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STOCK ISSUANCE AGREEMENT

 

 

 

This Agreement (“Agreement”) is made and entered into as of August 6, 2012 (the
“Effective Date”), by and among Synthetic Biologics, Inc., a Nevada corporation
(the “Company”), and Intrexon Corporation, a Virginia corporation (“Intrexon”).

 

A. Concurrently with the execution of this Agreement, the Company is entering
into an Exclusive Channel Collaboration Agreement with Intrexon (the “Channel
Agreement”), pursuant to which Intrexon is licensing the rights to certain
technology to the Company; and

 

B. In partial consideration of Intrexon’s license to the Company under the
Channel Agreement, the Company has agreed to issue to Intrexon certain shares of
the Company’s common stock, par value $0.001 per share, (the “Common Stock”) in
accordance with the terms and conditions of this Agreement.

 

 

 

AGREEMENT

 

In consideration of the mutual covenants contained in this Agreement and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and Intrexon hereby agree as follows:

 

 

 

sECTION 1.    Authorization of Issuance of Shares.

 

1.1              Technology Access Fee. Subject to the terms and conditions of
this Agreement, the Company has authorized the issuance to Intrexon of a certain
number of shares of the Company’s Common Stock at the Technology Access Fee
Closing (as hereinafter defined) as a technology access fee (the “Technology
Access Fee Shares”), which number of Technology Access Fee Shares is equal to
the difference between (i) 19.99% of the number of shares of Common Stock of
Company outstanding as of the date of the Technology Access Fee Closing prior to
the issuance of such shares, and (ii) the number of shares of Common Stock of
Company held by Intrexon immediately prior to the Technology Access Fee Closing.

 

1.2              Milestones. Subject to the terms and conditions of this
Agreement and the Channel Agreement, upon the attainment of certain
commercialization milestones as for each Synthetic Product (as that term is
defined in the Channel Agreement) developed under the Channel Agreement that
reach such milestones, the Company has agreed to make milestone payments (each,
whether in cash or equity, a “Milestone Payment” and together “Milestone
Payments”) set forth below in Sections 1.2(a) and 1.2(b) to Intrexon, at the
option of the Company, payable either in cash or in shares of Company Common
Stock at the option of the Company, on certain dates following achievement of
certain Milestone Events (as defined below).

 

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(a)               Upon the filing of an Investigational New Drug application
with the U.S. Food and Drug Administration for a Synthetic Product, or
alternatively the filing of the first equivalent regulatory filing with a
foreign regulatory agency (both as applicable, the “IND Milestone Event”),
Company will pay to Intrexon either (i) two million dollars ($2M) in cash, or
(ii) that number of shares of Common Stock (the “IND Milestone Shares”) having a
fair market value equaling two million dollars ($2M) where such fair market
value for this Section 1.2(a) is determined using published market data of the
share price for Common Stock at the close of market on the business day
immediately preceding the date of public announcement of attainment of the IND
Milestone Event.

 

(b)               Upon the first to occur of either first commercial sale of a
Synthetic Product in a country or the granting of the regulatory approval of
that Synthetic Product (both as applicable, the “Approval Milestone Event”),
Company will pay to Intrexon either (i) three million dollars ($3M) in cash, or
(ii) that number of shares of Common Stock (the “Approval Milestone Shares”)
having a fair market value equaling three million dollars ($3M) where such fair
market value for this Section 1.2(b) is determined using published market data
of the share price for Common Stock at the close of market on the business day
immediately preceding the date of public announcement of attainment of the
Approval Milestone Event.

 

The number of shares of Common Stock to be issued under each of subsections (a)
and (b) of this Section 1.2 shall be rounded down to the nearest whole share.
The event giving rise to an issuance of shares under subsections (a) and (b) of
this Section 1.2 shall be a “Milestone Event” and together, the “Milestone
Events.” A Milestone Payment shall be due within thirty days following the date
of the occurrence of a Milestone Event.

 

1.3              Field Expansion Fee. As set forth in Section 2.1(e) of the
Channel Agreement, Company has agreed that it will pay an optional and varying
fee whereby Synthetic remits a payment, in cash or equity at Synthetic’s sole
discretion, to Intrexon for each additional indication elected under Section
2.1(e) of the Channel Agreement (the “Field Expansion Fee”). For clarity, if the
Field, following the Field election by Synthetic required per Section 2.1(c) of
the Channel Agreement, contains three (3) total or less targets, then neither
this Section 1.3 nor Section 2.1(e) of the Channel Agreement will trigger any
obligation for Synthetic to pay a Field Expansion Fee irrespective of whether
any of such three (3) total or less targets have been previously swapped in by
Synthetic for other targets in accord with Section 2.1(b) of the Channel
Agreement. The Field Expansion Fee must be paid completely in either Common
Stock or cash, and will comprise either (i) two million dollars ($2M) in cash
for each such additional target elected under Section 2.1(e) of the Channel
Agreement, or (ii) that number of shares of Common Stock (the “Field Expansion
Fee Shares”) having a fair market value equaling two million dollars ($2M) for
each such target that Company will so elect where such fair market value for
this Section 1.3 is determined using published market data establishing the
volume-weighted average price for a share of Common Stock over the thirty (30)
day period immediately preceding the date of the Field Expansion Fee Closing (as
defined below).

 

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1.4              Capital Adjustments. If after the date hereof (i) the
outstanding shares of the Company’s Common Stock shall be subdivided or split
into a greater number of shares or a dividend in Common Stock shall be paid in
respect of such Common Stock or (ii) the outstanding shares of Common Stock are
combined, then all share quantities in this Agreement not yet issued shall be
appropriately adjusted to reflect such stock split, stock dividend or
conjunction. If after the date hereof (i) the Company shall pay a dividend in
securities of the Company (other than in Common Stock) or of other property
(including cash) on the Common Stock, or (ii) there shall occur any merger,
consolidation, capital reorganization or reclassification in which the Common
Stock is converted or exchanged for securities, cash or other property, the
class or series of stock constituting the Common Stock for purposes of this
Agreement, shall be appropriately adjusted to reflect such other dividend,
merger, consolidation, capital reorganization or reclassification. After any
event referenced in clauses (i) through (ii) of the immediately preceding
sentence is consummated, if applicable, all references herein to the Company’s
Common Stock shall be deemed to refer to the capital stock or property
(including cash) into or for which the Common Stock was converted or exchanged,
with the necessary changes in detail. Nothing contained in this Section 1.2 or
elsewhere in this Agreement will prevent or prohibit the dilution of Intrexon’s
ownership interest in the Company or grant to Intrexon any preemptive rights.

