulations promulgated
pursuant thereto.

“Environmental Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, liens, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any Action, claim or
demand by any other Person or in response to any violation of Environmental Law,
whether known or unknown, accrued or contingent, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
or administrative regulation, to the extent based upon, related to, or arising
under or pursuant to any Environmental Law, environmental Permit, order or
agreement with any Governmental Authority or other Person, which relates to any
environmental, health or safety condition, violation of Environmental Law or
Release or threatened Release of Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“FDA” means the United States Food and Drug Administration or any successor
entity thereto.

“Fully Diluted Shares of Company Capital Stock” means the sum, without
duplication, of the aggregate number of shares of Company Capital Stock (on an
as converted to Company Common Stock basis) that are issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled in
accordance with Section 2.7.2).

“GAAP” means the generally accepted accounting principles in the United States.

“Governmental Authority” means any (a) nation, region, state, county, city,
town, village, district or other jurisdiction, (b) federal, state, local,
municipal, foreign or other government, (c) department, agency or
instrumentality of a foreign or other government, including any state-owned or
state-controlled instrumentality of a foreign or other government,
(d) governmental or quasi-governmental entity of any nature (including any
governmental agency, branch, department or other entity and any court or other
tribunal), (e) international or multinational organization formed by states or
governments, (f) organization that is designated by executive order pursuant to
Section 1 of the United States International Organizations Immunities Act (22
U.S.C. 288 of 1945), as amended and the rules and regulations promulgated
thereunder or (g) other body entitled to exercise any administrative, executive,
judicial, legislative, police or regulatory authority or taxing authority.

“GYN Holdings” means GYN Holdings Inc, Inc, a Delaware corporation and wholly
owned subsidiary of the Company.

“Hazardous Materials” means any material, substance or waste that is regulated,
classified, or otherwise characterized under or pursuant to any Environmental
Law as “hazardous”, “toxic”, a “pollutant”, a “contaminant”, “radioactive” or
words of similar meaning or effect, including petroleum and its by-products,
asbestos, polychlorinated biphenyls, radon, mold, urea formaldehyde insulation,
chlorofluorocarbons and all other ozone-depleting substances.

“Holder” means any Stockholder.

5

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

“Holder Indemnified Persons” means the Holders and their respective directors,
officers, employees, Affiliates, agents, successors and assigns.

“Holder Indemnifying Parties” means the Company, the Holders and the Joinder
Holders, as applicable.

“Holders’ Representatives Expenses” means the loss, liability or expense of any
nature incurred by Holders’ Representatives arising out of or in connection with
the administration of its duties as Holders’ Representatives, including
reasonable legal fees and other costs and expenses of defending or preparing to
defend against any claim or liability in the premises, unless such loss,
liability or expense is caused by such Holders’ Representatives’ willful
misconduct or gross negligence.

“Indemnification Sharing Percentage” means, with respect to each Holder, the
percentage of the number of Fully Diluted Shares of Company Capital Stock held
by all Holders as a group that is held by such Holder.

“Indemnified Person” means a Parent Indemnified Person or a Holder Indemnified
Person, as applicable.

“Indemnifying Party” means Holders’ Representatives (on behalf of the Holder
Indemnifying Parties) or Parent, as applicable.

“Information System” means software, hardware, computer and telecommunications
equipment and other information technology and related services.

“Intellectual Property Rights” means the entire right, title and interest in and
to all proprietary rights of every kind and nature however denominated,
throughout the world, including (a) patents, industrial designs, copyrights,
mask work rights, trade secrets, database rights and all other proprietary
rights in Technology; (b) trademarks, trade names, service marks, service names,
brands, trade dress, logos and other indicia of origin and the goodwill and
activities associated therewith; (c) domain names, rights of privacy and
publicity and moral rights; (d) any and all registrations, applications,
recordings, licenses, common-law rights and contractual rights relating to any
of the foregoing; and (e) all Actions and rights to sue at law or in equity for
any past or future infringement or other impairment of any of the foregoing,
including the right to receive all proceeds and damages therefrom and all rights
to obtain renewals, continuations, divisions, or other extensions of legal
protections pertaining thereto.

“IRS” means the United States Internal Revenue Service.

“Joinder Holder” means each Holder who has executed and delivered a Joinder
prior to the Closing.

“Knowledge” means, with respect to the Company, the actual knowledge of Stephen
Rocamboli, Fred Mermelstein and Janet Chollet and the knowledge such individuals
would reasonably be expected to obtain in the performance of his or her duties
relating to the Company with respect to the subject matter so qualified with
Knowledge.

“Law” means any United States federal, state or local or any foreign law,
statute, standard, ordinance, code, rule, regulation, resolution or promulgation
or any Order or any Permit granted under any of the foregoing or any similar
provision having the force or effect of law.

“Liability” means, with respect to any Person, any liability or obligation of
such Person whether known or unknown, whether asserted or not asserted, whether
determined, determinable or otherwise, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, whether directly
incurred or consequential, whether due or to become due and whether or not
required under GAAP to be accrued on the financial statements of such Person.

6

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

“License Agreements” means, collectively, (a) the Amended and Restated Exclusive
License Agreement for Atrophic Vaginitis Technology, dated as of August 15,
2007, by and among the Company, Janet Chollet, M.D. (“Chollet”) and Fred
Mermelstein, Ph.D. (“Mermelstein”), as amended, (b) the Exclusive License
Agreement, dated as of February 13, 2017, by and between GYN Holdings and
Bernadette Klamerus, (c) the Exclusive License Agreement, dated as of February
13, 2017, between GYN Holdings and the Company, and (d) the Exclusive License
Agreement, dated as of September 15, 2017, by and among the Company, Chollet and
Mermelstein.

“Lien” means any charge, encumbrance, claim, community or other marital property
interest, equitable ownership interest, collateral assignment, lien, license,
option, pledge, security interest, mortgage, deed of trust, right of way,
easement, encroachment, servitude, right of first offer or first refusal,
buy/sell agreement and any other restriction or covenant with respect to, or
condition governing the use, construction, voting (in the case of any equity
interest), transfer, receipt of income or exercise of any other attribute of
ownership of any kind or nature whatsoever affecting or attached to any asset.

“Loss” means, with respect to any Person, any Action, cost, damage, expense,
Liability, loss, injury, deficiency, Tax, settlement, including interest,
penalties, fees, fines, reasonable legal, accounting and other professional fees
and reasonable expenses incurred in the investigation, collection, prosecution,
determination and defense of such Losses (including, in each case, in connection
with the enforcement of any claim for indemnification hereunder), that is
incurred or suffered by such Person.

“Nonqualified Deferred Compensation Plan” has the meaning given such term in
Section 409A(d)(1) of the Code.

“Order” means any Law, order, injunction (whether temporary, preliminary or
permanent), judgment, decree, assessment, award or ruling enacted, promulgated,
issued, entered, amended or enforced by any Governmental Authority.

“Ordinary Course of Business” means the ordinary course of business of the
Company consistent with past practice.

“Parent Indemnified Persons” means the Surviving Corporation, Parent, Merger Sub
and their Affiliates and each of their respective equity holders, directors,
officers, employees, agents, successors and assigns.

“Parent Transaction Expenses” means an amount equal to the aggregate fees and
expenses payable or reimbursable by the Parent to attorneys and accountants
directly related to negotiation, entering into and consummation of this
Agreement and the Transactions including the Merger. “Permit” means any permit,
license, franchise, certificate, approval, registration, notification or
authorization from any Governmental Authority, or required by any Governmental
Authority to be obtained, maintained or filed.

“Permitted Liens” means: (i) statutory liens with respect to the payment of
Taxes, in all cases which are not yet due or payable; and (ii) statutory liens
of landlords, suppliers, mechanics, carriers, materialmen, warehousemen, service
providers or workmen and other similar Liens imposed by Law created in the
Ordinary Course of Business the existence of which could not constitute a
default or breach under any of the Company’s Contracts for amounts that are not
yet delinquent.

“Person” means any natural person, corporation, limited liability company,
partnership, association, trust or other entity, including a Governmental
Authority.

“Personal Data” means any information collected or used by the Company
(including such Personal Data collected by the Company (if any) from visitors
who use the Company’s website(s)) that can be used to specifically identify a
natural person (including but not limited to name, address, telephone number,
electronic mail address, social security number or other government-issued
number, bank account number or credit card number) and any special categories of
personal information regulated under or covered under any applicable Law.

7

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

“Pre-Closing Tax Period” means (a) any taxable period ending on or before the
Effective Date and (b) with respect to a Straddle Period, any portion thereof
ending on the Effective Date.

“Pre-Closing Taxes” means all Taxes with respect to the Company with respect to
any Pre-Closing Tax Period.

“Preferred Per Share Consideration” means an amount for each share of Preferred
Stock equal to the sum of (i) the quotient of the Aggregate Preferred Share
Preference divided by the number of shares of Company Preferred Stock
outstanding as of immediately prior to the Effective Time plus (ii) the Common
Per Share Consideration multiplied by the number of shares of Company Common
Stock into which such share of Preferred Stock is convertible immediately prior
to the Merger.

“Products” means any product that the Company currently sells or has sold at any
time in the past.

“Public Software” means any software that is (i) distributed as free software or
as open source software (e.g., Linux), or (ii) subject to any licensing or
distribution model that includes as a term thereof any requirement for
distribution of source code to licensees or third parties, patent license
requirements on distribution, restrictions on future patent licensing terms, or
other abridgement or restriction of the exercise or enforcement of any Company
Intellectual Property Rights through any means, (iii) licensed or distributed
under any Public Software License or under less restrictive free or open source
licensing and distribution models such as those obtained under the BSD, MIT,
Boost Software License and the Beer-Ware Public Software Licenses or any similar
licenses, (iv) a public domain dedication or (v) derived from in any manner (in
whole or in part), links to, relies on, is distributed with, incorporates or
contains any software described in (i) through (iv) above.

“Public Software License” means any of the following licenses or distribution
models, or licenses or distribution models similar to any of the following
(i) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the
Artistic License (e.g., PERL); (iii) the Mozilla Public License; (iv) the
Netscape Public License; (v) the Sun Community Source License (SCSL); (vi) the
Sun Industry Standards License (SISL); (vii) the Apache License; and (viii) any
licenses that are defined as OSI (Open Source Initiative) licenses as listed on
the Opensource.org website.

“Related Party” means (a) any current or former director (or nominee), or
officer of the Company, (b) any five percent or greater Stockholder of the
Company or five percent or greater holder of the Company Options (calculated on
an as-converted to Company Common Stock basis) and (c) any relative, spouse,
officer, director or Affiliate of any of the foregoing Persons.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, disposing of or migrating
into or through the environment or any natural or man-made structure.

“Representatives” means, with respect to any Person, the officers, employees,
investment bankers, financial advisors, attorneys, accountants, agents and other
representatives of such Person.

“Securities Act” means The Securities Act of 1933, as amended.

“Securities Payment Schedule” has the meaning set forth in Section 2.8.8.

“Series A Original Issue Date” has the meaning set forth in the Company Charter.

“Series A Original Issue Price” has the meaning set forth in the Company
Charter.

“Stockholders” means the holders of Company Capital Stock.

8

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

“Straddle Period” has the meaning set forth in Section 5.8.2.

“Subsidiary” means, when used with respect to any corporation, limited liability
company, partnership, association, trust or other entity the accounts of which
would be consolidated with those of such party in such entity’s consolidated
financial statements if such financial statements were prepared in accordance
with GAAP, as well as any other corporation, limited liability company,
partnership, association, trust or other entity of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power (or, in the case of a partnership, more than 50% of
the general partnership interests) are, as of such date, owned by such entity or
one or more Subsidiaries of such entity or by such party and one or more
Subsidiaries of such party.

“Tax” or “Taxes” means (a) any or all federal, state, local or foreign taxes,
charges, fees, customs duties, imposts, levies or other assessments in the
nature of taxes, including all net income, gross receipts, capital, sales, use,
ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, (b) any or
all interest, penalties, fines, additions to tax or additional amounts imposed
by any Governmental Authority in connection with any item described in clause
(a) and (c) any liability in respect of any items described in clauses
(a) and/or (b) payable by reason of contract, assumption, transferee liability,
operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor
or successor thereof of any analogous or similar provision under Law) or
otherwise.

“Tax Returns” means with respect to Taxes any return, report, claim for refund,
estimate, information return or statement, declaration of estimated tax or other
similar document required to be filed with any Taxing Authority with respect to
Taxes, including any Schedule or attachment thereto and including any amendment
thereof.

“Tax Sharing Agreement” means any agreement relating to the sharing, allocation
or indemnification of Taxes.

“Taxing Authority” means any Governmental Authority exercising authority in
respect of Taxes.

“Technology” means all inventions, works, discoveries, innovations, know-how,
information (including ideas, research and development, formulas, algorithms,
compositions, processes and techniques, data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, business and
marketing plans and proposals, graphics, illustrations, artwork, documentation
and manuals), databases, computer software, firmware, computer hardware,
integrated circuits and integrated circuit masks, electronic, electrical and
mechanical equipment and all other forms of technology, including improvements,
modifications, works in process, derivatives, or changes, whether tangible or
intangible, embodied in any form, whether or not protectable or protected by
patent, copyright, mask work right, trade secret law, or otherwise and all
documents and other materials recording any of the foregoing.

“Third Party Claim” refers to any Action that is instituted, or any claim that
is asserted, by any Person not party to this Agreement in respect of an
indemnifiable matter under this Agreement.

“Threshold” means $50,000.

“Total Merger Consideration” means the Base Merger Consideration, as adjusted
herein, and the Contingent Consideration.

“Transactions” means any transaction contemplated by this Agreement, including
(a) the Merger and the other transactions described in the recitals to this
Agreement, (b) the execution, delivery and performance of the Transaction
Agreements other than this Agreement and (c) the payment of fees and expenses
relating to such transactions by the Company and the Holders.

“Transaction Agreements” means this Agreement, the Option Termination Agreements
and the Joinders.

9

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

ARTICLE II:  THE MERGER AND EFFECT OF THE MERGER

Section 2.1        The Merger.  Upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the DGCL, at the Effective Time,
Merger Sub shall be merged with and into the Company, and the separate corporate
existence of Merger Sub shall thereupon cease and the Company shall continue as
the surviving corporation and a wholly owned Subsidiary of Parent.  The Company
after the Merger is sometimes referred to herein as the “Surviving Corporation.”

Section 2.2        Closing.  The closing of the Transactions (the “Closing”)
shall take place at 10:00 a.m. (Pacific time) on the second Business Day
following the satisfaction or waiver of the conditions set forth in ARTICLE VI
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions at such
time) at the offices of Mintz Levin, 3580 Carmel Mountain Road, Suite 300, San
Diego, California 92130, unless another time, date or place is agreed to in
writing by the Parties (the “Closing Date”).

Section 2.3        Effective Time.  Subject to the provisions of this Agreement,
as soon as practicable on the Closing Date, the Parties shall file with the
Secretary of State of the State of Delaware a certificate of merger in form and
substance reasonably acceptable to Parent, executed in accordance with the
relevant provisions of the DGCL (the “Certificate of Merger”).  The Merger shall
become effective upon the filing of the Certificate of Merger or at such later
time as is agreed to by the Parties and specified in the Certificate of Merger
(the time at which the Merger becomes effective is herein referred to as the
“Effective Time”).

Section 2.4        Effects of the Merger.  The Merger shall have the effects set
forth in this Agreement and the DGCL.  Without limiting the generality of the
foregoing and subject thereto, at the Effective Time, (a) all the rights,
privileges and powers of the Company and Merger Sub shall vest in the Surviving
Corporation, (b) all of the property, real and personal, including causes of
action and every other asset of Merger Sub and the Company, shall vest in the
Surviving Corporation without further act or deed and (c) all debts, liabilities
and duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.

Section 2.5        Charter Documents of Surviving Corporation.

2.5.1        Certificate of Incorporation.  At the Effective Time, the
certificate of incorporation of the Company shall be amended and restated so as
to be identical to the certificate of incorporation of Merger Sub as in effect
immediately prior to the Effective Time, except that the name of the Surviving
Corporation shall be the name of the Company as of immediately prior to the
Effective Time and shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided therein or by applicable Law.

2.5.2        Bylaws.  At the Effective Time, the bylaws of the Company shall be
amended and restated so as to be identical to the bylaws of Merger Sub, as in
effect immediately prior to the Effective Time and shall be the bylaws of the
Surviving Corporation until thereafter amended as provided in its Charter
Documents and applicable Law.

Section 2.6        Management of the Surviving Corporation.

2.6.1        Board of Directors.  Unless otherwise determined by Parent prior to
the Effective Time, the Parties shall take all requisite action so that the
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation immediately following the Effective Time,
until their respective successors are duly elected and qualified or their
earlier death, resignation or removal in accordance with the Charter Documents
of the Surviving Corporation.

2.6.2        Officers.  Unless otherwise determined by Parent prior to the
Effective Time, the Parties shall take all requisite action so that the officers
of Merger Sub immediately prior to the Effective Time shall be the officers of
the Surviving Corporation until their respective successors are duly appointed
and qualified or their earlier death, resignation or removal in accordance with
the Charter Documents of the Surviving Corporation.

10

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 2.7        Effect of the Merger on Capital Stock.  At the Effective
Time, by virtue of the Merger and without any action to be taken on the part of
the holder of any shares of the Company Capital Stock or any shares of capital
stock of Merger Sub, or on the part of the Company, Parent, Merger Sub or any
other Person, the following shall occur:

2.7.1        Capital Stock of Merger Sub.  Each share of capital stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and non-assessable
share of common stock, par value $0.001 per share, of the Surviving Corporation
and collectively shall constitute the only outstanding shares of capital stock
of the Surviving Corporation and each stock certificate of Merger Sub evidencing
ownership of any such shares shall evidence ownership of such shares of common
stock of the Surviving Corporation.

2.7.2        Cancellation of Securities held by the Company.  Any shares of
Company Capital Stock that are owned by the Company immediately prior to the
Effective Time shall be automatically canceled and shall cease to exist and no
consideration shall be delivered in exchange therefor.  

2.7.3        Conversion of Company Capital Stock.  Each issued share of Company
Capital Stock outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 2.7.2 or Dissenting Shares)
shall, subject to the terms and conditions of this Agreement, be converted into
the right to receive a pro rata portion of the Total Merger Consideration as set
forth below:

(a)        Preferred Stock.  Each share of Company Preferred Stock outstanding
immediately prior to the Effective Time (other than any shares of Company
Preferred Stock to be canceled in accordance with Section 2.7.2 or Dissenting
Shares) shall be converted into the right to receive, before any amounts are
paid with respect to shares of the Company Common Stock, (i) an amount in cash,
without interest, equal to the Preferred Per Share Consideration and (ii) the
contingent right to receive such share’s applicable portion of the Base Merger
Delayed Consideration and the Contingent Consideration, if any, less any
applicable withholding Taxes in accordance with Section 2.9, which contingent
right shall be transferrable after the 18-month anniversary of the Effective
Date, provided that any transferee executes a Joinder Agreement in connection
with such transfer.  

(b)        Common Stock.  Each share of Company Common Stock outstanding
immediately prior to the Effective Time (other than shares of Company Common
Stock to be canceled in accordance with Section 2.7.2 and Dissenting Shares)
shall be converted into the right to receive (i) an amount in cash, without
interest, equal to the Common Per Share Consideration and (ii) the contingent
right to receive such share’s applicable portion of the Base Merger Delayed
Consideration and the Contingent Consideration, if any, less any applicable
withholding Taxes in accordance with Section 2.9, which contingent right shall
be transferrable after the 18-month anniversary of the Effective Date, provided
that any transferee executes a Joinder Agreement in connection with such
transfer.

2.7.4        Cancellation of Company Options.  

(a)        At the Effective Time, each Company Option shall have all rights
thereunder cancelled, and, as consideration for the potential receipt of
proceeds from the Management Incentive Plan, each holder of any cancelled
Company Option shall have delivered to the Company an Option Termination
Agreement in form and substance reasonably acceptable to Parent (which shall
include a release of claims substantially in the form of Section 5.13.1) (each,
an “Option Termination Agreement”), effective upon the Closing.  

(b)        Prior to the Closing, the Company and its board of directors shall,
subject to applicable Law, take all actions (including, if appropriate, amending
any Company Option Plan and individual option agreements and obtaining consents
from the holders of the Company Options and/or delivering optionee notices
thereto) necessary to give effect to the transactions provided for in this
Section 2.7.4 and to ensure that from and after the Effective Time, each holder
of an outstanding Company Option shall cease to have any rights with respect
thereto.

11

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

2.7.5        Rights Cease to Exist.  As of the Effective Time, all shares of
Company Capital Stock shall no longer be outstanding, shall automatically be
canceled and shall cease to exist and each holder of a Certificate shall cease
to have any rights with respect thereto, except the rights set forth in this
Section 2.7.

Section 2.8        Delivery of Closing Merger Consideration Calculation.  Not
less than five Business Days prior to the Closing Date, the Company shall
prepare and deliver to Parent (for Parent’s review and approval) in writing:

2.8.1        the Company’s calculation of the Closing Merger Consideration as of
the Closing setting forth, in reasonable detail, each of the adjustments made to
Base Merger Closing Consideration in such calculation;

2.8.2        the Company’s consolidated balance sheet as of immediately prior to
the Closing (the “Closing Balance Sheet”);

2.8.3        the Company’s calculation of the Common Per Share Consideration and
the Preferred Per Share Consideration;

2.8.4        the name, address, tax identification number (if known) and the
number of shares of Company Capital Stock (both by class or series and on an as
converted to Company Common Stock basis) held by each holder thereof;

2.8.5        the Company’s calculation of Fully Diluted Shares of Company
Capital Stock;

2.8.6        the Company’s calculation of the amount of the Closing Merger
Consideration payable to each Holder and the amount of Taxes required to be
withheld from such payments;

2.8.7        the Company’s calculation of each Holder’s Indemnification Sharing
Percentage; and

2.8.8        a certificate of a duly authorized officer of the Company
certifying the foregoing.

The calculations listed in the foregoing Section 2.8.1 through 2.8.8 shall be
set forth on a spreadsheet referred to herein as the “Securities Payment
Schedule”.  Notwithstanding anything in this Agreement to the contrary, the
Closing Balance Sheet and the calculation of the Closing Merger Consideration
shall be consistent with the Accounting Methodology and shall reflect all
vacation, sick leave, severance and/or other remuneration required by Law,
Contract or policy of the Company to be paid to each Employee for periods on or
prior to the Closing Date.

Section 2.9        Payments At and After Closing.  

