Exhibit 10.1

 
THIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of [●], 2015 (this
“Agreement”), is entered into by and among Midatech Pharma PLC, a public limited
liability company organized under the laws of England and Wales (“Parent”), DARA
BioSciences, Inc., a Delaware corporation (the “Company”), Shareholder
Representative Services LLC, a Colorado limited liability company, solely in its
capacity as representative of the Holders (as defined herein) (the “Holder
Representative”)  and [●], a [●], as initial Rights Agent (as defined herein).
 
Preamble
 
Parent, Midatech Acquisition Sub, Inc., a Delaware corporation (“Merger Sub”),
Duke Acquisition Sub, Inc., a Delaware corporation (“Secondary Merger Sub”) and
the Company have entered into an Agreement and Plan of Merger dated as of June
3, 2015 (the “Merger Agreement”), pursuant to which Merger Sub will merge with
and into the Company (the “Merger”), with the Company surviving the Merger as a
subsidiary of Parent. The Company, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the “Surviving Corporation.”
Immediately following the Merger, the Surviving Company will merge with and into
Secondary Merger Sub (the “Secondary Merger”), with Secondary Merger Sub
surviving as a subsidiary of Parent. The Secondary Merger Sub, as the surviving
corporation after the Secondary Merger, is hereinafter sometimes referred to as
the “Surviving Company.”
 
Pursuant to the Merger Agreement, Parent agreed to create and issue to the
Company’s stockholders of record immediately prior to the Effective Time
contingent value rights as hereinafter described, and to cause Company Warrants
that are outstanding at the Effective Time to become exercisable for Parent
Depositary Shares and the contingent value rights that would have been issued to
the holders thereof had such Company Warrants been exercised immediately prior
to the Effective Time.
 
Pursuant to the Merger Agreement, by approving the Merger Agreement and the
transactions contemplated thereby, or by executing and delivering a letter of
transmittal, the Company’s stockholders of record immediately prior to the
Effective Time have irrevocably authorized and appointed the Holder
Representative as the exclusive agent and attorney-in-fact on behalf of each
such stockholder with respect to this Agreement and any agreement contemplated
hereby, and to take any and all actions and make any decisions required or
permitted to be taken pursuant to this Agreement.
 
The parties have done all things necessary to make the contingent value rights,
when issued pursuant to the Merger Agreement and hereunder, the valid
obligations of Parent and to make this Agreement a valid and binding agreement
of Parent, in accordance with its terms.
 
NOW, THEREFORE, for and in consideration of the premises and the consummation of
the transactions referred to above, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders (as hereinafter defined), as
follows:
 
ARTICLE I.  DEFINITIONS
 
Section 1.1            Definitions.
 
(a)            For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
 
(i)             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, and Article, Section,
Preamble, Recital, Schedule and Exhibit references are to this Agreement unless
otherwise specified.  The meaning of defined terms shall be equally applicable
to the singular and plural forms of the defined terms.  The terms “include” and
“including” and variations thereof, are not limiting but rather shall be deemed
to be followed by the words “without limitation;”
 
 
 

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

 
 
(ii)            all accounting terms used and not expressly defined herein have
the respective meanings given to them under GAAP or IFRS, as applicable;
 
(iii)           whenever the context requires: the singular number shall include
the plural, and vice versa; the masculine gender shall include the feminine and
neuter genders; the feminine gender shall include the masculine and neuter
genders; and the neuter gender shall include the masculine and feminine genders;
 
(iv)          the captions and headings of this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement;
 
(v)           any reference herein to any Law or legal requirement (including to
any statute, ordinance, code, rule, regulation, or any provision thereof) shall
be deemed to include reference to such Law and or to such legal requirement, as
amended, and any legal requirements promulgated thereunder or successor thereto;
and
 
(vi)           Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed thereto in the Merger Agreement. The following terms
shall have the meanings ascribed to them as follows:
 
“AIM Rules” shall have the meaning given in the Merger Agreement.
 
“Board of Directors” means the board of directors of Parent.
 
“Board Resolution” means a copy of a resolution certified by the secretary or an
assistant secretary of Parent to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Rights Agent.
 
“Business Day” means any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York or London, England are permitted (in
the case of New York) or required (in the case of London) to be closed.
 
“Compliance Certificates” means the First CVR Payment Compliance Certificate (as
such term is defined in Section 2.4(a)) and the Second CVR Payment Compliance
Certificate (as such term is defined in Section 2.5(a)).
 
“CVRs” means the contingent value rights issued by Parent pursuant to the Merger
Agreement and this Agreement.
 
“CVR Fund” means the segregated cash fund maintained by the Rights Agent for the
benefit of holders of CVRs and Potential CVRs consisting of the CVR Payment
Amounts, which shall not exceed the amount of $5,700,000.
 
“CVR Payment Amounts” means the CVR 2016 Payment Amount (as such term is defined
in Section 2.4) and the CVR 2017 Payment Amount (as such term is defined in
Section 2.5).
 
“CVR Payment Date” means the date that a CVR Payment Amount or portion thereof
is to be distributed to the Holders, which date shall be established pursuant to
Section 2.7.
 
“Fiscal Year 2016” means the financial year of the Parent and its Subsidiaries
(including the Surviving Company) ending on 31 December 2016.
 
“Fiscal Year 2017” means the financial year of the Parent and its Subsidiaries
(including the Surviving Company) ending on 31 December 2017.
 
“Gelclair” means the bioadherent gel currently indicated for the management and
relief of pain associated with oral mucositis (a condition characterized by
erythema and oral lesions) being a product to which the Company has exclusive
license rights in the United States, the contents of which include
polyvinlypyrrolidone and sodium hyaluronate, and which product is currently sold
under the registered trade mark “GELCLAIR” and which is licensed by the Company
pursuant to the Gelclair License.
 
 
2

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

 
 
“Gelclair License” means that certain Distribution and License Agreement dated
as of September 7, 2012, by and between the Company and Helsinn Healthcare SA,
as amended, restated, supplemented or otherwise modified from time to time.
 
“Gross Sales” means those aggregate sales of Gelclair and Oravig for the Fiscal
Year 2016 or Fiscal Year 2017 by the Second Surviving Corporation, Parent, their
respective Affiliates, and any Permitted Sellers, such sales computed by, for
each product, multiplying (i) the number of units of such product shipped and
recognized in the final audited consolidated financial statements maintained in
accordance with revenue recognition standards of GAAP or such other successor
standard by (ii) the WAC for such product.
 
