SPLIT-OFF AGREEMENT

This SPLIT-OFF AGREEMENT, dated as of October __, 2010 (this “Agreement”), is
entered into by and among InVivo Therapeutics Holding Corp. (f/k/a Design
Source, Inc.), a Nevada corporation (“Seller”), DSource Split Corp., a Delaware
corporation (“Split-Off Subsidiary”) and Peter Reichard, Peter Coker and
Lawrence Reichard (“Buyers”).
 
RECITALS:

WHEREAS, Seller is the owner of all of the issued and outstanding capital stock
of Split-Off Subsidiary; Split-Off Subsidiary is a wholly-owned subsidiary of
Seller which will acquire the business assets and liabilities previously held by
Seller; and Seller has no other businesses or operations prior to the Merger (as
defined herein);

WHEREAS, contemporaneously with the execution of this Agreement, Seller, InVivo
Therapeutics Corporation, a Delaware corporation (“InVivo”), and a newly-formed
wholly-owned Nevada subsidiary of Seller, InVivo Therapeutics Acquisition Corp.
(“Acquisition Subsidiary”), will enter into an Agreement and Plan of Merger and
Reorganization (the “Merger Agreement”) pursuant to which Acquisition Subsidiary
will merge with and into InVivo with InVivo remaining as the surviving entity
(the “Merger”); and the equity holders of InVivo will receive securities of
Seller in exchange for their equity interests in InVivo;

WHEREAS, the execution and delivery of this Agreement is required by InVivo as a
condition to its execution of the Merger Agreement and the consummation of the
assignment, assumption, purchase and sale transactions contemplated by this
Agreement is also a condition to the completion of the Merger pursuant to the
Merger Agreement, and Seller has represented to InVivo in the Merger Agreement
that the transactions contemplated by this Agreement will be consummated in
conjunction with the closing of the Merger, and InVivo relied on such
representation in entering into the Merger Agreement;

WHEREAS, Buyers desire to purchase the Shares (as defined in Section 2.1) from
Seller, and to assume, as between Seller and Buyers, all responsibility for any
debts, obligations and liabilities of Seller (prior to the Merger) and Split-Off
Subsidiary, on the terms and subject to the conditions specified in this
Agreement; and

WHEREAS, Seller desires to sell and transfer the Shares to Buyers, on the terms
and subject to the conditions specified in this Agreement;

NOW, THEREFORE, in consideration of the premises and the covenants, promises and
agreements herein set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending legally to be bound, agree as follows:

 

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I.            ASSIGNMENT AND ASSUMPTION OF SELLER’S ASSETS AND LIABILITIES.
 
Subject to the terms and conditions provided below:
 
1.1          Assignment of Assets.  Seller hereby contributes, assigns, conveys
and transfers to Split-Off Subsidiary, and Split-Off Subsidiary hereby receives,
acquires and accepts, all assets and properties of Seller as of the Effective
Time, including but not limited to the following, but excluding in all cases (i)
the right, title and assets of Seller in, to and under the Transaction
Documentation and (ii) the capital stock of InVivo, Acquisition Subsidiary and
Split-Off Subsidiary:
 
 
(a)
all cash and cash equivalents;

 
 
(b)
all accounts receivable;

 
 
(c)
all inventories of raw materials, work in process, parts, supplies and finished
products;

 
 
(d)
all of Seller’s rights, title and interests in, to and under all contracts,
agreements, leases, licenses (including software licenses), supply agreements,
consulting agreements, commitments, purchase orders, customer orders and work
orders, and including all of Seller’s rights thereunder to use and possess
equipment provided by third parties, and all representations, warranties,
covenants and guarantees related to the foregoing (provided that to the extent
any of the foregoing or any claim or right or benefit arising thereunder or
resulting therefrom is not assignable by its terms, or the assignment thereof
shall require the consent or approval of another party thereto, this Agreement
shall not constitute an assignment thereof if an attempted assignment would be
in violation of the terms thereof or if such consent is not obtained prior to
the Effective Time, and in lieu thereof Seller shall reasonably cooperate with
Split-Off Subsidiary in any reasonable arrangement designed to provide Split-Off
Subsidiary the benefits thereunder or any claim or right arising thereunder);

 
 
(e)
all intellectual property, including but not limited to issued patents, patent
applications (whether or not patents are issued thereon and whether modified,
withdrawn or resubmitted), unpatented inventions, product designs, copyrights
(whether registered or unregistered), know-how, technology, trade secrets,
technical information, notebooks, drawings, software, computer coding (both
object and source) and all documentation, manuals and drawings related thereto,
trademarks or service marks and applications therefor, unregistered trademarks
or service marks, trade names, logos and icons and all rights to sue or recover
for the infringement or misappropriation thereof;

 
 
(f)
all fixed assets, including but not limited to the machinery, equipment,
furniture, vehicles, office equipment and other tangible personal property owned
or leased by Seller;

 
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(g)
all customer lists, business records, customer records and files, customer
financial records, and all other files and information related to customers, all
customer proposals, all open service agreements with customers and all
uncompleted customer contracts and agreements; and

 
 
(h)
to the extent legally assignable, all licenses, permits, certificates, approvals
and authorizations issued by Governmental Entities and necessary to own, lease
or operate the assets and properties of Seller and to conduct Seller’s business
as it is presently conducted;

 
all of the foregoing being referred to herein as the “Assigned Assets.”
 