 

1.5              Company Sale. In the event that the Company consummates a
Company Sale (as defined below) prior to any one of the Subsequent Closings (as
defined below), and the Channel Agreement is transferred or assigned to the
buyer or assigned to the buyer in connection with such Company Sale, the Company
and Intrexon agree that payments under Sections 1.2 and 1.3 of this Agreement
shall be payable only in cash following the Company Sale.

 

 

 

sECTION 2.    Closing and Delivery

 

2.1              Sale and Purchase Price of Shares. Subject to the terms and
conditions of this Agreement and in reliance upon the representations,
warranties and agreements contained herein, the Company will issue and sell to
Intrexon, and Intrexon will purchase from the Company, at each of the Technology
Access Fee Closing, the Milestone Closings (as hereinafter defined) if the
Company has not elected to make the Milestone Payment in cash, and the Field
Expansion Fee Closing (as hereinafter defined) if the Company has not elected to
make the Field Expansion Fee payment in cash, the applicable number of shares as
set forth above in Sections 1.1 through 1.3. The Parties agree that the
consideration received by the Company hereunder shall be the execution and
delivery by Intrexon of the Channel Agreement which consideration is at least
equal to the par value of the shares issued or issuable under this Agreement.

 

2.2              Closings. The closings of the purchase and sale of the shares
to be issued pursuant to this Agreement shall be held at the offices of Gracin &
Marlow, LLP, Chrysler Building, 405 Lexington Avenue, 26th Floor, New York, New
York 10174 or at such other place as the Company and Intrexon may agree, as
follows:

 

(a)               the closing of the purchase and sale of the Technology Access
Fee Shares will occur, subject to the conditions set forth in Section 7.1 hereof
and applicable to the Technology Access Fee Closing, subject to the timeframes
set forth in Section 5.1 of the Channel Agreement, (i) on the fourth business
day following approval of the Channel Agreement by NYSE Amex (the “NYSE Amex
Approval”), or (ii) on such other date as Intrexon and the Company may agree
upon (in either case, the “Technology Access Fee Closing”);

 

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(b)               the closing of the purchase and sale of each occurrence of
Milestone Shares or the payment of each Milestone Cash Payment will occur,
subject to the conditions set forth in Section 7.2 hereof and applicable to the
Milestone Closing, (A) if NYSE Amex approval (or approval of any other exchange
upon which the Common Stock may be listed) is required, on the tenth (10th)
business day after such approval is received, but in no event later than one
hundred twenty (120) days after the respective Milestone Event, or (B) if NYSE
Amex approval (or approval of any other exchange upon which the Common Stock may
be listed) is not required, on the earlier of (i) the thirtieth (30th) day
following the occurrence of the respective Milestone Event, and (ii) such other
date as Intrexon and the Company may agree (the “Milestone Closing”); and

 

(c)                the closing of the purchase and sale of the Field Expansion
Fee Shares or the payment of the cash Field Expansion Fee Payment will occur,
subject to the conditions set forth in Section 7.2 hereof and applicable to the
Field Expansion Fee Closing, at a date and time set by Company and reasonably
acceptable to Intrexon, but in no event shall that date be later than the one
year anniversary of the Channel Agreement’s effective date (the “Field Expansion
Fee Closing”).

 

The Technology Access Fee Closing, each of the Milestones Closing, and the Field
Expansion Fee Closing may be collectively herein referred to as the “Closings”
and individually as a “Closing”. Further, each of the Milestones Closing and the
Field Expansion Fee Closing may be collectively herein referred to as the
“Subsequent Closings” and individually as a “Subsequent Closing”.

 

2.3              Delivery of the Shares. Promptly following a Closing at which
shares are issued to Intrexon, the Company shall deliver to Intrexon a
certificate representing the number of shares purchased at such Closing,
registered in the name of Intrexon.

 

 

 

sECTION 3.    Representations and Warranties of the Company.

 

Subject to and except as set forth in the SEC Documents or on the Schedule of
Exceptions which is arranged in sections corresponding to the sub-section
numbered provisions contained below in this Section, the Company hereby
represents and warrants to, and covenants with, Intrexon as of the date hereof
as follows:

 

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3.1              Organization, Good Standing and Power.

 

(a)               The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Nevada and has the
requisite corporate power to own, lease and operate its properties and assets
and to conduct its business as it is now being conducted and as described in the
reports filed by the Company with the Securities and Exchange Commission (the
“Commission”) pursuant to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), since the end of its most recently
completed fiscal year through the date hereof, including, without limitation,
its most recent report on Form 10-Q. The Company does not have any subsidiaries
other than those identified in its most recent report on Form 10-Q. The Company
is qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except for any jurisdiction(s)
(alone or in the aggregate) in which the failure to be so qualified will not
have a Material Adverse Effect. For the purposes of this Agreement, “Material
Adverse Effect” means any effect on the business, operations, properties or
financial condition of the Company that is material and adverse to the Company,
taken as a whole, and any condition, circumstance or situation that would
prohibit the Company from entering into and performing any of its obligations
hereunder.

 

3.2              Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue and sell the shares in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company, its board of directors or stockholders is
required, except pursuant to Section 7. When executed and delivered by the
Company, this Agreement shall constitute a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by other equitable principles of general application. The Company’s board of
directors, at a meeting duly called and held, adopted resolutions approving the
transactions contemplated hereby, including the issuance of the Technology
Access Fee Shares, the Field Expansion Fee Shares, and the Milestone Shares
issuable upon occurrence of the various Milestone Events in a manner consistent
with and that meets the requirements of Nevada Corporate Code contained in
Chapter 78 of the Nevada Revised Statutes.

 

3.3              Issuance of Shares. The shares to be issued and sold hereunder
have been duly authorized by all necessary corporate action and, when paid for
and issued in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable. In addition, such shares will be free and clear of all
liens, claims, charges, security interests or agreements, pledges, assignments,
covenants, restrictions or other encumbrances created by, or imposed by, the
Company (collectively, “Encumbrances”) and rights of refusal of any kind imposed
by the Company (other than restrictions on transfer under applicable securities
laws) and the holder of such shares shall be entitled to all rights accorded to
a holder of Common Stock. As of the date hereof, 32,701,984 shares of the
Company’s Common Stock are issued and outstanding.