“Holder” means a Person in whose name a CVR is registered in the CVR Register.
 
“Holder Representative” means, at any time, the person then serving as the
Stockholder Representative under the Merger Agreement.
 
“Independent Accountant” means a nationally recognized accounting firm mutually
agreed upon by the Holder Representative and Parent, provided that such firm is
not at the time of selection serving as the independent auditor of any of the
Surviving Corporation, Second Surviving Company, or Parent, each of Holder
Representative and Parent hereby agreeing that it will not unreasonably withhold
or delay such agreement to a qualified firm.
 
“Non-Compliance Certificates” means the First CVR Payment Non-Compliance
Certificate (as such term is defined in Section 2.4(b)) and the Second CVR
Payment Non-Compliance Certificate (as such term is defined in Section 2.4(b)).
 
“Officer’s Certificate” means a certificate signed by the chief executive
officer, president, chief financial officer, any vice president, the controller,
the treasurer or the secretary, in each case of Parent, in his or her capacity
as such an officer, and delivered to the Rights Agent.
 
“Oravig” means the orally dissolving buccal tablet product acquired from Onxeo
S.A. and owned by the Company the contents of which include miconazole, which
product is currently sold under the registered trade mark “ORAVIG” and which is
licensed by the Company pursuant to the Oravig License.
 
“Oravig License” means that certain Commercialization Agreement, dated as of
March 10, 2015, by and between the Company and Onxeo, S.A., as amended,
restated, supplemented or otherwise modified from time to time.
 
“Parent Warrants” means the warrants issued by Parent to the holders of Company
Warrants in exchange for such Company Warrants pursuant to the Merger Agreement,
and as to which CVRs are issuable upon the exercise thereof.  For purposes of
this Agreement, no warrant included in the term Parent Warrants shall be deemed
outstanding at such time as it has been exercised, expired, terminated, or
otherwise is no longer exercisable to acquire any CVRs.
 
“Permitted Encumbrances” shall have the meaning given in the Merger Agreement.
 
“Permitted Transfer” means the transfer of any or all of the CVRs (i) on death
by will or intestacy; (ii) by instrument to an inter vivos or testamentary trust
in which the CVRs are to be passed to beneficiaries upon the death of the
grantor or other event specified in such trust; (iii) made pursuant to a court
order; (iv) made by operation of law (including a consolidation or merger) or
without consideration in connection with the dissolution, liquidation or
termination of any corporation, limited liability company, partnership or other
entity; (v) in the case of any CVR held by a nominee, broker or other similar
intermediary for the benefit of the beneficial owner of the Common Stock or
Company Warrant with respect to which such CVR was issued, by such nominee,
broker or other intermediary (including through another nominee, broker or other
intermediary) to the beneficial owner thereof; or (vi) to Parent as provided in
Section 2.10.
 
 
3

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

 
 
“Permitted Seller” means any authorized agent, licensee or sublicensee of
Parent, the Surviving Company, the Company or of any of their Affiliates (but
not a distributor of any of Parent, the Surviving Company, the Company, any such
Affiliate or any such licensee or sublicensee to the extent such distributor’s
sales of Gelclair and Oravig have been recognized by Parent, the Surviving
Company, the Company or any of their Affiliates in their final audited
consolidated financial statements) having the right to sell Gelclair or Oravig.
 
“Pro Rata 2016 CVR Payment” means an amount equal to (i) the CVR 2016 Payment
Amount (as such term is defined in Section 2.4) other than any such CVR 2016
Payment Amount that has already been paid to the Holders, divided by (ii) the
sum of (A) the total number of CVRs held by all Holders as of the applicable CVR
Record Date (as such term is defined in Section 2.7(a)) plus (B) the total
number of CVRs that are issuable under Parent Warrants that remain outstanding
as of the applicable CVR Record Date.
 
“Pro Rata 2017 CVR Payment” means an amount equal to (i) the CVR 2017 Payment
Amount (as such term is defined in Section 2.5) other than any such CVR 2017
Payment Amount that has already been paid to the Holders, divided by (ii) the
sum of (A) the total number of CVRs held by all Holders as of the applicable CVR
Record Date (as such term is defined in Section 2.7(a)) plus (B) the total
number of CVRs that are issuable under Parent Warrants that remain outstanding
as of the applicable CVR Record Date.
 
“Rights Agent” means the Rights Agent named in the first paragraph of this
Agreement, until a successor Rights Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter “Rights Agent” shall
mean such successor Rights Agent.
 
“Sales Notice” means the 2016 Sales Notice (as defined in Section 2.4(a)) and
the 2017 Sales Notice (as defined in Section 2.5(a)).
 
“WAC” means Wholesaler Acquisition Cost, which is the approved and published
amount at which a product is sold to wholesalers and other customers in the
pharmaceutical industry, as reported by the applicable manufacturer to First
Databank.
 
ARTICLE II. CONTINGENT VALUE RIGHTS
 
Section 2.1            Issuance of CVRs.  The CVRs represent the rights of
Holders to receive contingent cash payments pursuant to this Agreement. The
initial Holders will be determined pursuant to the terms of the Merger
Agreement. CVRs may also be issued upon the exercise of Parent Warrants, as
provided pursuant to the Merger Agreement.
 
Section 2.2             Nontransferable.  The CVRs shall not be sold, assigned,
transferred, pledged, encumbered or in any other manner transferred or disposed
of either in whole or in part, other than through a Permitted Transfer.
 
Section 2.3            No Certificate; Appointment of Rights Agent;
Registration; Registration of Transfer; Change of Address.
 
(a)            The CVRs shall not be evidenced by a certificate or other
instrument.
 
(b)            Parent hereby appoints the Rights Agent to act as rights agent
for Parent in accordance with the terms and conditions set forth in this
Agreement, and the Rights Agent hereby accepts such appointment.
 
(c)           The Rights Agent shall keep a register (the “CVR Register”) for
the purposes of identifying the Holders of CVRs, and registering the CVRs and
Permitted Transfers of CVRs as herein provided.
 