1.2           Assignment and Assumption of Liabilities. Seller hereby assigns to
Split-Off Subsidiary, and Split-Off Subsidiary hereby assumes and agrees to pay,
honor and discharge all debts, adverse claims, liabilities, judgments and
obligations of Seller as of the Effective Time, whether accrued, contingent or
otherwise and whether known or unknown, including those arising under any law
(including the common law) or any rule or regulation of any Governmental Entity
or imposed by any court or any arbitrator in a binding arbitration resulting
from, arising out of or relating to the assets, activities, operations, actions
or omissions of Seller, or products manufactured or sold thereby or services
provided thereby, or under contracts, agreements (whether written or oral),
leases, commitments or undertakings thereof, but excluding in all cases the
obligations of Seller under the Transaction Documentation (all of the foregoing
being referred to herein as the “Assigned Liabilities”).
 
The assignment and assumption of Seller’s assets and liabilities provided for in
this Article I is referred to as the “Assignment.”

II.          PURCHASE AND SALE OF STOCK.
 
2.1          Purchased Shares.  Subject to the terms and conditions provided
below, Seller shall sell and transfer to Buyers and Buyers shall purchase from
Seller, on the Closing Date (as defined in Section 3.1), all of the issued and
outstanding shares of capital stock of Split-Off Subsidiary (the “Shares”).
 
2.2          Purchase Price.  The purchase price for the Shares shall be the
transfer and delivery by Buyers to Seller of the type and number of shares of
common stock and other securities of Seller that Buyers own (the “Purchase Price
Securities”), as set forth in Exhibit A attached hereto, deliverable as provided
in Section 3.3.
 
III.         CLOSING.
 
3.1          Closing.  The closing of the transactions contemplated in this
Agreement (the “Closing”) shall take place as soon as practicable following the
execution of this Agreement; provided, however, that the Closing must occur
simultaneously with the closing of the Merger.  The date on which the Closing
occurs shall be referred to herein as the “Closing Date.”

 
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3.2          Transfer of Shares.  At the Closing, Seller shall deliver to Buyers
certificates representing the Shares purchased by Buyers, duly endorsed to
Buyers or as directed by Buyers, which delivery shall vest Buyers with good and
marketable title to such Shares, free and clear of all liens and encumbrances.
 
3.3          Payment of Purchase Price.  At the Closing, Buyers shall deliver to
Seller a certificate or certificates representing Buyers’ Purchase Price
Securities duly endorsed to Seller, which delivery shall vest Seller with good
and marketable title to the Purchase Price Securities, free and clear of all
liens and encumbrances.
 
3.4          Transfer of Records.  On or before the Closing, Seller shall
transfer to Split-Off Subsidiary all existing corporate books and records in
Seller’s possession relating to Split-Off Subsidiary and its business, including
but not limited to all agreements, litigation files, real estate files,
personnel files and filings with governmental agencies; provided, however, when
any such documents relate to both Seller and Split-Off Subsidiary, only copies
of such documents need be furnished. On or before the Closing, Buyers and
Split-Off Subsidiary shall transfer to Seller all existing corporate books and
records in the possession of Buyers or Split-Off Subsidiary relating to Seller,
including but not limited to all corporate minute books, stock ledgers,
certificates and corporate seals of Seller and all agreements, litigation files,
real property files, personnel files and filings with governmental agencies;
provided, however, when any such documents relate to both Seller and Split-Off
Subsidiary or its business, only copies of such documents need be furnished.
 
3.5          Instruments of Assignment. At the Closing, Seller and Split-Off
Subsidiary shall deliver to each other such instruments providing for the
Assignment as the other may reasonably request (the “Instruments of
Assignment”).
 
IV.         BUYERS’ REPRESENTATIONS AND WARRANTIES.  Buyers represent and
warrant that:
 
4.1          Capacity and Enforceability.  Buyers have the legal capacity to
execute and deliver this Agreement and the documents to be executed and
delivered by Buyers at the Closing pursuant to the transactions contemplated
hereby. This Agreement and all such documents constitute valid and binding
agreements of Buyers, enforceable in accordance with their terms.
 
4.2          Compliance.  Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby by Buyers will
result in the breach of any term or provision of, or constitute a default under,
or violate any agreement, indenture, instrument, order, law or regulation to
which Buyers are a party or by which Buyers are bound.

 
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4.3          Purchase for Investment.  Buyers are financially able to bear the
economic risks of acquiring the Shares and the other transactions contemplated
hereby, and have no need for liquidity in their investment in the Shares. Buyers
have such knowledge and experience in financial and business matters in general,
and with respect to businesses of a nature similar to the business of Split-Off
Subsidiary (after giving effect to the Assignment), so as to be capable of
evaluating the merits and risks of, and making an informed business decision
with regard to, the acquisition of the Shares and the other transactions
contemplated hereby. Buyers are “accredited investors” within the meaning of
Rule 501 of Regulation D under the Securities Act. Buyers are acquiring the
Shares solely for their own account and not with a view to or for resale in
connection with any distribution or public offering thereof, within the meaning
of any applicable securities laws and regulations, unless such distribution or
offering is registered under the Securities Act of 1933, as amended (the
“Securities Act”), or an exemption from such registration is available. Buyers
have (i) received all the information they have deemed necessary to make an
informed decision with respect to the acquisition of the Shares and the other
transactions contemplated hereby; (ii) had an opportunity to make such
investigation as they have desired pertaining to Split-Off Subsidiary (after
giving effect to the Assignment) and the acquisition of an interest therein and
the other transactions contemplated hereby, and to verify the information which
is, and has been, made available to them; and (iii) had the opportunity to ask
questions of Seller concerning Split-Off Subsidiary (after giving effect to the
Assignment). Buyers acknowledge that due to their affiliation with Seller and
Split-Off Subsidiary that they have actual knowledge of the business, operations
and financial affairs of Split-Off Subsidiary (after giving effect to the
Assignment). Buyers have received no public solicitation or advertisement with
respect to the offer or sale of the Shares. Buyers realize that the Shares are
“restricted securities” as that term is defined in Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act, the resale of the
Shares is restricted by federal and state securities laws and, accordingly, the
Shares must be held indefinitely unless their resale is subsequently registered
under the Securities Act or an exemption from such registration is available for
their resale. Buyers understand that any resale of the Shares by them must be
registered under the Securities Act (and any applicable state securities law) or
be effected in circumstances that, in the opinion of counsel for Split-Off
Subsidiary at the time, create an exemption or otherwise do not require
registration under the Securities Act (or applicable state securities laws).
Buyers acknowledge and consent that certificates now or hereafter issued for the
Shares will bear a legend substantially as follows:
 