 

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3.4              No Conflicts; Governmental Approvals. The execution, delivery
and performance of the Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby do not and will not (i) violate
any provision of the Company’s Articles of Incorporation or Bylaws, each as
amended to date, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company is a party or by which
the Company’s properties or assets are bound, or (iii) result in a violation of
any federal, state, local or foreign statute, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected, except for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company is
not required under federal, state, foreign or local law, rule or regulation to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or issue and sell
the shares in accordance with the terms hereof (other than any filings, consents
and approvals which may be required to be made by the Company under applicable
state and federal securities laws, rules or regulations prior to or subsequent
to the Closing). The sale and issuance of the shares hereunder will be required
to be approved in advance by NYSE Amex.

 

3.5              SEC Documents, Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(b) of the Exchange Act. During the
two year period preceding the execution of this Agreement other than with
respect to its Annual Report on Form 10-K for the year ended December 31, 2011,
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act (the “SEC Documents”). At the times
of their respective filing other than with respect to its initial Annual Report
on Form 10-K for the year ended December 31, 2011, all such reports, schedules,
forms, statements and other documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder. At the times of their respective filings, such reports,
schedules, forms, statements and other documents did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, other than with respect to its initial Annual Report on Form
10-K for the year ended December 31, 2011 the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission or other applicable rules and regulations with respect thereto.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary
statements), and fairly present in all material respects the consolidated
financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

 

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3.6              Accountants. Berman & Company, P.A. whose report on the
financial statements of the Company is filed with the SEC in the Company’s
Annual Report on Form 10-K/A for the year ended December 31, 2011 filed with the
SEC on May 11, 2012, were, at the time such report was issued, independent
registered public accountants as required by the Securities Act of 1933 and the
rules and regulations promulgated thereunder (together, the “Securities Act”).
Except as described in the SEC Documents and as preapproved in accordance with
the requirements set forth in Section 10A of the Exchange Act, to the Company’s
knowledge, Berman & Company, P.A. has not engaged in any non-audit services
prohibited by subsection (g) of Section 10A of the Exchange Act on behalf of the
Company.

 

3.7              Internal Controls. The Company has established and maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that: (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles in the United States and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

3.8              Corporate Governance. The Company’s board of directors meets
the independence requirements of, and has established an audit committee that
meets the independence requirements of, the rules and regulations of the
Commission and the NYSE Amex (formerly the American Stock Exchange). The Audit
Committee has reviewed the adequacy of its charter within the past 12 months.

 

3.9              Disclosure Controls. The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rules 13a-15 and
15d-15 under the Exchange Act). Since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no significant changes
in internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses. The Company is in compliance in all
material respects with all provisions currently in effect and applicable to the
Company of the Sarbanes-Oxley Act of 2002, and all rules and regulations
promulgated thereunder or implementing the provisions thereof.

 

3.10          No Material Adverse Change. Except as disclosed in the SEC
Documents, since March 31, 2012, the Company has not (i) experienced or suffered
any Material Adverse Effect, (ii) incurred any material liabilities,
obligations, claims or losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise) other than those incurred
in the ordinary course of the Company’s business or (iii) declared, made or paid
any dividend or distribution of any kind on its capital stock.

 

3.11          No Undisclosed Events or Circumstances. Except as disclosed in the
SEC Documents, since March 31, 2012, except for the consummation of the
transactions contemplated herein, to the Company’s knowledge, no event or
circumstance has occurred or exists with respect to the Company or its
businesses, properties, prospects, operations or financial condition, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.

 

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3.12          Litigation. No action, suit, proceeding or investigation is
currently pending or, to the knowledge of the Company, has been threatened in
writing against the Company that: (i) concerns or questions the validity of this
Agreement; (ii) concerns or questions the right of the Company to enter into
this Agreement; or (iii) is reasonably likely to have a Material Adverse Effect.
The Company is neither a party to nor subject to the provisions of any material
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate that would
have a Material Adverse Effect.

 

3.13          Compliance. Except for defaults or violations which are not
reasonably likely to have a Material Adverse Effect, the Company is not (i) in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company under), nor has the Company received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws, applicable to its
business, except in each case for such defaults or violations as would not have
a Material Adverse Effect.

 

3.14          Intellectual Property

 

(a)               To the best of its knowledge, the Company has entered into
agreements with each of its current and former officers, employees and
consultants involved in research and development work, including development of
the Company’s products and technology providing the Company, to the extent
permitted by law, with title and ownership to patents, patent applications,
trade secrets and inventions conceived, developed, reduced to practice by such
person, solely or jointly with other of such persons, during the period of
employment by the Company except where the failure to have entered into such an
agreement would not have a Material Adverse Effect. The Company is not aware
that any of its employees or consultants is in material violation thereof.

 

(b)               To the Company’s knowledge, the Company owns or possesses
adequate rights to use all, if any, trademarks, service marks, trade names,
domain names, copyrights, patents, patent applications, inventions, know how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), and other intellectual
property rights (“Intellectual Property”) as are necessary for the conduct of
its business as described in the SEC Documents. Except as described in the SEC
Documents, (i) to the knowledge of the Company, there is no infringement,
misappropriation or violation by third parties of any such Intellectual
Property; (ii) there is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or claim by others against the Company
challenging the Company’s rights in or to any such Intellectual Property;
(iii) the Intellectual Property owned by the Company and, to the knowledge of
the Company, the Intellectual Property licensed to the

 

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Company has not been adjudged invalid or unenforceable by a court of competent
jurisdiction or applicable government agency, in whole or in part, and there is
no pending or, to the knowledge of the Company, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such
Intellectual Property; (iv) there is no pending or, to the knowledge of the
Company, threatened action, suit, proceeding or claim by others against the
Company that the Company infringes, misappropriates or otherwise violates any
Intellectual Property or other proprietary rights of others, and the Company has
not received any written notice of such claim; and (v) to the Company’s
knowledge, no employee of the Company is the subject of any claim or proceeding
involving a violation of any term of any employment contract, patent disclosure
agreement, invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any restrictive covenant
to or with a former employer where the basis of such violation relates to such
employee’s employment with the Company or actions undertaken by the employee
while employed with the Company, in each of (i) through (v), for any instances
which would not, individually or in the aggregate, result in a Material Adverse
Effect.

