Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ONCOGENERIX, INC.,

THE STOCKHOLDERS’ REPRESENTATIVE,

THE PRINCIPAL STOCKHOLDERS,

DARA BIOSCIENCES, INC.

AND

ONCOGENERIX ACQUISITION CORPORATION

JANUARY 17, 2012

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

TABLE OF CONTENTS

 

              Page  

Article I DEFINITIONS

     1   

Article II THE MERGER

     11       2.1  

The Merger

     11       2.2  

Certificate of Merger

     11       2.3  

Articles of Incorporation; Bylaws

     11       2.4  

Directors and Officers

     11       2.5  

Merger Consideration

     11       2.6  

Effect on Securities of the Company and Merger Sub

     14       2.7  

Dissenting Shares

     15       2.8  

The Closing Date

     15       2.9  

Closing; Payment of Merger Consideration

     15       2.10  

Deduction for Taxes

     16       2.11  

Determination of Customer Revenue and Delivery of Contingent Merger
Consideration Shares.

     16       2.12  

Legends and Restrictions

     17       2.13  

Tax Intent of the Parties

     18   

Article III CONDITIONS TO CLOSING

     18   

Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     18       4.1  

Organization and Corporate Power

     18       4.2  

Authorization of Transaction

     18       4.3  

Capitalization

     19       4.4  

No Investments

     19       4.5  

Absence of Conflicts

     19       4.6  

Financial Statements

     19       4.7  

Absence of Undisclosed Liabilities

     20       4.8  

Absence of Certain Developments

     20       4.9  

Title to Assets

     21       4.10  

Taxes

     21       4.11  

Contracts and Commitments

     22       4.12  

Intellectual Property

     22       4.13  

Brokerage

     24       4.14  

Governmental Licenses and Permits

     24       4.15  

Employment and Labor Matters

     25       4.16  

Insurance

     25       4.17  

Affiliate Transactions

     25       4.18  

Environmental and Safety Matters

     26       4.19  

Litigation and Compliance with Law

     26       4.20  

Books and Records

     27       4.21  

Bank Accounts, Letters of Credit and Powers of Attorney

     27   

 

i

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

   4.22  

Customers and Suppliers

     27       4.23  

Accuracy of Information Furnished by the Company; Full Disclosure

     27   

Article V REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS

     28       5.1  

Organization and Power

     28       5.2  

Authorization

     28       5.3  

Absence of Conflicts

     28       5.4  

Title

     29       5.5  

Litigation

     29       5.6  

Investment Representations

     29   

Article VI REPRESENTATIONS AND WARRANTIES OF THE BUYER AND MERGER SUB

     30       6.1  

Organization and Power

     30       6.2  

Authorization of Transaction

     30       6.3  

Absence of Conflicts

     30       6.4  

Litigation

     31       6.5  

Brokers’ Fees

     31       6.6  

SEC Reports; Financial Statements

     31       6.7  

Absence of Certain Developments

     31   

Article VII TAX MATTERS COVENANTS

     32       7.1  

Stockholders Tax Indemnification

     32       7.2  

Closing of Taxable Period

     32       7.3  

Responsibility for Filing Tax Returns

     32       7.4  

Cooperation on Tax Matters

     32       7.5  

Tax Contests

     33       7.6  

Transfer Taxes

     33   

Article VIII EMPLOYMENT MATTERS AND OTHER COVENANTS

     33       8.1  

New Employment Arrangements

     33       8.2  

COBRA Coverage

     34       8.3  

Appointment of Directors

     34   

Article IX SURVIVAL, INDEMNIFICATION AND RELATED MATTERS

     34       9.1  

Survival

     34       9.2  

Indemnification

     34       9.3  

Escrow; Satisfaction of Losses

     37   

Article X ADDITIONAL AGREEMENTS

     39       10.1  

Press Releases and Announcements

     39       10.2  

Further Assurances

     39       10.3  

Expenses

     39       10.4  

Stockholders’ Representative

     39   

 

ii

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

Article XI MISCELLANEOUS

     40       11.1  

Amendment

     40       11.2  

Waiver

     40       11.3  

Notices

     40       11.4  

Binding Agreement; Assignment

     41       11.5  

Severability

     41       11.6  

No Strict Construction

     42       11.7  

Captions

     42       11.8  

Entire Agreement

     42       11.9  

Counterparts

     42       11.10  

Governing Law; Venue.