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER
ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH
REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE
SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT
AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF
THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE
AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH
OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT
VIOLATE THE SECURITIES LAWS.

 
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Buyers understand that the Shares are being sold to them pursuant to the
exemption from registration contained in Section 4(1) of the Securities Act and
that Seller is relying upon the representations made herein as one of the bases
for claiming the Section 4(1) exemption.
 
4.4          Liabilities.  Following the Closing, Seller will have no liability
for any debts, liabilities or obligations of Split-Off Subsidiary or its
business or activities, and there are no outstanding guaranties, performance or
payment bonds, letters of credit or other contingent contractual obligations
that have been undertaken by Seller directly or indirectly in relation to
Split-Off Subsidiary or its business and that may survive the Closing.
 
4.5          Title to Purchase Price Securities.  Buyers are the sole record and
beneficial owner of their respective Purchase Price Securities. At Closing,
Buyers will have good and marketable title to their respective Purchase Price
Securities, which Purchase Price Securities are, and at the Closing will be,
free and clear of all options, warrants, pledges, claims, liens and
encumbrances, and any restrictions or limitations prohibiting or restricting
transfer to Seller, except for restrictions on transfer as contemplated by
applicable securities laws.
 
V.          SELLER’S AND SUBSIDIARY’S REPRESENTATIONS AND WARRANTIES.  Seller
and Split-Off Subsidiary, jointly and severally, represent and warrant to Buyers
that:
 
5.1          Organization and Good Standing.  Each of Seller and Split-Off
Subsidiary is a corporation duly incorporated, validly existing, and in good
standing under the laws of their respective states of incorporation.
 
5.2          Authority and Enforceability.  The execution and delivery of this
Agreement and the documents to be executed and delivered at the Closing pursuant
to the transactions contemplated hereby, and performance in accordance with the
terms hereof and thereof, have been duly authorized by Seller and all such
documents constitute valid and binding agreements of Seller enforceable in
accordance with their terms.
 
5.3          Title to Shares.  Seller is the sole record and beneficial owner of
the Shares.  At Closing, Seller will have good and marketable title to the
Shares, which Shares are, and at the Closing will be, free and clear of all
options, warrants, pledges, claims, liens and encumbrances, and any restrictions
or limitations prohibiting or restricting transfer to Buyers, except for
restrictions on transfer as contemplated by Section 4.3 above.  The Shares
constitute all of the issued and outstanding shares of capital stock of
Split-Off Subsidiary.
 
5.4          WARN Act.  Split-Off Subsidiary does not have a sufficient number
of employees to make it subject to the Worker Adjustment and Retraining
Notification Act.
 
5.5          Representations in Merger Agreement.  Split-Off Subsidiary
represents and warrants that all of the representations and warranties by
Seller, insofar as they relate to Split-Off Subsidiary, contained in the Merger
Agreement are true and correct.

 
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VI.         OBLIGATIONS OF BUYERS PENDING CLOSING.  Buyers covenant and agree
that between the date hereof and the Closing:
 
6.1          Not Impair Performance.  Buyers shall not take any intentional
action that would cause the conditions upon the obligations of the parties
hereto to effect the transactions contemplated hereby not to be fulfilled,
including, without limitation, taking or causing to be taken any action that
would cause the representations and warranties made by any party herein not to
be true, correct and accurate as of the Closing, or in any way impairing the
ability of Seller to satisfy its obligations as provided in Article VII.
 
6.2          Assist Performance.  Buyers shall exercise their reasonable best
efforts to cause to be fulfilled those conditions precedent to Seller’s
obligations to consummate the transactions contemplated hereby which are
dependent upon actions of Buyers and to make and/or obtain any necessary filings
and consents in order to consummate the sale transaction contemplated by this
Agreement.
 
VII.        OBLIGATIONS OF SELLER PENDING CLOSING.  Seller covenants and agrees
that between the date hereof and the Closing:
 
7.1          Business as Usual.  Split-Off Subsidiary shall operate and Seller
shall cause Split-Off Subsidiary to operate in accordance with past practices
and shall use best efforts to preserve its goodwill and the goodwill of its
employees, customers and others having business dealings with Split-Off
Subsidiary. Without limiting the generality of the foregoing, from the date of
this Agreement until the Closing Date, Split-Off Subsidiary shall preserve and
maintain Split-Off Subsidiary’s assets in their current operating condition and
repair, ordinary wear and tear excepted. From the date of this Agreement until
the Closing Date, Split-Off Subsidiary shall not (i) amend, terminate or
surrender any material franchise, license, contract or real property interest,
or (ii) sell or dispose of any of its assets except in the ordinary course of
business. Neither Split-Off Subsidiary nor Buyers shall take or omit to take any
action that results in Seller incurring any liability or obligation prior to or
in connection with the Closing.
 