 

3.15          FDA Compliance.

 

(a)               Except as described in the SEC Documents, the Company: (i) is
in material compliance with all statutes, rules or regulations applicable to the
ownership, testing, development, manufacture, packaging, processing, use,
distribution, marketing, labeling, promotion, sale, offer for sale, storage,
import, export or disposal of any product that is under development,
manufactured or distributed by the Company (“Applicable Laws”); (ii) has not
received any FDA Form 483, notice of adverse finding, warning letter, untitled
letter or other correspondence or notice from the U.S. Food and Drug
Administration (the “FDA”) or any other federal, state, local or foreign
governmental or regulatory authority alleging or asserting material
noncompliance with any Applicable Laws or any licenses, certificates, approvals,
clearances, authorizations, permits and supplements or amendments thereto
required by any such Applicable Laws (“Authorizations”), which would not,
individually or in the aggregate, result in a Material Adverse Effect; (iii)
possesses all material Authorizations necessary for the operation of its
business as described in the SEC Documents and such Authorizations are valid and
in full force and effect and the Company is not in material violation of any
term of any such Authorizations; and (iv) since December 31, 2011: (A) has not
received notice of any claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from the FDA or any other federal,
state, local or foreign governmental or regulatory authority or third party
alleging that any product operation or activity is in material violation of any
Applicable Laws or Authorizations and the Company has no knowledge that the FDA
or any other federal, state, local or foreign governmental or regulatory
authority or third party is considering any such claim, litigation, arbitration,
action, suit, investigation or proceeding; (B) has not received notice that the
FDA or any other federal, state, local or foreign governmental or regulatory
authority has taken, is taking or intends to take action to limit, suspend,
modify or revoke any material Authorizations and has no knowledge that the FDA
or any other federal, state, local or foreign governmental or regulatory
authority is considering such action; (C) has filed, obtained, maintained or
submitted all material reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments as required by any
Applicable Laws or Authorizations and that all such reports, documents, forms,
notices, applications, records, claims, submissions and supplements or
amendments were materially complete and correct on the date filed (or were
corrected or supplemented by a subsequent submission); and (D) has not, either
voluntarily or involuntarily, initiated, conducted, or issued or caused to be
initiated, conducted or issued, any recall, market withdrawal or replacement,
safety alert, post sale warning, “dear doctor” letter, or other notice or action
relating to the alleged lack of safety or efficacy of any product or any alleged
product defect or violation and, to the Company’s knowledge, no third party has
initiated, conducted or intends to initiate any such notice or action.

 

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(b)               Since January 1, 2009, and except to the extent disclosed in
the SEC Documents, the Company has not received any notices or correspondence
from the FDA or any other federal, state, local or foreign governmental or
regulatory authority requiring the termination, suspension or material
modification of any studies, tests or preclinical or clinical trials conducted
by or on behalf of the Company.

 

3.16          General Healthcare Regulatory Compliance.

 

(a)               As used in this subsection:

 

(i)                 “Governmental Entity” means any national, federal, state,
county, municipal, local or foreign government, or any political subdivision,
court, body, agency or regulatory authority thereof, and any Person exercising
executive, legislative, judicial, regulatory, taxing or administrative functions
of or pertaining to any of the foregoing.

 

(ii)               “Law” means any federal, state, local, national or foreign
law, statute, code, ordinance, rule, regulation, order, judgment, writ,
stipulation, award, injunction, decree or arbitration award or finding.

 

(b)               The Company has not committed any act, made any statement or
failed to make any statement that would reasonably be expected to provide a
basis for the FDA or any other Governmental Entity to invoke its policy with
respect to “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities”, or similar policies, set forth in any applicable Laws. Neither the
Company, nor, to the knowledge of the Company, any of its officers, key
employees or agents has been convicted of any crime or engaged in any conduct
that has resulted, or would reasonably be expected to result, in debarment under
applicable Law, including, without limitation, 21 U.S.C. Section 335a. No
claims, actions, proceedings or investigations that would reasonably be expected
to result in such a material debarment or exclusion are pending, or to the
knowledge of the Company, threatened, against the Company or any of its
respective officers, employees or agents.

 

(c)                Each of the Company and, to its knowledge, its directors,
officers, employees, and agents (while acting in such capacity) is, and at all
times has been, in material compliance with all health care Laws applicable to
the Company or by which any of its properties, businesses, products or other
assets is bound or affected, including, without limitation, the federal
Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), the Anti-Inducement Law (42
U.S.C. § 1320a-7a(a)(5)), the civil False Claims Act (31 U.S.C. §§ 3729 et
seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), the Health
Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et
seq.), the exclusion laws (42 U.S.C. § 1320a-7), the Food Drug and Cosmetic Act
(21 U.S.C. §§ 301 et seq.) (collectively, “Health Care Laws”). The Company has
not received any notification, correspondence or any other written or oral
communication from any Governmental Entity, including, without limitation, the
FDA, the Centers for Medicare and Medicaid Services, and the Department of
Health and Human Services Office of Inspector General, of potential or actual
material non-compliance by, or liability of, the Company under any Health Care
Laws.

 

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(d)               The Company is not a party to any corporate integrity
agreements, monitoring agreements, consent decrees, settlement orders, or
similar agreements with or imposed by any Governmental Entity.

 

3.17          Application of Takeover Protections. The issuance of the shares
hereunder and Intrexon’s ownership thereof is not prohibited by the business
combination statutes of the state of Nevada. The Company has not adopted any
stockholder rights plan, “poison pill” or similar arrangement that would trigger
any right, obligation or event as a result of the issuance of such shares and
Intrexon’s ownership of such shares and there are no similar anti-takeover
provisions under the Company's charter documents.

 

3.18          Listing and Maintenance Requirements. The Company is in compliance
with the requirements of the NYSE Amex (formerly the American Stock Exchange)
for continued listing of the Company common stock thereon and has not received
any notification that, and has no knowledge that NYSE Amex is contemplating
terminating such listing. The issuance and sale of the shares hereunder does not
contravene the rules and regulations of the NYSE Amex in any material respect,
provided such sale and issuance is approved in advance by NYSE Amex.