     42       11.11  

Waiver of Jury Trial

     43       11.12  

Parties in Interest

     43       11.13  

Exhibits and Schedules

     43       11.14  

Certain Interpretive Matters and Definitions

     43   

LIST OF EXHIBITS

 

Exhibit A    Form of Escrow Agreement Exhibit B    Form of Transmittal Letter

 

iii

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

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made as of January 17,
2012, by and among Oncogenerix, Inc., a Nevada corporation (the “Company”); the
stockholders of the Company listed on the signatures pages hereto (the
“Principal Stockholders”); Christopher Clement, in his capacity as the
Stockholders’ Representative; DARA BioSciences, Inc., a Delaware corporation
(the “Buyer”); and Oncogenerix Acquisition Corporation, a Nevada corporation
(the “Merger Sub”). The Company, the Principal Stockholders, the Stockholders’
Representative, the Buyer and the Merger Sub are each referred to herein as a
“Party” and collectively as the “Parties.”

STATEMENT OF PURPOSE

A. The Buyer, the Merger Sub and the Company wish to effect a tax free business
combination through a merger of the Merger Sub with and into the Company on the
terms and conditions set forth in this Agreement and in accordance with the
applicable provisions of the Nevada Revised Statues (the “N.R.S.”).

B. The respective Boards of Directors of each of the Buyer, the Merger Sub and
the Company has (i) unanimously approved this Agreement, the Merger and the
other transactions contemplated by this Agreement and (ii) determined that this
Agreement, the Merger and the other transactions contemplated by this Agreement
are advisable and in the best interest of their corporation and their
corporation’s stockholders.

C. The requisite Stockholders of the Company have duly approved and adopted this
Agreement, the Merger and the Transaction in accordance with the applicable
provisions of the N.R.S.

D. The Buyer, as the sole stockholder of Merger Sub has duly approved and
adopted this Agreement, the Merger and the Transaction in accordance with the
applicable provisions of the N.R.S.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises made herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

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

“Action” means any claims, charges, arbitrations, grievances, actions, suits,
proceedings or investigations.

“Affiliate” means and includes, with respect to a specified Person, any other
Person that directly or indirectly controls, is controlled by or is under common
control with such specified Person, where “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such specified Person, whether through the ownership
of voting securities, contract or otherwise.

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

“Affiliated Group” means an affiliated group as defined in Section 1504 of the
Code (or any similar combined, consolidated or unitary group defined under any
state, local or foreign income Tax law).

“Agreement” has the meaning set forth in the introductory paragraph hereof.

“Ancillary Agreements” means the other agreements attached (or forms of which
are attached) as exhibits to this Agreement, and any document, certificate or
instrument delivered pursuant hereto or thereto, including, but not limited to,
the Key Employee Employment Agreements.

“Articles of Incorporation” means the Company’s Articles of Incorporation, as
filed with the Secretary of State of the State of Nevada on February 2, 2011, as
amended by that certain Certificate of Amendment filed with the Secretary of
State of the State of Nevada on October 27, 2011.

“Audited Financial Statements” has the meaning set forth in Section 4.6.

“Basket” has the meaning set forth in Section 9.2(e)(iii).

“Business Day” means any day other than Saturday, Sunday or any other day on
which banks in Atlanta, Georgia or New York, New York are closed.

“Buyer” has the meaning set forth in the introductory paragraph hereof.

“Buyer Indemnitees” has the meaning set forth in Section 9.2(a)(i).

“Buyer Common Stock” means the common stock, par value $.01, of Buyer.

“Cap Amount” means that number of shares of Buyer Common Stock equal to fifteen
percent (15%) of the aggregate Merger Consideration. For the avoidance of doubt,
the Cap Amount shall be reduced on a dollar for dollar basis by the amount of
any set-off against the Escrow Shares pursuant to the terms hereof (but not for
amounts payable under Article VII).

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. § 9601, et seq.), as amended, and all rules,
regulations and standards issued thereunder.

“Certificate of Merger” has the meaning set forth in Section 2.2.

“Certificates” means, collectively, the Common Certificates and the Preferred
Certificates.