7.2          Not Impair Performance.  Seller shall not take any intentional
action that would cause the conditions upon the obligations of the parties
hereto to effect the transactions contemplated hereby not to be fulfilled,
including, without limitation, taking or causing to be taken any action which
would cause the representations and warranties made by any party herein not to
be materially true, correct and accurate as of the Closing, or in any way
impairing the ability of Buyers to satisfy her obligations as provided in
Article VI.
 
7.3          Assist Performance.  Seller shall exercise its reasonable best
efforts to cause to be fulfilled those conditions precedent to Buyers’
obligations to consummate the transactions contemplated hereby which are
dependent upon the actions of Seller and to work with Buyers to make and/or
obtain any necessary filings and consents. Seller shall cause Split-Off
Subsidiary to comply with its obligations under this Agreement.

 
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VIII.       SELLER’S AND SPLIT-OFF SUBSIDIARY’S CONDITIONS PRECEDENT TO
CLOSING.  The obligations of Seller and Split-Off Subsidiary to close the
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing of each of the following conditions precedent (any or
all of which may be waived by Seller and InVivo in writing):
 
8.1          Representations and Warranties; Performance.  All representations
and warranties of Buyers contained in this Agreement shall have been true and
correct, in all material respects, when made and shall be true and correct, in
all material respects, at and as of the Closing, with the same effect as though
such representations and warranties were made at and as of the Closing. Buyers
shall have performed and complied with all covenants and agreements and
satisfied all conditions, in all material respects, required by this Agreement
to be performed or complied with or satisfied by Buyers at or prior to the
Closing.
 
8.2          Additional Documents.  Buyers shall deliver or cause to be
delivered such additional documents as may be necessary in connection with the
consummation of the transactions contemplated by this Agreement and the
performance of their obligations hereunder.
 
8.3          Release by Buyers and Split-Off Subsidiary.  At the Closing, Buyers
and Split-Off Subsidiary shall execute and deliver to Seller a general release
which in substance and effect releases Seller and InVivo from any and all
liabilities and obligations that Seller and InVivo may owe to Buyers or
Split-Off Subsidiary in any capacity, and from any and all claims that Buyers or
Split-Off Subsidiary may have against Seller, InVivo or their respective
managers, members, officers, directors, stockholders, employees and agents
(other than those arising pursuant to this Agreement or any document delivered
in connection with this Agreement).
 
IX.         BUYERS’ CONDITIONS PRECEDENT TO CLOSING.  The obligation of Buyers
to close the transactions contemplated by this Agreement is subject to the
satisfaction at or prior to the Closing of each of the following conditions
precedent (any and all of which may be waived by Buyers in writing):
 
9.1          Representations and Warranties; Performance.  All representations
and warranties of Seller and Split-Off Subsidiary contained in this Agreement
shall have been true and correct, in all material respects, when made and shall
be true and correct, in all material respects, at and as of the Closing with the
same effect as though such representations and warranties were made at and as of
the Closing. Seller and Split-Off Subsidiary shall have performed and complied
with all covenants and agreements and satisfied all conditions, in all material
respects, required by this Agreement to be performed or complied with or
satisfied by them at or prior to the Closing.
 
X.          OTHER AGREEMENTS.
 
10.1        Expenses.  Each party hereto shall bear its expenses separately
incurred in connection with this Agreement and with the performance of its
obligations hereunder.

 
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10.2        Confidentiality.  Buyers shall not make any public announcements
concerning this transaction without the prior written agreement of InVivo, other
than as may be required by applicable law or judicial process. If for any reason
the transactions contemplated hereby are not consummated, then Buyers shall
return any information received by Buyers from Seller or Split-Off Subsidiary,
and Buyers shall cause all confidential information obtained by Buyers
concerning Split-Off Subsidiary and its business to be treated as such.
 
10.3        Brokers’ Fees.  In connection with the transaction specifically
contemplated by this Agreement, no party to this Agreement has employed the
services of a broker and each agrees to indemnify the other against all claims
of any third parties for fees and commissions of any brokers claiming a fee or
commission related to the transactions contemplated hereby.
 
10.4        Access to Information Post-Closing; Cooperation.
 
(a)           Following the Closing, Buyers and Split-Off Subsidiary shall
afford to Seller and its authorized accountants, counsel and other designated
representatives, reasonable access (and including using reasonable efforts to
give access to persons or firms possessing information) and duplicating rights
during normal business hours to allow records, books, contracts, instruments,
computer data and other data and information (collectively, “Information”)
within the possession or control of Buyers or Split-Off Subsidiary insofar as
such access is reasonably required by Seller. Information may be requested under
this Section 10.4(a) for, without limitation, audit, accounting, claims,
litigation and tax purposes, as well as for purposes of fulfilling disclosure
and reporting obligations and performing this Agreement and the transactions
contemplated hereby. No files, books or records of Split-Off Subsidiary existing
at the Closing Date shall be destroyed by Buyers or Split-Off Subsidiary after
Closing but prior to the expiration of any period during which such files, books
or records are required to be maintained and preserved by applicable law without
giving Seller at least 30 days’ prior written notice, during which time Seller
shall have the right to examine and to remove any such files, books and records
prior to their destruction.
 
(b)           Following the Closing, Seller shall afford to Split-Off Subsidiary
and its authorized accountants, counsel and other designated representatives
reasonable access (including using reasonable efforts to give access to persons
or firms possessing information) duplicating rights during normal business hours
to Information within Seller’s possession or control relating to the business of
Split-Off Subsidiary. Information may be requested under this Section 10.4(b)
for, without limitation, audit, accounting, claims, litigation and tax purposes
as well as for purposes of fulfilling disclosure and reporting obligations and
for performing this Agreement and the transactions contemplated hereby. No
files, books or records of Split-Off Subsidiary existing at the Closing Date
shall be destroyed by Seller after Closing but prior to the expiration of any
period during which such files, books or records are required to be maintained
and preserved by applicable law without giving Buyers at least 30 days prior
written notice, during which time Buyers shall have the right to examine and to
remove any such files, books and records prior to their destruction.