 
4

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

 
 
(d)            Subject to the restriction on transferability set forth in
Section 2.2, every request made to transfer a CVR must be in writing and
accompanied by a written instrument of transfer and other documentation in form
reasonably satisfactory to the Rights Agent, duly executed by the Holder or
Holders thereof, or by the Holder Representative or other duly appointed legal
representative, personal representative or survivor of such Holder or Holders,
setting forth in reasonable detail the circumstances relating to the transfer.
Upon receipt of such written notice, the Rights Agent shall, subject to its
reasonable determination that the transfer instrument is in proper form and the
transfer otherwise complies with the other terms and conditions herein, register
the transfer of the CVRs in the CVR Register. All duly transferred CVRs
registered in the CVR Register shall be the valid obligations of Parent,
evidencing the same right, and shall entitle the transferee to the same benefits
and rights under this Agreement, as those held by the transferor. Parent and
Rights Agent may require payment of a sum sufficient to cover any stamp or other
transfer tax or governmental charge that is imposed in connection with any such
registration of transfer. The Rights Agent shall have no duty or obligation to
take any action under any section of this Agreement that requires the payment by
a Holder of a CVR of such applicable taxes or charges unless and until the
Rights Agent is satisfied that all such taxes or charges have been paid. No
transfer of a CVR shall be valid until registered in the CVR Register, and any
transfer not duly registered in the CVR Register will be void ab initio.
 
(e)            A Holder may make a written request to the Rights Agent to change
such Holder’s address of record in the CVR Register. The written request must be
duly executed by the Holder. Upon receipt of such written notice, the Rights
Agent shall promptly record the change of address in the CVR Register.
 
Section 2.4            Payment Procedure: Fiscal Year 2016
 
(a)            Parent shall provide to the Rights Agent and the Holder
Representative, as soon as is reasonably practicable, but not later than 28
February 2017 (the “Fiscal Year 2016 Outside Date”) a certificate signed by the
chief executive officer or chief financial officer of the Parent setting forth
the Gross Sales for the Fiscal Year 2016 (the “2016 Sales Notice”). If the 2016
Sales Notice shows at least $15,000,000 in Gross Sales (the “2016 Minimum Sales
Target”), then upon delivery of the 2016 Sales Notice reflecting that the 2016
Minimum Sales Target is met, Parent shall deliver to the Rights Agent and the
Holder Representative a certificate (the “First CVR Payment Compliance
Certificate”), certifying that the Holders are collectively entitled to receive
the “CVR 2016 Payment Amount” which shall be an amount equal to:
 
(i)             in the event that Gross Sales in the Fiscal Year 2016 equal or
exceed $15,000,000 but are less than $16,500,000, the sum of $1,425,000, payable
in cash to the CVR Fund; (ii) in the event that such Gross Sales equal or exceed
$16,500,000 but are less than $18,000,000, the sum of $1,900,000 payable in cash
to the CVR Fund; (iii) in the event that such Gross Sales equal or exceed
$18,000,000, the sum of $2,375,000, payable in cash to the CVR Fund (any amounts
in (ii) and (iii) to take into account payments previously made).
 
(b)            If the 2016 Minimum Sales Target is not met as shown in the 2016
Sales Notice then as soon as is reasonably practicable, but no later than the
2016 Outside Date, Parent shall deliver to the Rights Agent and the Holder
Representative a certificate (the “First CVR Payment Non-Compliance
Certificate”), certifying that the 2016 Minimum Sales Target was not met during
the Fiscal Year 2016, and as a result the Holders are not entitled to receive
any CVR 2016 Payment Amount.
 
Section 2.5            Payment Procedure: Fiscal Year 2017
 
(a)            Parent shall provide to the Rights Agent and the Holder
Representative, as soon as is reasonably practicable, but not later than 28
February 2018 (the “2017 Outside Date”) a certificate signed by the chief
executive officer or chief financial officer of Parent setting forth the Gross
Sales for the Fiscal Year 2017 (the “2017 Sales Notice”). If the 2017 Sales
Notice shows at least $26,000,000 in Gross Sales (the “2017 Minimum Sales
Target”), then upon delivery of the 2017 Sales Notice reflecting that the 2017
Minimum Sales Target is met, Parent shall deliver to the Rights Agent and the
Holder Representative a certificate (the “Second CVR Payment Compliance
Certificate”, certifying that the Holders are collectively entitled to receive
the “CVR 2017 Payment Amount” which shall be an amount equal to:
 
 
5

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

 
 
(i)             in the event that Gross Sales in the Fiscal Year 2017 equal or
exceed $26,000,000 but are less than $28,600,000, the sum of $2,375,000, payable
in cash to the CVR Fund; (ii) in the event that such Gross Sales equal or exceed
$28,600,000 but are less than $31,200,000, the sum of $2,850,000 payable in cash
to the CVR Fund; (iii) in the event that such Gross Sales equal or exceed
$31,200,000, the sum of $3,325,000, payable in cash to the CVR Fund (any amounts
in (ii) and (iii) to take into account payments previously made in respect of
Fiscal Year 2017).
 
(b)            If the 2017 Minimum Sales Target is not met as shown in the 2017
Sales Notice then as soon as is reasonably practicable, but no later than the
2017 Outside Date, Parent shall deliver to the Rights Agent and the Holder
Representative a certificate (the “Second CVR Payment Non-Compliance
Certificate” certifying that the 2017 Minimum Sales Target was not met during
the Fiscal Year 2017, and as a result the Holders are not entitled to receive
any CVR 2017 Payment Amount.
 
Section 2.6            Review
 
(a)            Except as otherwise requested by any Holder, the Rights Agent
shall promptly (and in no event later than five Business Days after receipt of
each Compliance Certificate and Non-Compliance Certificate) send each Holder and
the Holder Representative a copy of such Compliance Certificate or
Non-Compliance Certificate, as applicable, at such person’s registered address.
In addition, upon the request of any Holder or the Holder Representative, the
Rights Agent shall promptly (and in no event later than five Business Days after
such request) send such person a copy of any Sales Notice delivered by Parent.
 