“Change of Control” means (i) the consummation of a transaction or series of
related transactions as a result of which any Person becomes the beneficial
owner of, or obtains voting control over, more than fifty percent (50%) of the
outstanding Buyer Common Stock; or (ii) the consummation by the Buyer of (A) a
merger or consolidation of the Buyer with or into another

 

2

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

Person, in which the Buyer is not the continuing or surviving corporation or
pursuant to which any shares of the Buyer Common Stock would be converted into
cash, securities or other property of another Person, other than a merger or
consolidation of the Buyer in which holders of Buyer Common Stock immediately
prior to the merger or consolidation have the same proportionate ownership of
Buyer Common Stock of the surviving corporation immediately after the merger as
immediately before, or (B) a sale or other disposition of all or substantially
all the assets of the Buyer in a single transaction or a series of related
transactions.

“Closing” has the meaning set forth in Section 2.8.

“Closing Date” has the meaning set forth in Section 2.8.

“Closing Date Merger Consideration Shares” has the meaning set forth in
Section 2.5(a).

“COBRA” means Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.

“COBRA Coverage” means continuation coverage required under Section 4980B of the
Code and Part 6 of Title I of ERISA or any similar state law.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Certificate” shall mean a stock certificate which immediately prior to
the Effective Time represented any shares of Common Stock.

“Common Stock” means the shares of the Company’s Common Stock, par value $0.01
per share.

“Company” has the meaning set forth in the introductory paragraph hereof.

“Company Intellectual Property” means all Intellectual Property that is used or
held for use by the Company in connection with the business of the Company.

“Company Intellectual Property Agreements” has the meaning set forth in
Section 4.12(b)

“Company Securities” means any and all options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights or other agreements or
commitments to which the Company is a party or which are binding upon the
Company, providing for the issuance, disposition or acquisition of any of the
Company’s capital stock (other than this Agreement), and any and all stock
appreciation, phantom stock or similar rights with respect to the Company
Company’s capital stock.

“Company Stock” means the Common Stock and Preferred Stock.

“Confidential Information” means any confidential information with respect to
the Company’s business, including methods of operation, pending or completed
acquisitions of any company, division or other business unit, prices, fees,
costs, plans, designs, technology, inventions, trade secrets, know-how,
software, marketing methods, policies, plans, personnel, customers, suppliers,
competitors, markets or other specialized information or proprietary matters.

 

3

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

“Confidentiality Agreement” means that certain confidentiality agreement between
the Buyer and the Company in effect as of the date hereof.

“Contingent Merger Consideration Shares” has the meaning set forth in
Section 2.5(b).

“Contingent Earnout Period” has the meaning set forth in Section 2.5(b).

“Contract” means any contract, lease, license, indenture, agreement, commitment
or other legally binding arrangement, whether written or oral.

“Customer Revenue” means the aggregate revenue of the Buyer or its Affiliate
from Marketed Products shipped and invoiced to customers of the Buyer, the
Company, or any other Affiliate of the Company during the Contingent Earnout
Period including revenue from orders shipped and invoiced during the Contingent
Earnout Period but for which payment will not be received until after the
Contingent Earnout Period, minus all amounts for refunds, returns, allowances,
credits, rebates and charge-backs.

“Customer Revenue Calculation Notice” shall have the meaning given that term in
Section 2.11(b).

“Designated Representations” has the meaning set forth in Section 9.1.

“Dispute Period” means the period ending thirty (30) days following receipt by
an Indemnifying Party of a notice from an Indemnified Party pursuant to
Section 9.2(c)(i).

“Effective Time” has the meaning set forth in Section 2.2.

“Environmental Liabilities” means any Liabilities that are (a) related to
environmental issues, or (b) based upon or related to Pollutants or any
provision of Environmental Requirements. The term “Environmental Liabilities”
includes: (A) fines, penalties, judgments, awards, settlements, losses, damages,
costs, fees (including reasonable attorneys’ and consultants’ fees), expenses
and disbursements; (B) defense and other responses to any administrative or
judicial Proceeding (including notices, claims, complaints, Orders, suits and
other assertions of Liability); and (C) financial responsibility for cleanup
costs and injunctive relief, including any corrective or remedial actions, and
natural resource damages or remedial measures.

“Environmental Requirements” means all Legal Requirements concerning pollution
or protection of the environment, including all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
distribution, labeling, testing, processing, release, threatened release,
control, or cleanup of any hazardous substance or pollutant, as such of the
foregoing are in effect, prior to or on the Closing Date.

“ERISA” has the meaning set forth in Section 4.15(e).