 
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(c)           At all times following the Closing, Seller, Buyers and Split-Off
Subsidiary shall use their reasonable efforts to make available to the other
party on written request, the current and former officers, directors, employees
and agents of Seller or Split-Off Subsidiary for any of the purposes set forth
in Section 10.4(a) or (b) above or as witnesses to the extent that such persons
may reasonably be required in connection with any legal, administrative or other
proceedings in which Seller or Split-Off Subsidiary may from time to be
involved.
 
(d)           The party to whom any Information or witnesses are provided under
this Section 10.4 shall reimburse the provider thereof for all out-of-pocket
expenses actually and reasonably incurred in providing such Information or
witnesses.
 
(e)           Seller, Buyers, Split-Off Subsidiary and their respective
employees and agents shall each hold in strict confidence all Information
concerning the other party in their possession or furnished by the other or the
other’s representative pursuant to this Agreement with the same degree of care
as such party utilizes as to such party’s own confidential information (except
to the extent that such Information is (i) in the public domain through no fault
of such party or (ii) later lawfully acquired from any other source by such
party), and each party shall not release or disclose such Information to any
other person, except such party’s auditors, attorneys, financial advisors,
bankers, other consultants and advisors or persons with whom such party has a
valid obligation to disclose such Information, unless compelled to disclose such
Information by judicial or administrative process or, as advised by its counsel,
by other requirements of law.
 
(f)           Seller, Buyers and Split-Off Subsidiary shall each use their best
efforts to forward promptly to the other party all notices, claims,
correspondence and other materials which are received and determined to pertain
to the other party.
 
10.5           Guarantees, Surety Bonds and Letter of Credit Obligations.  In
the event that Seller is obligated for any debts, obligations or liabilities of
Split-Off Subsidiary by virtue of any outstanding guarantee, performance or
surety bond or letter of credit provided or arranged by Seller on or prior to
the Closing Date, Buyers and Split-Off Subsidiary shall use their best efforts
to cause to be issued replacements of such bonds, letters of credit and
guarantees and to obtain any amendments, novations, releases and approvals
necessary to release and discharge fully Seller from any liability thereunder
following the Closing. Buyers and Split-Off Subsidiary, jointly and severally,
shall be responsible for, and shall indemnify, hold harmless and defend Seller
from and against, any costs or losses incurred by Seller arising from such
bonds, letters of credits and guarantees and any liabilities arising therefrom
and shall reimburse Seller for any payments that Seller may be required to pay
pursuant to enforcement of its obligations relating to such bonds, letters of
credit and guarantees.
 
10.6           Filings and Consents.  Buyers, at their risk, shall determine
what, if any, filings and consents must be made and/or obtained prior to Closing
to consummate the purchase and sale of the Shares. Buyers shall indemnify the
Seller Indemnified Parties (as defined in Section 12.1 below) against any Losses
(as defined in Section 12.1 below) incurred by such Seller Indemnified Parties
by virtue of the failure to make and/or obtain any such filings or consents.
Recognizing that the failure to make and/or obtain any filings or consents may
cause Seller to incur Losses or otherwise adversely affect Seller, Buyers and
Split-Off Subsidiary confirm that the provisions of this Section 10.6 will not
limit Seller’s right to treat such failure as the failure of a condition
precedent to Seller’s obligation to close pursuant to Article VIII above.

 
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10.7        Insurance.  Buyers acknowledge that on the Closing Date, effective
as of the Closing, any insurance coverage and bonds provided by Seller for
Split-Off Subsidiary, and all certificates of insurance evidencing that
Split-Off Subsidiary maintains any required insurance by virtue of insurance
provided by Seller, will terminate with respect to any insured damages resulting
from matters occurring subsequent to Closing.
 
10.8        Agreements Regarding Taxes.
 
(a)          Tax Sharing Agreements.  Any tax sharing agreement between Seller
and Split-Off Subsidiary is terminated as of the Closing Date and will have no
further effect for any taxable year (whether the current year, a future year or
a past year).
 
(b)          Returns for Periods Through the Closing Date.  Seller will include
the income and loss of Split-Off Subsidiary (including any deferred income
triggered into income by Reg. §1.1502-13 and any excess loss accounts taken into
income under Reg. §1.1502-19) on Seller’s consolidated federal income tax
returns for all periods through the Closing Date and pay any federal income
taxes attributable to such income. Seller and Split-Off Subsidiary agree to
allocate income, gain, loss, deductions and credits between the period up to
Closing (the “Pre-Closing Period”) and the period after Closing (the
“Post-Closing Period”) based on a closing of the books of Split-Off Subsidiary,
and both Seller and Split-Off Subsidiary agree not to make an election under
Reg. §1.1502-76(b)(2)(ii) to ratably allocate the year’s items of income, gain,
loss, deduction and credit. Seller, Split-Off Subsidiary and Buyers agree to
report all transactions not in the ordinary course of business occurring on the
Closing Date after Buyers’ purchase of the Shares on Split-Off Subsidiary’s tax
returns to the extent permitted by Reg. §1.1502-76(b)(1)(ii)(B). Buyers agrees
to indemnify Seller for any additional tax owed by Seller (including tax owned
by Seller due to this indemnification payment) resulting from any transaction
engaged in by Split-Off Subsidiary during the Pre-Closing Period or on the
Closing Date after Buyers’ purchase of the Shares. Split-Off Subsidiary will
furnish tax information to Seller for inclusion in Seller’s consolidated federal
income tax return for the period which includes the Closing Date in accordance
with Split-Off Subsidiary’s past custom and practice.
 