 

3.19          Private Placement. Neither the Company nor its Affiliates, nor any
Person acting on its or their behalf, (i) has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the shares
hereunder, (ii) has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under any circumstances
that would require registration of the sale and issuance by the Company of the
Technology Access Fee Shares, the Milestone Shares, and Field Expansion Shares
under the Securities Act or (iii) has issued any shares of Common Stock or
shares of any series of preferred stock or other securities or instruments
convertible into, exchangeable for or otherwise entitling the holder thereof to
acquire shares of Common Stock which would be integrated with the sale of the
Common Stock to Intrexon for purposes of the Securities Act or of any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated, nor will the Company or
any of its subsidiaries or affiliates take any action or steps that would
require registration of any of the Common Stock under the Securities Act or
cause the offering of the Common Stock to be integrated with other offerings.
Assuming the accuracy of the representations and warranties of Intrexon, the
offer and sale of the Common Stock by the Company to Intrexon pursuant to this
Agreement will be exempt from the registration requirements of the Securities
Act.

 

3.20          No Manipulation of Stock. The Company has not taken and will not,
in violation of applicable law, take, any action outside the ordinary course of
business designed to or that might reasonably be expected to cause or result in
unlawful manipulation of the price of the Common Stock.

 

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3.21          Brokers. Neither the Company nor any of the officers, directors or
employees of the Company has employed any broker or finder in connection with
the transaction contemplated by this Agreement. The Company shall indemnify
Intrexon from and against any broker’s, finder’s or agent’s fees for which the
Company is responsible.

 

 

sECTION 4.    Representations, Warranties and Covenants of Intrexon.

 

Intrexon hereby represents and warrants to, and covenants with, the Company as
of the date hereof as follows:

 

4.1              Purchaser Sophistication. Intrexon (a) is knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to, investments in shares presenting an investment decision like that
involved in the purchase of the shares, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the shares; (b) Intrexon, in
connection with its decision to purchase the shares, relied only upon the SEC
Documents, other publicly available information, and the representations and
warranties of the Company contained herein; (c) Intrexon is an "accredited
investor" pursuant to Rule 501 of Regulation D under the Securities Act; (d)
Intrexon is acquiring the shares for its own account for investment only and
with no present intention of distributing any of such shares or any arrangement
or understanding with any other persons regarding the distribution of such
shares; (e) Intrexon has not been organized, reorganized or recapitalized
specifically for the purpose of investing in the shares; (f) Intrexon will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire to take a pledge
of) any of the shares except in compliance with the Securities Act and
applicable state securities laws; (g) Intrexon understands that the shares are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of the Securities Act and state securities laws, and
that the Company is relying upon the truth and accuracy of, and Intrexon’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Intrexon set forth herein in order to determine the
availability of such exemptions and the eligibility of Intrexon to acquire the
shares; (h) Intrexon understands that its investment in the shares involves a
significant degree of risk, including a risk of total loss of Intrexon’s
investment (provided that such acknowledgment in no way diminishes the
representations, warranties and covenants made by the Company hereunder); and
(i) Intrexon understands that no United States federal or state agency or any
other government or governmental agency has passed upon or made any
recommendation or endorsement of the shares.

 

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4.2              Authorization and Power. Intrexon has the requisite power and
authority to enter into and perform this Agreement and to purchase the shares
being sold to it hereunder. The execution, delivery and performance of this
Agreement by Intrexon and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action,
and no further consent or authorization of Intrexon or its board of directors or
stockholders is required. When executed and delivered by Intrexon, this
Agreement shall constitute a valid and binding obligation of Intrexon
enforceable against Intrexon in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

 

4.3              No Conflict. The execution, delivery and performance of this
Agreement by Intrexon and the consummation by Intrexon of the transactions
contemplated hereby do not and will not (i) violate any provision of Intrexon’s
charter or organizational documents, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which Intrexon is a party
or by which Intrexon’s properties or assets are bound, or (iii) result in a
violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to Intrexon or by which any property or asset of
Intrexon are bound or affected, except, in all cases, other than violations
(with respect to federal and state securities laws) above, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, materially and adversely affect
Intrexon’s ability to perform its obligations under the Agreement.

 

4.4              Restricted Shares. Intrexon acknowledges that the Technology
Access Fee Shares, the Milestone Shares, and the Field Expansion Shares are
restricted securities and must be held indefinitely unless subsequently
registered under the Securities Act or the Company receives an opinion of
counsel reasonably satisfactory to the Company that such registration is not
required. Intrexon is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of stock purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the stock, the availability
of certain current public information about the Company, the resale occurring
not less than one year after a party has purchased and paid for the stock to be
sold, the sale being through a “broker’s transaction” or a transaction directly
with a “market maker” and the number of shares of the stock being sold during
any three-month period not exceeding specified limitations. Intrexon further
acknowledges and understands that the Company may not be satisfying the current
public information requirement of Rule 144 at the time Intrexon wishes to sell
the shares and, if so, Intrexon would be precluded from selling the shares under
Rule 144 even if the one year minimum holding period has been satisfied.

 

4.5              Ownership of Common Stock. As of the date hereof, excluding the
shares, Intrexon and its Affiliates beneficially own no shares of Common Stock
of the Company.

 

4.6              Stock Legends. Intrexon acknowledges that certificates
evidencing the shares shall bear a restrictive legend in substantially the
following form (and including related stock transfer instructions and record
notations):

 

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THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

 

 

sECTION 5.    Survival of Representations, Warranties and Agreements.

 

Notwithstanding any investigation made by any party to this Agreement, all
representations and warranties made by the Company and Intrexon herein shall
survive the execution of this Agreement and the issuance and sale to Intrexon of
the shares and shall terminate two years after the later of Technology Access
Fee Closing or the Field Expansion Shares Closing, provided, however, the
representations and warranties in Sections 3.1, 3.2, 3.3, 4.1, 4.3, 4.4, 4.5 and
4.6 shall survive for so long as Intrexon continues to hold any of the shares
issued hereunder.

 

 

sECTION 6.    Covenants.

 

6.1              Notifications.

 

(a)               During the period prior to the Technology Access Fee Closing,
the Company will promptly advise Intrexon in writing of (i) any Material Adverse
Effect, or (ii) any notice or other communication from any third person or
entity alleging that the consent of the third person is required in connection
with the transactions contemplated by this Agreement.

 

(b)               During the period prior to the Field Expansion Shares
Closings, each party shall promptly notify the other of any action, suit or
proceeding that is instituted or specifically threatened in writing against such
party to restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement.