2.9.1        Payments At Closing.  At the Closing, Parent shall make, or cause
to be made, the following payments by wire transfer of immediately available
funds:

(a)        first, to the respective holders of any Company Debt, in the
aggregate amount of the Company Debt outstanding as of the Closing (the
principal amounts of which are set forth on Schedule 3.5.5) pursuant to payoff
letters from each such holder (A) indicating the amount required to discharge
such Company Debt in full and terminate all lines of credit thereunder at the
Closing (the “Payoff Amount”) and (B) if such Company Debt is secured by any
Liens, agreeing to release such Liens upon receipt of the applicable Payoff
Amount;

(b)        second, to the payees thereof, the Company Transaction Expenses, in
each case as directed in writing by the Company prior to the Closing;

(c)        third, to Holders’ Representatives, the Holders’ Representatives
Expenses;

12

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

(d)        fourth, to the persons identified in the Management Incentive Plan in
the amounts set forth in the Securities Payment Schedule;

(e)        fifth, as set forth in the Securities Payment Schedule, (i) to the
Holders of Company Preferred Stock listed on Exhibit B attached hereto, $[***]
(which includes a [***]% return on the Series A Original Issue Price each year
(based on a 360-day year), compounded annually, during the period commencing on
the Series A Original Issue Date and ending on the Effective Date), and (ii) to
the Holders of Company Preferred Stock listed on Exhibit C attached hereto,
$[***] (which includes a [***]% return on the Series A Original Issue Price each
year (based on a 360-day year), compounded annually, during the period
commencing on the Series A Original Issue Date and ending on the Effective Date)
(together, the “Series A Liquidation Preference”); provided that if any payment
hereunder is insufficient to pay the Holders of Company Preferred Stock the full
amount to which they shall be entitled under the Company Charter, the Holders of
Company Preferred Stock shall share ratably in any distribution of the amount
available for distribution in proportion to the respective amounts which would
otherwise be payable in respect of the shares of Company Preferred Stock held by
them upon such distribution if all amounts payable on or with respect to such
shares of Company Preferred Stock were paid in full; and

(f)        sixth, as set forth in the Securities Payment Schedule, after the
payment of the Series A Liquidation Preference to the Holders of Company
Preferred Stock, any remaining amount shall be distributed among the Holders of
Company Capital Stock, pro rata based on the number of shares held by each such
Holder, treating for this purpose all such securities as if they had been
converted to Company Common Stock pursuant to the terms of the Company Charter
immediately prior to such payment.

2.9.2        Base Merger Delayed Consideration; Closing Offset.  On the one year
anniversary of the Closing Date, Parent shall pay, or cause to be paid, the Base
Merger Delayed Consideration in accordance with the order of priority set forth
in Section 2.9.1 hereof. Notwithstanding the above, in the event that the
Closing Merger Consideration is less than or equal to $0.0, (i) no Closing
Merger Consideration shall be deliverable by Parent to the Holders at Closing
and (ii) Parent shall be entitled to withhold any of the Base Merger Delayed
Consideration and the Contingent Consideration Payments payable in accordance
with Section 2.14.3, as necessary, to set off against any such negative Closing
Consideration Amount (the “Closing Offset”).  Additionally, Parent shall have
the right to withhold and set off against any amount otherwise due to be paid as
Base Merger Delayed Condensation pursuant to this Section 2.9.2 the amount of
any Losses to which any Parent Indemnified Persons may be entitled under Article
VIII of this Agreement.  For the avoidance of doubt, in the event that no
Closing Merger Consideration or Base Merger Delayed Consideration is received by
the Holders pursuant to the immediately preceding sentence, the Total Merger
Consideration to be paid to the Holders shall be equal to the Contingent
Consideration.

2.9.3        Payments After Closing.  Any and all Contingent Consideration
Payments (as adjusted to deduct any Closing Offset in accordance with
Section 2.9.2) to be made pursuant to Section 2.14 shall be paid in accordance
with Section 2.9.1.    

Section 2.10        Non-Conversion.

2.10.1        Dissenting Shares.  Notwithstanding anything in this Agreement to
the contrary, any Dissenting Shares shall not be converted into or represent a
right to receive the applicable consideration for Company Capital Stock set
forth in Section 2.7, but instead the holder thereof shall only be entitled to
such rights as are provided by the DGCL.  

2.10.2        Withdrawal or Loss of Rights.  Notwithstanding the provisions of
Section 2.10.1, if any holder of Dissenting Shares effectively withdraws or
loses (through failure to perfect or otherwise) such holder’s appraisal or
dissenters’ rights with respect to such shares under the DGCL, then, as of the
later of the Effective Time and the occurrence of such event, (a) such holder’s
shares shall automatically convert into and represent only the right to receive
the consideration for Company Capital Stock, as applicable, set forth in and
subject to the provisions of this Agreement, upon surrender of the
Certificate(s) formerly representing such shares and (b) Parent shall deliver to
such holder such holder’s portion of the Total Merger Consideration that is
attributable to such shares at the time such rights are withdrawn or lost.

13

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

2.10.3        Demands for Appraisal.  The Company shall give Parent (a) prompt
notice of any written demand for appraisal received by the Company pursuant to
the applicable provisions of the DGCL and (b) the opportunity to participate in
all negotiations and proceedings with respect to such demands.  The Company
shall not, except with the prior written consent of Parent, make any payment
with respect to any such demands or offer to settle or settle any such
demands.  Any communication to be made by the Company to any Stockholder with
respect to such demands must be submitted and consented to in writing by Parent
prior to delivery to any such Stockholder.

Section 2.11        Exchange of Certificates.

2.11.1        Payment Procedures.

(a)        Following the Effective Time, Parent shall send to each Stockholder
of record:  (i) a letter of transmittal in form and substance reasonably
acceptable to Parent (each, a “Letter of Transmittal”) (which shall specify that
delivery shall be effected and risk of loss and title to the Certificates shall
pass, only upon receipt of the Certificates by Parent and shall contain a
release of claims substantially in the form of Section 5.15, an appointment of
Holders’ Representatives as provided for in Section 8.4 and an agreement to
indemnify Parent Indemnified Persons for Losses as provided in Section 8.2) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment of the applicable portion of the Total Merger
Consideration, if any.  Upon surrender by a holder of a Certificate for
cancellation to Parent, together with such Letter of Transmittal, duly completed
and validly executed in accordance with the instructions (and such other
customary documents as may reasonably be required by Parent), the holder of such
Certificate shall be entitled to receive in exchange therefor, subject to
Section 2.11.5, the consideration, if any, provided for herein and the
Certificate so surrendered shall thereafter be canceled.  If payment of any
portion of the Total Merger Consideration is to be made to any Person other than
the Person in whose name the surrendered Certificate is registered, it shall be
a condition of payment that (y) the Certificate so surrendered be properly
endorsed or otherwise be in proper form for transfer in accordance with
Section 2.11.2 and (z) the Person requesting such payment shall have paid any
transfer and other Taxes required by reason of the payment of the applicable
portion of the Total Merger Consideration to a Person other than the registered
holder of such Certificate surrendered or shall have established to the
reasonable satisfaction of Parent that such Tax either has been paid or is not
applicable.  After the Effective Time, each Certificate shall represent only the
right to receive the applicable portion of the Total Merger Consideration, as
contemplated by this ARTICLE II.

(b)        On or prior to the Closing Date, the Company shall deliver to each
holder of a Company Option an Option Termination Agreement.  

2.11.2        Transfer Books; No Further Ownership Rights in Company Stock.  The
Closing Merger Consideration paid in respect of shares of Company Capital Stock
(together with the contingent right to receive, if, when and to the extent
payable, the Base Merger Delayed Consideration and the Contingent Consideration)
upon the surrender for exchange of Certificates in accordance with the terms of
this ARTICLE II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Capital Stock previously represented
by such Certificates and at the close of business on the day on which the
Effective Time occurs, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Capital
Stock that were outstanding immediately prior to the Effective Time.  If, at any
time after the Effective Time, Certificates are presented to Parent or the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this ARTICLE II.

14

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

2.11.3        Lost, Stolen or Destroyed Certificates.  If any Certificate is
lost, stolen or destroyed, upon the making of an affidavit of the fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, , such Person will indemnify against any claim that may be
made with respect to such Certificate, Parent shall pay, subject to
Section 2.11.5, in exchange for such lost, stolen or destroyed Certificate, the
applicable portion of the Total Merger Consideration to be paid in respect of
the shares of Company Capital Stock formerly represented by such Certificate, as
contemplated by this ARTICLE II.  Notwithstanding anything in this Agreement to
the contrary, Parent shall not be obligated or required to post a bond for any
Holder for any reason in connection with a lost, stolen or destroyed Certificate
or otherwise.

2.11.4        No Liability.  Notwithstanding anything in this Agreement to the
contrary, none of the Parties shall be liable to any Person for any portion of
the Total Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.

2.11.5        Withholding Taxes.  Parent, the Company and the Surviving
Corporation shall deduct and withhold from any payment payable to a Holder under
this Agreement and shall pay to the appropriate Taxing Authority such amounts
that are required to be deducted and withheld with respect to the making of such
payment under any Tax Law.  To the extent amounts are so withheld and paid to a
Taxing Authority, the withheld amounts shall be treated for purposes of this
Agreement as having been paid to the Holder in respect of which such deduction
and withholding was made.

Section 2.12        Adjustments.  Notwithstanding any provision of this
ARTICLE II to the contrary (but without in any way limiting the covenants in
Section 6.1 (Conduct of Business)), if between the date hereof and the Effective
Time the outstanding shares of any class or series of Company Capital Stock are
changed into a different number of shares or a different class or series by
reason of the occurrence or record date of any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction, the per share Total Merger Consideration shall be
appropriately adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction.

Section 2.13        Aggregate Consideration.  Notwithstanding anything in this
Agreement to the contrary, in no event shall the aggregate amounts to be paid to
the Holders pursuant to this Agreement with respect to shares of Company Capital
Stock exceed (a) in respect of the amounts payable at the Closing, the Closing
Merger Consideration and (b) in respect of the amounts payable thereafter, the
portion of the Base Merger Delayed Consideration and the Contingent
Consideration, if any, payable to the Holders.

Section 2.14        Contingent Consideration.  In addition to the Base Merger
Consideration, as adjusted, Parent shall pay certain contingent consideration
(“Contingent Consideration”) as set forth below.

2.14.1        Contingent Consideration Definitions.  For purposes of
Section 2.14, the following terms shall have the following meanings in this
Section 2.14:

“Aggregate Net Sales” means cumulative Net Sales of Parent and its Affiliates of
all Revenue Share Years.

“Annual Net Sales” means Net Sales during any given Revenue Share Year.

“De Facto Exclusivity” means, on a Revenue Product-by-Revenue Product and on a
country-by-country basis, the period of time commencing upon the Effective Date
and ending upon the date that a Third Party (i) has obtained approval for sale
(if required) in that country for a product which contains the same active
ingredient and which is approved for the same indication as a Revenue Product in
that country, and (ii) has made at least one commercial sale for value of such
product that is competitive with a Revenue Product in that country within six
months prior to or after the calendar quarter in which Parent’s royalty
calculation is being made, provided, however, that there shall be no De Facto
Exclusivity in a particular country to the extent that such De Facto Exclusivity
is primarily attributable to patent rights owned by, or licensed to, Parent, in
such country.

15

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

“EMA” means the European Medicines Agency or any successor entity thereto.

“First Commercial Sale” means, with respect to any Revenue Product in any
country, the first sale on a commercial basis to a Third Party of such Revenue
Product in such country after Regulatory Approval for such Revenue Product has
been granted in such country.

“NDA” means a New Drug Application (as more fully defined in 21 C.F.R. 314.5 et
seq. or its successor regulation) filed with the FDA.

“Net Sales” means, with respect to any Revenue Product following its Regulatory
Approval, the gross amounts invoiced for sales of such Revenue Product by
Parent, its Affiliates, or Sublicensee, as applicable (the “Selling Party”)
anywhere in the world, less to the extent actually taken, paid, accrued,
allowed, included, or allocated based on good faith estimate, in the gross sales
prices with respect to such sales (and consistently applied as set forth below):

(a)        sales taxes, excise taxes, use taxes, VAT and duties paid by the
Selling Party in relation to Revenue Product and any other equivalent
governmental charges imposed upon the importation, use or sale of Revenue
Product (excluding taxes when assessed on income derived from sales);

(b)        credits and allowances (actually allowed or paid) for defective or
returned Revenue Product(s), including allowances for spoiled, damaged,
outdated, rejected, returned, withdrawn or recalled Revenue Product(s);

(c)        governmental and other rebates and refunds (or equivalents thereof)
granted to managed health care organizations, pharmacy benefit managers (or
equivalents thereof), federal, state, provincial, local and other governments,
their agencies and purchasers and reimbursers or to trade customers, in each
case with respect to such Revenue Product;

(d)        actual bad debt expense (but not exceeding [***]% of Net Sales);

(e)        chargebacks and retroactive price reductions actually granted to the
Third Party applicable to sales of such product; and

(f)        trade, cash, prompt payment and/or quantity discounts, actually
allowed and taken directly by the Third Party, and mandated discounts.

Where a Revenue Product is sold in combination with other pharmaceutical
products or active ingredients (collectively, “Combination Components”) the Net
Sales applicable to such sale shall be calculated by multiplying the total Net
Sales of such combined product by the fraction A/(A+B), where A is the sale
price of the Revenue Product portion of such Combination Revenue Product when
sold separately and B is the sale price of the other active ingredient(s) in
such Combination Revenue Product when sold separately (and B may not exceed
[***] for purposes of this calculation); provided, however, that if the Revenue
Product portion of such Combination Revenue Product or any of the other active
ingredients in such Combination Revenue Product is not then sold separately,
then Parent shall calculate Net Sales of such Combination Revenue Products by
the fraction C/C+D, where C is [***] and D is [***]. Notwithstanding anything to
the contrary herein, (i) Annual Net Sales shall never be reduced by more than
[***] percent ([***]%) for the purpose of calculating payments owed under
2.14.2(b) to be paid in accordance with Section 2.9.3, and (ii) Aggregate Net
Sales shall not be reduced for any purpose when calculating payments due under
2.14.2(a)(ix)-(xiii) (i.e., milestones shall be achieved by Aggregated Net Sales
of the product as a whole).

16

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

Sales of Revenue Product(s) between or among Parent and its Affiliates or
Sublicensees shall be excluded from the calculation of Net Sales and no payments
shall be payable on such sales except where such Affiliates or Sublicensees are
end users.  For the avoidance of doubt, sales of a Revenue Product for use in
conducting clinical trials of such Revenue Product in a country in order to
obtain the Regulatory Approval of such Revenue Product in such country shall be
excluded from Net Sales calculations.  Also, notwithstanding anything to the
contrary above, sales or transfers of a Revenue Product for any charitable
purposes, compassionate use, named patient sales or free samples shall be
excluded from Net Sales calculations.

“Phase I/II Study” means any human clinical trial of a Revenue Product conducted
mainly to evaluate its safety that would satisfy the requirements of 21 C.F.R. §
312.21(a) or its non-United States equivalents, or a human clinical trial of a
Revenue Product that uses information obtained from one or more previously
conducted Phase 1 human clinical trials that is designed to provide a
preliminary determination of safety of the Revenue Product in the target patient
population over a range of doses and dose regimens.

“Phase III Study” means a pivotal clinical trial of a Revenue Product in human
patients in order to establish the safety and efficacy of the Revenue Product
for a particular indication, which study is prospectively designed to
demonstrate with statistical significance that the Revenue Product is
sufficiently safe and effective for use in the indication to support the filing
of an application for approval to market such Revenue Product for such
indication in any jurisdiction without the need to conduct additional clinical
trials, as more fully described in US federal regulation 21 C.F.R. § 312.21(c)
and its equivalents in other jurisdictions.  

“Regulatory Approval” means any and all approvals, licenses, registrations or
authorizations by a Governmental Authority in a country necessary for the
development, manufacturing, use, storage, import, marketing and full commercial
sale of a product in such country, including any necessary pricing and
reimbursement approval.

“Regulatory Authority” means any Governmental Authority or other authority
responsible for granting Regulatory Approvals for products, including the FDA,
EMA and any corresponding national or regional regulatory authorities.

“Revenue Product” means a product, the manufacture, use, sale or import of which
requires that Parent or the Surviving Corporation pay a royalty to its licensors
pursuant to any of the License Agreements.

“Revenue Share Term” means, on a Revenue Product-by-Revenue Product and
country-by-country basis, the period of time commencing upon First Commercial
Sale and ending upon the later of (i) the date that Parent is no longer
obligated to pay royalties to its licensors under the License Agreements; or
(ii) the date that there is no longer any De Facto Exclusivity within such
country.

“Revenue Share Year” means (a) the period of time commencing upon First
Commercial Sale and ending on the first anniversary of the last day of the
calendar month in which such falls and (b) each succeeding 12 month period
thereafter.

“Sublicensee” means any person or entity other than an Affiliate of Parent to
which Parent has granted a sublicense under any of the License Agreements.

“Third Party” means any person or entity other than Parent or an Affiliate of
Parent or the Surviving Corporation or an Affiliate of the Surviving
Corporation.

17

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

2.14.2        Contingent Consideration Earnout.  Parent shall pay the following
Contingent Consideration in accordance with Section 2.9.3:

(a)        Milestone Payments.  As additional consideration paid in respect of
shares of Company Capital Stock pursuant to this Agreement, Parent shall pay the
following additional amounts (each, a “Milestone Payment”) upon the achievement
of the following events (each, a ”Milestone Event”) in accordance with
Section 2.9.3:

 

Milestone Event

Milestone Payment

(i)

Earlier to occur of (a) completion of successful Phase I/II Study for a Revenue
Product and (b) first use or treatment of a Revenue Product in a human subject
in a Phase III Study.

 

Under item (a), $[***], payable as follows:

 

$[***] is payable upon safety and efficacy endpoints that meet the minimal
definition of success (i.e. Phase I/II Study data concluding that the Revenue
Product is well‐tolerated and results in no serious adverse events) and
establishes an effective and tolerable dose to advance to a Phase III Study;

 

and

 

$[***] is payable if, upon completion of the Phase I/II Study, the Revenue
Product does not significantly increase circulating estrogen levels and the
Surviving Corporation makes a determination of a dose for the definitive trials
of Revenue Product safety and efficacy;

 

or, if (a) is not met then, alternatively,

 

Under item (b), $[***], payable upon first use or treatment of a Revenue Product
in a human subject in a Phase III Study.

 

And for the avoidance of doubt, only $[***] is payable pursuant to this
Milestone Event (i).

(ii)

Regulatory Approval to commence Phase III Study for a Revenue Product

 

$[***]

(iii)

Completion of first successful Phase III Study that meets criteria required for
submission of an NDA for a Revenue Product

 

$[***]

(iv)

Completion of second successful Phase III study that meets criteria required for
submission of an NDA for a Revenue Product

 

$[***]

18

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

(v)

NDA approval of a Revenue Product by the FDA

 

$[***], provided, however, if the Parent, its affiliates, or sublicensees is not
required to perform one or more of the clinical studies listed above, such
payments shall become due and payable upon FDA approval (for example, if FDA
does not require two Phase 3 clinical trials, and a payment is

not made pursuant to (vi) above, payment pursuant to this (vii) shall be $[***])

(vi)

Regulatory Approval in the European Union of a Revenue Product

 

$[***]

(vii)

First Regulatory Approval of a Revenue Product outside of United States and
outside of the European Union

 

$[***]

(viii)

First Commercial Sale of a Revenue Product

 

$[***]

(ix)

Aggregate Net Sales of a Revenue Product reach USD $[***]

 

$[***]

(x)

Aggregate Net Sales of a Revenue Product reach USD $[***]

 

$[***]

(xi)

Aggregate Net Sales of a Revenue Product reach USD $[***]

 

$[***]

        

(xii)

Aggregate Net Sales of a Revenue Product reach USD $[***]

$[***]

 

Each Milestone Payment shall only be due once upon the first occurrence of any
Milestone Event as indicated above.  The Milestone Events set forth in items
(iii)-(xii) of Section 2.14.2(a) may be achieved by the Surviving Corporation,
Parent or a Sublicensee in respect of Revenue Products.

(b)        Revenue Share Consideration.  

(i)        Annual Net Sales.  As additional consideration paid in respect of
shares of Company Capital Stock pursuant to this Agreement, Parent shall pay a
revenue share on Parent’s and its Affiliates’ Net Sales for each Revenue Share
Year during the Revenue Share Term as set forth in the table below in accordance
with Section 2.9.3.  For clarity, Annual Net Sales for any given Revenue Share
Year shall be aggregated for all Revenue Products in order to determine the
applicable revenue share rate.

Revenue Share Rate

Annual Net Sales

[***]%

Less than USD $[***]

[***]%

Portion of Annual Net Sales between USD $[***] and less than $[***]

[***]%

Portion of Annual Net Sales between USD $[***] and $[***]

[***]%

Portion of Annual Net Sales greater than USD $[***]

 

 

19

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

(ii)        Revenue Share Stacking.  Except with respect to payments made by
Parent to licensors pursuant to the License Agreements, if Parent or its
Affiliate is a party to a royalty-bearing license agreement with any Third
Party, which license is employed in the manufacture, use and/or sale of a
Revenue Product, then Parent may reduce the revenue share rate applicable to
such Revenue Product by [***]% for each [***]% of royalty rate payable to such
Third Party; provided, however, that the revenue share rate otherwise due under
this Agreement shall never be reduced by more than [***] percent ([***]%).  

(iii)        License Agreements Revenue Share Offset.  Royalties paid by Parent
or the Surviving Corporation to its licensors pursuant to the License Agreements
(including without limitation royalties payable to the licensors based on
Sublicensee sales) (“License Agreements Payments”), and fees paid by Parent or
the Surviving Corporation to its licensors pursuant to the License Agreements
based on income received from Sublicensees, are fully credible against all
revenue share due under Section 2.14.2(b).

(iv)        De Facto Exclusivity.  On a country-by-country and Revenue
Product-by-Revenue Product basis, once Parent and the Surviving Corporation is
no longer obligated to pay royalties to its licensors under the License
Agreements for such Revenue Product in such country, but there is De Facto
Exclusivity for such Revenue Product in such country, then each revenue share
rate set forth in the table above shall be reduced by one-half in that country
for such Revenue Product during such period of De Facto Exclusivity.  

(v)        One Revenue Share.  For clarity, only one revenue share shall be due
with respect to the same unit of a Revenue Product.  

(vi)        Sublicense Fees.  Parent shall pay [***] percent ([***]%) of
royalties received by Parent and the Surviving Corporation from Sublicensees
based on such Sublicensees’ Net Sales (“Sublicensee Revenue”) in accordance with
Section 2.9.3, provided, however, that such amount shall never be less than
[***] percent ([***]%) of such Sublicensee’s corresponding Net Sales.