 
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(c)          Audits.  Seller will allow Split-Off Subsidiary and its counsel to
participate at Split-Off Subsidiary’s expense in any audits of Seller’s
consolidated federal income tax returns to the extent that such audit raises
issues that relate to and increase the tax liability of Split-Off Subsidiary.
Seller shall have the absolute right, in its sole discretion, to engage
professionals and direct the representation of Seller in connection with any
such audit and the resolution thereof, without receiving the consent of Buyers
or Split-Off Subsidiary or any other party acting on behalf of Buyers or
Split-Off Subsidiary, provided that Seller will not settle any such audit in a
manner which would materially adversely affect Split-Off Subsidiary after the
Closing Date unless such settlement would be reasonable in the case of a person
that owned Split-Off Subsidiary both before and after the Closing Date. In the
event that after Closing any tax authority informs Buyers or Split-Off
Subsidiary of any notice of proposed audit, claim, assessment or other dispute
concerning an amount of taxes which pertain to Seller, or to Split-Off
Subsidiary during the period prior to Closing, Buyers or Split-Off Subsidiary
must promptly notify Seller of the same within 15 calendar days of the date of
the notice from the tax authority. In the event Buyers or Split-Off Subsidiary
does not notify Seller within such 15 day period, Buyers and Split-Off
Subsidiary, jointly and severally, will indemnify Seller for any incremental
interest, penalty or other assessments resulting from the delay in giving
notice. To the extent of any conflict or inconsistency, the provisions of this
Section 10.8 shall control over the provisions of Section 12.2 below.
 
(d)          Cooperation on Tax Matters.  Buyers, Seller and Split-Off
Subsidiary shall cooperate fully, as and to the extent reasonably requested by
any party, in connection with the filing of tax returns pursuant to this Section
and any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include 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. Split-Off Subsidiary shall (i) retain all books
and records with respect to tax matters pertinent to Split-Off Subsidiary
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by Seller,
any extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and
(ii) give Seller reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if Seller so requests, Buyers agree
to cause Split-Off Subsidiary to allow Seller to take possession of such books
and records.
 
10.9        ERISA.  Effective as of the Closing Date, Split-Off Subsidiary shall
terminate its participation in, and withdraw from, any employee benefit plans
sponsored by Seller, and Seller and Buyers shall cooperate fully in such
termination and withdrawal. Without limitation, Split-Off Subsidiary shall be
solely responsible for (i) all liabilities under those employee benefit plans
notwithstanding any status as an employee benefit plan sponsored by Seller, and
(ii) all liabilities for the payment of vacation pay, severance benefits, and
similar obligations, including, without limitation, amounts which are accrued
but unpaid as of the Closing Date with respect thereto. Buyers and Split-Off
Subsidiary acknowledge that Split-Off Subsidiary is solely responsible for
providing continuation health coverage, as required under the Consolidated
Omnibus Reconciliation Act of 1985, as amended (“COBRA”), to each person, if
any, participating in an employee benefit plan subject to COBRA with respect to
such employee benefit plan as of the Closing Date, including, without
limitation, any person whose employment with Split-Off Subsidiary is terminated
after the Closing Date.
 
 
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XI.         TERMINATION.  This Agreement may be terminated at, or at any time
prior to, the Closing by mutual written consent of Seller, Buyers and InVivo.
 
If this Agreement is terminated as provided herein, it shall become wholly void
and of no further force and effect and there shall be no further liability or
obligation on the part of any party except to pay such expenses as are required
of such party.
 
XII.        INDEMNIFICATION.
 
12.1       Indemnification by Buyers.  Buyers covenant and agree to indemnify,
defend, protect and hold harmless Seller and InVivo, and their respective
officers, directors, employees, stockholders, agents, representatives and
Affiliates (collectively, the “Seller Indemnified Parties”) at all times from
and after the date of this Agreement from and against all losses, liabilities,
damages, claims, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys’ fees and expenses of investigation), whether or not involving a third
party claim and regardless of any negligence of any Seller Indemnified Party
(collectively, “Losses”), incurred by any Seller Indemnified Party as a result
of or arising from (i) any breach of the representations and warranties of
Buyers set forth herein or in certificates delivered in connection herewith,
(ii) any breach or nonfulfillment of any covenant or agreement (including any
other agreement of Buyers to indemnify set forth in this Agreement) on the part
of Buyers under this Agreement, (iii) any Assigned Asset or Assigned Liability
or any other debt, liability or obligation of Split-Off Subsidiary, (iv) the
conduct and operations, whether before or after Closing, of (A) the business of
Seller pertaining to the Assigned Assets and Assigned Liabilities or (B) the
business of Split-Off Subsidiary, (v) claims asserted, whether before or after
Closing, (A) against Split-Off Subsidiary or (B) pertaining to the Assigned
Assets and Assigned Liabilities, or (vi) any federal or state income tax payable
by Seller or InVivo and attributable to the transactions contemplated by this
Agreement.  The obligations of Buyers under this Section, as between Buyers and
the Seller Indemnified Parties, are joint and several.
 