 

4

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

“Escrow Agent” means Wells Fargo Bank, National Association.

“Escrow Agreement” means the Escrow Agreement dated as of the Closing Date by
and among the Buyer, the Escrow Agent and the Stockholders’ Representative, in
substantially the form of Exhibit A attached hereto.

“Escrow Shares” means an aggregate number of shares of the Buyer’s Common Stock
equal to 2.985% of the shares of the Buyer’s Common Stock issued and outstanding
as of the Closing Date constituting Closing Date Merger Consideration Shares to
which the Principal Stockholders are entitled pursuant to Schedule 2.5, and with
respect to each Principal Stockholder, means such Principal Stockholder’s pro
rata portion of the Escrow Shares based on the number of shares of Company Stock
owned by such Principal Stockholder as a percentage of the Company Stock owned
by all of the Principal Stockholders.

“Escrow Fund” has the meaning set forth in Section 2.8(a)(iv).

“Existing Debt” means all Indebtedness of the Company.

“Existing Debt Payoff Amount” means the amount necessary to fully discharge the
Existing Debt outstanding as of the Effective Time, including any fees and
expenses due in connection with such discharge.

“FDA” means the United States Food and Drug Administration.

“Financial Statements” has the meaning set forth in Section 4.6.

“GAAP” means United States generally accepted accounting principles,
consistently applied.

“Governmental Authority” means any domestic or foreign government, including any
federal, provincial, state, territorial or municipal government, and any
government agency, court, tribunal, commission or other instrumentality or
authority exercising or purporting to exercise executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, government, and any
official of any of the foregoing.

“IND” means an Investigational New Drug Application filed with the FDA or
foreign equivalent.

“Indebtedness” means, with respect to the Company, without duplication, (i) any
indebtedness related to past due payables in excess of 60 days owed to any
vendors or suppliers of the Company or other Person, (ii) any indebtedness for
borrowed money, whether short term or long term, or for the deferred purchase
price of property or services, (iii) any indebtedness relating to a capitalized
lease or other indebtedness arising under conditional sales contracts and other
similar title retention instruments, (iv) all Liabilities in respect of
outstanding letters of credit, acceptances and similar obligations, (v) all
interest, fees, prepayment premiums, penalties, breakage costs and other
expenses owed with respect to indebtedness described in the foregoing clauses
(i) through (v), and (vi) all indebtedness referred to in the foregoing clauses
(i) through (v) of any Person other than the Company that is directly or
indirectly guaranteed by the Company.

 

5

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

“Indemnified Party” has the meaning set forth in Section 9.2(c)(i).

“Indemnifying Party” has the meaning set forth in Section 9.2(c)(i).

“Intellectual Property Right(s)” means any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States and
foreign patents and utility models, including utility patents, design patents,
and all registrations and applications therefore and all reissues, divisionals,
re-examinations, corrections, renewals, extensions, provisionals, continuations
and continuations in-part thereof, and other derivatives and certificates
associated therewith, and equivalent or similar rights anywhere in the world in
inventions and discoveries, including, without limitation, invention disclosures
(“Patents”); (ii) all trade secrets, research records, processes, procedures,
manufacturing formulae, technical know-how, technology, blue prints, designs,
plans, inventions and confidential or proprietary information throughout the
world (“Trade Secrets”); (iii) all copyrights, copyright registrations and
applications therefore and all other rights corresponding thereto throughout the
world (“Copyrights”); (iv) all mask works, mask work registrations and
applications therefore, and any equivalent or similar rights (“Mask Works”);
(v) all industrial designs and any registrations and applications therefore
throughout the world; (vi) all rights in domain names and applications and
registrations therefore (“Domain Names”); (vii) all trade names, trade dress,
logos or other corporate designations, common law trademarks and service marks,
trademark and service mark registrations and applications therefore and all
goodwill associated therewith throughout the world (“Trademarks”); and
(viii) any similar, corresponding or equivalent rights to any of the foregoing
anywhere in the world, including, without limitation, moral rights and publicity
rights.

“Key Employee” has the meaning set forth in Section 8.1.

“Key Employee Employment Agreement” has the meaning set forth in Section 8.1.