2.14.3        Payment of Contingent Consideration.  

(a)        All amounts to be paid in respect of Contingent Consideration (each
such payment, a “Contingent Consideration Payment”), if any, shall be paid by
Parent in accordance with the order of priority set forth in Sections 2.9.1,
2.9.2 and 2.9.3 hereof.

(b)        The Contingent Consideration, if any, to be paid in accordance with
Section 2.9.3 shall be paid in U.S. Dollars by wire transfer or electronic funds
transfer of immediately available funds by Parent to the Holders, as follows:

(i)        Notification and Payment of Milestone Event.  Parent shall promptly
notify the Holders’ Representatives after a Milestone Event has been
achieved.  Within 30 Business Days of notification by Parent to the Holders’
Representatives of the realization of a Milestone Event, Parent shall provide to
the Holders’ Representatives a schedule setting forth the amounts of the
Contingent Consideration Payments to be paid to each Holder and any other
payments required pursuant to Sections 2.9.1, 2.9.2 and 2.9.3 (the “Contingent
Payment Schedule”). Within 5 Business Days of the receipt of such Contingent
Payment Schedule by the Holders’ Representatives, the Holders’ Representatives
shall provide a written response to Parent stating whether the Holders’
Representatives agree with or object to the Contingent Payment Schedule.  If the
Holders’ Representatives agree with such Contingent Payment Schedule or if the
Holders’ Representatives fail to provide a written response to Parent within
such 5 Business Day period, then within 2 Business Days of receipt of the
Holders’ Representatives’ acceptance or the expiration of the 5 Business Day
Period without a response, Parent shall pay or cause to be paid the
corresponding Milestone Payment in accordance with the Contingent Payment
Schedule. If the Holders’ Representatives timely object to the Contingent
Payment Schedule, then Parent and the Holders’ Representatives shall attempt in
good faith for 10 Business Days to resolve such dispute.  If Parent and the
Holders’ Representatives reach an agreement with respect to the Contingent
Payment Schedule, then within 2 Business Days of such agreement, Parent shall
pay or cause to be paid the corresponding Milestone Payment in accordance
therewith.  If

20

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

Parent and the Holders’ Representatives are unable reach an agreement within 20
Business Days after receipt by the Holders’ Representatives of the Contingent
Payment Schedule, the disputed items shall be resolved by the Accounting Firm,
and any determination by the Accounting Firm shall be final.  The Accounting
Firm shall resolve any disputed items with respect to the Contingent Payment
Schedule within 30 days of having the item referred to it pursuant to such
procedures as it may require.  The costs, fees and expenses of the Accounting
Firm shall be deducted and paid from the Contingent Consideration Payment that
is payable in accordance with this Section 2.14.3. Parent shall pay or cause to
be paid the corresponding Milestone Payment within 2 Business Days of receipt of
the determination by the Accounting Firm.

(ii)        Reports and Payment of Revenue Share.  On a Revenue
Product-by-Revenue Product basis, commencing upon First Commercial Sale and
until expiration or termination of the Revenue Share Term, Parent shall prepare
and deliver to the Holders’ Representatives a revenue share report of the sales
of Revenue Products by Parent and its Affiliates made, and of Sublicensee
Revenue received, for each calendar quarter, within 60 days of the end of such
calendar quarter, specifying (1) all Sublicensee Revenue received; and (2) in
the aggregate and on a Revenue Product-by-Revenue Product and country by country
basis: (a) total gross amounts for Revenue Products sold or otherwise disposed
of by Parent and its Affiliates; (b) amounts deducted in accordance with the
definition of Net Sales from such gross amounts to calculate Net Sales; (c) Net
Sales; (d) revenue share based on such Net Sales; (e) License Agreements
Payments credited against such revenue share; (f) Aggregate Net Sales to date;
and (g) revenue share payable in accordance with Section 2.9.3.  The revenue
share and Sublicensee Revenue will be payable following the procedures set forth
in Section 2.14.3(b)(i) above and the date on which any such revenue share and
Sublicensee Revenue are payable shall be referred to as the “Revenue Share
Delivery Date”.

(c)        Currency Conversion.  In the case of Net Sales outside the United
States, for purposes of paying the revenue share hereunder, payments received by
Parent and its Affiliates will be expressed in the U.S. Dollar equivalent
calculated on a quarterly basis in the currency of the country of sale and
converted to their U.S. Dollar equivalent using the average rate of exchange
over the applicable calendar quarter to which the sales relate, in accordance
with the rate of exchange for such currency reported in The Wall Street Journal,
Internet U.S. Edition at www.wsj.com, as of the last day of the applicable
reporting period (or, if unavailable on such date, the first date thereafter on
which such rate is available).  

(d)        Records and Audits.  Parent will keep complete and accurate records
of the underlying revenue data relating to the calculations of Parent’s and its
Affiliates’ and Sublicensees’ Net Sales generated in the then current calendar
year and during the preceding 3 calendar years.  The Holders’ Representatives
may, once annually at their own expense, have a nationally recognized,
independent, certified public accounting firm, selected by them and subject to
Parent’s prior written consent (which shall not be unreasonably withheld),
review any such records of Parent and its Affiliates and Sublicensees (the
“Audited Party”) in the location(s) where such records are maintained by the
Audited Party upon reasonable written notice (which shall be no less than 30
days’ prior written notice) and during regular business hours and under
obligations of strict confidence, for the sole purpose of verifying the basis
and accuracy of the payments made under Section 2.14.3(b)(ii) within the 24
month period preceding the date of the request for review.  No calendar year
will be subject to audit under this Section 2.14.3(d) more than once.  The
Audited Party will receive a copy of each such report concurrently with receipt
by the Holders’ Representatives.  Should such audit certify a discrepancy to the
Holders’ detriment, the Audited Party will, within 45 days after receipt of such
report from the accounting firm, pay any undisputed amount of the
discrepancy.  The Holders will pay the full cost of the review unless the
underpayment of amounts due to the Holders is certified to be greater than five
percent (5%) of the amount due for the entire period being examined, in which
case the Audited Party will pay the cost charged by such accounting firm for
such review.  Should the audit lead to the discovery of a discrepancy to the
Audited Party’s detriment, the Audited Party may credit the amount of the
discrepancy, without interest, against future payments payable under this
Agreement, and if there are no such payments payable, then the Holders shall pay
to the Audited Party the amount of the discrepancy, without interest, within 45
days of the Holder’s Representative receipt of the report.

21

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

(e)        Equity Consideration.  Each Contingent Consideration Payment to be
paid by Parent under this Section 2.14 may be paid, at Parent’s sole discretion,
in cash as set forth above, or in shares of Parent’s common stock (the
“Contingent Consideration Shares”), as determined pursuant to the following
formula.  If Parent elects to deliver all or a portion of a Contingent
Consideration Payment in the form of Contingent Consideration Shares (each such
payment, a “Contingent Equity Consideration Payment”), the total number of
Contingent Consideration Shares payable in connection with such Contingent
Equity Consideration Payment shall be equal to the number obtained by dividing
(i) the respective Contingent Consideration  Payment amount to be paid in
Contingent Consideration Shares by (ii) the average closing price of Parent
common stock on the Nasdaq Capital Market for the 30 consecutive trading days
prior to the date two Business Days prior to either (x) the achievement of such
Milestone Event or (y) the Revenue Share Delivery Date, as applicable.  The
Contingent Consideration Shares shall be registered, fully transferable, fully
paid and non-assessable on the date of issuance.

2.14.4        Right to Set-off.  Parent shall have the right to withhold and set
off against any amount otherwise due to be paid pursuant to this Section 2.14
the amount of (i) any Closing Offset pursuant to Section 2.9.2 and (ii) any
Losses to which any Parent Indemnified Persons may be entitled under
Article VIII of this Agreement.

Section 2.15        Diligent Efforts.  From and after the Closing, Parent
(itself or through the Company or any of their respective Affiliates or
sublicensees) shall use commercially reasonable efforts to bring the Revenue
Product to market through a thorough diligent development program for commercial
exploitation of the Company Intellectual Property Rights during the term of the
License Agreements.

ARTICLE III:  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

For purposes of these representations and warranties (other than those in
Sections 3.1.3, 3.2, 3.3, and 3.4), the term the “Company” shall include any
subsidiaries of the Company, unless otherwise noted herein.  As a material
inducement to Parent and Merger Sub to enter into this Agreement and effect the
Merger, with the understanding that Parent and Merger Sub are relying thereon in
entering into this Agreement and consummating the Transactions (including the
Merger), the Company hereby represents and warrants as of the date hereof and as
of the Closing Date to Parent and Merger Sub as follows:

Section 3.1        Organizational Matters.

3.1.1        Valid Existence; Good Standing.  The Company is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Delaware and, except as set forth in Schedule 3.1.1, has all requisite power
and authority to own or lease all of its properties and assets and to carry on
its business as now or currently proposed to be conducted.  The Company is duly
licensed or qualified to do business and is in good standing under the laws of
each jurisdiction set forth in Schedule 3.1.1, which represent all of the
jurisdictions in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or licensed by
it makes such licensing or qualification necessary.  

3.1.2        Operations.  The Company has no employees outside of Massachusetts
and no consultants outside of New Jersey and North Carolina.  

3.1.3        Subsidiaries.  Schedule 3.1.3 sets forth a true, correct and
complete list of the Company’s Subsidiaries.  Each of the Company’s Subsidiaries
has been duly formed or organized, is validly existing and in good standing
under the Laws of the jurisdiction of its organization, and has all requisite
power and authority necessary to own or lease all of its properties and assets
and to carry on its business as it is now being conducted or as currently
proposed to be conducted.  Each of the Company’s Subsidiaries is duly licensed
or qualified to do business and is in good standing under the Laws of each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or licensed by
it makes such licensing or qualification necessary.  The outstanding capital
stock, membership interests, partnership interests or other equity or voting
interests, as the case may be, of each of the Company’s Subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable and are
not subject to, nor were they issued

22

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

in violation of, any preemptive right.  The Company or one of its wholly owned
Subsidiaries owns of record and beneficially all the issued and outstanding
capital stock, membership interests, partnership interests or other equity or
voting interests, as the case may be, of such Subsidiaries free and clear of any
Liens other than Permitted Liens.  There are no authorized or outstanding
options, warrants, rights, subscriptions, agreements or obligations to issue any
shares of capital stock, membership interests, partnership interests or other
equity interests nor any other securities convertible into or exchangeable or
exercisable for shares, membership interests, partnership interests or other
equity interests in any Subsidiary of the Company.  Except as set forth in
Schedule 3.1.3, the Company does not own and never has owned, directly or
indirectly, any shares of capital stock, voting securities, or equity interests
in any Person.  The Company has no obligation to make an investment (in the form
of a purchase of equity securities, loan, capital contribution or
otherwise) directly or indirectly in any Person.

3.1.4        Corporate Documents.  The Company has delivered to Parent true and
complete copies of the Company Charter and the bylaws of the Company in each
case as the same may have been amended from time to time (collectively, the
“Company Charter Documents”).  All such Company Charter Documents are unmodified
and in full force and effect and the Company is not in violation of any
provision of the Company Charter Documents.  The Company’s Board of Directors
has not proposed or approved any amendment of any of the Company Charter
Documents.  The Company has made available to Parent and its representatives
true and complete copies of the stock ledger of the Company and of the minutes
(or, in the case of minutes that have not yet been finalized, drafts thereof) of
all meetings of the Stockholders, the Board of Directors and each committee of
the Board of Directors of the Company held since the Company’s inception.

3.1.5        Officers and Directors.  Schedule 3.1.5 lists all of the directors
and officers of the Company as of the date hereof.

Section 3.2        Authority; Noncontravention; Voting Requirements.  

3.2.1        Power and Authority.  The Company has all necessary power and
authority to execute and deliver this Agreement and the Transaction Agreements
to which it is a party and to perform all of its obligations thereunder and to
consummate the Transactions (including the Merger).

3.2.2        Due Authorization of Agreement.  The Company’s Board of Directors,
at a meeting duly called and held pursuant to the DGCL, has unanimously
(a) approved and declared advisable and in the best interests of the Company and
its Stockholders the Transaction Agreements and the Transactions (including the
Merger) and (b) resolved to recommend that the Stockholders adopt this Agreement
and approve the Merger.  The execution, delivery and performance by the Company
of this Agreement and the Transaction Agreements to which it is a party and the
consummation by it of the Transactions (including the Merger) have been duly
authorized by the Company’s Board of Directors and no other action on the part
of the Company’s Board of Directors or its Stockholders is necessary to
authorize the execution, delivery and performance by the Company of this
Agreement and the Transaction Agreements to which it is a party and the
consummation by it of the Transactions (including the Merger) except for the
Company Stockholder Approval pursuant to the Written Consents.  The affirmative
vote (in person or by proxy) or written consent of the holders of a majority of
the outstanding shares of Company Capital Stock (voting together as a single
class on an as-converted to common stock basis) and the affirmative vote (in
person or by proxy) or written consent of the holders of a majority of the
outstanding shares of Company Preferred Stock voting in favor of the adoption of
this Agreement (collectively, the ”Company Stockholder Approval”) are the only
votes or approvals of the holders of any class or series of capital stock of the
Company necessary to adopt this Agreement.

3.2.3        Valid and Binding Agreements.  This Agreement and each of the other
Transaction Agreements to which the Company is a party have been duly executed
and delivered by the Company.  Assuming due authorization, execution and
delivery of this Agreement and the other Transaction Agreements by the other
Parties hereto and thereto, this Agreement constitutes and the other Transaction
Agreements shall, when executed and delivered, constitute, the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.  

23

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

3.2.4        No Conflict.  Except as set forth in Schedule 3.2.4, neither the
execution and delivery by the Company of this Agreement and any Transaction
Agreement to which the Company is a party nor the consummation of the
Transactions (including the Merger), nor compliance by the Company with any of
the terms hereof or thereof, shall conflict with or result in any violation of
or default under (with or without notice or lapse of time, or both) or give rise
to a right of termination, cancellation, modification or acceleration of any
obligation or loss of any benefit or result in the creation of any Lien upon any
of the properties or assets of the Company (any such event, a “Conflict”) under
(i) any provision of the Company Charter Documents or any resolutions adopted by
the Company’s Board of Directors or Stockholders, (ii) any Contract to which the
Company is a party or by which any of its properties or assets may be bound or
affected, or (iii) any Permit issued to the Company or any Order or Law
applicable to the Company or any of its properties or assets (whether tangible
or intangible).  Except as set forth in Schedule 3.2.4, following the Closing
Date, the Company shall continue to be permitted to exercise all of its rights
under the Contracts without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments which the Company
would otherwise be required to pay pursuant to the terms of such Contracts had
the Transactions contemplated by this Agreement not occurred.

Section 3.3        Capitalization.

3.3.1        Authorized and Issued Securities.  The authorized capital stock of
the Company consists of 40,000,000 shares of Company Common Stock and 10,000,000
shares of Company Preferred Stock.  The capitalization of the Company is as
follows: (a) 3,625,000 shares of Company Common Stock are issued and
outstanding, (b) no shares of Company Common Stock are held by the Company in
its treasury, (c) 235,000 shares of Company Common Stock are subject to
outstanding options under the Company Option Plan, (d) no outstanding options
have been issued outside the Company Option Plan, (e) 901,000 shares of Company
Preferred Stock are issued and outstanding, all of which are designated as
Series A Preferred Stock, (f) no shares of Company Preferred Stock are subject
to outstanding options under the Company Option Plan and (g) a sufficient number
of shares of Company Common Stock is available for issuance upon exercise of
outstanding options under the Company Option Plan and upon conversion of the
Company Preferred Stock into Company Common Stock. No Company Option has a per
share exercise price that is greater than the Common Per Share
Consideration.  Each share of Company Preferred Stock is currently convertible
into one share of Company Common Stock.  Except as set forth in this
Section 3.3.1, there are no and as of the Effective Time there shall be no,
shares of Company Capital Stock, voting securities or equity interests of the
Company issued and outstanding or any subscriptions, options, warrants, calls,
convertible or exchangeable securities, rights, commitments or agreements of any
character providing for the issuance of any shares of capital stock, voting
securities or equity interests of the Company, including any representing the
right to purchase or otherwise receive any Company Capital Stock.

3.3.2        Ownership of Stock and Options.  Schedule 3.3.2 sets forth a
complete and accurate list of each of the record holders of (a) each class or
series of the Company Capital Stock and the number of shares of each such class
or series the Company Capital Stock held by each holder as of the date hereof
and the number of shares or other securities into which such Company Capital
Stock is convertible, listed by class and series and (b) all Company Options and
the exercise price, date of grant and number of shares of Company Common Stock
into which such Company Option are exercisable by each such Holder as of the
date hereof and the vesting schedules of each such Company Option (noting
specifically any options subject to vesting acceleration upon the Merger or
certain terminations of service following the Merger). All issued and
outstanding shares of Company Capital Stock are owned of record and
beneficially, as set forth in Schedule 3.3.2, and are free and clear of all
Liens.

3.3.3        Valid Issuance; No Preemptive or Other Rights.

(a)        All issued and outstanding shares of Company Capital Stock (i) are
and all shares of Company Capital Stock that may be issued pursuant to the
exercise of Company Options and the conversion of outstanding shares of any
class or series of Company Preferred Stock shall be, when issued in accordance
with the respective terms thereof, duly authorized, validly issued, fully paid
and nonassessable and (ii) except as set forth in Schedule 3.3.3, are not
subject to, nor were issued in violation of, any preemptive rights, rights of
first offer or refusal, co-sale rights or similar rights arising under
applicable Law or pursuant to the Company Charter

24

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Documents, or any Contract to which the Company is a party or by which it is
bound and have been offered, issued, sold and delivered by the Company in
compliance with all registration or qualification requirements (or applicable
exemptions therefrom) of applicable federal, state and foreign securities
Laws.  Each option granted under the Company Option Plan was duly authorized by
all requisite corporate action on a date no later than the grant date and has an
exercise price per share at least equal to the fair market value of a share of
Company Common Stock on the grant date. The Company is not under any obligation
to register any of its presently outstanding securities, or securities issuable
upon exercise or conversion of such securities, under the Securities Act or any
other Law.

(b)        The rights, preferences and privileges of the Company Capital Stock
are as set forth in the Company Charter.  Other than those accruing to the
Company’s outstanding Series A Preferred Stock, if any, there is no liability
for dividends accrued and/or declared but unpaid with respect to the outstanding
Company Capital Stock.  The Company is not subject to any obligation to
repurchase, redeem or otherwise acquire any shares of Company Capital Stock or
any other voting securities or equity interests (or any options, warrants or
other rights to acquire any shares of Company Capital Stock, voting securities
or equity interests) of the Company.  Except as provided for in this Agreement
or set forth in Schedule 3.3.3, there are no voting trusts or other agreements
or understandings with respect to the voting of the Company Capital
Stock.  There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or other similar rights with respect to the
Company.

(c)        True and complete copies of all form agreements and instruments (and
any amendments thereto, if applicable) relating to or issued under the Company
Option Plan and the Management Incentive Plan have been delivered to Parent;
there are no agreements to amend, modify or supplement such agreements or
instruments from the forms thereof provided to Parent; and all equity grants
under the Company Option Plan have been made pursuant to agreements and
instruments and do not deviate from such form agreements and instruments.

Section 3.4        No Consents or Approvals.  Except for the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to the DGCL, no consents or approvals of, filings with, or notices to
any Governmental Authority or Person are required to be made or obtained by the
Company for the valid execution, delivery and performance of this Agreement or
the other Transaction Agreements to which it is a party and the consummation of
the Transactions (including the Merger), except for those set forth in the
documents on Schedule 3.4 and pursuant to the Company’s corporate charter.

Section 3.5        Financial Matters.

3.5.1        Financial Statements.  

(a)        Schedule 3.5.1 sets forth the following financial statements of the
Company (collectively, the “Financial Statements”): the unaudited balance sheets
and related unaudited statements of income, cash flows and stockholders’ equity
as of and for the fiscal years ended 2015, 2016 and 2017 (the “Balance Sheet
Date”) (such unaudited financial statements, collectively, the “Unaudited
Financial Statements”) and the unaudited balance sheet and the related unaudited
statements of income, cash flows and stockholders’ equity as of and for the
one-month period ended January 31, 2018 (the “Interim Balance Sheet” and such
date the “Interim Balance Sheet Date”).  

(b)        The books and records of the Company (i) have been and are being
maintained in accordance with GAAP and (ii) are complete, properly maintained
and do not contain or reflect any material inaccuracies or discrepancies.  

3.5.2        Fair Presentation.  The Financial Statements were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby.  The Financial Statements fairly present the financial
condition of the Company as of such dates and the results of operations of the
Company for such periods, and were derived from and are consistent with the
books and records of the Company; provided, however, that the Financial
Statements as of and for the period ended on the Interim Balance Sheet Date are
subject to normal year-end adjustments (which shall not be material individually
or in the aggregate).  Since January 1, 2015, the Company has not effected any
material change in any method of accounting or accounting practice.

25

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

3.5.3        No Undisclosed Liabilities.  Except as set forth in Schedule 3.5.3,
the Company does not have any Liabilities that are not reflected or reserved
against on the face of (and not in the notes to) the Financial Statements,
except Liabilities (a) incurred by the Company in connection with the
preparation, execution, delivery and performance of the Transaction Agreements
and included in the Company Transaction Expenses or (b) which have arisen in the
Ordinary Course of Business since the Interim Balance Sheet Date.

3.5.4        Bank Accounts.  Schedule 3.5.4 sets forth an accurate list and
summary description (including name and address) of each bank and other
financial institution in which the Company maintains an account (whether
checking, savings or otherwise), lock box or safe deposit box and the names of
the persons having signing authority or other access thereto.  All cash in such
accounts is held in demand deposits and is not subject to any restriction as to
withdrawal.

3.5.5        Company Debt.  Except as set forth in Schedule 3.5.5, there is no
Company Debt.  With respect to each item of Company Debt, Schedule 3.5.5
accurately sets forth the name of the creditor, the Contract under which such
debt was issued, the name and address of the creditor, the principal amount of
the debt and a description of the collateral if secured.

Section 3.6        Absence of Certain Changes or Events.  Since the Interim
Balance Sheet Date, (a) there have not been any events, changes, occurrences or
circumstances that, individually or in the aggregate, have had or could
reasonably be expected to have a Company Material Adverse Effect and (b) there
has not occurred any material damage, destruction or loss (whether or not
covered by insurance) of any material asset of the Company that adversely
affects the use thereof.  Since the Interim Balance Sheet Date, the Company has
been operated in the Ordinary Course of Business.  Without limiting the
foregoing, since the Interim Balance Sheet Date, the Company has not taken any
action described in Section 5.1 that if taken after the date hereof and prior to
the Effective Time would violate such provision.  