(b)           From and after the delivery of the applicable Sales Notice to the
Holder Representative, and until the related CVR Payment Amount (or
determination that no such CVR Payment Amount is due) is finally determined,
upon reasonable advance written notice from the Holder Representative, Parent
shall permit the Holder Representative and its agents (and, if applicable, the
Independent Accountant) to have access at such reasonable times as are agreed
with the Parent (which such times shall in any event be during normal business
hours and to which Parent’s agreement shall not be unreasonably withheld or
delayed) to the books and records of Parent, the Surviving Company and their
Affiliates as may be reasonably necessary to evaluate and verify the accuracy of
the Gross Sales calculations set forth in the most recently delivered Sales
Notice and the figures underlying such calculations to the extent such
calculations have not become conclusive and binding on the Rights Agent and the
Holders in accordance with this Section 2.6; provided that (x) the Holder
Representative (and, if applicable, the Independent Accountant) enter into
customary confidentiality agreements reasonably satisfactory to Parent with
respect to the confidential information of Parent, the Surviving Company or
their Affiliates to be furnished pursuant to this Section 2.6(b) and (y) such
access does not interfere with the conduct of the business of Parent, the
Surviving Company or any of their Affiliates in any material respect.
 
(c)            In the event the Holder Representative disputes any calculation
of Gross Sales in the most recently delivered Sales Notice, within 45 days after
delivery by Parent to the Holder Representative of such Sales Notice in
accordance with Section 2.4 or Section 2.5, as applicable, the Holder
Representative shall provide Parent with written notice (a “Notice of
Objection”) of such dispute in reasonable detail, together with supporting
documentation (the items so disputed, the “Disputed Items”. If the Holder
Representative shall fail to provide a Dispute Notice to Parent within such
45-day period, the calculations set forth in the applicable Sales Notice, and
any CVR Payment Amount determined therefrom, shall become conclusive and binding
on the Rights Agent and the Holders upon the expiration of such 45-day period.
If the Holder Representative delivers a Dispute Notice within such 45-day
period, all calculations and items set forth in the applicable Sales Notice
other than the Disputed Items (including any CVR Payment Amount or portion
thereof determined therefrom) shall become conclusive and binding on Parent, the
Rights Agent and the Holders.
 
(d)            In the event the Holder Representative agrees with the
calculation of Gross Sales in the most recently delivered Sales Notice, the
Holder Representative may so notify Parent in writing (a “Notice of Agreement”),
whereupon the calculations set forth in the applicable Sales Notice, and any CVR
Payment Amount determined therefrom, shall become conclusive and binding on the
Rights Agent and the Holders.
 
 
6

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

 
 
(e)           For ten Business Days following the delivery of a Notice of
Objection, Parent and the Holder Representative shall attempt in good faith to
resolve the Disputed Items. To the extent the parties fail to resolve such
Disputed Items within such ten-Business Day period, the parties shall submit the
unresolved Disputed Items to the Independent Accountant for final determination.
The Independent Accountant shall deliver to Parent and the Holder
Representative, as promptly as practicable (and in any event within 30 days), a
report setting forth the Independent Accountant’s determination with respect to
each of such Disputed Items. The Independent Accountant shall only decide the
specific items under dispute by the parties and the Independent Accountant’s
determination with respect to each Disputed Item shall be no more favorable to
Parent than as reflected in the applicable Sales Notice and no more favorable to
the Holders than as reflected in the applicable Notice of Objection. The
determination of the Independent Accountant with respect to the Disputed Items
shall be final, conclusive and binding on Parent and the Holders, shall be
non-appealable and shall not be subject to further review, and the amount of any
CVR Payment Amount to which such Disputed Items relate (the “Disputed CVR
Payment Amount”) shall be finally determined based upon such determination of
the Disputed Items and the other items forming the basis therefor, if any, that
were not Disputed Items.  The fees and expenses charged by the Independent
Accountant shall be borne by Holders, on the one hand (but only to the extent of
the CVR Payment Amount determined to be due them), and by Parent, on the other
hand, based upon the percentage that the amount actually contested but not
awarded to the Holder Representative or Parent, respectively, bears to the
aggregate amount actually contested by the Holder Representative and Parent. By
way of example, if Parent’s calculations of the Disputed CVR Payment Amount is
$1,000 and the Holder Representative’s calculation of the Disputed CVR Payment
Amount is $2,000 (resulting in a difference of $1,000) and the determination of
the Independent Accountant is $1,700, then 70% of the fees and expenses of the
Independent Accountant shall be borne by Parent and 30% of the fees and expenses
of the Independent Accountant shall be borne by the Holders. Any such fees and
expenses to be borne by the Holders shall be paid by Parent and Parent shall be
entitled to deduct an equal amount from the CVR Payment Amount to the extent
thereof. To the extent there is no offset of a CVR Payment Amount available to
cover the expenses that would otherwise be borne by the Holders, then Parent
shall pay any such fees and expenses of the Independent Accountant that would
otherwise have been borne by the Holders.
 
(f)            Parent shall promptly furnish to the Rights Agent and the Holder
Representative all information and documentation in connection with this
Agreement and the CVRs that the Rights Agent or the Holder Representative may
reasonably request in connection with the determination of the CVR Payment
Amounts. The Rights Agent shall forward any information and documentation it
receives to the Holder Representative.
 
Section 2.7            Satisfaction of Amounts
 
(a)            Promptly upon (and no later than five days after) the final
determination of a CVR Payment Amount or any portion thereof (including the
portion of any proposed CVR Payment Amount that becomes final while Disputed
Items are still being resolved), whether by the failure of the Holder
Representative to deliver a Notice of Objection with respect thereto within the
time permitted, or by the delivery by the Holder Representative of a Notice of
Agreement with respect thereto, or by agreement between Parent and the Holder
Representative, or by the determination of the Independent Accountant, the
Holder Representative and Parent shall jointly give written notice to the Rights
Agent of such final determination and the amount, if any, of the CVR Payment
Amount that has become payable as a result thereof.  The date on which such
notice is given to the Rights Agent is referred to herein as the “CVR Record
Date” with respect to the CVR Payment Amount so finally determined.  If after
the existence or nonexistence and amounts of all of the CVR Payments or portions
thereof have been finally determined and the CVR Record Date with respect
thereto has occurred, there remain outstanding any Parent Warrants, there shall
also be a CVR Record Date on each December 31 thereafter on which any Parent
Warrants remain outstanding and on the first day on which no Parent Warrants
remain outstanding (each such subsequent CVR Record Date being referred to as a
“Post-Determination CVR Record Date”).
 
(b)            Within ten (10) Business Days after each CVR Record Date other
than a Post-Determination CVR Record Date, Parent shall transfer an amount equal
to the applicable CVR Payment Amount less any amounts withheld pursuant to
Section 2.8 to the CVR Fund.
 