 

(c)                During the period prior to each of the Milestone Closings,
each party shall promptly notify the other of any action, suit or proceeding
that is instituted or specifically threatened in writing against such party to
restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement.

 

(d)               Information received by Intrexon pursuant to this Section 6.1
shall be considered “Confidential Information” as such term is defined in the
Channel Agreement and Intrexon agrees to treat such information in accordance
with the provisions of Article 7 of the Channel Agreement.

 

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6.2              Compliance. The Company shall use commercially reasonable best
efforts to (i) cause the Common Stock to continue to be registered under the
Exchange Act, file all periodic reports thereunder and continue the listing or
trading of the Common Stock on the NYSE Amex or any successor market (or other
exchange upon which the Common Stock may be listed) in good standing and to
comply in all material respects with all applicable rules and regulations of the
Commission and all reporting requirements under the rules and regulations of the
Exchange Act and (ii) to satisfy the current public information requirement of
Rule 144, in each case for so long as and at all times during which Intrexon
holds any shares.

 

6.3              Use of Proceeds. The Company shall apply the proceeds from the
sale of the shares hereunder to ongoing operations, or for such other uses as
determined by the Company’s board of directors.

 

6.4              Best Efforts. Each party will use its reasonable best efforts
to satisfy in a timely fashion each of the conditions to be satisfied by it
under Section 8 of this Agreement.

 

6.5              Press Release. The Company shall issue a press release
announcing the transaction contemplated by this Agreement and the Channel
Agreement prior to the opening of the financial markets in New York City within
four days immediately following the date hereof. The Company shall provide
Intrexon with a reasonable opportunity to review and comment on the press
release.

 

6.6              Approval. In each case where the Company determines that the
approval of Company investors or any exchange or other listing upon which the
Common Stock may be listed is required for the issuance of Common Stock to
Intrexon, the Company shall use commercially reasonable efforts to secure such
approval as promptly as possible. In the event, notwithstanding the foregoing
obligation, the Company is unable to secure the approval with respect to the
issuance of any shares to be issued hereunder, the Company shall negotiate the
terms of an alternate form of consideration of equivalent value to such unissued
shares.

 

6.7              Board Observer Rights.

 

(a)               Upon the Technology Access Fee Closing, Intrexon will be
entitled to maintain one person who is an employee, officer, or director of
Intrexon who is appointed by Company as an observer to the board of directors of
the Company (the “Observer”). If Intrexon does not already have an Observer on
the board of directors of Company at or prior to the Technology Access Fee
Closing, the Company shall cause the President of Intrexon’s Human Therapeutics
Division to be appointed as Observer. Intrexon may, upon written notice to
Company, change the identity of the Observer, and the right of Intrexon to
maintain one Observer on the board of directors of the Company shall continue
until the Channel Agreement is terminated. The Observer shall be entitled to
attend all meetings of the Company’s board of directors and committees thereof
as an observer (with no power to vote on any matter before the board of
directors) and shall be entitled to receive copies of all materials and receive
all briefings provided to members of the Company’s board of directors; provided
that the Observer enters into a confidentiality agreement with the Company in a
form reasonably satisfactory to the Company; and provided, further, that the
Company reserves the right to (i) exclude the Observer from access to any board
of directors’ materials or meetings or portion thereof if the Company believes
that such exclusion is reasonably necessary to preserve the attorney-client
privilege, to protect highly confidential information or for other similar
reasons, or if the Company believes in good faith that the Observer has a
conflict of interest, (ii) at the discretion of the applicable committee,
exclude the Observer from access to any meeting materials or meetings (or
portion thereof) of the nominating committee of the Company’s board of
directors, compensation committee of the Company’s board of directors, audit
committee of the Company’s board of directors and any other committee of the
Company’s board of directors performing similar functions or which the listing
rules of the NYSE Amex require to have such discretion.

 

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(b)               Subject to Section 10.14, Intrexon’s rights and the Company’s
obligations under this Section 6.6 shall continue so long as the Channel
Agreement is in force and terminate upon the termination of the Channel
Agreement.

 

6.8              No Poison Pill. The Company will not adopt any stockholder
rights plan, “poison pill” or similar arrangement, or adopt any anti-takeover
provisions under its Charter documents, that would trigger any right, obligation
or event as a result of the issuance of the shares hereunder to Intrexon.

 

6.9              No Standstill. The parties agree that Intrexon's acquisition of
Common Stock pursuant to this Agreement shall not trigger any standstill
provisions set forth in any prior agreements between the parties including in
the Stock Purchase Agreement executed November 18, 2011 by and between Intrexon
and Adeona Pharmaceuticals, Inc., and that any such standstill provisions from
prior agreements shall remain otherwise unaffected by this Agreement or the
Channel Agreement.

 

6.10          Intrexon Proposals. Notwithstanding any of the foregoing
provisions of Section 6.9, the Company further agrees that nothing herein shall
limit the ability of the Observer or Intrexon to confidentially propose to the
executive management of the Company and its board of directors, and/or advocate
for, any transaction between the Company and any third party unaffiliated with
Intrexon or its Affiliates.

 

6.11          NYSE Amex Approval. In each case where the Company determines that
the approval of the NYSE Amex (or any other exchange upon which the Common Stock
may be listed) is required for the issuance of Common Stock to Intrexon, the
Company shall use commercially reasonable efforts to secure such approval as
promptly as possible. In the event, notwithstanding the foregoing obligation,
the Company is unable to secure the NYSE Amex (or any other exchange upon which
the Common Stock may be listed) approval with respect to the issuance of any
shares to be issued hereunder, the Company shall negotiate the terms of an
alternate form of consideration of equivalent value to such unissued shares.

 

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sECTION 7.    Conditions to Closing.

 

7.1              The obligation hereunder of the Company to issue and sell
shares to Intrexon at each Closing is subject to the satisfaction or waiver, at
or before the Closing of the conditions set forth below. These conditions are
for the Company’s sole benefit and may be waived by the Company at any time in
its sole discretion.

 

(a)               Accuracy of Intrexon’s Representations and Warranties. The
representations and warranties of Intrexon shall be true and correct as of the
date when made and as of the Closing Date as though made at that time, except
for representations and warranties that are expressly made as of a particular
date, which shall be true and correct as of such date.

 

(b)               No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

 

(c)                Performance by Intrexon. Intrexon shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
by Intrexon at or prior to the Closing Date.