Section 3.7        Legal Proceedings.  Except as set forth in Schedule 3.7,
since January 1, 2013, there have not been and there are no pending or, to the
Knowledge of the Company, threatened, Actions, in either case, by or against the
Company, its properties or assets or any of the Company’s officers or directors
in their capacities as such, nor, to the Company’s Knowledge, are there any
circumstances that would constitute a basis therefor.

Section 3.8        Compliance with Laws; Permits.  The Company is and has at all
times been, in compliance in all material respects with all Laws applicable to
the Company or any of its properties, assets, business or operations.  The
Company holds all Permits necessary to conduct its business and own, lease and
operate its properties and assets and all such Permits are in full force and
effect.  The Company is and has always been, in compliance in all material
respects, with the terms of all Permits necessary to conduct its business and to
own, lease and operate its properties and facilities.  Schedule 3.8 sets forth a
list of all material Permits that are held by the Company.  The Company has not
received notice from any Governmental Authority or other Person claiming or
alleging that the Company was not in compliance with all Laws applicable to the
Company or its business or operations; the Company has not been assessed a
material penalty with respect to any alleged failure by the Company to have or
comply with any Permit; and the Company has no Knowledge of a Governmental
Authority considering the amendment, termination, revocation or cancellation of
any Permit held by the Company.  

Section 3.9        Taxes.  Except as set forth in Schedule 3.9 hereto:

3.9.1        Except as set forth in Schedule 3.9.1, the Company has timely paid
all Taxes owed by the Company (without regard to whether or not such Taxes are
or were disputed), whether or not shown on any Tax Return.  Since December 31,
2016, the Company has incurred no Liability for Taxes arising outside of the
Ordinary Course of Business.  There are no Liens for Taxes (other than Taxes not
yet due and payable on any of the assets of the Company).  The Company is not
subject to any currently effective waiver of any statute of limitations in
respect of Taxes nor has it agreed to any currently effective extension of time
with respect to a Tax assessment or deficiency.  

26

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

3.9.2        The Company has timely filed all Tax Returns that are required to
have been filed by or with respect to the Company.  All such Tax Returns were,
when filed, true, correct and complete in all material respects and were
prepared in compliance in all material respects with all applicable Laws.  The
Company is not the beneficiary of any currently effective extension of time
within which to file any Tax Return.  The Company has not received written
notice of a claim by a Taxing Authority in a jurisdiction where the Company does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction and, to the Company’s Knowledge, there is no such claim outstanding
or pending.

3.9.3        The Company has timely and properly withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any Employee, Consultant, creditor, Stockholder, or any other Person.

3.9.4        The Company has made available to Parent correct and complete
copies of all federal and state income Tax Returns and all examination reports
and statements of deficiencies filed, or assessed against and agreed to, by the
Company with respect to Taxes for all taxable periods ending on or after
December 31, 2015.

3.9.5        Schedule 3.9.5 lists all jurisdictions (whether foreign or
domestic) in which the Company pays Taxes and describes the nature of the Taxes
paid by the Company.  

3.9.6        All Taxes (including sales tax, use tax and VAT) that were required
to be collected or self-assessed by the Company have been duly collected or
self-assessed, and all such amounts that were required to be remitted to any
Taxing Authority have been duly remitted, and the Company has timely complied
with all reporting requirements with respect thereto.

3.9.7        Except as set forth in Schedule 3.9.7, the Company has never
(i) made an election under Section 1362 of the Code to be treated as an S
corporation for federal income tax purposes or (ii) made a similar election
under any comparable provision of any state, local or non-U.S. Tax Law.

3.9.8        No deficiencies for any Taxes have been proposed or assessed in
writing against or with respect to any Taxes due by or Tax Returns of the
Company and there is no outstanding audit, assessment, dispute or claim
concerning any Tax liability of the Company either within the Company’s
Knowledge or claimed, pending or raised by any Taxing Authority in writing.  

3.9.9        The Company (A) is not nor has never been a member of an affiliated
group (other than a group the common parent of which is Company) filing a
consolidated federal income Tax Return or (B) has no liability for Taxes of any
person arising from the application of Treasury Regulation Section 1.1502-6 or
any analogous provision of state, local or foreign law, or as a transferee or
successor, by contract, or otherwise (other than pursuant to the provisions of a
contract entered into in the Company’s Ordinary Course of Business the principal
purpose of which is unrelated to Taxes).

3.9.10        The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

3.9.11        The Company shall not be required to include an item of income in,
or exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Effective Date as a result of any:  (a) change
in method of accounting requested prior to the Effective Time; (b) agreement
entered into with any Taxing Authority prior to the Effective Time;
(c) installment sale or open transaction disposition made prior to the Effective
Time; (d) prepaid amounts received or paid on or prior to the Effective Time;
(e) intercompany transaction occurring prior to the Effective Time or excess
loss account described in Treasury Regulations under Section 1502 of the Code
(or any similar provision of any state, local, or foreign income Tax Laws)
arising prior to the Effective Time; or (f) deferral of income under
Section 108(i) of the Code as a result of any reacquisition of a debt instrument
occurring prior to the Effective Time.

27

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

3.9.12        The Company has not distributed stock of another Person, nor, to
the Company’s Knowledge, has its stock been distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in part by
Section 355 or Section 361 of the Code.    

3.9.13        Notwithstanding anything to the contrary in this Agreement, it is
agreed and understood that (i) no representation or warranty is made by the
Company in this Agreement in respect of Tax matters, other than the
representations and warranties set forth in this Section 3.9 and Section 3.10,
(ii) the representations and warranties in this Section 3.9 other than
Sections 3.9.4 and 3.9.11 refer only to activities on or prior to the Closing
Date and shall not serve as representations and warranties regarding, or a
guarantee of, nor can they be relied upon with respect to, Taxes attributable to
any Tax period (or portion thereof) beginning, or Tax positions taken, after the
Closing Date, and (iii) no representations or guarantees are made with respect
to the amount or availability of any Tax attributes of the Company, including,
without limitation, net operating losses, capital losses, built-in losses, tax
credits or similar items of the Company after the Closing Date.

Section 3.10        Employee Benefits and Labor Matters.

3.10.1        Plans and Arrangements.  Schedule 3.10.1 sets forth a true and
complete list of all Company Plans together with a brief description of the type
of plan and benefit provided thereunder.  The Company has provided or made
available to Parent a current, accurate and complete copy (including amendments)
of each Company Plan, or a copy of the representative form agreement thereof,
and written descriptions of all non-written Company Plans.  None of the Company
Plans provides for post-employment life or health coverage for any participant
or any beneficiary of a participant, except as may be required under Part 6 of
Subtitle B of Title I of ERISA, Section 4980B of the Code or any similar state
law and at the expense of the participant or the participant’s beneficiary.  All
contributions required to have been made under any of the Company Plans or by
Law (without regard to any waivers granted under Section 412 of the Code), have
been timely made.  There are no unfunded liabilities or benefits under any
Company Plans that are not reflected in the Financial Statements.

3.10.2        ERISA.  No Company Plan is subject to Title IV of ERISA or is
otherwise a Defined Benefit Plan as defined in Section 3(35) of ERISA (a “Title
IV Plan”) and neither the Company nor any other entity (whether or not
incorporated) that, together with the Company, would be treated as a single
employer under Section 414 of the Code or Section 4001 of ERISA (each an “ERISA
Affiliate”) has incurred any liability pursuant to Title IV of ERISA that
remains unsatisfied.  Neither the Company nor any ERISA Affiliate has sponsored,
contributed or had an obligation to contribute, to any Title IV Plan, or any
money purchase pension plan subject to Section 412 of the Code, within the past
six years.  No Company Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA or a multiple employer welfare arrangement
within the meaning of Section 3(40) of ERISA.    

3.10.3        Conformity with Laws.  All Company Plans have been established,
operated and maintained in accordance with their terms and with all applicable
provisions of ERISA, the Code and other Laws.  All amendments and actions
required to bring the Company Plans into conformity in all material respects
with all of the applicable provisions of the Code, ERISA and other applicable
Laws have been made or taken, except to the extent that such amendments or
actions are not required by Law to be made or taken until a date after the
Effective Time.  There are no pending Actions arising from or relating to the
Company Plans (other than routine benefit claims), nor does the Company have any
Knowledge of facts that could form or could reasonably be expected to form the
basis for any such Action.    

3.10.4        Employment Matters.

(a)        The Company has delivered to Parent a true and complete listing of
the Employees and the Consultants.  Other than as fully reflected or
specifically reserved against in accordance with GAAP in the Financial
Statements (or as otherwise expressly permitted or required pursuant to this
Agreement), neither the Company nor any Holder has paid or promised to pay any
bonuses, commissions or incentives to any Employee or Consultant.  

28

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

(b)        Except as set forth in Schedule 3.10.4(b):

(i)        the Company has paid to each applicable Employee the entire amount of
the bonus, if any, earned by such Employee for the year ended 2017 and no
remaining bonus amounts for the year ended 2017, payable to any Employee, remain
unpaid as of the Closing Date; and

(ii)        since the Company’s inception, (A) the Company has paid or made
provision for payment of all salaries and wages, which are payable by the
Company to any Employees, accrued through the Closing Date and is in compliance
in all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment, collective bargaining,
immigration, wages, hours and benefits, non-discrimination in employment,
workers compensation, the collection and payment of withholding and/or payroll
taxes and similar Taxes, including Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act of 1967, the Equal Employment
Opportunity Act of 1972, ERISA, the Equal Pay Act, the National Labor Relations
Act, the Fair Labor Standards Act, the Americans with Disabilities Act of 1990,
the Vietnam Era Veterans Reemployment Act, the Family and Medical Leave Act and
any and all similar applicable state and local Laws; and (B) the Company has not
been engaged in any unfair employment practice.  

3.10.5        Effect of Transaction.  With the exception of payments to be made
pursuant to the Management Incentive Plan, neither the execution and delivery of
the Transaction Agreements by the Company nor the consummation of the
Transactions (including the Merger) by the Company, shall result in (a) any
payment becoming due to any Employee, (b) the provision of any benefits or other
rights to any Employee, (c) the increase, acceleration or provision of any
payments, benefits or other rights to any Employee, whether or not any such
payment, right or benefit would constitute a “parachute payment” within the
meaning of Section 280G of the Code, or (d) require any contributions or
payments to fund any obligations under any Company Plan.

3.10.6        Compliance with Section 409A of the Code.  To the extent that any
Company Plan is a “Nonqualified Deferred Compensation Plan,” as such term is
defined in Section 409A of the Code, such Company Plan is in documentary and
operational compliance with Section 409A of the Code and all applicable guidance
issued by the IRS thereunder.  Each Company Option is exempt from or in
compliance with the requirements of Section 409A of the Code.

Section 3.11        Environmental Matters. The Company is and at all times has
been, in compliance in all material respects with all applicable Environmental
Laws.  There is no Action relating to or arising under Environmental Laws that
is pending or, to the Knowledge of the Company, threatened against or affecting
the Company.  The Company has not received any written notice of, or entered
into, or assumed by Contract or operation of Law, any obligation, liability,
order, settlement, judgment, injunction or decree relating to or arising under
Environmental Laws.  To the Knowledge of the Company, there are no facts,
circumstances or conditions existing with respect to the Company or any property
or facility to or at which the Company transported or arranged for the disposal
or treatment of Hazardous Materials that could reasonably be expected to result
in the Company incurring any Environmental Liability.    

Section 3.12        Contracts.

3.12.1        Specified Material Contracts.  The Company is not a party to, does
not have any obligations, rights or benefits under and none of its assets or
properties are bound by:

(a)        Except as set forth in Schedule 3.12.1(a), any Contracts that purport
to limit, curtail or restrict the ability of the Company or its Affiliates to
conduct business in any geographic area or line of business or restrict the
Persons with whom the Company or any of its future Subsidiaries or Affiliates
may do business;

29

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

(b)        Except as set forth in Schedule 3.12.1(b), any Contracts that provide
for an obligation or an anticipated obligation for a payment in excess of $2,000
for any individual or Person, including any Contracts with individuals providing
for any commission-based payments in excess of such amount;

(c)        Except as set forth in Schedule 3.12.1(c), any voting agreements or
registration rights agreements relating to Company Capital Stock to which the
Company is a party;

(d)        Except as set forth in Schedule 3.12.1(d), any Contract with any
supplier or provider of goods or services that are incorporated into any Product
involving consideration in excess of $2,000 in the current or either of the two
previous fiscal years;

(e)        Except as set forth in Schedule 3.12.1(e), any Contract (other than
as set forth above) that is material to the Company’s Products or necessary to
utilize the Company’s Intellectual Property Rights, including, but not limited
to, any Contracts that if terminated would have potential to have a Company
Material Adverse Effect on the Company’s ability to utilize the Company’s
Intellectual Property Rights; and

(f)        Except as set forth in Schedule 3.12.1(f), any Contract to enter into
or negotiate the entering into of any of the foregoing.

3.12.2        Documentation.  The Company is not party to any oral Material
Contracts and has previously made available to Parent true and complete copies
of each written Material Contract (as defined below), together with any and all
amendments, supplements and “side letters” thereto.

3.12.3        Status of Material Contracts.  Each of the Contracts required to
be listed in Schedule 3.12.1 and each of the IP Contracts (collectively, the
“Material Contracts”) is valid and binding on the Company and in full force and
effect and, assuming due execution and delivery by the other parties thereto, is
enforceable in accordance with its terms by the Company.  The Company is not in
breach or default under any Material Contract, nor does any condition exist
that, with notice or lapse of time or both, would constitute a breach or default
in any respect thereunder by the Company or that would result in material
liability to the Company.  To the Knowledge of the Company, (a) no other party
to any Material Contract is in default thereunder and (b) no condition exists
that with notice or lapse of time or both would constitute a default in any
material respect by any such other party thereunder.  The Company has not
received notice of any termination or cancellation of any Material Contract and
to the Company’s Knowledge, no other party to a Material Contract has plans to
terminate or cancel such Material Contract.  The Company has not and, to the
Knowledge of the Company, no other party to any Material Contract has repudiated
any material provision of any Material Contract.  The Company is not disputing
and, to the Knowledge of the Company, no other party to such Material Contract
is disputing, any material provision of any Material Contract.  None of the
parties to any Material Contract is renegotiating any material amounts paid or
payable to or by the Company under such Material Contract or any other material
term or provision thereof.

Section 3.13        License Agreements.  The Company has not breached and to the
Knowledge of the Company is not in breach or default under any License
Agreement, nor does any condition exist that, with notice or lapse of time or
both, would constitute a breach or default in any respect thereunder by the
Company.  Neither the execution and delivery by the Company of this Agreement
and any Transaction Agreement to which the Company is a party nor the
consummation of the Transactions (including the Merger), nor compliance by the
Company with any of the terms hereof or thereof, shall create a Conflict with
any of the License Agreements.

Section 3.14        Real Property.  The Company does not own any real property,
nor has the Company ever owned any real property, and the Company is not party
to any lease, sublease, license or other Contract under which such real property
is occupied or used.

30

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 3.15        Intellectual Property.

3.15.1        Company IP.  The Company does not use, own, possess or control any
Technology or Intellectual Property Rights material to the conduct of its
business as currently conducted except for the Technology and Intellectual
Property Rights licensed to the Company under the Inbound IP Contracts
identified on Schedule 3.15.1.  The Company exclusively owns and has the right
to use all Clinical Data free and clear of all Liens and does not use any Public
Software.

3.15.2        Infringement.  Except as set forth in Schedule 3.15.2, neither the
Company nor any of its predecessors has (i) received any written charge,
complaint, claim, demand, or notice alleging infringement, dilution,
misappropriation or violation of the Intellectual Property Rights of any Person
(including any demand to refrain from using or to license any Intellectual
Property Rights of any Person in connection with the conduct of the business) or
(ii) agreed to, or has a contractual obligation to, indemnify any Person for or
against any interference, infringement, dilution, misappropriation or violation
with respect to any Intellectual Property Rights.

3.15.3        Scheduled IP.  Schedule 3.15.3 identifies all patents, patent
applications, registered trademarks and copyrights, applications for trademark
and copyright registrations, domain names, registered design rights and other
forms of registered Intellectual Property Rights and applications therefor owned
by or exclusively licensed to the Company (collectively, the ”Company
Registrations”) and accurately identifies and describes each action, filing, and
payment that must be taken or made on or before the date that is 120 days after
the Closing Date in order to maintain in full force and effect each Company
Registration.  No interference, opposition, cancellation, reissue,
reexamination, review or other Action, to the Knowledge of the Company, is
pending or, to the Knowledge of the Company, threatened, in which the ownership,
scope, validity or enforceability of any Company Intellectual Property Right is
being contested or challenged.

3.15.4        IP Contracts.  Schedule 3.15.4 identifies each Contract under
which the Company uses or licenses Technology or Intellectual Property Rights
that are material to the operation of the business of the Company (other than
Shrink Wrap Licenses) (the “Inbound IP Contracts”) or under which the Company
has granted any Person any right or interest in Company Intellectual Property
Rights including any right to use or access any item of Technology (the
“Outbound IP Contracts,” and together with the Inbound IP Contracts, the “IP
Contracts”).  Except as provided in the Inbound IP Contracts and Shrink Wrap
Licenses, the Company does not owe any royalties or other payments for the use
of any Intellectual Property Rights or Technology.

3.15.5        Inbound IP Contracts. With respect to the Inbound IP Contracts:
(i) to the Knowledge of the Company, Company is the sole and exclusive licensee
under each Inbound IP Contract; (ii) Company has not assigned, transferred,
conveyed or otherwise encumbered any of its rights, title or interests under any
Inbound IP Contract; (iii) to the Knowledge of the Company, there are no claims,
judgments or settlements against or pending with respect to any Intellectual
Property Rights licensed under any Inbound IP Contract; (iv) Company has not
received written notice that any claims, judgments or settlements described in
the prior clause are threatened; (v) to the Knowledge of the Company, no
Intellectual Property Rights licensed under any Inbound IP Contract are subject
of any pending interference, opposition, cancellation or patent protest; and
(vi) to the Knowledge of the Company, no Third Party is infringing or
misappropriating any of the Intellectual Property Rights licensed under any
Inbound IP Contract.

Section 3.16        Insurance.  Schedule 3.16 sets forth a list of all policies
of property, general liability, directors and officers, fiduciary, employment,
title, workers’ compensation, environmental, product liability, cyber liability
and other forms of insurance maintained by the Company and all pending
outstanding claims against such insurance policies.  The Company has delivered
to Parent complete and correct copies of all such policies, together with all
endorsements, riders and amendments thereto.

31

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 3.17        Related Party/Affiliate Transactions.  Except as set forth
in Schedule 3.17, there are no Liabilities of the Company to any Related Party
other than ordinary course, Employee- and director-related compensation and
reimbursement Liabilities.  No Related Party has any interest in any property
(real, personal or mixed, tangible or intangible) used by the Company in the
conduct of its business.  The Company is not subject to any ongoing transactions
pursuant to which the Company purchases any services, products, or Technology
from, or sells or furnishes any services, products or Technology to, any Related
Party.  All transactions pursuant to which any Related Party has purchased any
services, products, or Technology from, or sold or furnished any services,
products or technology to, the Company (each a “Related Party Transaction”) have
been on an arms-length basis on terms no less favorable to the Company than
would be available from an unaffiliated party.  

Section 3.18        No Untrue Statements.  No statement by the Company contained
in this Agreement, any Schedule to this Agreement, any other Transaction
Agreement, any certificate delivered pursuant to this Agreement or otherwise
made in connection with the Transactions (including the Merger) contains any
untrue statement of a material fact, or omits to state a material fact necessary
in order to make the statements therein contained not misleading.

Section 3.19        Brokers and Other Advisors.  No broker, investment banker,
financial advisor or other Person is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission, or the reimbursement of
expenses, in connection with the Transactions (including the Merger) or any
prior merger, acquisition or divestiture transaction based upon arrangements
made by or on behalf of the Company or any of its Affiliates (any such fees,
commissions and reimbursement expenses, the “Broker Fees”).  Notwithstanding
anything in this Agreement to the contrary, there are no fees or expenses
related to the Transactions (including the Merger) payable by the Company to any
third party other than the Company Transaction Expenses.

ARTICLE IV:  REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub jointly and severally represent and warrant to the Company
as follows:

Section 4.1        Organization, Standing and Corporate Power.  Each of Parent
and Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the Laws of the jurisdiction in which it is incorporated.

Section 4.2        Authority; Noncontravention.

4.2.1        Power; Enforceability.  Each of Parent and Merger Sub has all
requisite corporate power and corporate authority to execute and deliver the
Transaction Agreements to which it is a party and to perform its obligations
thereunder and to consummate the Transactions (including the Merger).  The
execution, delivery and performance by each of Parent and Merger Sub of the
Transaction Agreements to which it is a party and the consummation by Parent and
Merger Sub of the Transactions (including the Merger), have been duly authorized
and approved by their respective Boards of Directors (and prior to the Effective
Time shall be adopted by Parent as the sole Stockholder of Merger Sub) and no
other corporate action on the part of Parent or Merger Sub is necessary to
authorize the execution, delivery and performance by Parent and Merger Sub of
the Transaction Agreements to which it is a party and the consummation by it of
the Transactions (including the Merger).  This Agreement has been and, when
delivered at the Closing, the other Transaction Agreements to which Parent or
Merger Sub is a party shall be, duly executed and delivered by Parent and Merger
Sub.  Assuming due authorization, execution and delivery hereof by the other
parties hereto and thereto, this Agreement constitutes and the other Transaction
Agreements to which Parent or Merger Sub is a party shall, when delivered at the
Closing, constitute, the legal, valid and binding obligations of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with their
respective terms, except to the extent that their enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the enforcement of creditors’ rights generally and by general
equitable principles.

32

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

4.2.2        No Violations.  Neither the execution and delivery of the
Transaction Agreements to which Parent or Merger Sub is a party, nor the
consummation by Parent or Merger Sub of the Transactions (including the Merger),
nor compliance by Parent and Merger Sub with any of the terms or provisions
thereof, shall (a) violate any provision of the Charter Documents of Parent or
Merger Sub or (b) assuming that the consents and approvals referred to in
Section 4.3 are obtained and the filings referred to in Section 4.3 are made,
(i) violate any Law applicable to Parent or Merger Sub or any of their
respective properties or assets, or (ii) constitute a default under, result in
the termination of or cancellation under, or result in the creation of any Lien
upon any of the respective properties or assets of, Parent or Merger Sub under,
any of the terms, conditions or provisions of any material Contract to which
Parent or Merger Sub is a party, except for such violations, losses, defaults,
terminations, cancellations, accelerations or Liens as, individually or in the
aggregate, would not reasonably be expected to prevent or materially delay or
materially impair the ability of Parent or Merger Sub to consummate the Merger,
(a “Parent Material Adverse Effect”).