12.2       Third Party Claims.
 
(a)           Defense.  If any claim or liability (a “Third-Party Claim”) should
be asserted against any of the Seller Indemnified Parties (the “Indemnitee”) by
a third party after the Closing for which Buyers have an indemnification
obligation under the terms of Section 12.1, then the Indemnitee shall notify
Buyers (the “Indemnitors”) within 20 days after the Third-Party Claim is
asserted by a third party (said notification being referred to as a “Claim
Notice”) and give the Indemnitor a reasonable opportunity to take part in any
examination of the books and records of the Indemnitee relating to such
Third-Party Claim and to assume the defense of such Third-Party Claim and in
connection therewith and to conduct any proceedings or negotiations relating
thereto and necessary or appropriate to defend the Indemnitee and/or settle the
Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all
negotiations, proceedings, contests, lawsuits or settlements with respect to any
Third-Party Claim shall be borne by the Indemnitors. If the Indemnitors agree to
assume the defense of any Third-Party Claim in writing within 20 days after the
Claim Notice of such Third-Party Claim has been delivered, through counsel
reasonably satisfactory to Indemnitee, then the Indemnitors shall be entitled to
control the conduct of such defense, and any decision to settle such Third-Party
Claim, and shall be responsible for any expenses of the Indemnitee in connection
with the defense of such Third-Party Claim so long as the Indemnitors continue
such defense until the final resolution of such Third-Party Claim. The
Indemnitors shall be responsible for paying all settlements made or judgments
entered with respect to any Third-Party Claim the defense of which has been
assumed by the Indemnitors.  Except as provided on subsection (b) below, both
the Indemnitor and the Indemnitee must approve any settlement of a Third-Party
Claim. A failure by the Indemnitee to timely give the Claim Notice shall not
excuse Indemnitor from any indemnification liability except only to the extent
that the Indemnitors are materially and adversely prejudiced by such failure.
 
 
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(b)           Failure to Defend.  If the Indemnitors shall not agree to assume
the defense of any Third-Party Claim in writing within 20 days after the Claim
Notice of such Third-Party Claim has been delivered, or shall fail to continue
such defense until the final resolution of such Third-Party Claim, then the
Indemnitee may defend against such Third-Party Claim in such manner as it may
deem appropriate and the Indemnitee may settle such Third-Party Claim, in its
sole discretion, on such terms as it may deem appropriate. The Indemnitors shall
promptly reimburse the Indemnitee for the amount of all settlement payments and
expenses, legal and otherwise, incurred by the Indemnitee in connection with the
defense or settlement of such Third-Party Claim. If no settlement of such
Third-Party Claim is made, then the Indemnitors shall satisfy any judgment
rendered with respect to such Third-Party Claim before the Indemnitee is
required to do so, and pay all expenses, legal or otherwise, incurred by the
Indemnitee in the defense against such Third-Party Claim.
 
12.3       Non-Third-Party Claims.  Upon discovery of any claim for which Buyers
has an indemnification obligation under the terms of Section 12.1 which does not
involve a claim by a third party against the Indemnitee, the Indemnitee shall
give prompt notice to Buyers of such claim and, in any case, shall give Buyers
such notice within 30 days of such discovery. A failure by Indemnitee to timely
give the foregoing notice to Buyers shall not excuse Buyers from any
indemnification liability except to the extent that Buyers is materially and
adversely prejudiced by such failure.
 
12.4       Survival.  Except as otherwise provided in this Section 12.4, all
representations and warranties made by Buyers, Split-Off Subsidiary and Seller
in connection with this Agreement shall survive the Closing. Anything in this
Agreement to the contrary notwithstanding, the liability of all Indemnitors
under this Article XII shall terminate on the fourth (4th) anniversary of the
Closing Date, except with respect to (a) liability for any item as to which,
prior to the fourth (4th) anniversary of the Closing Date, any Indemnitee shall
have asserted a Claim in writing, which Claim shall identify its basis with
reasonable specificity, in which case the liability for such Claim shall
continue until it shall have been finally settled, decided or adjudicated,
(b) liability of any party for Losses for which such party has an
indemnification obligation, incurred as a result of such party’s breach of any
covenant or agreement to be performed by such party after the Closing,
(c) liability of Buyers for Losses incurred by a Seller Indemnified Party due to
breaches of their representations and warranties in Article IV of this
Agreement, and (d) liability of Buyers for Losses arising out of Third-Party
Claims for which Buyers have an indemnification obligation, which liability
shall survive until the statute of limitation applicable to any third party’s
right to assert a Third-Party Claim bars assertion of such claim.
 
 
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XIII.        MISCELLANEOUS.
 
13.1       Definitions.  Capitalized terms used herein without definition have
the meanings ascribed to them in the Merger Agreement.
 
13.2       Notices.  All notices and communications required or permitted
hereunder shall be in writing and deemed given when received by means of the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or personal delivery, or
overnight courier, as follows:
 
(a)          If to Seller, addressed to:
 
InVivo Therapeutics Holding Corp.
One Broadway, 14th Floor
Cambridge, MA 02142
Attention: Frank M. Reynolds
Facsimile: (617) 225-4430

With a copy to (which shall not constitute notice hereunder):
 
Meister Seelig & Fein, LLP
140 East 45th Street
New York, NY  10017
Attention:  Mitchell Lampert, Esq.
Facsimile: (646) 539-3675

(b)         If to Buyers or Split-Off Subsidiary, addressed to:
 
Peter Reichard
100 Europa Drive, Suite 455
Chapel Hill, NC 27515-4321
Facsimile:  (919) 933-2730

or to such other address as any party hereto shall specify pursuant to this
Section 13.2 from time to time.
 
13.3       Exercise of Rights and Remedies.  Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
 
 
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13.4       Time.  Time is of the essence with respect to this Agreement.
 