(c)            Within five (5) Business Days after the transfer of the
applicable CVR Payment Amount, less amounts withheld, to the CVR Fund (a “CVR
Payment Date,” which term shall also include the date of any Distribution
pursuant to subsection (d) below, the Rights Agent shall pay each Holder of
record of the CVRs as of the applicable CVR Record Date an amount equal to (i)
the Pro Rata 2016 CVR Payment or the Pro Rata 2017 CVR Payment, as applicable,
multiplied by (ii) the number of CVRs held by such Holder as of the applicable
CVR Record Date, less any amounts withheld with respect to such Holder’s CVR’s
pursuant to Section 2.8 (any payment to the Holders from the CVR Fund, a
“Distribution”).  Any amounts transferred to the CVR Fund that are not used for
such Distributions shall be retained in the CVR Fund for subsequent
Distributions with respect to CVRs issued after the applicable CVR Record Date
pursuant to the exercise of Parent Warrants, or Distributions with respect to
all issued CVRs upon reallocation of amounts that would otherwise have been
payable to CVRs reserved for issuance upon the exercise of Parent Warrants that
expire or otherwise terminate unexercised. The Rights Agent shall provide prompt
reports to the Holder Representative detailing all amounts distributed by the
Rights Agent.
 
 
7

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

 
 
(d)           Promptly after each CVR Record Date, including each
Post-Determination CVR Record Date, the Rights Agent shall recalculate the Pro
Rata 2016 CVR Payment and the Pro Rata 2017 CVR Payment, as applicable, taking
into account any exercises, expirations or other terminations of Parent Warrants
during the period between such CVR Record Date and the preceding CVR Record
Date, and shall promptly notify the Holder Representative regarding the details
of each such recalculation.  If during such period additional CVRs have been
issued pursuant to the exercise of Parent Warrants, the Distributions with
respect to such CVR Record Date shall include Distributions to the holders of
such newly issued CVRs.  If during such period the Pro Rata 2016 CVR Payment or
Pro Rata 2017 CVR Payment shall have increased from the amounts previously
distributed to the Holders by reason of the expiration or other termination of
Parent Warrants during such period, the Distributions with respect to such CVR
Record Date shall include additional Distributions of such increased amounts to
all Holders; provided, that the Rights Agent need not make any such additional
Distribution to any particular Holder prior to the final CVR Payment Date until
all additional Distributions payable to such Holder pursuant to this provision
total $1.00 or more.  Subject to the foregoing proviso, all Distributions to
Holders pursuant to this subsection (d) shall be made within five (5) Business
Days after the applicable CVR Record Date.
 
(e)            The Rights Agent shall pay the Distributions to the Holders
(i) by check mailed to the address of each Holder as reflected in the CVR
Register as of the close of business on the applicable CVR Record Date, or,
(ii) with respect to Holders that are due CVR Payment Amounts in excess of
$10,000 who have provided the Rights Agent with wire transfer instructions in
writing and authorized the Rights Agent to deduct the costs of such wire
transfer from the Distribution otherwise payable to them, by wire transfer of
immediately available funds to such account.
 
Section 2.8            Witholding.
 
(a)            Parent shall be entitled to deduct and withhold, or cause to be
deducted or withheld from, each CVR Payment Amount otherwise payable pursuant to
this Agreement such amounts as: (i) Parent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code, or
any provision of state, local or foreign tax Law; and (ii) any amount due from
the Holders to the Parent under the terms of the Merger Agreement.
 
(b)            To the extent that amounts are so withheld pursuant to (a) above
are paid over to or deposited with the relevant governmental entity, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Holder in respect of which such deduction and withholding was
made.
 
Section 2.9            No Voting, Dividends Or Interest; No Equity Or Ownership
Interest In Parent.
 
(a)            The CVRs shall not have any voting or dividend rights, and
interest shall not accrue on any amounts payable on the CVRs to any Holder.
 
(b)           The CVRs shall not represent any equity or ownership interest in
Parent or in any constituent company to the Merger or any of their respective
affiliates.
 
Section 2.10          Ability to Abandon CVR.  A Holder may at any time, at such
Holder’s option, abandon all of such Holder’s remaining rights in a CVR by an
instrument in writing transferring such CVR to Parent without consideration
therefor. Nothing in this Agreement is intended to prohibit Parent from offering
to acquire CVRs for consideration in its sole discretion.
 
 
8

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

 
 
Section 2.11         Valuation.  Following the signing date of the Agreement and
Plan of Merger but prior to the filing of the Proxy Statement/Prospectus (as
part of the Registration Statement) , Parent and the Company shall work together
in good faith to determine the value of each CVR at the Effective Time (the
“Agreed Valuation”) and the parties shall report the federal, state and local
income and other Tax consequences related to the issuance and satisfaction of
the CVRs in a manner consistent with the Agreed Valuation and shall not take any
position inconsistent therewith upon examination of any Tax Return, in any
refund claim, in any litigation, or otherwise, unless otherwise required to do
so by applicable Law.  In the event that the Agreed Valuation is disputed by any
Taxing Authority, the party receiving notice of such dispute shall promptly
notify and consult with the other party and keep the other party apprised of
material developments concerning resolution of such dispute.  If there remains
any disagreement among the parties at the time of the filing of the Proxy
Statement/Prospectus (as part of the Registration Statement) as to the Agreed
Valuation, each party shall be permitted to report the federal, state and local
income and other Tax consequences related to the issuance and satisfaction of
the CVRs using the valuation for each CVR at the Effective Time as such party
determines in its own discretion, consistent with applicable law.
 
ARTICLE III.  THE RIGHTS AGENT
 
Section 3.1            Certain Duties And Responsibilities.
 
The Rights Agent shall not have any liability for any actions taken or not taken
in connection with this Agreement, except to the extent of its willful
misconduct, bad faith or gross negligence. No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers.
 
Section 3.2            Certain Rights of Rights Agent.
 