Section 4.3        Governmental Approvals.  Except for (a) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to the DGCL and (b) such consents, approvals, orders, authorizations,
registrations, declarations, notices and filings as may be required under
applicable state securities laws or the rules and regulations of the Nasdaq
Stock Market (in each case, if required), no consents or approvals of, or
filings, declarations or registrations with, any Governmental Authority are
necessary for the execution and delivery of this Agreement by Parent and Merger
Sub or the consummation by Parent and Merger Sub of the Transactions (including
the Merger), other than such other consents, approvals, filings, declarations or
registrations that, if not obtained, made or given, would not, individually or
in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.

Section 4.4        Ownership and Operations of Merger Sub.  Parent is the record
owner of all of the outstanding capital stock of Merger Sub.  Merger Sub was
formed solely for the purpose of engaging in the Transactions, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.

Section 4.5        Availability of Funds.  Parent shall have available to it at
the times required by this Agreement, sufficient funds to pay the Closing Merger
Consideration, to make the other payments contemplated hereby and to consummate
the Transactions (including the Merger).

Section 4.6        Brokers and Other Advisors.  No broker, investment banker,
financial advisor or other Person is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission, or the reimbursement of
expenses, in connection with the Transactions based upon arrangements made by or
on behalf of Parent or any of its Affiliates.

ARTICLE V:  ADDITIONAL COVENANTS AND AGREEMENTS

Section 5.1        Conduct of Business.  Except as expressly permitted by this
Agreement, or with the prior written consent of Parent, in its sole discretion
or as required by applicable Law, from the date of this Agreement until the
Effective Time or the earlier termination of this Agreement pursuant to
ARTICLE VII (Termination), the Company shall, and shall cause the
Representatives and Affiliates of the Company to, (a) conduct its business in in
the Ordinary Course of Business and in compliance in all material respects with
all applicable Laws, (b) maintain and preserve the License Agreements and
continue to perform any and all obligations under the License Agreements in
accordance with their respective terms, (c) maintain and preserve the goodwill
of those having business relationships with the Company (including by using
commercially reasonable efforts to maintain the value of its assets and
technology and preserve its relationships with suppliers, distributors,
strategic partners, licensors, licensees, regulators and others having business
relationships with the Company) and (d) maintain in full force and effect all
insurance policies described in Section 3.16.  Without limiting the generality
of the foregoing, except as set forth in Schedule 5.1, until the Effective Time,
the Company shall not:

33

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

5.1.1        issue, sell, grant, dispose of, amend any term of (with the
exception of the termination of the Company Options), grant registration rights
with respect to, pledge or otherwise encumber any shares of its capital stock or
other equity interests, or any securities or rights convertible into,
exchangeable or exercisable for, or evidencing the right to subscribe for any
shares of its capital stock or other equity interests, or any rights, warrants,
options, calls, commitments or any other agreements of any character to purchase
or acquire any shares of its capital stock or other equity interests or any
securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for, any shares of its capital stock or other
equity interests;

5.1.2        amend (including by reducing an exercise price or extending a term)
or waive any of its rights under, or accelerate the vesting under, any provision
of the Company Option Plan or any agreement evidencing any outstanding stock
option or other right to acquire capital stock of the Company or any restricted
stock purchase agreement or any similar or related contract;

5.1.3        redeem, purchase or otherwise acquire or cancel any of its
outstanding shares of capital stock or equity interests, or any rights,
warrants, options, calls, commitments or any other agreements of any character
to acquire any shares of its capital stock or equity interests;

5.1.4        declare, set aside funds for the payment of or pay any dividend on,
or make any other distribution (whether in cash, stock or property) in respect
of, any shares of its capital stock or other equity interests or make any
payments to the Stockholders in their capacity as such;

5.1.5        split, combine, subdivide, reclassify or take any similar action
with respect to any shares of the Company’s capital stock;

5.1.6        form any Subsidiary;

5.1.7        incur, guarantee, issue, sell, repurchase, prepay or assume any
(a) Company Debt, or issue or sell any options, warrants, calls or other rights
to acquire any debt securities of the Company; (b) obligations of the Company
issued or assumed as the deferred purchase price of property; (c) conditional
sale obligations of the Company; (d) obligations of the Company under any title
retention agreement (but excluding trade accounts payable and other accrued
current liabilities arising in the Ordinary Course of Business); (e) obligations
of the Company for the reimbursement of any obligor on any letter of credit; and
(f) obligations of the type referred to in clauses (a) through (e) of other
Persons for the payment of which the Company is responsible or liable, directly
or indirectly, as obligor, guarantor, surety or otherwise, including guarantees
of such obligations;

5.1.8        sell, transfer, lease, license, mortgage, encumber or otherwise
dispose of or subject to any Lien (including pursuant to a sale-leaseback
transaction or an asset securitization transaction), any of its properties or
assets;

5.1.9        make any capital expenditure or expenditures in excess of $2,000;

5.1.10        acquire or agree to acquire in any manner (whether by merger or
consolidation, the purchase of an equity interest in or a material portion of
the assets of or otherwise) any business or any corporation, partnership,
association or other business organization or division thereof other than the
acquisition of inventory and equipment in the Ordinary Course of Business;

5.1.11        make any investment (by contribution to capital, property
transfers, purchase of securities or otherwise) in, or loan or advance funds to
any Person;

34

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

5.1.12        with respect to Contracts, (a) enter into, adopt, terminate,
modify, renew or amend (including by accelerating material rights or benefits
under) any Material Contract, (b) enter into or extend the term or scope of any
Contract that purports to restrict the Company, or any future Subsidiary of the
Company, from engaging in any line of business or in any geographic area,
(c) enter into any Contract that could be breached by, or require the consent of
any third party in order to continue in full force following consummation of the
Transactions (including the Merger), or (d) release any Person from, or modify
or waive any material provision of, any confidentiality or non-disclosure
agreement;

5.1.13        except as provided for in this Agreement or on Schedule 5.1.13,
(a) hire or terminate any employees, (b) grant any bonus, benefit or other
direct or indirect compensation to any director, Employee or Consultant other
than in the Ordinary Course of Business, (c) increase the coverage or benefits
available under or otherwise modify or amend or terminate any (or create any
new) Company Plan, except as required by applicable Law or by the terms of any
Company Plan, (d) other than in the Ordinary Course of Business, enter into any
employment, deferred compensation, severance, consulting, non-competition or
similar agreement to which the Company is a party (or amend any such agreement
in any material respect) or enter into any agreement involving an Employee or
Consultant, except, in each case, as required by applicable Law from time to
time in effect or by the terms of any Company Plan or (e) enter into any Related
Party Transaction;

5.1.14        except as set forth on Schedule 5.1.14, make, change or revoke any
election concerning Taxes or Tax Returns, file any amended Tax Return or any Tax
Return inconsistent with past practice, enter into any closing agreement or
Contract with any Governmental Authority with respect to Taxes, settle any Tax
claim or assessment or surrender any right to claim a refund of Taxes or request
any Tax ruling or agree to an extension or waiver of the statute of limitations
with respect to the assessment or determination of Taxes;

5.1.15        amend the Company Charter Documents;

5.1.16        adopt a plan or agreement for or carry out any complete or partial
liquidation, dissolution, restructuring, recapitalization, merger, consolidation
or other reorganization other than as required by the provisions of the
Transaction Agreements;

5.1.17        pay, repurchase, prepay, discharge, settle or satisfy any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise) in excess of $10,000, other than the payment, discharge,
settlement or satisfaction in accordance with the terms of the Liabilities
reflected in the Balance Sheet;

5.1.18        initiate, settle, agree to settle, waive or compromise any Action;

5.1.19        delay beyond normal payment terms payment of any accounts payable;

5.1.20        grant or agree to grant any license to any of the Company’s
Intellectual Property Rights;

5.1.21        hire, appoint or terminate any director or officer of the Company
except as required by the terms of this Agreement; or

5.1.22        agree to take any of the foregoing actions.

Nothing contained in this Agreement shall give Parent or Merger Sub, directly or
indirectly, rights to control any operations of the Company prior to the
Effective Time.

35

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 5.2        Company Stockholder Approval, Joinders, Etc.

5.2.1        Written Consents.  Within 72 hours of the execution and delivery of
this Agreement, Stockholders shall have delivered Written Consents to Parent
sufficient to approve the Merger under the DGCL and the Company Charter
Documents and within ten Business Days of the execution and delivery of this
Agreement, any remaining Stockholders required to sign a Written Consent shall
have delivered their Written Consents to Parent.

5.2.2        Joinder Agreements.  To the extent not executed and delivered on
the date hereof, the Company shall use commercially reasonable efforts to have
each Holder who is not party to this Agreement execute a Joinder prior to the
Effective Time and shall provide copies of the executed Joinders to Parent
promptly upon receipt.   

5.2.3        Parachute Payments.  Following the execution of this Agreement and
prior to the Closing Date, the Company shall use its commercially reasonable
efforts to (i) obtain waivers from each Person who has a right to any payments
and/or benefits as a result of or in connection with the Transactions that that
could separately or in the aggregate, be deemed constitute “excess parachute
payments” within the meaning of Section 280G of the Code (the ”Waived 280G
Benefits”) and (ii) solicit the approval of the Stockholders for approval (in a
manner satisfactory to Parent) by such number of Stockholders in a manner
intended to comply with Section 280G(b)(5)(A)(ii) and Section 280G(b)(5)(B) of
the Code of any Waived 280G Benefits.

Section 5.3        Commercially Reasonable Efforts.

5.3.1        Actions Required to Consummate Transactions.

(a)        Subject to the terms and conditions of this Agreement, from the date
of this Agreement until the Closing Date or the earlier termination of this
Agreement pursuant to ARTICLE VII (Termination), each of the Parties shall use
(and shall cause its Affiliates to use) commercially reasonable efforts to
promptly (a) take, or cause to be taken, all actions and do, or cause to be
done, all things, necessary, proper or advisable to cause the conditions to
closing of the other Parties hereunder to be satisfied and to consummate and
make effective the Transactions (including the Merger), in each case, as
expeditiously as practicable and (b) obtain all approvals, consents,
registrations, Permits, authorizations and other confirmations from any
Governmental Authority or third party necessary, proper or advisable to
consummate the Transactions (including the Merger).

(b)        Except as may be agreed in writing by the other Parties or as may be
expressly permitted pursuant to this Agreement, from the date hereof until the
Effective Date or such earlier date if this Agreement is terminated pursuant to
ARTICLE VII, each Party shall not and shall not permit any of its Subsidiaries
to agree to take any action which could reasonably be expected to delay the
consummation of the Merger or result in the failure to satisfy any condition to
consummation of Transactions (including the Merger).

5.3.2        Governmental Authorities.  Each of the Parties shall use its
commercially reasonable efforts to (a) cooperate with each other in connection
with any investigation or other inquiry by or before a Governmental Authority
relating to the Transactions (including the Merger), including any proceeding
initiated by a private party and (b) keep the other Parties informed in all
material respects and on a reasonably timely basis of any material communication
received by such party from, or given by such party to, any Governmental
Authority and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
Transactions.  

5.3.3        Contractual Consents.  The Company shall use its commercially
reasonable efforts to obtain all necessary consents, waivers and approvals of
any parties to any Material Contracts as are required thereunder in connection
with the Merger or for any such Material Contracts to remain in full force and
effect, so as to preserve all material rights of and material benefits to, the
Company under such Material Contract from and after the Effective Time.  Such
consents, waivers and approvals shall be in a form reasonably acceptable to
Parent.

36

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 5.4        Public Announcements.  The Company shall not (nor shall it
permit, any Company Representative or Affiliate to), directly or indirectly,
issue any statement or communication with any third party regarding the
existence of the subject matter of this Agreement or the Transactions (including
the Merger) (including any claim or dispute arising out of or related to this
Agreement or the interpretation, entering into, performance, breach or
termination hereof) without the prior written consent of Parent.

Section 5.5        Access to Information.

5.5.1        Access. Subject to the requirements of applicable Law, the Company
shall afford to Parent and Parent’s Representatives, from time to time prior to
the earlier of (i) the Effective Time or (ii) the termination of the Agreement
pursuant to Section 7.1, access during normal business hours to (a) all of the
Company’s Facilities, books, reports, Contracts, assets, filings with and
applications to Governmental Authorities, records and correspondence (in each
case, whether in physical or electronic form) and (b) to the Representatives of
the Company, as Parent may reasonably request, and the Company shall furnish
promptly to Parent all information and documents concerning its business,
financial condition and operations, properties and personnel as Parent may
reasonably request and Parent shall be allowed to make copies of such
information and documents.

5.5.2        Updated Financials.  Promptly, but in no event later than 10
calendar days after the end of each month from the date hereof until the Closing
Date, the Company shall provide Parent with a copy of the true and correct
unaudited balance sheets and related statements of income and cash flows of the
Company as of and for the period ended the most-recent month-end prepared using
the Company’s books and records and in accordance with GAAP consistently
applied, together with a copy of the standard monthly reporting package provided
to the Company’s management.

Section 5.6        Confidentiality.  The Holders’ Representatives on behalf of
the Holders acknowledge that the success of the Surviving Corporation after the
Closing Date depends upon the preservation of the confidentiality of the
Confidential Information (as hereinafter defined), that the preservation of the
confidentiality of the Confidential Information is an essential premise of the
bargain between the Parties and Parent and Merger Sub would be unwilling to
enter into this Agreement in the absence of this Section 5.6.  Accordingly,
Holders’ Representatives on behalf of the Holders shall and shall use their
commercially reasonable efforts to cause its Affiliates and their respective
Representatives to, keep confidential all documents and information involving or
relating to the Company or its business (the “Confidential Information”), unless
(a) compelled to disclose by competent judicial process so long as reasonable
prior notice of such disclosure is given to Parent and the Company and a
reasonable opportunity is afforded Parent and the Company to contest the same or
(b) disclosed in an Action brought by a Party in pursuit of its rights or in the
exercise of its remedies hereby (clauses (a) and (b) together, the “Confidential
Information Exceptions”).  Confidential Information does not include any
document or information which (i) is or becomes generally available to the
public other than as a result of a disclosure in violation of this Section 5.6
by the receiving party or its Representatives, (ii) was available to the
receiving party on a non-confidential basis prior to its disclosure hereunder,
(iii) becomes available to the receiving party on a non-confidential basis from
a person not known by the receiving party to be under an obligation not to
transmit the information to the receiving party or (iv) is independently
developed by the receiving party without reference to any of the Confidential
Information.  The provisions of this Section 5.6 shall survive the Closing Date
indefinitely.

Section 5.7        Notification of Certain Matters.  The Company shall provide
prompt written notice to Parent upon becoming aware (a) that any representation
or warranty made by such Party in this Agreement was, when made or subsequently
has become untrue, (b) of any failure by such Party to comply with or satisfy
any of its covenants or agreements hereunder, (c) of the occurrence or
nonoccurrence of any event that could reasonably be expected to cause any
condition precedent to any obligation of any Party to consummate the
Transactions (including the Merger) not to be satisfied at or prior to the
Closing Date, (d) of any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
Transactions (including the Merger), (e) of any notice or other communication
from any Governmental Authority in connection with the Transactions (including
the Merger), (f) of the commencement or threat of commencement of any Action
regarding the Transactions (including the Merger) or otherwise relating to the
Company or its business, or (g) of any other

37

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

material development affecting the assets, Liabilities, business, financial
condition or operations of the Company, included, but not limited to, any of the
License Agreement, that could be reasonably expected to cause a Company Material
Adverse; provided, however, that neither the delivery of any notice pursuant to
this Section 5.7 nor obtaining any information or knowledge in any investigation
pursuant to Section 5.5 or otherwise shall (i) cure any breach of, or
non-compliance with, any representation or warranty requiring disclosure of such
matter, or any breach of any other provision of this Agreement, (ii) amend or
supplement any scheduled disclosure made by the Company in ARTICLE III or
(iii) limit the remedies available to the Party receiving, or entitled to
receive, such notice, including remedies pursuant to ARTICLE II (Merger),
ARTICLE VI (Conditions Precedent), ARTICLE VII (Termination), ARTICLE VIII
(Indemnification) or ARTICLE IX (Misc.).

Section 5.8        Tax Matters.  For purposes of this Section 5.8, all
references to the Company include any predecessor entity of the Company.

5.8.1        Pre-Closing Period Tax Returns.  The Company shall, at the
Company’s expense, prepare or cause to be prepared and file or cause to be filed
all Tax Returns for the Company for all taxable periods ending on or before the
Closing Date and which are due on or before the Closing Date and the Company
shall pay or cause to be paid all Taxes with respect to such periods. Parent
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Company for all taxable periods ending on or prior to the
Closing Date and which are due after the Closing Date.  All Tax Returns referred
to in this Section 5.8.1 shall be prepared in accordance with past practices of
the Company.  Parent and the Surviving Corporation shall submit each Tax Return
to the Holders’ Representatives at least 20 days before such Tax Return is due
for the Holders’ Representatives’ written approval prior to filing.  If the
Holders’ Representatives object to any item on any such Tax Return, they shall,
with 15 days after delivery of such Tax Return, notify Parent and the Surviving
Corporation in writing that they so object, specifying with particularity any
such item and stating the specific factual or legal basis for any such
objection.  If a notice of objection shall be duly delivered, Parent and the
Holders’ Representatives shall negotiate in good faith and use their reasonable
best efforts to resolve such items.  If Parent and the Holders’ Representatives
are unable to reach such agreement with 10 days after receipt by Parent of such
notice, the disputed items shall be resolved by an independent nationally
recognized accounting firm selected by Parent and reasonably acceptable to the
Holders’ Representatives (the “Accounting Firm”) and any determination by the
Accounting Firm shall be final.  The Accounting Firm shall resolve any disputed
items within 30 days of having the item referred to it pursuant to such
procedures as it may require.  If any disputed items are unable to be resolved
before the due date for such Tax Return, the Tax Return shall be filed as
prepared by Parent and the Surviving Corporation and then amended to reflect the
Parties’ or the Accounting Firm’s resolution.  The costs, fees and expenses of
the Accounting Firm shall be borne equally by Parent and the Holders’
Representatives.  Any amount due by the Holders under this Section 5.8.1 shall
be paid by the Surviving Corporation, and Parent shall be entitled to withhold
any Base Merger Delayed Consideration payments payable in accordance with
Section 2.9.2 and any Contingent Consideration Payments payable in accordance
with Section 2.14.3 to set off against any such amount.

5.8.2        Post-Closing and Straddle Period Tax Returns.

(a)        Parent shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns of the Company for taxable periods that end after the
Closing Date, including all Tax Returns for all complete taxable periods
including but not ending on the Closing Date (collectively, the “Straddle
Periods”) and Parent shall cause the Surviving Corporation to pay all Taxes with
respect to such periods.  Parent shall permit the Holders’ Representatives a
reasonable period of time, but not less than 20 days to review and comment,
prior to filing, on each Tax Return for a Straddle Period.  Parent and the
Surviving Corporation shall consider in good faith any changes to such Straddle
Period Tax Returns that are reasonably requested by the Holders’ Representatives
with respect to Taxes for which the Holders would bear liability pursuant to
this Agreement.  If the Holders’ Representatives object to any item on any such
Tax Return, they shall, with 15 days after delivery of such Tax Return, notify
Parent in writing that they so object, specifying with particularity any such
item and stating the specific factual or legal basis for any such objection.  If
a notice of objection shall be duly delivered, Parent and the Holders’
Representatives shall negotiate in good faith and use their reasonable best
efforts to resolve such items.  If Parent and the Holders’ Representatives are
unable to reach such agreement with 10 days after receipt by Parent of

38

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

such notice, the disputed items shall be resolved by the Accounting Firm and any
determination by the Accounting Firm shall be final.  The Accounting Firm shall
resolve any disputed items within 30 days of having the item referred to it
pursuant to such procedures as it may require.  If any disputed items are unable
to be resolved before the due date for such Tax Return, the Tax Return shall be
filed as prepared by Parent and then amended to reflect the Parties’ or the
Accounting Firm’s resolution.  The costs, fees and expenses of the Accounting
Firm shall be borne equally by Parent and the Holders’ Representatives.  Any
amount due by the Holders under this Section 5.8.2(a) shall be paid by the
Surviving Corporation, and Parent shall be entitled to withhold any Base Merger
Delayed Consideration payments payable in accordance with Section 2.9.2 and any
Contingent Consideration Payments payable in accordance with Section 2.14.3 to
set off against any such amount.

(b)        In the case of any Straddle Period, the amount of Taxes allocable to
the portion of the Straddle Period ending on the Closing Date shall be
determined as follows: In the case of Taxes imposed on a periodic basis (such as
real or personal property Taxes), the amount of such Taxes for the entire period
(or, in the case of such Taxes determined on an arrears basis, the amount of
such Taxes for the immediately preceding period) multiplied by a fraction, the
numerator of which is the number of calendar days in the Straddle Period ending
on and including the Closing Date and the denominator of which is the number of
calendar days in the entire relevant Straddle Period.  In the case of Taxes not
described in the previous sentence (such as franchise Taxes, Taxes that are
based upon or related to income or receipts, based upon occupancy or imposed in
connection with any sale or other transfer or assignment of property (real or
personal, tangible or intangible)), the amount of any such Taxes shall be
determined as if such taxable period ended as of the close of business on the
Closing Date.

5.8.3        Tax Contests.  If a claim shall be made by any Taxing Authority,
which, if successful, might result in an indemnity payment to an Indemnified
Person pursuant to Article VIII, then such Indemnified Person shall give notice
to the Indemnifying Party in writing of such claim and of any counterclaim the
Indemnified Person proposes to assert (a “Tax Claim”); provided, however, the
failure to give such notice shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party has been prejudiced as a
result of such failure.  With respect to any Tax Claim relating to a Pre-Closing
Tax Period, the Holders’ Representatives shall, solely at the Holders’ cost and
expense, control all proceedings in connection with such Tax Claim (including
selection of counsel); provided, however, that the Holders’ Representatives must
first consult, in good faith with Parent before taking any action with respect
to the conduct of such Tax Claim.  Notwithstanding the foregoing, the Holders’
Representatives shall not settle such Tax Claim without the prior written
consent of Parent, which consent shall not be unreasonably withheld,
conditioned, or delayed, and Parent and counsel of its own choosing (at the
Holders’ cost) shall have the right to participate fully in all aspects of the
prosecution or defense of such Tax Claim if Parent reasonably determines that
such Tax Claim could have a material adverse impact on the Taxes of the Company
in a taxable period or portion thereof beginning after the Closing Date.  Parent
shall control all proceedings with respect to any Tax Claim relating to a
taxable period or portion thereof beginning after the Closing Date and the
Holders shall have no right to participate in the conduct of any such
proceeding.  