 

(d)               Channel Partnership Agreement. The Channel Agreement shall
have been entered into by the Company and Intrexon and shall be in full force
and effect.

 

(e)                No Proceedings or Litigation. No action, suit or proceeding
before any arbitrator or any governmental authority shall have been commenced,
and no investigation by any governmental authority shall have been threatened in
writing against Intrexon or any of the officers, directors or Affiliates of
Intrexon seeking to restrain, prevent or change the transactions contemplated by
this Agreement, or seeking damages in connection with such transactions.

 

(f)                Officer’s Certificate. On each Closing, Intrexon shall have
delivered to the Company a certificate signed by its Chief Financial Officer or
Secretary on behalf of Intrexon, dated as of such Closing, confirming on behalf
of Intrexon the conditions precedent set forth in paragraphs (a), (b), (c) and
(e) of this Section 7.1 as of such Closing; provided, however, if the Company
has elected to make the Milestone Cash Payment, the officer’s certificate to be
delivered at the Milestone Closing by Intrexon will address only the conditions
precedent set forth in paragraphs (b) and (e) of this Section 7.1.

 

7.2              The obligation hereunder of Intrexon to receive shares and
consummate the transactions contemplated by this Agreement, other than the
payment by the Company of cash in lieu of issuance of any of the Milestone
Shares or in lieu of the Field Expansion Shares, is subject to the satisfaction
or waiver, at or before each Closing, of each of the conditions set forth below.
These conditions are for Intrexon’s sole benefit and may be waived by Intrexon
at any time in its sole discretion. For clarity, neither the satisfaction nor
the waiver of any of the events, circumstances, deliveries or conditions set
forth below is a condition precedent to the obligation of Intrexon to accept the
any cash payments in lieu of the Company’s issuing the Milestone Shares or the
Field Expansion Shares to Intrexon.

 

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(a)               Accuracy of the Company’s Representations and Warranties. Each
of the representations and warranties of the Company in this Agreement shall be
true and correct as of the Closing Date, except for representations and
warranties that speak as of a particular date, which shall be true and correct
as of such date.

 

(b)               Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.

 

(c)                Channel Partnership Agreement. The Channel Agreement shall
have been entered into by the Company and Intrexon and shall be in full force
and effect.

 

(d)               No Suspension, Etc. Trading in the common stock shall not have
been suspended by the Commission or the NYSE Amex.

 

(e)                No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

 

(f)                No Proceedings or Litigation. No action, suit or proceeding
before any arbitrator or any governmental authority shall have been commenced,
and no investigation by any governmental authority shall have been threatened in
writing against the Company or any of the officers, directors or Affiliates of
the Company seeking to restrain, prevent or change the transactions contemplated
by this Agreement, or seeking damages in connection with such transactions.

 

(g)               Execution of Rights Agreement. On the date of the Technology
Access Fee Closing, each party shall have delivered its signature to the First
Amendment to Registration Rights Agreement substantially in the form attached as
Exhibit A to this Agreement to the other party, and such agreement shall be in
full force and effect as of the Closing Date.

 

(h)               Opinion. Counsel for the Company shall have delivered to
Intrexon opinion letters containing legal opinions substantially in the form
attached hereto as Exhibit B.

 

(i)                 Officer’s Certificate. On each Closing, the Company shall
have delivered to Intrexon a certificate signed by its Chief Financial Officer
or Secretary on behalf of the Company (the “Officer’s Certificate”), dated as of
such Closing, confirming on behalf of the Company the conditions precedent set
forth in paragraphs (a), (b), (d), (e), (i) and (j) of this Section 7.2 as of
such Closing, and attaching and certifying a copy of the resolutions of the
Company’s board of directors referred to in the last sentence of Section 3.2.

 

(j)                 No Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect.

 

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(k)               Board Observer. The President of Intrexon’s Protein Production
Division, or someone else identified in advance by Intrexon, shall have been
appointed as, or have been previously appointed as, Observer.

 

(l)                 Approvals. Any requisite shareholder, board, or exchange
approvals relating to the issuance of the Milestone Shares or the Field
Expansion Shares (as the case may be) have been obtained in advance by Company.

 

 

sECTION 8.    Notices.

 

All notices or other communications which are required or permitted hereunder
shall be in writing and addressed as follows:

 

If to the Company: Synthetic Biologics, Inc.   617 Detroit Street, Suite 100  
Ann Arbor, MI  48104   Attention:  Chief Executive Officer   Fax No.: (734)
332-7878     If to Intrexon: Intrexon Corporation   20358 Seneca Meadows Parkway
  Germantown, MD 20876   Attention: Legal Department   Fax No.:  (301) 556-9902

  

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered if personally
delivered or sent by facsimile (provided that the party providing such notice
promptly confirms receipt of such transmission with the other party by
telephone), on the business day after dispatch if sent by a
nationally-recognized overnight courier and on the third business day following
the date of mailing if sent by certified mail, postage prepaid, return receipt
requested.

 

 

sECTION 9.    Miscellaneous.

 

9.1              Fees and Expenses. Each party shall pay the fees and expenses
of its advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.

 

9.2              Waivers and Amendments. Neither this Agreement nor any
provision hereof may be changed, waived, discharged, terminated, modified or
amended except upon the written consent of the parties hereto.

 

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9.3              Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.

 

9.4              Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect, then, to the fullest extent permitted
by law, (a) all other provisions hereof shall remain in full force and effect
and shall be liberally construed in order to carry out the intentions of the
Parties as nearly as may be possible and (b) the parties shall use their best
efforts to replace the invalid, illegal or unenforceable provision(s) with
valid, legal and enforceable provision(s) which, insofar as practical, implement
the purposes of such provision(s) in this Agreement.

 

9.5              Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York as applied to
contracts entered into and performed entirely in the State of New York by New
York residents, without regard to conflicts of law principles.

 

9.6              Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.

 

9.7              Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto, provided that Intrexon shall not assign its rights or
obligations hereunder unless Intrexon assigns such rights in whole and not in
part to an assignee of such rights and obligations which shall agree in writing
with the Company to be bound by this Agreement and that Intrexon’s rights under
Sections 6.3, 6.4, 6.5 and 7 shall not be assignable.