13.5       Reformation and Severability.  In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
 
13.6       Further Acts and Assurances.  From and after the Closing, Seller,
Buyers and Split-Off Subsidiary agree that each will act in a manner supporting
compliance, including compliance by its Affiliates, with all of its obligations
under this Agreement and, from time to time, shall, at the request of another
party hereto, and without further consideration, cause the execution and
delivery of such other instruments of conveyance, transfer, assignment or
assumption and take such other action or execute such other documents as such
party may reasonably request in order more effectively to convey, transfer to
and vest in Buyers, and to put Split-Off Subsidiary in possession of, all
Assigned Assets and Assigned Liabilities, and to convey, transfer to and vest in
Seller and Buyers, and to them in possession of, the Purchase Price Securities
and the Shares (respectively), and, in the case of any contracts and rights that
cannot be effectively transferred without the consent or approval of other
Persons that is unobtainable, to use its best reasonable efforts to ensure that
Split-Off Subsidiary receives the benefits thereof to the maximum extent
permissible in accordance with applicable law or other applicable restrictions,
and shall perform such other acts which may be reasonably necessary to
effectuate the purposes of this Agreement.
 
13.7       Entire Agreement; Amendments.  This Agreement contains the entire
understanding of the parties relating to the subject matter contained herein.
This Agreement cannot be amended or changed except through a written instrument
signed by all of the parties hereto and by InVivo. No provisions of this
Agreement or any rights hereunder may be waived by any party without the prior
written consent of InVivo.
 
13.8       Assignment.  No party may assign his, her or its rights or
obligations hereunder, in whole or in part, without the prior written consent of
the other parties.
 
13.9       Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts or choice of laws thereof.
 
13.10     Counterparts.  This Agreement may be executed in one or more
counterparts, with the same effect as if all parties had signed the same
document. Each such counterpart shall be an original, but all such counterparts
taken together shall constitute a single agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page was an original thereof.
 
 
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13.11     Section Headings and Gender.  The Section headings used herein are
inserted for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement. All personal pronouns used in this
Agreement shall include the other genders, whether used in the masculine,
feminine or neuter, and the singular shall include the plural, and vice versa,
whenever and as often as may be appropriate.
 
13.12     Third-Party Beneficiary.  Each of Seller, Buyers and Split-Off
Subsidiary acknowledges and agrees that this Agreement is entered into for the
express benefit of InVivo, and that InVivo is relying hereon and on the
consummation of the transactions contemplated by this Agreement in entering into
and performing its obligations under the Merger Agreement, and that InVivo shall
be in all respects entitled to the benefit hereof and to enforce this Agreement
as a result of any breach hereof.
 
13.13     Specific Performance; Remedies.  Each of Seller, Buyers and Split-Off
Subsidiary acknowledge and agree that InVivo would be damaged irreparably if any
provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached. Accordingly, each of Seller, Buyers and
Split-Off Subsidiary agrees that InVivo will be entitled to seek an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and its terms and provisions in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, subject to Section 13.9, in
addition to any other remedy to which InVivo may be entitled, at law or in
equity. Except as expressly provided herein, the rights, obligations and
remedies created by this Agreement are cumulative and are in addition to any
other rights, obligations or remedies otherwise available at law or in equity,
and nothing herein will be considered an election of remedies.
 
13.14     Submission to Jurisdiction; Process Agent; No Jury Trial.
 
(a)           Each party to the Agreement hereby submits to the jurisdiction of
any state or federal court sitting in the State of New York in any action
arising out of or relating to this Agreement and agrees that all claims in
respect of the action may be heard and determined in any such court. Each party
to the Agreement also agrees not to bring any action arising out of or relating
to this Agreement in any other court. Each party to the Agreement agrees that a
final judgment in any action so brought will be conclusive and may be enforced
by action on the judgment or in any other manner provided at law or in equity.
Each party to the Agreement waives any defense of inconvenient forum to the
maintenance of any action so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto.
 
 
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(b)           EACH PARTY TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS TO
JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
OTHER AGREEMENTS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY
DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope
of this waiver is intended to be all encompassing of any and all actions that
may be filed in any court and that relate to the subject matter of the
transactions, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. Each party to the Agreement hereby
acknowledges that this waiver is a material inducement to enter into a business
relationship and that they will continue to rely on the waiver in their related
future dealings. Each party to the Agreement further represents and warrants
that it has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE
WAIVER WILL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the
event of commencement of any action, this Agreement may be filed as a written
consent to trial by a court.
 
13.15     Construction.  The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof will arise
favoring or disfavoring any party because of the authorship of any provision of
this Agreement. Any reference to any federal, state, local or foreign law will
be deemed also to refer to law as amended and all rules and regulations
promulgated thereunder, unless the context requires otherwise. The words
“include,” “includes,” and “including” will be deemed to be followed by “without
limitation.”  The words “this Agreement,” “herein,” “hereof,” “hereby,”
“hereunder,” and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The parties
hereto intend that each representation, warranty and covenant contained herein
will have independent significance. If any party hereto has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which
that party has not breached will not detract from or mitigate the fact that such
party is in breach of the first representation, warranty or covenant.
 
[Signature page follows this page.]

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Split-Off
Agreement as of the day and year first above written.

INVIVO THERAPEUTICS HOLDING CORP.
 
By:
   
Name:
Peter Reichard
Title:
President
 
DSOURCE SPLIT CORP.
 
By:
   
Name:
Peter Reichard
Title:
President
 
BUYERS
     
Peter Reichard
         
Lawrence Reichard
         
Peter Coker
 

 
 

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EXHIBIT A

Buyers
 
Purchase Price Security
 
Number
         
Peter Reichard
 
Common Stock
 
6,644,910
         
Lawrence Reichard
 
Common Stock
 
405,796
         
Peter Coker
  
Common Stock
  
7,696,848

* As adjusted to reflect the 2.02898-for-1 forward stock split of the common
stock of Seller, in the form of a dividend.
 
 

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