5.8.4        Certification.  Parent and the Holders’ Representatives agree, upon
request from the other party, to use their commercially reasonable efforts to
obtain any certificate or other document from any Taxing Authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed (including, but not limited to, with respect to the transactions
contemplated by this Agreement (including the Merger)).

5.8.5        Tax Sharing Agreements.  The Company shall terminate all Tax
Sharing Agreements with respect to the Company as of the Closing Date and shall
ensure that such agreements are of no further force or effect on and after the
Closing Date and that there shall be no further liabilities or obligations
imposed on the Company under any such agreements.  

39

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

5.8.6        Cooperation.  Following the Closing Date, Parent, the Surviving
Corporation and the Holders’ Representatives shall, as reasonably requested by
any party hereto: (a) assist any other Party in preparing and filing any Tax
Returns relating to the Company that such other Party is responsible for
preparing and filing; (b) cooperate in preparing for any Tax Claim, Tax audit
of, or dispute with any Taxing Authority regarding and any judicial or
administrative proceeding relating to, liability for Taxes, in the preparation
or conduct of litigation or investigation of claims and in connection with the
preparation of financial statements or other documents to be filed with any
Taxing Authority, in each case with respect to the Company; (c) make available
to the other parties and to any Taxing Authority as reasonably requested all
information, records and documents relating to Taxes relating to the Company (at
the cost and expense of the requesting Party); (d) provide timely notice to the
other Parties in writing of any pending or threatened Tax audits or assessments
relating to the Company for taxable periods for which any such other Party is
responsible; and (e) furnish the other Parties with copies of all correspondence
received from any Taxing Authority in connection with any Tax audit or
information request with respect to any taxable periods for which any such other
Party is responsible.  For the avoidance of doubt, the cooperation noted in this
Section 5.8.6 shall include signing any Tax Returns, amended Tax Returns, claims
or other documents with respect to any Tax controversy or proceeding, with
respect to Taxes, the retention and (upon the other Party’s request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder.

5.8.7        No Section 338 Tax Election.  Neither Parent nor its Affiliates
shall make a Tax election pursuant to Section 338 of the Code or any similar
election under state, local or foreign Tax Law with respect to the Company in
connection with the Merger.

5.8.8        Transfer Taxes.  The Holders, jointly and severally, shall be
liable for any real property transfer or gains tax, stamp tax, stock transfer
tax, or other similar Tax imposed as a result of the Merger (collectively, the
“Transfer Taxes”), and any penalties or interest with respect to the Transfer
Taxes.  The Parties shall cooperate in filing all necessary Tax Returns and
other documentation with respect to the Transfer Taxes. Any such Transfer Taxes
shall be paid by the Surviving Corporation, and Parent shall be entitled to
withhold any Base Merger Delayed Consideration payments payable in accordance
with Section 2.9.2 and any Contingent Consideration Payments payable in
accordance with Section 2.14.3 to set off against any such Transfer Taxes paid
by the Surviving Corporation.

5.8.9        Stockholders’ Liability for Payment Obligations.  The Holders
severally shall be liable for all personal Taxes or other amounts payable by the
Holders pursuant to this Agreement.

5.8.10        336(e) Election.  Without the prior written consent of the Parent
(which may be withheld for any reason), neither the Company nor the Holders
shall make a Tax election pursuant to Section 336(e) of the Code or any similar
election under state, local or foreign Tax Law with respect to the Merger.

Section 5.9        Support Agreements.  The Company acknowledges that the
Persons listed on Schedule 5.9 have executed and delivered to Parent a support
agreement in form and substance reasonably acceptable to Parent which agreement
shall become binding and effective as of the Closing Date (collectively, the
“Support Agreements”).

Section 5.10        Employee Matters.

5.10.1        Employees. Nothing in this Agreement shall give rise to any
obligation by Parent to retain any Employee, any group of Employees of the
Company or any Company Plan following the Closing Date.  At or prior to the
Effective Time, the Company will terminate all Employees.  The Company shall be
responsible for (i) compliance with all applicable Law with respect to the
employment or termination of all such Employees prior to the Effective Time and
(ii) the employment-related obligations with respect to Employees prior to the
Effective Time including worker’s compensation benefits with respect to injuries
or incidents occurring prior to the Effective Time, any paid time-off and sick
or vacation amounts due or granted by the Company to any Employees prior to the
Effective Time as well as any amounts due to any Employees resulting from the
Company’s existing Company Plans.  The Company shall pay all unused vacation
benefits earned or accrued by Employees through the Effective Time.  

40

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

5.10.2        Company Plans.  Parent reserves the right to request that the
Company cease contributions to and/or terminate one of more of the Company Plans
effective immediately prior to Closing.  Any such cessation or termination may
only be undertaken (i) in accordance with the governing documents and Contracts
for the Company Plans (including through plan amendment) and (ii) if such
cessation or termination conforms with applicable Laws.

5.10.3        No Third-Party Beneficiaries.  This Section 5.10 is not intended
to amend any benefit plans or arrangements of Parent or any of its Subsidiaries,
to limit the ability of Parent or any of its Subsidiaries to amend, modify or
terminate any of such benefit plans or arrangements or to confer third-party
beneficiary rights on any Person who is not a Party to this Agreement.

Section 5.11        Restrictive Covenant Agreements. On the date hereof, the
Company shall use commercially reasonable efforts to cause each of the Holders
listed on Schedule 5.11 (each, a “Restricted Person”) to execute and deliver to
Parent a Restricted Person Non-competition and Non-solicitation Agreement in
form and substance reasonably acceptable to Parent (each a ”Restricted Person
Non-competition and Non-solicitation Agreement”).

Section 5.12        No Negotiations, Etc.  The Company shall not and shall cause
the Holders and their respective Representatives not to, directly or indirectly
solicit, initiate, or enter into any discussions or negotiations or continue in
any way any discussions or negotiations with any Person or group of Persons
regarding any Competing Transaction (defined below).  The Company shall promptly
but not later than 48 hours of the occurrence of the relevant event notify
Parent orally and in writing if any inquiries, proposals, or requests for
information concerning a Competing Transaction are received by the Company, the
Holders or any of their respective Representatives.  The written notice shall
include the identity of the Person making such inquiry, proposal, or request and
the terms and conditions thereof as well as a copy of such inquiry proposal or
request.  For purposes of this Section 5.12, “Competing Transaction” means a
transaction or a series of related transactions (other than the Transactions,
including the Merger) involving (i) any sale of stock or other equity interests
in the Company, (ii) a merger, consolidation, share exchange, business
combination, or other similar transaction involving the Company (iii) any sale,
lease, exchange, exclusive license, mortgage, pledge, transfer, or other
disposition of 10% or more of the assets of the Company or (iv) any other
transaction or series of transactions which could reasonably preclude the
consummation of the Transactions (including the Merger).

Section 5.13        Release of Claims.  

5.13.1        General Release of Claims.  Effective as of the Effective Date,
each Holder on behalf of itself and each of its equity holders (if any) and each
of their respective Subsidiaries, Affiliates, employees, agents, advisors,
heirs, legal representatives, successors and assigns (each a “Releasor”),
pursuant to its Joinder Agreement shall completely release, acquit and forever
discharge, to the fullest extent permitted by Law, Parent, the Company and their
Affiliates and each of their respective current, former and future officers,
directors, employees, agents, advisors, successors and assigns (collectively,
the “Releasees”) from any losses, liabilities, suits, actions, debts or rights,
whether fixed or contingent, known or unknown, matured or unmatured, arising out
of, relating to, or in any manner connected with any facts, events or
circumstances, or any actions taken, at or prior to the consummation of the
Transactions (including the Merger) that any Releasor ever had or now has
against the Releasees (collectively, the “Released Matters”), excluding any
liabilities arising solely in relation to the Transactions (including the
Merger) (collectively, the “Release of Claims”).  Effective as of the Effective
Date, the Representative (on behalf of each Holder) shall not and, to the extent
within its control, shall not cause or permit its equity holders or any of their
respective Subsidiaries, Affiliates, employees, agents, advisors, heirs, legal
representatives, successors and assigns, to assert any claims against the
Releasees in respect of the Released Matters.  Pursuant to the Joinders, each of
the Holders has (a) represented and warranted that such Holder has (i) had the
opportunity to consult with legal counsel of its choice, (ii) been fully
informed of the nature and contents of its Release of Claims and (ii) entered
into such Release of Claims freely, (b) acknowledged that it would be difficult
to fully compensate Parent or any of its Affiliates for damages resulting from
any breach of the provisions of such Release of Claims.  Accordingly, in the
event of any actual or threatened breach of such provisions, Parent and its

41

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Affiliates shall (in addition to any other remedies that it may have) be
entitled to temporary and/or permanent injunctive relief to enforce such
provisions and recover related attorneys’ fees and costs.  Each Holder has
further acknowledged in its respective Joinder that its Release of Claims
constitutes a material inducement to Parent to consummate the Transactions
(including the Merger) and Parent shall be relying on the enforceability of such
Release of Claims in consummating such Transactions.

Section 5.14        No Challenge to IP Rights.  None of Parent, Merger Sub or
the Surviving Corporation (a) shall have the right to challenge, and shall not
challenge, the validity or scope of the patents that are subject to the License
Agreements or the validity or effectiveness of the License Agreements; or (b)
shall amend or modify, or otherwise permit the amendment or modification, in
whole or in part, any of the License Agreements without the prior written
consent of the Holders’ Representatives. Notwithstanding anything to the
contrary herein, this Section 5.14 shall survive the Closing until all of the
License Agreements expire upon their terms.

ARTICLE VI:  CONDITIONS TO CLOSING

Section 6.1        Conditions to Obligations of Parent and Merger Sub.  The
obligations of Parent and Merger Sub to effect the Transactions (including the
Merger) are subject to the satisfaction (or waiver, if permissible under
applicable Law by Parent, in its sole discretion) at or prior to the Closing of
the following conditions:

6.1.1        Representations and Warranties. (a) Each of the representations and
warranties contained in Section 3.1 (Organizational Matters), Section 3.2
(Capitalization), Section 3.3 (Authority; Noncontravention; Voting
Requirements), Section 3.6 (Absence of Certain Changes or Events) and in
Section 4 of the Joinders shall have been true and correct when made and shall
be true and correct as of the Closing Date with the same force and effect as if
made on the Closing Date and (b) disregarding all materiality, Material Adverse
Effect, substantial compliance or similar materiality qualifications, each of
the other representations and warranties set forth in ARTICLE III
(Representations and Warranties of the Company) and each of the other
representations and warranties of the Holders set forth in the Joinders shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date with the same force
and effect as if made at and as of the Closing Date; provided, however, that any
such representation or warranty expressly made as of a specified date shall only
need to have been true on and as of such date.  The Parties understand and agree
that for the purposes of this Section 6.1.1 the representations and warranties
shall not be deemed to have been modified by and the requirement that their
accuracy meet the standards set in this Section 6.1.1 shall not be excused by,
any disclosure made pursuant to Section 5.7 (Notification of Certain Matters) or
and any discovery of information by Parent.

6.1.2        Performance of Obligations of Company.  The Company shall have
performed in all respects all covenants, agreements and obligations required to
be performed by it under this Agreement at or prior to the Closing.

6.1.3        Third Party Consents.  The Company shall have delivered to Parent
all necessary consents, waivers and approvals of the Governmental Authorities
and the parties to any Material Contract set forth in Schedule 6.1.3 in form and
substance reasonably satisfactory to Parent.

6.1.4        Written Consents.  The Written Consents shall have been obtained in
accordance with applicable Law and the Company Charter Documents and delivered
to Parent in accordance with Section 5.2.1.

6.1.5        No Litigation.  No Action shall have been instituted, commenced or
threatened and no Action shall remain pending that seeks to or could reasonably
be expected to (a) restrain, prevent, enjoin, prohibit or make illegal the
Transactions (including the Merger), (b) cause any of the Transactions
(including the Merger) to be rescinded following the Closing Date or (c) impose
limitations on the ability of the Surviving Corporation to effectively conduct
its business following the Closing Date or (d) compel Parent or the Company to
dispose of any portion of the Company’s business or assets.

42

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

6.1.6        Support Agreements. The Support Agreements described in Section 5.9
shall have been executed and delivered to Parent at or prior to the execution of
this Agreement and no such Support Agreement shall have been amended,
terminated, cancelled or repudiated.

6.1.7        Restricted Person Non-competition and Non-solicitation
Agreements.  The Restricted Person Non-competition and Non-solicitation
Agreements described in Section 5.11 shall have been executed and delivered to
Parent at or prior to the execution of this Agreement and no such Restricted
Person Non-competition and Non-solicitation Agreement shall have been amended,
terminated, cancelled or repudiated.

6.1.8        Resignation of Employees, Officers and Directors.  Parent shall
have received resignations, in form and substance reasonably satisfactory to
Parent, effective as of the Effective Date from each Employee, officer and
director of the Company.

6.1.9        Cancellation of Certain Agreements.  Each of the Contracts listed
on Schedule 6.1.9 shall have been terminated effective the Closing Date pursuant
to documents in form and substance reasonably satisfactory to Parent.

6.1.10        Delivery of Closing Certificates.  Parent shall have received:

(a)        Company Secretary’s Certificate.  A certificate in form and substance
reasonably acceptable to Parent, dated as of the Closing Date, signed by the
Secretary of the Company, certifying (i) the continued effectiveness of the
Company Charter Documents, (ii) the names and incumbency of each of the officers
of the Company executing this Agreement and each of the other Transaction
Agreements, (iii) the valid adoption of resolutions of the Board of Directors of
the Company approving this Agreement and the consummation of the Transactions
(including the Merger) and (iv) that the Holders have adopted and approved this
Agreement, the Merger and the matters set forth in the Written Consent;

(b)        Closing Certificate.  A certificate in form and substance reasonably
acceptable to Parent dated as of the Closing Date, signed by the President of
the Company certifying that the conditions precedent set forth in Section 6.1.1
and Section 6.1.2 have been met; and

(c)        Good Standing Certificates.  Certificates of good standing with
respect to the Company issued by the Company’s jurisdiction of organization and
each of the jurisdictions in which the Company does business, each dated not
more than five days prior to the Closing Date;

6.1.11        Payment of all Taxes.  Parent shall have received evidence, in
form and substance reasonably satisfactory to Parent, that all Pre-Closing Taxes
have been fully paid.

6.1.12        Release of Liens.  Parent shall have received payoff letters, in
form and substance reasonably satisfactory to Parent, from each lender to the
Company evidencing the aggregate amount of Company Debt outstanding as of the
Closing Date and an agreement that, if such aggregate amount is paid to such
lender on the Closing Date, such indebtedness shall be repaid in full and that
all Liens of the Company shall be released forthwith.

6.1.13        Cancellation of Company Options.  Parent shall have received
evidence, in form and substance reasonably satisfactory to Parent, of the valid
exercise or cancellation of all Company Options.

6.1.14        No Material Adverse Effect.  Since the date of this Agreement, no
Company Material Adverse Effect shall have occurred.

6.1.15        Appraisal Rights.  Holders of no more than 5% of the shares of
Company Capital Stock (determined immediately prior to the Effective Time on an
as converted to Company Common Stock basis) shall have exercised or remain
entitled to exercise appraisal rights under Section 262 of the DGCL.

43

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

6.1.16        280G Stockholder Approval or Disapproval. With respect to any
payments and/or benefits that may constitute “parachute payments” under
Section 280G of the Code with respect to any Employees, the Company shall have
submitted such parachute payments to the Stockholders for approval and the
Stockholders shall have (a) approved, pursuant to the method provided for in the
regulations promulgated under Section 280G of the Code, any such “parachute
payments” or (b) shall have voted upon and disapproved such “parachute
payments,” and, as a consequence, such “parachute payments” shall not be paid or
provided for in accordance with applicable Law.

6.1.17        Joinders.  The Company shall have delivered to Parent Joinders or
Option Termination Agreements executed by Holders of at least 90% of the Fully
Diluted Shares of Company Capital Stock.

6.1.18        No Injunctions or Restraints. No Order shall be in effect
(a) enjoining, restraining, preventing or prohibiting consummation of the
Transactions (including the Merger), (b) causing any of the Transactions
(including the Merger) to be rescinded following the Closing Date, (c) imposing
limitations on the ability of the Surviving Corporation to effectively conduct
its business following the Closing Date or (d) compelling Parent or the Company
to dispose of any portion of the Company’s business or assets.

6.1.19         Completion of Due Diligence.  Parent shall have completed its due
diligence of the Company to Parent’s full satisfaction and shall be fully
satisfied with the results thereof, including, without limitation, with respect
to the Company Intellectual Property Rights, Company Technology and the License
Agreements.

Section 6.2        Conditions to Obligation of the Company. The obligation of
the Company to effect the Transactions (including the Merger) is subject to the
satisfaction (or waiver, if permissible under applicable Law) prior to the
Closing of the following conditions:

6.2.1        Representations and Warranties.  (a) Each of the representations
and warranties contained in Section 4.1 (Organization, Standing and Corporate
Power) and Section 4.2 (Authority; Noncontravention) shall have been true and
correct when made and shall be true and correct as of the Closing Date with the
same force and effect as if made on the Closing Date and (b) disregarding all
materiality, Material Adverse Effect, substantial compliance or similar
materiality qualifications, each of the other representations and warranties set
forth in ARTICLE IV (Representations and Warranties of Parent and Merger
Sub) shall have been true and correct when made and as of the Closing Date with
the same force and effect as if made at and as of the Closing Date; provided,
however, that any such representation or warranty expressly made as of a
specified date shall only need to have been true on and as of such date.

6.2.2        Performance of Obligations of Parent and Merger Sub.  Parent and
Merger Sub shall have performed in all respects all covenants, agreements and
obligations required to be performed by them under this Agreement prior to the
Closing.

(a)        Delivery of Closing Certificates.  The Company shall have received a
certificate in form and substance reasonably acceptable to the Company, dated as
of the Closing Date, signed by the Secretary of Parent, certifying (A) the
continued effectiveness of Parent’s Charter Documents, (B) the names and
incumbency of each of the officers of Parent executing this Agreement and each
of the other Transaction Agreements and (C) the valid adoption of resolutions of
the Board of Directors of Parent approving this Agreement and the consummation
of the Transactions (including the Merger).

(b)        Closing Certificate.  A certificate in form and substance reasonably
acceptable to the Company dated as of the Closing Date, signed by the President
of Parent certifying that the conditions precedent set forth in Section 6.2.1
and 6.2.2 have been met; and

(c)        Good Standing Certificate.  A certificate of good standing with
respect to Parent issued by Parent’s jurisdiction of organization dated not more
than five days prior to the Closing Date.

44

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 6.3        Frustration of Closing Conditions.  None of the Company,
Parent or Merger Sub may rely on the failure of any condition set forth in
Section 6.1 or Section 6.2.1 to be satisfied if such failed condition is the
result of a breach of its obligations under this Agreement.

ARTICLE VII:  TERMINATION

Section 7.1        Termination.  This Agreement may be terminated and the
Transactions (including the Merger) abandoned at any time prior to the Closing:

7.1.1        By the mutual written consent of the Company and Parent;

7.1.2        By Parent, if any final and non-appealable Order has the effect of
enjoining, restraining, preventing, prohibiting or making illegal the
consummation of the Merger;

7.1.3        By Parent, if any of the representations or warranties of the
Company set forth in ARTICLE III shall not be true and correct or if the Company
has failed to perform any covenant or agreement on the part of the Company set
forth in this Agreement (including an obligation to consummate the Closing) and,
in the case of the representations and warranties, measured on the date of this
Agreement or as of any subsequent date (as if made on such date) up to the
Closing Date, such that the condition to Closing set forth in Section 6.2.1 or
Section 6.2.2 would not be satisfied and the breach or breaches causing such
representations or warranties not to be true and correct, or the failures to
perform any covenant or agreement, as applicable, are not cured on or prior to
the earlier of (i) 20 days after written notice thereof is delivered to the
Company and (ii) the Outside Date; provided that the failure of any of the
Company’s representations or warranties to be true and correct as of the date of
this Agreement shall not be subject to cure;

7.1.4        By the Company, if any of the representations or warranties of
Parent set forth in ARTICLE IV shall not be true and correct or if Parent has
failed to perform any covenant or agreement on the part of Parent set forth in
this Agreement (including an obligation to consummate the Closing) such that the
conditions to Closing set forth in either Section 6.1 and Section 6.2 would not
be satisfied and the breach or breaches causing such representations or
warranties not to be true and correct, or the failures to perform any covenant
or agreement, as applicable, are not cured on or prior to the earlier of (i) 20
days after written notice thereof is delivered to Parent and (ii) the Outside
Date; provided that this provision shall not be available to the Company if the
Company is then in breach of this Agreement; and provided further that the
failure of any of the representations or warranties of Parent to be true and
correct as of the date of this Agreement shall not be subject to cure.

7.1.5        By either the Company or Parent, upon written notice to the other
Party, if the Merger shall not have been consummated on or before May 15, 2018,
which date may be extended from time to time by mutual written consent of Parent
and the Company (such date, as it may be so extended from time to time, the
“Outside Date”); provided, however, that the right to terminate this Agreement
under this Section 7.1.5 shall not be available to a Party whose failure to
perform any of its obligations under this Agreement has been a principal cause
of or directly resulted in the failure of the Merger to occur on or before the
Outside Date;

7.1.6        By Parent, if the Written Consents shall not have been obtained and
delivered to Parent within 24 hours of the execution and delivery of this
Agreement; or

7.1.7        By Parent, upon written notice to the Company, if since the date of
this Agreement the Company has experienced a Material Adverse Effect.

45

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 7.2        Effect of Termination.  In the event this Agreement is
terminated pursuant to Section 7.1, this Agreement shall become null and void
(other than the provisions of this ARTICLE VII, Section 5.4 (Public
Announcement), Section 5.6 (Confidentiality), Section 9.13 (Governing Law),
Section 9.14 (Exclusive Jurisdiction; Venue; Service of Process) and
Section 9.15 (Jury Trial) and any provision hereof that forms the basis for a
claim of breach of this Agreement prior to the termination of this Agreement,
all of which shall survive termination of this Agreement and remain in full
force and effect), without further liability on the part of the Parties or any
of their respective directors, officers or Affiliates, except that nothing shall
relieve any Party from liability related to claims sounding in contract, tort or
otherwise related to a material breach of this Agreement prior to the
termination of this Agreement.  Notwithstanding the above, in the event this
Agreement is terminated by the Company pursuant to Section 7.1.4, Parent shall
pay Company a termination fee in an amount equal to $[***].