The Rights Agent undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Rights Agent. In
addition:
 
(a)            the Rights Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
 
(b)            whenever the Rights Agent shall deem it desirable that a matter
be proved or established prior to taking, suffering or omitting any action
hereunder, the Rights Agent may, in the absence of bad faith, gross negligence
or willful misconduct on its part, rely upon an Officer’s Certificate;
 
(c)            the Rights Agent may engage and consult with counsel of its
selection and the written advice of such counsel or any opinion of counsel shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
 
(d)            in the event of arbitration, the Rights Agent may engage and
consult with tax experts, valuation firms and other experts and third parties
that it, in its sole and absolute discretion, deems appropriate or necessary to
enable it to discharge its duties hereunder;
 
(e)            the permissive rights of the Rights Agent to do things enumerated
in this Agreement shall not be construed as a duty;
 
(f)            the Rights Agent shall not be required to give any note or surety
in respect of the execution of such powers or otherwise in respect of the
premises;
 
(g)           Parent agrees to indemnify Rights Agent for, and hold Rights Agent
harmless against, any loss, liability, claim, demands, suits or expense arising
out of or in connection with Rights Agent’s duties under this Agreement,
including the reasonable costs and expenses of defending Rights Agent against
any claims, charges, demands, suits or loss, unless such loss shall have been
determined by a court of competent jurisdiction to be a result of Rights Agent’s
gross negligence, bad faith or willful or intentional misconduct; and
 
 
9

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

 
 
(h)            Parent agrees (i) to pay the fees and expenses of the Rights
Agent in connection with this Agreement as agreed upon in writing by the Rights
Agent and Parent on or prior to the date hereof, and (ii) to reimburse the
Rights Agent for all taxes and governmental charges, reasonable expenses and
other charges of any kind and nature incurred by the Rights Agent in the
execution of this Agreement (other than taxes imposed on or measured by the
Rights Agent’s net income and franchise or similar taxes imposed on it (in lieu
of net income taxes)). The Rights Agent will also be entitled to reimbursement
from Parent for all reasonable and necessary out-of-pocket expenses paid or
incurred by it in connection with the administration by the Rights Agent of its
duties hereunder.
 
Section 3.3            Resignation And Removal; Appointment of Successor.
 
(a)            The Rights Agent may resign at any time by giving written notice
thereof to Parent and the Holder Representative specifying a date when such
resignation shall take effect, which notice shall be sent at least 60 days prior
to the date so specified (or, if earlier, the appointment of the successor
Rights Agent).
 
(b)            Parent shall have the right to remove the Rights Agent at any
time by a Board Resolution specifying a date when such removal shall take
effect. Notice of such removal shall be given by Parent to Rights Agent, which
notice shall be sent at least 60 days prior to the date so specified (or, if
earlier, the appointment of the successor Rights Agent).
 
(c)           If the Rights Agent shall resign, be removed or become incapable
of acting, Parent, by a Board Resolution, shall promptly appoint a qualified
successor Rights Agent which shall be a bank or trust company organized under
the laws of the United States or any state thereof that is regularly engaged in
the business of providing paying agency or other corporate trust services. The
successor Rights Agent so appointed shall, forthwith upon its acceptance of such
appointment in accordance with this Section 3.3(c) and Section 3.4, become the
successor Rights Agent.
 
(d)            Parent shall give notice of each resignation and each removal of
a Rights Agent and each appointment of a successor Rights Agent by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders as their names and addresses appear in the CVR Register and to the
Holder Representative. Each notice shall include the name and address of the
successor Rights Agent. If Parent fails to send such notice within ten Business
Days after acceptance of appointment by a successor Rights Agent, the successor
Rights Agent shall cause the notice to be mailed at the expense of Parent.
 
Section 3.4            Acceptance of Appointment By Successor.  Every successor
Rights Agent appointed hereunder shall execute, acknowledge and deliver to
Parent and to the retiring Rights Agent an instrument accepting such appointment
and a counterpart of this Agreement, and thereupon such successor Rights Agent,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Rights Agent; but, on request
of Parent or the successor Rights Agent, such retiring Rights Agent shall
execute and deliver an instrument transferring to such successor Rights Agent
all the rights, powers and trusts of the retiring Rights Agent.
 
ARTICLE IV. COVENANTS
 
Section 4.1            List of Holders.  Parent shall furnish or cause to be
furnished to the Rights Agent (with a copy of to the Holder Representative) in
such form as Parent receives from its transfer agent (or other agent performing
similar services for Parent), the names and addresses of the Holders and the
number of CVRs which are held by them within 20 Business Days of the Effective
Time, and also furnish to the Rights Agent the number of CVRs that were subject
immediately after the Effective Time to issuance upon the exercise of Parent
Warrants immediately after the Effective Time.  Parent shall also identify to
the Rights Agent (with a copy to the Holder Representative) any of such Holders
whose shares of Common Stock are Dissenting Shares, and from time to time notify
the Rights Agent and the Holder Representative as to any change in the status of
such shares; and for so long as the shares of Common Stock for which such
Holder’s CVRs were to be issued pursuant to the Merger Agreement continue to be
Dissenting Shares, then the corresponding CVRs shall not be deemed to have been
issued.  Upon the issuance of any additional  CVRs pursuant to the exercise of
Parent Warrants, Parent shall promptly notify the Rights Agent and the Holder
Representative thereof and provide to the Rights Agent and the Holder
Representative the names and addresses of the Holders of such additional CVRs
and the respective numbers of CVRs acquired by them pursuant to such
exercise.  Upon the expiration or termination of any Parent Warrants, Parent
shall promptly notify the Rights Agent and the Holder Representative thereof and
of the number of CVRs that were subject to such expired or terminated Parent
Warrants and are therefore no longer to be included in the calculation of the
Pro Rata 2016 CVR Payment or the Pro Rata 2017 CVR Payment.  The Rights Agent
may rely upon all such information in establishing and maintaining the CVR
Register.
 
 
10

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

 
 
Section 4.2            Payment of CVR Payment Amount.  If a Holder is entitled
to payment pursuant to the terms of this Agreement, Parent will, as and when
required by Section 2.7, deposit with the Rights Agent, for payments to each
Holder in accordance with Section 2.7 and in accordance with the terms of this
Agreement, the aggregate amount necessary to pay the applicable CVR Payment
Amount to all Holders.
 
Section 4.3            Ownership of Products.  If at any time, through 2017
Parent or one or more of its Affiliates (including the Second Surviving
Corporation) shall dispose of all ownership rights in Gelclair and Oravig held
by the Company immediately prior to the Effective Time, (subject only to
(i) licensing thereof to Permitted Sellers in the ordinary course of business
consistent with the Company’s past practices prior to the Effective Time and
(ii) any Permitted Encumbrances) then to the extent that any amounts have not
previously been paid to the Rights Agent in respect of Fiscal Year 2016 or
Fiscal Year 2017 the full amount of the Pro Rata 2016 CVR Payment and the Pro
Rata 2017 CVR Payment shall be paid being the maximum amount of $5,700,000.
 