“Knowledge” means with respect to an individual, that such individual will be
deemed to have knowledge of a particular fact or other matter if that individual
is actually aware of that fact or matter, following reasonable inquiry. As
applied to the Company in this Agreement, “Knowledge” means that any of the
officers of the Company is actually aware of a particular fact or other matter,
following reasonable inquiry. As applied to the Buyer or the Merger Sub in this
Agreement, “Knowledge” means that the Buyer’s Chief Executive Officer, Lynn
Morris, Linda Jett, Mary Kay Delmonico, or Ann Rosar is actually aware of a
particular fact or other matter, following reasonable inquiry.

“Law” means any statute, law (including common law), constitution, treaty,
ordinance, code, order, decree, judgment, rule, regulation and any other binding
requirement or determination of any Governmental Authority.

“Leased Premises” means all leasehold or subleasehold estates and other rights
to use or occupy any land, buildings, structures, improvements, fixtures or
other interest in real property held by the Company.

 

6

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

“Leases” means all leases, subleases, or other contracts pursuant to which the
Company holds any Leased Premises.

“Legal Requirement” means and includes any federal, state, provincial, local,
municipal, foreign, international, multinational, judicial Orders and
determinations or other administrative Orders and determinations, constitution,
law, ordinance, regulation or similar provision having the force or effect of
law, rule or principle of common law, regulation, statute, or treaty, as the
same are in effect or enacted on or prior to the Closing Date.

“Letter of Transmittal” means a letter of transmittal in the form attached
hereto as Exhibit B.

“Liability” or “Liabilities” means all liabilities, obligations or commitments
of any nature whatsoever, asserted or unasserted, known or unknown, absolute or
contingent, accrued or unaccrued, matured or unmatured or otherwise.

“Licensed Company Intellectual Property” shall mean all Company Intellectual
Property and Company Intellectual Property Rights, other than the Owned Company
Intellectual Property.

“Licenses” has the meaning set forth in Section 4.14.

“Lien” means any security interest, pledge, bailment (in the nature of a pledge
or for purposes of security), mortgage, deed of trust, the grant of a power to
confess judgment, conditional sales and title retention agreement (including any
lease in the nature thereof), charge, encumbrance or other similar arrangement
or interest in real or personal property.

“Loss” or “Losses” has the meaning set forth in Section 9.2(a)(i).

"Market Capitalization" means the dollar figure equal to the product of the
number of shares of Buyer Common Stock issued and outstanding multiplied by the
Average Trading Price. For the purpose of any computation hereunder, the
"Average Trading Price" per share of Buyer Common Stock on any date shall be
deemed to be the average of the daily closing price per share of such shares for
the ten consecutive trading days immediately prior to such date; provided,
however, if prior to the expiration of such requisite ten trading day period the
issuer announces either (i) a dividend or distribution on Buyer Common Stock
payable in such shares or securities convertible into such shares or (ii) any
subdivision, combination or reclassification of Buyer Common Stock, then,
following the ex-dividend date for such dividend or the record date for such
subdivision, as the case may be, the "Average Trading Price" shall be properly
adjusted to take into account such event. The closing price for each day shall
be, if the shares are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such the Buyer Common Stock is listed or admitted to trading or, if
such shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the lowest bid price in
the over-the-counter market, as reported by The NASDAQ Stock Market, Inc.’s OTC
Bulletin Board service or such other system then in use. If the Buyer Common
Stock is not publicly held or not so listed or traded or if, for the ten days
prior to such date, no market maker is making a market in such shares, the
Average Trading

 

7

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

Price of such Buyer Common Stock on such shares shall be deemed to be the fair
value of such shares as determined in good faith by the Buyer’s Board of
Directors. The term "trading day" shall mean, if such shares are listed or
admitted to trading on any national securities exchange, a day on which the
principal national securities exchange on which the Buyer Common Stock is listed
or admitted to trading is open for the transaction of business or, if such
shares are not listed or admitted, a Business Day.

“Marketed Products” means (i) any current or future product licensed to or owned
by the Company and all enhancements and improvements thereof and which is
marketed by the Buyer or any Affiliate of the Buyer, including the Company;
(ii) any current or future product licensed to or owned by the Company that is
FDA approved or cleared by the FDA for marketing and sale and all enhancements
and improvements thereof; (iii) any new products that are discovered or
developed by the Key Employees which are marketed by Buyer or any Affiliate of
the Buyer, including the Company; and (iv) any new products that are developed
based upon intellectual property owned by the Buyer if the development or
marketing of such products results from the efforts of the Key Employees. For
the avoidance of doubt, all products currently owned by or licensed to the Buyer
or any Affiliate of the Buyer, immediately prior to the Effective Time shall not
be considered Marketed Products.