ARTICLE VIII:  SURVIVAL AND INDEMNIFICATION

Section 8.1        Survival.  All representations and warranties of the Parties
contained in this Agreement or any other Transaction Agreement or in any
certificate or Schedule delivered hereunder or thereunder shall survive the
Closing until the eighteen-month anniversary of the Closing Date or such later
time as such period may be extended by tolling periods and other extensions (the
“Initial Survival Date”); provided, however, that (a) the representations and
warranties contained in Section 3.9 (Taxes) and Section 3.13 (License
Agreements) shall survive until 30 days following expiration of the applicable
statute of limitations; (b) the representations and warranties contained in
Section 3.1 (Organizational Matters), Section 3.2 (Authority; Noncontravention;
Voting Requirements), Section 3.3 (Capitalization), and Section 3.19 (Brokers
and Other Advisors) (the “Company Special Representations”), and the
representations and warranties at Section 4.1 (Organization, Standing and
Corporate Power), Section 4.2 (Authority; Noncontravention) and Section 4.6
(Brokers and Other Advisors) (the “Parent Special Representations” and
collectively with the Company Special Representations, the “Special
Representations”)  shall survive for a period of 7 years after the Closing Date
or such later time as may be extended by tolling periods and other extensions
and (c) all of the covenants, agreements and obligations of the Parties
contained in this Agreement or any other document, certificate, Schedule or
instrument delivered or executed in connection herewith shall survive until
performed in accordance with their terms (the Initial Survival Date or the last
day of any of the periods specified in clauses (a), (b) and (c), the “Survival
Date”).  Notwithstanding the foregoing, if a claim or notice with respect to
recovery under the indemnification provisions hereof is given in accordance with
the terms hereof prior to the applicable Survival Date, the claim and any
representations and warranties or covenants underlying such claim, shall
continue until such claim is finally resolved pursuant to the terms of this
ARTICLE VIII.  Notwithstanding anything in this Agreement to the contrary,
claims for fraud, willful misconduct or intentional misrepresentation shall
survive indefinitely.

Section 8.2        Indemnification.

8.2.1        Indemnification by Holders. Subject to the terms, conditions and
limitations of this ARTICLE VIII,

(a)        each Holder (severally and not jointly in accordance with such
Holder’s Indemnification Sharing Percentage of any indemnifiable Loss), shall
indemnify, defend and hold harmless the Parent Indemnified Persons from and
against any and all Losses suffered, sustained or incurred by any such Parent
Indemnified Person, whether or not involving a Third Party Claim, caused by, in
connection with, as a result of or arising out of:

(i)        any breach of, or misrepresentation or inaccuracy (or any Third Party
Claim alleging facts that, if true, would be a breach of, misrepresentation or
inaccuracy) in any of the representations or warranties (other than the Company
Special Representations) made by the Company in this Agreement or in any other
Transaction Agreement to which it is a party, including in any certificate
delivered by or on behalf of the Company pursuant hereto;

46

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

(ii)        any breach of, or misrepresentation or inaccuracy (or any Third
Party Claim alleging facts that, if true, would be a breach of,
misrepresentation or inaccuracy) in any of the Special Representations of the
Company, without giving effect to any qualifications as to materiality, Material
Adverse Effect, substantial compliance or similar qualifications contained in
such representations and warranties;

(iii)        any breach of or failure to perform any covenant or agreement of
the Company provided for in this Agreement or any other Transaction Agreement,
without giving effect to any qualifications as to materiality, Material Adverse
Effect, substantial compliance or similar qualifications contained in such
representations and warranties;

(iv)        (A) any Tax imposed on the Company for a Pre-Closing Tax Period
(except to the extent that such Taxes were taken into account for purposes of
calculating Closing Merger Consideration or were otherwise paid by Holders
pursuant to this Agreement), (B) any Tax of any member of an affiliated,
combined, consolidated, or unitary group of which the Company (or any
predecessor) is or was a member on or prior to the Closing Date, including
pursuant to Treasury Regulation Section 1.1502-6 (or any similar state, local,
or foreign law), (C) any Tax for a Pre-Closing Tax Period of any Person for
which the Company is liable as a transferee or successor, by contract, pursuant
to any Law or otherwise, (D) the liability of the Holders for Transfer Taxes
pursuant to Section 5.8, (E) any and all Taxes resulting from a breach of a
covenant of the Holders or the Holders’ Representatives contained in
Section 5.8; and (F) any and all Taxes imposed on the Holders resulting from or
attributable to the Merger other than with respect to Transfer Taxes allocated
to Parent pursuant to Section 5.8,;

(v)        Any Company Transaction Expenses not paid at or prior to the Closing;

(vi)        any inaccuracy in the Securities Payment Schedule;

(vii)        any appraisal rights exercised by any Stockholder to the extent not
covered by amounts returned to the Parent with respect to Dissenting Shares
pursuant to Section 2.10;

(viii)        any fraud or intentional misconduct committed by any Holder or the
Company, including any director, officer or Employee of the Company, in
connection with the negotiation and execution of this Agreement or the other
Transaction Agreements and the consummation of the Transactions (including the
Merger); and

(ix)        any Third Party Claim arising from or relating to that certain
Advertisement Agreement, dated April 4, 2010, by and between the Company and
NewCompounds.

(b)        each Joinder Holder severally and not jointly shall indemnify, defend
and hold harmless the Parent Indemnified Persons from and against any and all
Losses suffered, sustained or incurred by any such Parent Indemnified Person,
whether or not involving a Third Party Claim, caused by, in connection with, as
a result of or arising out of:

(i)        any breach of, or misrepresentation or inaccuracy (or any Third Party
Claim alleging facts that, if true, would be a breach of, misrepresentation or
inaccuracy) in any of the representations or warranties (other than the Special
Representations) made by such Joinder Holder in his, her or its Joinder
Agreement or in any other Transaction Agreement to which he, she or it is a
party, without giving effect to any qualifications as to materiality, Material
Adverse Effect, substantial compliance or similar qualifications contained in
such representations and warranties;

(ii)        any breach of, or misrepresentation or inaccuracy (or any Third
Party Claim alleging facts that, if true, would be a breach of,
misrepresentation or inaccuracy) in any of the Special Representations made by
such Joinder Holder in this Agreement, without giving effect to any
qualifications as to materiality, Material Adverse Effect, substantial
compliance or similar qualifications contained in such representations and
warranties; and

47

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

(iii)        any breach of or failure by such Joinder Holder to perform any
covenant or agreement of such Joinder Holder provided for in its Joinder
Agreement.

8.2.2        Indemnification by the Parent.  Subject to the terms, conditions
and limitations of this ARTICLE VIII, the Parent shall indemnify, defend and
hold harmless the Holder Indemnified Persons from and against any and all Losses
suffered, sustained or incurred by such Holder Indemnified Person, whether or
not involving a Third Party Claim, claims between the Parties, or otherwise
relating to, as a result of, arising out of, or by virtue of:

(a)        any breach of, or misrepresentation or inaccuracy (or any Third Party
Claim alleging facts that, if true, would be a breach of, misrepresentation or
inaccuracy) in any of the representations or warranties (other than Parent
Special Representations) made by the Parent or Merger Sub in this Agreement,
including in any certificate delivered by or on behalf of the Parent or Merger
Sub pursuant hereto, without giving effect to any qualifications as to
materiality, Material Adverse Effect or similar qualifications contained in such
representations and warranties;

(b)        any breach of, or misrepresentation or inaccuracy (or any Third Party
Claim alleging facts that, if true, would be a breach of, misrepresentation or
inaccuracy) in any of the Parent Special Representations, without giving effect
to any qualifications as to materiality, Material Adverse Effect or similar
qualifications contained in such representations and warranties; and

(c)        any breach of or failure to perform any covenants or agreements of
the Parent or Merger Sub provided for in this Agreement or any other Transaction
Agreement to which it is a party; provided, however, that notwithstanding
anything in this Agreement to the contrary, neither the Parent nor the Surviving
Corporation shall be liable to any Holder for any payment inaccuracy if such
payment is made in accordance with the Securities Payment Schedule.

8.2.3        General Limitations on Claims.  Notwithstanding the foregoing:

(a)        The Parent Indemnified Persons will not be entitled to recover Losses
pursuant to Section 8.2.1(a)(i) or 8.2.1(b)(i) until the total amount of Losses
which the Parent Indemnified Persons would have been entitled to recover under
Section 8.2.1(a)(i) and 8.2.1(b)(i) exceeds the Threshold and then only the
Losses in excess of the Threshold will be subject to indemnification hereunder;
provided, however, that the indemnification obligations of the Holders with
respect to Losses arising from or relating to any fraudulent or willful
misconduct shall not be subject to the Threshold;

(b)        the aggregate amount that may be recovered by the Parent Indemnified
Persons or the Holder Indemnified Persons for Losses under Section 8.2.1(a)(i),
8.2.1(b)(i) or 8.2.2(a), respectively, shall not exceed the “Cap Amount”;
provided, however, that the indemnification obligations of the Holders and the
Parent with respect to Losses arising from or relating to any fraudulent or
willful misconduct shall not be subject to the Cap Amount;

(c)        for purposes of determining the amount of any Losses resulting from
or in connection with the breach of any representation or warranty made by the
Company, any Joinder Holder, Parent or Merger Sub, such representations shall be
read as though none of them were subject to materiality, Material Adverse
Effect, substantial compliance or similar materiality qualifications; and

(d)        notwithstanding anything in this Agreement to the contrary, all
indemnification obligations under this ARTICLE VIII shall exclude punitive
damages (except to the extent that Losses payable to a third party as a result
of a claim by such third party include punitive damages).

8.2.4        Holder Limitation. Except with respect to Losses by reason of any
claims brought on the basis of fraudulent or willful misconduct, in no event
shall the Parent Indemnified Persons have the right under this Agreement to
recover from any Holder any amounts in excess of the Closing Merger
Consideration, the Base Merger Delayed Consideration and any Contingent
Consideration paid or payable to such Holder hereunder.

48

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

Section 8.3        Claims for Indemnification; Resolution of Conflicts.

8.3.1        Direct Claims for Indemnification. Subject to the limitations set
forth above, any Parent Indemnified Person or Holder Indemnified Person (as
represented by Holders’ Representatives) (each, an “Indemnified Person”) may
seek recovery of Losses pursuant to this Section 8.3.1 not involving a third
party by delivering to Holders’ Representatives (on behalf of the Holder
Indemnifying Parties) or the Parent (each, an “Indemnifying Party”) as
applicable, a notice (a) stating that an Indemnified Person has paid, sustained,
suffered or incurred a Loss, and (b) specifying in reasonable detail the nature
of the Loss, including an estimate (if reasonably apparent) of the amount of the
Loss (a “Indemnification Claim Notice”); provided, however, that (1) the
Indemnification Claim Notice need only specify such information to the knowledge
of such Indemnified Person as of the date of such Indemnification Claim Notice,
(2) shall not limit any of the rights or remedies of any Indemnified Person
except to the extent that a material omission or misstatement was knowingly made
in bad faith by such Indemnified Person and the Indemnifying Party shall have
been materially prejudiced thereby and (3) may be updated and amended from time
to time by the Indemnified Person by delivering an updated or amended
Indemnification Claim Notice as provided for in the preceding sentence. All
claims for indemnification under this Section 8.3 (i) by any Holder Indemnified
Person may only be made on behalf of such Holder Indemnified Person by Holders’
Representatives and (ii) against any Holder Indemnifying Party shall be
addressed to Holders’ Representatives.  The Indemnifying Party may object to a
claim for indemnification set forth in an Indemnification Claim Notice by
delivering a notice to the Indemnified Person seeking indemnification within 30
days of the delivery of the applicable Indemnification Claim Notice (the
“Indemnification Claim Objection Deadline”), setting forth in reasonable detail
the objections to the claim.  If the Indemnifying Party either notifies the
applicable Indemnified Person that it does not object or does not object in
writing by the Indemnification Claim Objection Deadline, such failure to so
object shall be an irrevocable acknowledgment that the Indemnified Person is
entitled to the full amount of the claims set forth in such Indemnification
Claim Notice, and the Indemnifying Party shall take all necessary actions under
this Agreement to effect payment in respect thereof.

8.3.2        Resolution of Conflicts.

(a)        If an Indemnifying Party timely delivers an Objection Notice in
accordance with Section 8.3.1, the Indemnifying Party and the Indemnified
Person(s) shall attempt in good faith for 30 days to resolve such dispute.  If
the Indemnifying Party and the Indemnified Person(s) reach an agreement with
respect to such dispute, a memorandum setting forth such agreement shall be
prepared and signed by the parties (a “Settlement Memorandum”).  

(b)        If the Indemnifying Party and the Indemnified Person(s) are unable to
resolve such dispute during such 30-day period, any party to such dispute may
institute dispute resolution proceedings in accordance with Section 9.14 and
Section 9.15 with respect to the matter.  Any final and non-appealable written
decision, judgment or award rendered by a court of competent jurisdiction as to
the validity and amount of any claim in such Indemnification Claim Notice shall
be final, binding, and conclusive upon the parties to such dispute and any other
Indemnifying Parties and Indemnified Persons.  

8.3.3        Third-Party Claims.

(a)        In the event that any Action is instituted, or that any claim is
asserted, by any Person not party to this Agreement in respect of an
indemnifiable matter hereunder (a “Third Party Claim”), the Indemnified Person
seeking indemnification for any related Loss shall notify the Indemnifying Party
of any such Action or claim promptly after receiving notice thereof (each, a
“Third Party Indemnification Claim Notice”); provided, however, that no delay on
the part of the Indemnified Person in giving any such notice shall relieve an
Indemnifying Party of any indemnification obligations unless, and only to the
extent that, such Indemnifying Party is actually and materially prejudiced by
such delay and then only to the extent of such prejudice.  Subject to the
provisions of this Section 8.3.3, and assuming the Indemnified Person does not
have the right to elect or does not choose to elect in its Third Party
Indemnification Claim Notice to assume the defense of the Third Party Claim in
accordance with clause (d) of this Section 8.3.3, the Indemnifying Party shall
be entitled at its own expense to

49

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

conduct and control the defense and settlement of such Third Party Claim on
behalf of the Indemnified Person through counsel chosen by the Indemnifying
Party and reasonably acceptable to the Indemnified Person if the Indemnifying
Party notifies the Indemnified Person in writing within 30 days (or sooner, if
the nature of the Third Party Claim so requires) of its intent to do so and
confirms that the Indemnifying Party shall be obligated to indemnify the
Indemnified Person against all resulting Losses in accordance with this
Agreement.  If the Indemnifying Party does not elect within 30 days (or sooner,
if the nature of the Third Party Claim so requires) to defend against,
negotiate, settle or otherwise deal with any Third Party Claim, the Indemnified
Person may defend against, negotiate, settle or otherwise deal with such Third
Party Claim with counsel of its choice at the expense of the Indemnifying Party.

(b)        If the Indemnifying Party elects to defend against, negotiate, settle
or otherwise deal with any Third Party Claim:

(i)        the Indemnifying Party shall use its commercially reasonable efforts
to defend such Third Party Claim;

(ii)        the Indemnified Person, prior to the period in which the
Indemnifying Party assumes the defense of such matter, may take such reasonable
actions to preserve any and all rights with respect to such matter, without such
actions being construed as a waiver of the Indemnified Person’s rights to
defense and indemnification pursuant to this Agreement and without such actions
being determinative of the amount of any indemnifiable Losses, except to the
extent the Indemnifying Party’s ability to defend such action is actually and
materially prejudiced by such actions; and

(iii)        the Indemnified Person may participate in the defense of such Third
Party Claim with separate counsel at its own expense or, if so requested by the
Indemnifying Party or, if in the reasonable opinion of counsel to the
Indemnified Person, a conflict or potential conflict exists between the
Indemnified Person and the Indemnifying Party that would make such separate
representation advisable, at the reasonable expense of the Indemnifying Party.

(c)        In connection with this Section 8.3.3, the Parties agree to:

(i)        cooperate with each other in connection with the defense, negotiation
or settlement of any such Third Party Claim;

(ii)        make available witnesses in a timely manner to provide testimony
through declarations, affidavits, depositions, or at hearing or trial and to
work with each other in preparation for such events consistent with deadlines
dictated by the particular Third Party Claim;

(iii)        preserve all documents and things required by litigation hold
orders pending with respect to particular Third Party Claims; and

(iv)        provide such documents and things to each other, consistent with
deadlines dictated by a particular matter, as required by legal procedure or
court order, or if reasonably requested by another Party hereto;

provided that such cooperation referenced in clauses (i) through (iv) shall not
be required if it could reasonably be expected to result in a waiver of any
attorney-client, work product or other privilege, and provided further that the
Parties shall use commercially reasonable efforts to avoid production of
confidential information (consistent with Law), and to cause all communications
among Employees, counsel and others representing any party to a Third Party
Claim to be made so as to preserve any applicable attorney-client or
work-product privileges.

50

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

(d)        Except as permitted in this Section 8.3.3, the Indemnifying Party
shall not, without the written consent of the Indemnified Person(s) (such
consent not to be unreasonably conditioned, withheld or delayed), settle or
compromise any Third Party Claim or permit a default or consent to entry of any
judgment (each a “Settlement”); provided, however, that an Indemnified Person’s
written consent shall not be required if (i) the claimant provides such
Indemnified Person an unqualified release from all liability in respect of the
Third Party Claim, (ii) such Settlement does not impose any additional
liabilities or obligations on the Indemnified Person and (iii) with respect to
any non-monetary provision of such Settlement, such provisions could not have,
or be reasonably expected to have, any adverse effect on the business, assets,
financial condition or results of operations of the Indemnified Person and its
Subsidiaries, if any.  Any Settlement or compromise that does not comply with
the preceding sentence shall not be determinative of the amount of Losses with
respect to any related claims for indemnification pursuant to this
ARTICLE VIII.  The costs incurred by Holders’ Representatives pursuant to
participating in the defense of any Third Party Claims shall constitute Holders’
Representatives Expenses.

(e)        Notwithstanding anything in this Agreement to the contrary, if (i) a
Third Party Claim seeks relief other than the payment of monetary damages,
(ii) the subject matter of a Third Party Claim relates to the ongoing business
of the Indemnified Person, which Third Party Claim, if decided against the
Indemnified Person, could adversely affect the ongoing business of the
Indemnified Person, (iii) the claim for indemnification relates to or arises in
connection with any criminal proceeding, action or indictment, or (iv) the
Indemnified Person reasonably concludes that the amount of the Third Party Claim
and associated defense costs shall exceed the limits on the Indemnifying Party’s
obligations under Section 8.2.3(a) or the Indemnifying Party’s financial
resources available to defend against the Third Party Claim, then, in each such
case, the Indemnified Person alone shall be entitled to contest, defend and
settle such Third Party Claim.  If the Indemnified Person elects to exercise
such right to contest, defend and settle such Third Party Claim, then the
Indemnified Person shall notify the Indemnifying Party of such election within
30 days of the later of (x) receiving the applicable Third Party Indemnification
Claim Notice or (y) the occurrence of the event giving rise to the Indemnified
Person’s right to make such election pursuant to clause (i), (ii) or (iii) of
this Section 8.3.3(e).  In such event, the Indemnified Person shall instead have
the right to be represented by counsel of its choice (of which it shall notify
the Indemnifying Party) at the Indemnifying Party’s reasonable expense and to
defend against, negotiate, settle or otherwise deal with any Third Party
Claim.  If the Indemnified Person elects to defend against, negotiate, settle or
otherwise deal with any Third Party Claim, then (1) the Indemnified Person shall
use its commercially reasonable efforts to defend such Third Party Claim,
conduct such defense in a good faith and reasonably diligent manner, keep the
Indemnifying Party reasonably informed of the status of such defense, and use
commercially reasonable efforts to cooperate with the Indemnifying Party with
respect to such defense during the course of such defense, and (2) the
Indemnifying Party may participate, at its own expense, in the defense of such
Third Party Claim.  If the Indemnified Person does not elect to contest, defend
and settle such Third Party Claim, then the Indemnifying Party shall then have
the right to contest and defend such Third Party Claim as described above in
Section 8.3.3(a).  Notwithstanding the foregoing, any Third Party Claims in
respect of Taxes shall be governed by Section 5.8.3 rather than this
Section 8.3.3.

8.3.4        Surviving Corporation.  The Parties acknowledge and agree that if
the Surviving Corporation suffers, incurs or otherwise becomes subject to any
Losses as a result of or in connection with any misrepresentation or inaccuracy
in or breach of any representation, warranty, covenant or agreement, then
(without limiting any of the rights of the Surviving Corporation as an
Indemnified Person) the Parent shall also be deemed, by virtue of its ownership
of the stock of the Surviving Corporation, to have incurred Losses as a result
of and in connection with such misrepresentation, inaccuracy or breach.

8.3.5        Cumulative Remedies.  The rights of the Parent Indemnified Persons
and the Holder Indemnified Persons under this ARTICLE VIII are cumulative, and
each Parent Indemnified Person and Holder Indemnified Person shall have the
right in its sole discretion to enforce any provision of this ARTICLE VIII
without regard to the availability of any other remedy under any other provision
of this Agreement.

51

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

8.3.6        Indemnification Adjusts Merger Consideration for Tax
Purposes.  Each Party shall, including retroactively, treat indemnification
payments under this Agreement as adjustments to the Closing Merger
Consideration, the Base Merger Delayed Consideration and the Contingent
Consideration for Tax purposes to the extent permitted under applicable Law.

8.3.7        No Subrogation.  No Holder shall make any claim for indemnification
against either the Parent Indemnified Persons or the Surviving Corporation based
on the fact that such Holder was a controlling person, director, Employee or
agent of the Company (whether such claim is for Losses of any kind or otherwise
and whether such claim is pursuant to Law, a Charter Document, a Contract or
otherwise) with respect to any claim brought by a Parent Indemnified Person
against any Holder under or relating to this Agreement or any other Transaction
Agreement or the Transactions.  With respect to any claim brought by a Parent
Indemnified Person against any Holder under or relating to this Agreement, any
Transaction Agreement or the Transactions, each Holder expressly waives any
right of subrogation, contribution, advancement, indemnification or other claim
against the Company with respect to any indemnification obligation or any other
liability to which such Holder may become subject under or in connection with
this Agreement.

8.3.8        Set-Off is Exclusive Remedy.  From and after the Closing, the sole
remedy of any Parent Indemnified Person shall be the right to withhold and
deduct any sum that may be owed to any Parent Indemnified Person under this
ARTICLE VIII from any amount otherwise payable to any Holder under any
Transaction Agreement, including this Agreement and the agreements entered into
in connection with the Transaction; provided, however, that Parent shall be
entitled to seek equitable relief with respect to indemnification obligations of
the Holders for Losses arising from or relating to any fraudulent or willful
misconduct.  For avoidance of doubt, nothing in this Agreement shall limit the
liability of a licensor under any of the License Agreements.