Section 4.4            Board Observation Rights.  Until this Agreement
terminates pursuant to Section 6.11 hereof, Parent shall invite and allow a
representative designated by the Holder Representative (the “Observer”) to
attend all meetings of its Board of Directors (whether in person, telephonic or
other) in a nonvoting observer capacity and shall give such representative
copies of all notices, minutes, consents and other materials (including, but not
limited to, financial reports and data) that it provides to its directors,
provided that the Observer complies with reasonable confidentiality provisions
and requirements under the AIM Rules.
 
ARTICLE V. AMENDMENTS
 
Section 5.1            Amendments Without Consent of Holders.
 
(a)            Without the consent of any Holders, the Holder Representative or
the Rights Agent, Parent, when authorized by a Board Resolution, at any time and
from time to time, may enter into one or more amendments hereto, for any of the
following purposes:
 
(i)             to evidence the succession of another Person to Parent and the
assumption by any such successor of the covenants of Parent herein; or
 
(ii)            to evidence the termination of the Rights Agent and the
succession of another Person as a successor Rights Agent and the assumption by
any successor of the obligations of the Rights Agent herein.
 
(b)            Without the consent of any Holders or the Holder Representative,
Parent, when authorized by a Board Resolution, and the Rights Agent, in the
Rights Agent’s sole and absolute discretion, at any time and from time to time,
may enter into one or more amendments hereto, for any of the following purposes:
 
(i)             to evidence the succession of another Person as a successor
Rights Agent and the assumption by any successor of the covenants and
obligations of the Rights Agent herein;  
 
 
11

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

 
 
(ii)            to add to the covenants of Parent such further covenants,
restrictions, conditions or provisions as the Board of Directors and the Rights
Agent shall consider to be for the protection of the Holders; provided, that in
each case, such provisions shall not adversely affect the interests of the
Holders;
 
(iii)           to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Agreement; provided, that in each case, such provisions shall not adversely
affect the interests of the Holders;
 
(iv)           as may be necessary or appropriate to ensure that the CVRs are
not subject to registration under the Securities Act or the Exchange Act;
provided that such provisions shall not adversely affect the interests of the
Holders;
 
(v)            to reduce the number of CVRs, in the event any Holder agrees to
renounce such Holder’s rights under this Agreement pursuant to the terms of this
Agreement or to transfer such CVRs to Parent pursuant to Section 2.10; or
 
(vi)           any other amendments hereto for the purpose of adding,
eliminating or changing any provisions of this Agreement unless such addition,
elimination or change is adverse to the interests of the Holders.
 
(c)            Promptly after the execution by Parent and the Rights Agent of
any amendment pursuant to the provisions of this Section 5.1, Parent shall mail
a notice thereof by first class mail to the Holders at their addresses as they
shall appear on the CVR Register and to the Holder Representative, setting forth
in general terms the substance of such amendment.
 
Section 5.2            Amendments With Consent of Holders.
 
(a)            Subject to Section 5.1 (which amendments pursuant to Section 5.1
may be made without the consent of the Holders), with the consent of the Holders
of not less than a majority of the outstanding CVRs, whether evidenced in
writing or taken at a meeting of the Holders, Parent, when authorized by a Board
Resolution, and the Rights Agent may enter into one or more amendments hereto
for the purpose of adding, eliminating or changing any provisions of this
Agreement, even if such addition, elimination or change is in any way adverse to
the interest of the Holders.
 
(b)            Promptly after the execution by Parent and the Rights Agent of
any amendment pursuant to the provisions of this Section 5.2, Parent shall mail
a notice thereof by first class mail to the Holders at their addresses as they
shall appear on the CVR Register and to the Holder Representative, setting forth
in general terms the substance of such amendment.
 
Section 5.3            Execution of Amendments.  In executing any amendment
permitted by this Article V, the Rights Agent shall be entitled to receive, and
shall be fully protected in relying upon, an opinion of counsel selected by
Parent stating that the execution of such amendment is authorized or permitted
by this Agreement. The Rights Agent may, but is not obligated to, enter into any
such amendment that affects the Rights Agent’s own rights, privileges, covenants
or duties under this Agreement or otherwise.
 
Section 5.4            Effect of Amendments.  Upon the execution of any
amendment under this Article V, this Agreement shall be modified in accordance
therewith, such amendment shall form a part of this Agreement for all purposes
and every Holder shall be bound thereby.
 
ARTICLE VI. OTHER PROVISIONS OF GENERAL APPLICATION
 
Section 6.1            Notices To Rights Agent And Parent.  Any request, demand,
authorization, direction, notice, consent, waiver or other document provided or
permitted by this Agreement shall be sufficient for every purpose hereunder if
in writing and sent by facsimile transmission, delivered personally, sent by
electronic mail or other electronic transmission, sent by certified or
registered mail (return receipt requested and first-class postage prepaid) or
sent by a nationally recognized overnight courier (with proof of delivery),
addressed as follows:
 
 
12

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

 
 
(a)            if to the Rights Agent, addressed to it at:
 
[●]
[●]
[●]

or at any other address previously furnished in writing to the Holder
Representative and Parent by the Rights Agent; or
 
(b)            if to Parent, addressed to it at the address set forth for it in
the Merger Agreement or at any other address previously furnished in writing to
the Rights Agent and the Holder Representative by Parent.
 
Section 6.2            Notice To Holders And Holder Representative.  Where this
Agreement provides for notice to Holders, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his, her
or its address as it appears in the CVR Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. Where this Agreement provides for notice to the Holder Representative,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the Holder
Representative, at the address set forth for the Holder Representative in the
Merger Agreement, or at any other address previously furnished in writing to
Parent and the Rights Agent by Holder Representative, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders or to the Holder Representative.
 