“Material Adverse Change” means, any effect or change that would be (or could
reasonably be expected to be) materially adverse to the business, assets,
condition (financial or otherwise), operating results, operations or business
prospects of the Company, taken as a whole, or to the ability of the Company to
consummate timely the transactions contemplated hereby (regardless of whether or
not such adverse effect or change can be or has been cured at any time or
whether Buyer has knowledge of such effect or change on the date hereof).

“Merger” has the meaning set forth in Section 2.1.

“Merger Consideration” has the meaning set forth in Section 2.5(a).

“Merger Sub” has the meaning set forth in the introductory paragraph hereof.

“NDA” means a New Drug Application filed with the FDA or foreign equivalent.

“Order” means any order, injunction, judgment, decree, ruling, writ, arbitration
decision, award or assessment of a Governmental Authority.

“Ordinary Course of Business” means the ordinary course of business consistent
with past custom and practice (including with respect to nature, scope,
magnitude, quantity and frequency) that does not require any board of director
or shareholder approval or any other separate or special authorization of any
nature and similar in nature, scope and magnitude to actions customarily taken
in the ordinary course of the normal day-to-day operations of other Persons that
are in the same line of business.

“Owned Company Intellectual Property” shall mean that portion of the Company
Intellectual Property and Company Intellectual Property Rights that is owned by
the Company

“Party” and “Parties” has the meaning set forth in the introductory paragraph
hereof.

 

8

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

“Pending Claim Escrow Amount” has the meaning set forth in Section 9.3(a).

“Pending Claim Escrow Excess” has the meaning set forth in Section 9.3(a).

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Authority.

“Plan” has the meaning set forth in Section 4.15(e).

“Pre-Closing Tax Period” has the meaning set forth in Section 7.1.

“Preferred Certificate” shall mean a stock certificate which immediately prior
to the Effective Time represented any shares of Preferred Stock.

“Preferred Stock” means the shares of the Company’s Preferred Stock, par value
$0.01 per share.

“Principal Stockholders” has the meaning set forth in the introductory paragraph
hereof.

“Pro Rata Percentage” means with respect to each Stockholder, a percentage equal
to the pro rata share of the Merger Consideration payable to the Stockholder in
accordance with the Articles of Incorporation as set forth on Schedule 2.5
attached hereto.

“Proceeding” means any action, arbitration, audit, demand, examination, hearing,
claim, complaint, charge, investigation, litigation, proceeding or suit (whether
civil, criminal, administrative, judicial or investigative, whether public or
private) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Authority or arbitrator.

“Representative” means, with respect to a particular Person, any director,
officer, manager, member, partner, stockholder, employee, agent, consultant,
advisor, accountant, financial advisor, legal counsel or other representative of
that Person.

“Rosemont License” means that certain Exclusive Distribution Agreement dated as
of June 29, 2011 by and between the Company and Rosemont Pharmaceuticals
Limited.

“Safety Requirements” means all Legal Requirements concerning public health and
safety, product safety, product liability, worker health and safety, including
the Occupational Safety and Health Act, as enacted or in effect, on or prior to
the Closing Date.

“Stockholder” means a holder of Company Stock.

“Stockholders’ Representative” has the meaning set forth in Section 10.4.

“Stockholders’ Representative Parties” has the meaning set forth in
Section 10.4.

“Stockholders’ Transaction Expenses” means, to the extent payable by the Company
(and not paid by the Company or the Stockholders before the Closing), costs and
expenses

 

9

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

incurred by or on behalf of the Company and the Stockholders in connection with
the preparation, execution and performance of this Agreement and the Ancillary
Agreements, up to a maximum amount of $10,000, including all fees and out of
pocket expenses due all attorneys, accountants and financial advisors of the
Company and the Stockholders (but excluding, for the avoidance of doubt, any
income Taxes imposed on the Stockholders as a result of the Transaction), plus
all fees of Ladenburg Thalmann & Co. (“LTC”), or its affiliates, due as a result
of the consummation of the Transaction pursuant to an agreement mutually agreed
to by Buyer and LTC. For the avoidance of doubt, (i) Stockholders’ Transaction
Expenses shall in no event exceed $10,000, and (ii) neither the Company nor the
Stockholders shall be responsible for any fees of LTC, or its affiliates, due as
a result of the consummation of the Transaction.