Section 8.4        Holders’ Representatives.

8.4.1        Appointment.  By virtue of approving the Merger and the execution
of the Joinders, each of the Holders shall irrevocably nominate, constitute and
appoint Holders’ Representatives with full power of substitution, to act in the
name, place and stead of the Holders for purposes of executing any documents and
taking any actions that Holders’ Representatives may, in their sole discretion,
determine to be necessary, desirable or appropriate in connection with any claim
for indemnification, compensation or reimbursement under this ARTICLE VIII or
set-off in satisfaction of claims.  Fred Mermelstein and Stephen C. Rocamboli
hereby accept their appointment as Holders’ Representatives.

8.4.2        Authority.  The Holders grant to Holders’ Representatives full
authority to execute, deliver, acknowledge, certify and file on behalf of each
such Holder (in the name of any or all of the Holders or otherwise) any and all
documents that Holders’ Representatives may, in their sole discretion, determine
to be necessary, desirable or appropriate, in such forms and containing such
provisions as Holders’ Representatives may, in their sole discretion, determine
to be appropriate, in performing its duties as contemplated by this
Section 8.4.  Notwithstanding anything in any Transaction Agreement to the
contrary: (a) each Indemnified Person shall be entitled to deal exclusively with
each Holders’ Representative on all matters relating to any claim for
indemnification, compensation, reimbursement or set off pursuant to
ARTICLE VIII; and (b) the Parent, each Parent Indemnified Person and each Holder
shall be entitled to rely conclusively (without further evidence of any kind
whatsoever) on any document executed or purported to be executed on behalf of
any Holder by either Holders’ Representative and on any other action taken or
purported to be taken on behalf of any Holder by either Holders’ Representative
as fully binding upon such Holder.  A decision, act, consent or instruction of
either Holders’ Representative, including an amendment, extension or waiver of
this Agreement pursuant to Section 8.4 or Section 8.5 shall constitute a
decision of the Holders and shall be final, binding and conclusive upon the
Holders.  Parent, Merger Sub, and the Surviving Corporation may rely upon any
such decision, act, consent or instruction of either Holders’ Representative as
being the decision, act, consent or instruction of the Holders.  Parent, Merger
Sub, and the Surviving Corporation are hereby relieved from any liability to any
Person for any acts done by them in accordance with such decision, act, consent
or instruction of either Holders’ Representative.

52

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

8.4.3        Power of Attorney.  The Holders recognize and intend that the power
of attorney granted to the Holders’ Representatives: (a) is coupled with an
interest and is irrevocable; (b) may be delegated by Holders’ Representatives;
and (c) shall survive the death, dissolution or incapacity, as applicable, of
each of the Holders.

8.4.4        Replacement.  If Holders’ Representatives are dissolved, resign or
are otherwise unable to fulfill their responsibilities hereunder, the Holders
shall (by consent of those Persons entitled to at least a majority of the
Contingent Consideration), within ten days after such dissolution, resignation
or inability, appoint a successor to such Holders’ Representatives reasonably
satisfactory to Parent.  Any such successor shall succeed Holders’
Representatives as Holders’ Representatives hereunder.  If for any reason there
is no Holders’ Representative at any time, all references herein to Holders’
Representatives shall be deemed to refer to the Holders who may take action by
the written consent of Persons entitled to at least a majority of the Contingent
Consideration.

8.4.5        Indemnification; Holders’ Representatives Expenses. The Holders’
Representatives shall not be liable to the Holders for any action taken or
omitted to be taken by it as Holders’ Representatives except in the case of
willful misconduct or gross negligence.  The Holders severally, but not jointly,
pro rata based on the number of shares held by each such Holder, shall
indemnify, defend and hold harmless the Holders’ Representatives and the
Holders’ Representatives Affiliates and the respective agents, representatives
and attorneys of each of the foregoing against any claim that such indemnitees
may suffer or incur in connection with their capacity as Holders’
Representatives, or any action taken or omitted by such indemnitees hereunder or
thereunder (except such resulting from such indemnitee’s willful misconduct or
gross negligence).  Pursuant to this Subsection 8.4.5, the Holders shall
reimburse the Holders’ Representatives for attorneys, accounting, and other
specialists fees reasonably incurred by the Holders’ Representatives in the
performance of their duties set forth in this Agreement.  In addition to seeking
reimbursement, the Holders’ Representatives may set-off any amounts owed by
Holders pursuant to this Subsection 8.4.5 against any amount otherwise payable
to such Holders under this Agreement.

8.4.6        Independent Analysis by Holders.  Each Holder acknowledges that he,
she or it has, independently and without reliance upon the Holders’
Representatives or any other Holder, and based on such documents and information
as he, she or it has deemed appropriate, made his, her or its own legal analysis
and decision to enter into this Agreement.  Each Holder also acknowledges that
he, she or it, independently and without reliance upon the Holders’
Representative or any other Holder, and based on such documents and information
as he, she or it deems appropriate at the time, will continue to make his, her
or its own decisions in taking or not taking any action under this Agreement
and/or any other Transaction Agreement.

8.4.7        No Implied Duties.  This Section 8.4 sets forth all of the duties
of the Holders’ Representatives with respect to any and all matters pertinent
hereto.  No implied duties or obligations will be read into this Agreement
against the Holders’ Representatives.  The obligations of the Holders’
Representatives hereunder are only those expressly set forth herein and therein.

ARTICLE IX:  GENERAL PROVISIONS

Section 9.1        Interpretation.  The following rules shall apply to the
interpretation and construction of the terms and provisions of this Agreement
and the other Transaction Agreements:

9.1.1        Provisions.

(a)        When a reference is made in this Agreement or another Transaction
Agreement to an “Article,” “Section,” “Exhibit” or “Schedule,” such reference
shall be to an Article or Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated.

(b)        The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  

53

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

(c)        Whenever the words “include,” “includes,” or “including” are used in
this Agreement or any other Transaction Agreement, such words shall be deemed to
be followed by the words “without limitation.”

(d)        The words “hereof,” “herein,” and “hereunder” and words of similar
import when used in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement unless otherwise expressly indicated
in the accompanying text.

(e)        The use of “or” is not intended to be exclusive unless otherwise
expressly indicated in the accompanying text.

(f)        The defined terms contained in this Agreement or any of the other
Transaction Agreements are applicable to the singular as well as the plural
forms of such terms.  Reference to the masculine gender shall be deemed to also
refer to the feminine gender and vice versa.

(g)        A reference to documents, instruments or agreements also refers to
all addenda, exhibits or schedules thereto.

(h)        Any reference to a provision or part of a Law shall include a
reference to that provision or part as it may be renumbered or amended from time
to time and any successor provision or part or any renumbering or amendment
thereof unless otherwise indicated herein.

9.1.2        No Presumption.  The Parties have participated jointly in the
negotiation and drafting of this Agreement and, in the event any ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the Parties and no presumption or burden of proof shall be
used to favor or disfavor any Party by virtue of the authorship of any provision
of this Agreement.

Section 9.2        Notices.  All notices, waivers, consents and other
communications to any Party hereunder shall be in writing and shall be deemed
given (a) when personally delivered, (b) when receipt is electronically
confirmed, if sent by facsimile or email of a PDF document, (c) one Business Day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with proof of receipt or (d) three Business Days after being sent
by registered or certified mail, return receipt requested and postage prepaid,
in each case to the Parties at the address, or if applicable, facsimile number
or email address following such Party’s name below or such other address,
facsimile number or email address as such Party may subsequently designate to
the other Parties by notice in accordance with this Section 9.2:

If to Parent or Merger Sub, to:

Daré Bioscience, Inc.

11119 North Torrey Pines Road, Suite 200

La Jolla, CA 92037

Attention: Sabrina Martucci Johnson

Email: sjohnson@darebioscience.com

 

with copies (which shall not constitute notice) to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

3580 Carmel Mountain Road, Suite 300

San Diego, CA 92130

Attention: Jeremy Glaser, Esq.

Email: JDGlaser@mintz.com

Facsimile: (858) 314-1501

54

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

If to the Company, to:

30 Colbert Road East

Newton, MA 02465

Attention: Fred Mermelstein and Stephen C. Rocamboli

Email:  fmerm@comcast.net; Steve@integrinpartners.com

 

with a copy (which shall not constitute notice) to:

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, NC 27607

Attention: W. David Mannheim, Esq. and Robert E. Futrell Jr., Esq.

Email:  wmannheim@wyrick.com; rfutrell@wyrick.com

Facsimile: (919) 781-4865

If to Holders’ Representatives, to:

Fred Mermelstein

30 Colbert Road East

Newton, MA 02465

Email:  fmerm@comcast.net

 

Stephen C. Rocamboli

300 Second Ave, Apt 4183

Needham, MA 02494

Email:  Steve@integrinpartners.com

 

with a copy (which shall not constitute notice) to:

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, NC 27607

Attention: W. David Mannheim, Esq. and Robert E. Futrell Jr., Esq.

Email:  wmannheim@wyrick.com; rfutrell@wyrick.com

Facsimile: (919) 781-4865

Section 9.3        Assignment and Succession.  Neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned or delegated by
any of the Parties without the written consent of the other Parties, except that
Parent or Merger Sub may, without the prior consent of any other Party,
(a) assign any or all of its rights, interests and obligations under this
Agreement to any Affiliate of Parent, (b) assign this Agreement and any of its
rights and obligations hereunder to the purchaser of all or substantially all of
its equity securities or assets by merger, contract or otherwise in one
transaction or a series of related transactions and (c) collaterally assign this
Agreement to any lender; provided that no such assignment shall relieve the
assigning party of any of its obligations hereunder.  Any assignment of this
Agreement or any of the rights, interests or obligations hereunder not permitted
under this Section 9.3 shall be null and void ab initio.  Subject to the
foregoing terms of this Section 9.3, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the Parties and their respective
successors and permitted assigns.

55

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 9.4        Amendment or Supplement.  Subject to the requirements of
applicable Law, this Agreement may be amended at any time by execution of an
instrument in writing identifying itself as an amendment signed, when amended
prior to the Closing, by Parent, Merger Sub and the Company and, when amended on
or after the Closing, by Parent, the Company and Holders’ Representatives.  For
purposes of this Section 9.4, the Joinder Holders have agreed pursuant to the
Joinders that any amendment of this Agreement consented to by Holders’
Representatives shall be binding on and enforceable against them, whether or not
they have signed this Agreement or such amendment, except those relating to the
Total Merger Consideration, which shall require the vote of the Holders of 67%
of the as-converted shares of the Company Capital Stock.  

Section 9.5        Waivers.  No waiver of any provision of this Agreement shall
be valid and binding unless it is in writing and signed by the Party against
whom the waiver is to be effective.  No failure on the part of any Party in
exercising any right, privilege or remedy hereunder and no delay on the part of
any Party in executing any right, privilege or remedy under this Agreement,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right hereunder.  No notice to or demand on a Party made hereunder
shall operate as a waiver of any right of the Party giving such notice or making
such demand to take further action without notice or demand as permitted
hereunder.

Section 9.6        Entire Agreement.  This Agreement, including the Schedules
and Exhibits hereto and the other documents referred to herein which form a part
hereof, the Confidentiality Agreement and the Joinders, contain the entire
understanding of the Parties with respect to the subject matter contained herein
and therein.  This Agreement supersedes all prior and contemporaneous,
agreements, arrangements, contracts, discussions, negotiations, undertakings and
understandings (whether written or oral) between the Parties with respect to
such subject matter (other than the Confidentiality Agreement and the
Joinders).  Upon the Closing, the Confidentiality Agreement shall automatically
terminate and none of the Parties shall have any further Liability or obligation
thereunder.

Section 9.7        No Third-Party Beneficiaries.  Nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person (other than
the Parties) any right, benefit or remedy of any nature whatsoever under this
Agreement, except that after the Effective Time, Parent Indemnified Persons and
Holder Indemnified Persons shall be third party beneficiaries for purposes of
enforcing the rights granted to such Parent Indemnified Persons and Holder
Indemnified Persons under Section 8.2.  For the avoidance of doubt, no consent
of any Indemnified Person shall be necessary to amend any provision of this
Agreement.

Section 9.8        Remedies Cumulative.  All rights and remedies of each of the
Parties shall be cumulative and the exercise of any one or more rights or
remedies shall not preclude the exercise of any other right or remedy available
hereunder or under applicable Law.

Section 9.9        Specific Performance.  The Parties agree that Parent and
Merger Sub would be irreparably harmed if any of the provisions of this
Agreement are not performed in accordance with their specific terms and that any
breach of this Agreement by the Company could not be compensated adequately by
monetary damages alone.  Accordingly, the Parties agree that, in addition to any
other remedy to which they may be entitled to at Law or in equity, Parent and
Merger Sub shall be entitled to seek temporary, preliminary and/or permanent
injunctive relief or injunctions to prevent breaches or threatened breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement (including the right of Parent to compel the other Parties to cause
the Merger to be consummated on the terms and subject to conditions set forth in
this Agreement) without having to prove irreparable harm or that monetary
damages would be inadequate.  The Company expressly waives any requirement under
any Law that Parent or Merger Sub obtain any bond or give any other undertaking
in connection with any action seeking injunctive relief or specific performance
of any of the provisions of this Agreement.  The Company further agrees that in
the event of any action for specific performance relating to this Agreement or
the Merger, it shall not assert and hereby waives the defense that a remedy at
Law would be adequate or that specific performance is not an appropriate remedy
for any reason in Law or equity.  

56

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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CONFIDENTIAL TREATMENT REQUESTED

 

Section 9.10        Severability.  If a court of competent jurisdiction finds
that any term or provision of the Agreement is invalid, illegal or unenforceable
under any Law or public policy, the remaining provisions of the Agreement shall
remain in full force and effect if the economic and legal substance of this
Agreement and the Merger shall not be affected in any manner materially adverse
to any Party.  Any such term or provision found to be illegal, invalid or
unenforceable only in part or in degree shall remain in full force and effect to
the extent not invalid, illegal or unenforceable.  Upon the determination that
any term or provision is invalid, illegal or unenforceable, the Parties intend
that such provision shall be construed by modifying or limiting it so as to be
valid and enforceable to the maximum extent possible under applicable Law and
compatible with the consummation of the Transactions as originally intended.

Section 9.11        Costs and Expenses.  Except as otherwise specified herein,
whether or not the Merger is consummated, each Party shall pay all costs and
expenses it has incurred in connection with this Agreement and the Merger.

Section 9.12        Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original copy of this Agreement
and all of which, when taken together, shall constitute one instrument.  The
exchange of copies of this Agreement and manually executed signature pages by
transmission by facsimile or by email of a PDF of a handwritten original
signature or signatures to the other Parties shall constitute effective
execution and delivery of this Agreement and may be used in lieu of the original
Agreement for all purposes.  The signature of a Party transmitted by facsimile
or other electronic means shall be deemed to be an original signature for any
purpose.

Section 9.13        Governing Law.  This Agreement and all claims or causes of
action (whether sounding in contract or tort) arising under or related to this
Agreement, shall be governed by and construed in accordance with, the Laws of
the State of Delaware, without regard to any rule or principle that might refer
the governance or construction of this Agreement to the Laws of another
jurisdiction.

Section 9.14        Exclusive Jurisdiction; Venue; Service of Process.  In any
action or proceeding between any of the Parties arising under or related to this
Agreement, the other Transaction Agreements or the Merger, each of the Parties
(a) knowingly, voluntarily, irrevocably and unconditionally consents and submits
to the exclusive jurisdiction and venue of the Court of Chancery of the State of
Delaware or to the extent that such court does not accept jurisdiction, the
Superior Court of the State of Delaware or the United States District Court for
the District of Delaware, (b) agrees that all claims in respect of any such
action or proceeding shall be heard and determined exclusively in accordance
with clause (a) of this Section 9.14, (c) waives any objection to the laying of
venue of any such action or proceeding in such courts, including any objection
that any such action or proceeding has been brought in an inconvenient forum or
that the court does not have jurisdiction over any Party and (d) agrees that
service of process upon such Party in any such action or proceeding shall be
effective if such process is given as a notice in accordance with
Section 9.2.  The Parties agree that any Party may commence a proceeding in a
court other than the above-named courts solely for the purpose of enforcing an
order or judgment issued by one of the above-named courts.

Section 9.15        JURY TRIAL. EACH OF THE PARTIES KNOWINGLY, VOLUNTARILY,
IRREVOCABLY AND UNDER THE PROFESSIONAL ADVICE OF COUNSEL WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY LEGAL ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE TRANSACTION AGREEMENTS
OR THE MERGER BETWEEN ANY OF THE PARTIES.

57

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

Section 9.16        Legal Representation.

9.16.1        Parent hereby agrees, on its own behalf and on behalf of the
Surviving Corporation (following Closing) and their respective directors,
members, managers, partners, officers, employees and Affiliates, and each of
their successors and assigns (all such parties, the “Waiving Parties”), that
(i) Wyrick Robbins Yates & Ponton LLP (the “Law Firm”) may represent the
Holders, the Holders’ Representatives and their Affiliates (other than the
Surviving Corporation) (collectively, the “Holder Group”), on the one hand, and
the Company, on the other hand, in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other Transaction Agreements,
the other agreements contemplated hereby and thereby, and the consummation of
the transactions contemplated hereby and thereby (such representation, the
“Current Representation”), and (ii) the Law Firm (or any successor) may
represent any and all members of the Holder Group or any director, member,
manager, partner, officer, employee or Affiliate of the Holder Group in
connection with any dispute, litigation, claim, proceeding or obligation arising
out of or relating to this Agreement or the other Transaction Agreements, any
other agreements contemplated hereby and thereby, or the transactions
contemplated hereby or thereby, notwithstanding the Current Representation (or
any continued representation of the Company) and even though the interests of
such Person(s) may be directly adverse to Parent, the Surviving Corporation and
their respective Affiliates, and each of Parent and the Surviving Corporation on
behalf of itself and the other Waiving Parties hereby consents thereto and
waives (and will not assert) any conflict of interest or any objection arising
therefrom or relating thereto.  The parties acknowledge that the foregoing
provision applies whether or not the Law Firm provides legal services to the
Surviving Corporation after the Closing Date.

9.16.2        The parties hereby irrevocably acknowledge and agree that all
communications between the Holder Group and their counsel, including the Law
Firm, made in connection with the negotiation, preparation, execution, delivery
and performance under, or any dispute or proceeding arising out of or relating
to, this Agreement or the other Transaction Agreements, any other agreements
contemplated hereby and thereby, or the transactions contemplated hereby or
thereby, or any matter relating to any of the foregoing (including, for the
avoidance of doubt, all of the client files and records in the possession of the
Law Firm related thereto), shall be deemed to be attorney-client privileged
communications between the Holder Group and such counsel that belong to the
Holder Group and the attorney-client privilege and the expectation of client
confidence belongs to, and shall be controlled by, the Holder Group and will not
pass to or be claimed by Parent, the Surviving Corporation or any of the Waiving
Parties and may only be waived with the prior written consent of the Holders’
Representatives on behalf of the Holder Group. From and after the Closing,
Parent, on behalf of itself, the Surviving Corporation (following Closing) and
the Waiving Parties, waives and will not assert any attorney-client privilege
with respect to any communication between the Law Firm and the Company, its
Subsidiaries or any Person in the Holder Group occurring during the Current
Representation.

9.16.3        None of Parent, the Surviving Corporation or any of the other
Waiving Parties or any Person purporting to act on behalf of or through Parent
(including, for the avoidance of doubt, any of their officers that might also be
members of the Holder Group), the Surviving Corporation or any of the Waiving
Parties, will access or seek to obtain access to any such communications, or to
the files of the Law Firm relating to the Current Representation.  The Law Firm
shall have no duty whatsoever to reveal or disclose any such attorney-client
communications or files to any of Parent, the Surviving Corporation or any of
the Waiving Parties by reason of any attorney-client relationship between the
Law Firm and the Company or otherwise.  In addition, Parent and the Surviving
Corporation agree that it would be impractical to remove all attorney-client
communications from the records (including e-mails and other electronic files)
of the Surviving Corporation.  Accordingly, as to any such communications prior
to the date hereof, Parent and the Surviving Corporation, together with any of
the Waiving Parties, further agree that no such Person may use, rely on or
access without the prior written consent of the Holders’ Representatives any of
such communications in a manner that may compromise the attorney-client
privilege of such communications.

* * *

[Signature page follows]

58

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

IN WITNESS WHEREOF, the Parties have caused this Agreement and Plan of Merger to
be duly executed and delivered as of the date first above written.

 

DARÉ BIOSCIENCE, INC.

 

 

 

 

 

By:

 

/s/ Sabrina Martucci Johnson

 

 

Name:

 

Sabrina Martucci Johnson

 

 

Title:

 

President and CEO

 

DARÉ MERGER SUB, INC.

 

 

 

 

 

By:

 

/s/ Sabrina Martucci Johnson

 

 

Name:

 

Sabrina Martucci Johnson

 

 

Title:

 

President and CEO

 

 

 

 

[Signature Page to Agreement and Plan of Merger]

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

IN WITNESS WHEREOF, the Parties have caused this Agreement and Plan of Merger to
be duly executed and delivered as of the date first above written.

 

PEAR TREE PHARMACEUTICALS, INC.

 

 

 

 

 

By:

 

/s/ Stephen C. Rocamboli

 

 

Name:

 

Stephen C. Rocamboli

 

 

Title:

 

President

 

 

 

[Signature Page to Agreement and Plan of Merger]

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

IN WITNESS WHEREOF, the Parties have caused this Agreement and Plan of Merger to
be duly executed and delivered as of the date first above written.

 

HOLDERS’ REPRESENTATIVES

 

/s/ Fred Mermelstein

Fred Mermelstein

 

/s/ Stephen C. Rocamboli

Stephen C. Rocamboli

 

 

 

 

[Signature Page to Agreement and Plan of Merger]

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT A

Joinder Agreement

 

[Attached]

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT B

 

Holders of Company Preferred Stock

 

Stockholder

Series A Shares

 

 

[***]

         [***]

[***]

         [***]

[***]

         [***]

[***]

         [***]

[***]

           [***]

[***]

         [***]

[***]

           [***]

[***]

       [***]

[***]

         [***]

[***]

           [***]

[***]

         [***]

[***]

         [***]

Totals

[***]

 

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

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

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT C

 

Holders of Company Preferred Stock

 

Stockholder

Series A Shares

 

 

[***]

         [***]

[***]

       [***]

Totals

[***]

 

Portions of this Exhibit, indicated by the mark “[***]”, were omitted and have
been filed separately with the Securities and Exchange Commission pursuant to
the Registrant’s application requesting confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.