 

9.8              No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

 

9.9              Expenses. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement.

 

9.10          Entire Agreement. This Agreement (including the Schedule of
Exceptions), the Channel Agreement, the Rights Agreement and other documents
delivered pursuant hereto and thereto, including the exhibits, constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof. Except as explicitly set forth herein, nothing
in this Agreement is intended to alter the rights or obligations of the parties
pursuant to the Stock Purchase Agreement executed November 18, 2011 by and
between Intrexon and Adeona Pharmaceuticals, Inc.

 

9.11          Publicity. Except as otherwise provided herein or in the Channel
Agreement, no party shall issue any press releases or otherwise make any public
statement with respect to the transactions contemplated by this Agreement
without the prior written consent of the other party, except as may be required
by applicable law or regulations, in which case such party shall provide the
other parties with reasonable notice of such publicity and/or opportunity to
review such disclosure.

 

20.

EXECUTION COPY
CONFIDENTIAL

 

9.12          Waiver of Rule of Construction. Each Party has had the opportunity
to consult with counsel in connection with the review, drafting and negotiation
of this Agreement. Accordingly, the rule of construction that any ambiguity in
this Agreement shall be construed against the drafting Party shall not apply.

 

9.13          Further Assurances. From and after the date of this Agreement,
upon the reasonable request of Intrexon or the Company, the Company and Intrexon
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

 

9.14          Company Sale. For purposes of this Agreement, a “Company Sale”
shall mean the sale of the Company, whether in a single transaction or in a
series of related transactions that are consummated contemporaneously (or
consummated pursuant to contemporaneous agreements), to one or more unaffiliated
third parties on an arm’s-length basis, pursuant to which such unaffiliated
third party or parties acquires (i) (whether by merger, consolidation, sale or
transfer of capital stock, recapitalization, or otherwise) more than fifty
percent (50%) of the Company's common stock or (ii) all or substantially all
of the assets of the Company determined on a consolidated basis.

 

 

 

[Remainder of page intentionally left blank.]

 

21.

EXECUTION COPY
CONFIDENTIAL

 

In Witness Whereof, the parties hereto have caused this Stock Issuance Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.

 

 

SYNTHETIC BIOLOGICS, INC.

 

By: /s/ Jeffrey Riley

Name: Jeffrey Riley

Title: Chief Executive Officer, President, and Director

 

 

         

 

 

INTREXON CORPORATION

 

By: /s/Saiid Zarrabian

Name: Saiid Zarrabian

Title: President of Protein Production Division,

and Senior Vice President

 

 

       

SIGNATURE PAGE FOR STOCK ISSUANCE AGREEMENT

 

22.

 

 

 

 

Exhibit A

 

FORM OF FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

 

 

23

 

 

Exhibit B

 

FORM OF LEGAL OPINION

 

1.The Company has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of Nevada.

 

2.The Company has the requisite corporate power to own, lease and operate its
property and assets, and to conduct its business as described in the SEC
Documents.

 

3.The Company is duly qualified to do business as a foreign corporation and is
in good standing in the State of Michigan.

 

4.The Company has the requisite corporate power to execute, deliver and perform
its obligations under the Agreement, the Channel Agreement and the Rights
Agreement (collectively, the “Transaction Documents”), including, without
limitation, to issue, sell and deliver the shares as contemplated by the
Agreement.

 

5.All corporate action on the part of the Company necessary for the
authorization, execution and delivery of the Transaction Documents by the
Company, the authorization, sale, issuance and delivery of the shares and the
performance by the Company of its obligations to be performed at the Closing
under the Transaction Documents has been taken. Each of the Transaction
Documents has been duly and validly authorized, executed and delivered by the
Company. The Agreement and the Rights Agreement (together, the “Equity
Documents”) each constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its respective terms.

 

6.The Company has the authorized capital stock as set forth in the SEC
Documents. The shares have been duly authorized and, when issued, sold and
delivered against payment therefor in accordance with the terms of the
Agreement, will be validly issued, fully paid and nonassessable.

 

7.There are no pre-emptive rights or similar rights contained in the Company’s
Articles of Incorporation, as amended, or Bylaws, as amended, or any Material
Agreement.

 

8.The execution and delivery of the Equity Documents and the issuance of the
shares pursuant thereto do not violate any provision of the Company’s Articles
of Incorporation or Bylaws, do not constitute a default under or a material
breach of any Material Agreement and do not (a) violate any U. S. Federal or
state statute, rule or regulation which in the experience of such counsel is
typically applicable to transactions of the nature contemplated by the Equity
Documents or (b) violate any order, writ, judgment, injunction, decree,
determination or award which has been entered against the Company and of which
such counsel is aware, except, with respect to clauses (a) and (b), where such
violation would not materially and adversely affect the Company.

 

 

-i-

 

 

 

9.To the knowledge of such counsel, there is no action, proceeding or
investigation pending or overtly threatened against the Company before any court
or administrative agency that questions the validity of the Transaction
Documents or that could reasonably be expected to result, either individually or
in the aggregate, in a material adverse effect on the Company.

 

10.All consents, approvals, authorizations, or orders of, and filings,
registrations and qualifications with any U.S. Federal or state regulatory
authority or governmental body required for the issuance of the shares have been
made or obtained, except (a) for the filing of a Form D pursuant to Securities
and Exchange Commission Regulation D and (b) and any requisite blue sky
filing(s).

 

11.Subject to the accuracy of Intrexon’s representations in Section 4 of the
Agreement and assuming (a) that neither the Company nor any person acting on
behalf of the Company has offered or sold the shares by any form of general
solicitation or general advertising within the meaning of Rule 502(c) of
Regulation D promulgated (the “Regulation D”) under the Securities Act; (b) that
no offerings or sales of securities of the Company after the date hereof in a
transaction can be “integrated” with any sales of the shares, the offer and sale
of the shares in conformity with the terms of the Agreement constitute
transactions that are exempt from the registration requirements of the
Securities Act of 1933, as amended, subject to the timely filing of a Form D
pursuant to Regulation D.

 

12.The Company is not, and, after giving effect to the offering and sale of the
shares and the application of the proceeds thereof in accordance with the
business plans of the Company to which such counsel is aware, will not be an
“investment company” as defined in the Investment Company Act of 1940, as
amended.

 

13.To the knowledge of such counsel, there are no written contracts, agreements
or understandings between the Company and any person granting such person the
right (other than rights which have been waived in writing or otherwise
satisfied) to require the Company to include any securities of the Company in
any registration statement contemplated by Section 2(a) of the Rights Agreement.

  

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