Section 6.3            Successors and Assigns.  Parent may assign, in its sole
discretion and without the consent of any other party, any or all of its rights,
interests and obligations hereunder to one or more direct or indirect wholly
owned subsidiaries of Parent provided that the Assignee agrees to assume and be
bound by all of the terms of this Agreement; and Parent or any such subsidiary
may assign, in its sole discretion and without the consent of any other party,
any or all of its rights, interests and obligations hereunder to any Person who
acquires substantially all of the business of Parent and its subsidiaries and
who agree to assume and be bound by all of the terms of this Agreement;
provided, however, that in connection with any such assignment, Parent  shall
agree to remain liable for the performance by each assignee of all obligations
of Parent hereunder. Upon any such assignment, all references in this Agreement
to Parent shall include such assignee. This Agreement will be binding upon,
inure to the benefit of and be enforceable by Parent’s successors and each such
assignee, and this Agreement shall not restrict Parent’s, any such assignee’s or
any of their respective successor’s ability to merge or consolidate so long as
the surviving entity remains responsible for the obligations of Parent, such
assignee or such successors. Each of Parent’s successors and assigns shall
expressly assume by an instrument supplemental hereto, executed and delivered to
the Rights Agent and the Holder Representative, the due and punctual payment of
the CVRs and the due and punctual performance and observance of all of the
covenants and obligations of this Agreement to be performed or observed by
Parent. The Rights Agent may not assign this Agreement without Parent’s prior
written consent, but the Rights Agent’s rights and duties hereunder shall
devolve upon any successor Rights Agent appointed in accordance herewith.
 
Section 6.4            Non-Interference with Business Operations.  For purposes
of this Section 6.4 only, the term “Company” shall mean the Company, Surviving
Corporation and the Surviving Company, as applicable. Parent shall use
commercially reasonable efforts (and cause the Company to use commercially
reasonable efforts) to maximize Gross Sales during 2016 and 2017 on the same
basis as it would do so were it not obligated to make payments of CVR Payment
Amounts hereunder.  Notwithstanding the foregoing, but consistent with Parent’s
foregoing undertaking as to commercially reasonable efforts, nothing contained
herein shall limit Parent’s discretion  in good faith to operate the Company in
the same manner as it would had it not entered into this Agreement, including
but not limited to full discretion as to (i) the determination of pricing of
products, (ii) the acceptance or rejection of any product sales or orders, (iii)
the determination to discontinue the business or certain product lines (other
than Gelclair and Oravig), or to incorporate the activities of such business or
product line into the Parent or its affiliates, (iv) all decisions concerning
production, marketing, sales, licensing, capital expenditures, expenses and
related matters respecting the operations of the Company and its business, or
any part thereof, and (v) all decisions pertaining to personnel, staffing and
other resources of the Company.
 
 
13

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

 
 
Section 6.5            Benefits of Agreement.  Nothing in this Agreement,
express or implied, shall give to any Person (other than the parties hereto, the
Holders and their permitted successors and assigns hereunder) any benefit or any
legal or equitable right, remedy or claim under this Agreement or under any
covenant or provision herein contained, all such covenants and provisions being
for the sole benefit of the parties hereto, the Holders and their permitted
successors and assigns. The Holders shall have no rights hereunder except as are
expressly set forth herein and in the Merger Agreement.  Notwithstanding
anything to the contrary contained herein, any Holder may agree to renounce, in
whole or in part, such Holder’s rights under this Agreement by written notice to
the Rights Agent and Parent, which notice, if given, shall be irrevocable.
 
Section 6.6            Governing Law; Jurisdiction.
 
(a)            This Agreement and the CVRs shall be governed by and construed in
accordance with the laws of the State of Delaware without regards to its rules
of conflicts of laws.
 
(b)            Each of the parties hereto hereby agrees that (i) all actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in the Chancery Court of the State of Delaware and any state
appellate court therefrom sitting in New Castle County in the State of Delaware
(or, if the Chancery Court of the State of Delaware declines to accept
jurisdiction over a particular matter, any state or federal court within the
State of Delaware), (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (iii) a final Judgment in any action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the Judgment or in any other
manner provided by Law.
 
(c)            Each party irrevocably consents to the service of process outside
the territorial jurisdiction of the courts referred to in this Section 6.6 in
any such action or proceeding by mailing copies thereof by registered or
certified United States mail, postage prepaid, return receipt requested, to its
address as specified in or pursuant to this Agreement. However, the foregoing
shall not limit the right of a party to effect service of process on the other
party by any other legally available method.
 
Section 6.7            WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT.
 
Section 6.8            Legal Holidays.  In the event that a CVR Payment Date
shall not be a Business Day, then, notwithstanding any provision of this
Agreement to the contrary, any payment required to be made in respect of the
CVRs on such date need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
applicable CVR Payment Date.
 
Section 6.9            Severability Clause.  In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein. Upon such determination that any term
or other provision is invalid, illegal or unenforceable, the court or other
tribunal making such determination is authorized and instructed to modify this
Agreement so as to effect the original intent of the parties as closely as
possible so that the transactions and agreements contemplated herein are
consummated as originally contemplated to the fullest extent possible.
 
Section 6.10          Counterparts.  This Agreement may be signed in any number
of counterparts (which may be effectively delivered by facsimile or other
electronic means), each of which shall be deemed to constitute but one and the
same instrument.
 
 
14

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

 
 
Section 6.11          Termination.  This Agreement shall be terminated and of no
force or effect, and the parties hereto shall have no liability hereunder, upon
the earlier to occur of (a) the Distribution to the Holders of all potential CVR
Payment Amounts required to be paid under the terms of this Agreement and
(b) the final determination in accordance with this Agreement, following
delivery and approval of Non-Compliance Certificates relating to both CVR
Payment Amounts, that no CVR Payment Amount is, or can ever be, payable under of
this Agreement.
 
Section 6.12         Entire Agreement.  This Agreement and the Merger Agreement
represent the entire understanding of the parties hereto with reference to the
transactions and matters contemplated hereby and thereby and this Agreement
supersedes any and all other oral or written agreements hereto made except for
the Merger Agreement. If and to the extent that any provision of this Agreement
is inconsistent or conflicts with the Merger Agreement, this Agreement shall
govern and be controlling.
 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
15

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

 
 
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its duly authorized officers as of the day and year first above
written.
 

 
MIDATECH PHARMA PLC
                   
By:
   
Name:
   
Title:
                                 
DARA BIOSCIENCES, INC.
                   
By:
   
Name:
   
Title:
                     
[RIGHTS AGENT]
             
By:
   
Name:
   
Title:
                     
SHAREHOLDER REPRESENTATIVE SERVICES
LLC, solely in its capacity as Holder Representative
             
By:
   
Name:
   
Title:
 

 
16

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