“Straddle Period” has the meaning set forth in Section 7.2.

“Surviving Corporation” has the meaning set forth in Section 2.1.

“Tangible Personal Property” means all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, vehicles and other
items of tangible personal property owned or leased by the Company.

“Tax” or “Taxes” means (i) any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax, of
any kind whatsoever, including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing, (ii) any Liability for or in
respect of the payment of any amount of a type described in clause (i) of this
definition as a result of being or having been a member of an Affiliated Group,
or (iii) any Liability for or in respect of the payment of any amount described
in clauses (i) or (ii) of this definition as a transferee or successor, by
contract or otherwise.

“Tax Contest” means any audit, claim, dispute or controversy relating to Taxes,
including any Proceeding, assessment or adjustment.

“Tax Effective Time” has the meaning set forth in Section 7.2.

“Tax Returns” means returns, declarations, reports, claims for refund,
information returns or other documents (including any related, supporting,
supplemental, or amending schedules, statements or information) filed or
required to be filed in connection with the determination, assessment or
collection of Taxes of any party or the administration of any laws, regulations
or administrative requirements relating to any Taxes.

“Third Party Proceeding” has the meaning set forth in Section 9.2(c)(i).

“Transaction” means the transactions contemplated by this Agreement and the
Ancillary Agreements.

 

10

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

“Treasury Regulation” means any Treasury Regulations (including temporary
regulations) promulgated by the United States Department of the Treasury with
respect to the Code, as amended.

“Unaudited Financial Statements” has the meaning set forth in Section 4.6.

ARTICLE II

THE MERGER

2.1 The Merger. Upon the terms and subject to the conditions of this Agreement,
at the Effective Time, the Merger Sub shall, pursuant to the provisions of the
applicable provisions of the N.R.S., be merged with and into the Company (the
“Merger”), and the separate corporate existence of the Merger Sub shall
thereupon cease in accordance with the provisions of the applicable provisions
of the N.R.S. The Company shall be the surviving corporation in the Merger and
shall continue to exist as the surviving corporation pursuant to the provisions
of the applicable provisions of the N.R.S. The separate corporate existence of
the Company with all its rights, privileges, powers and franchises shall
continue unaffected by the Merger. The Merger shall have the effects specified
in the applicable provisions of the N.R.S. From and after the Effective Time,
the Company is sometimes referred to herein as the “Surviving Corporation.”

2.2 Certificate of Merger. On the Closing Date and subject to the terms and
conditions of this Agreement, the parties hereto shall cause the Merger to be
consummated by filing the certificate of merger (the “Certificate of Merger”)
with the Secretary of State of the State of Nevada and by making all other
filings or recordings required under the applicable provisions of the N.R.S. in
connection with the Merger, in such form as is required by, and executed in
accordance with, the relevant provisions of the applicable the N.R.S. The Merger
shall be effective at the time and on the date of the filing of the Certificate
of Merger in accordance with the applicable provisions of the N.R.S., which
filing shall occur on the Closing Date (the “Effective Time”).

2.3 Articles of Incorporation; Bylaws. At the Effective Time, the Articles of
Incorporation of the Company shall remain the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by the applicable
provisions of the N.R.S. and such Articles of Incorporation. The bylaws of the
Company in effect immediately prior to the Effective Time shall be the bylaws of
the Surviving Corporation until amended in accordance with applicable law.

2.4 Directors and Officers. From and after the Effective Time, until the earlier
of their resignation or removal or until their respective successors are duly
elected or appointed and qualified in accordance with applicable law, (i) the
directors of the Surviving Corporation shall be those persons who were the
directors of the Merger Sub immediately prior to the Effective Time, and
(ii) the officers of the Surviving Corporation shall be those persons who were
the officers of the Merger Sub immediately prior to the Effective Time.

2.5 Merger Consideration. The aggregate merger consideration (the “Merger
Consideration”) due with respect to the securities of the Company shall consist
of the Closing Date Merger Consideration Shares, the Escrow Shares and the
Contingent Merger Consideration Shares.

 

11

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

(a) Closing Date Merger Consideration Shares. That portion of the Merger
Consideration payable to the Stockholders at the Effective Time of the Merger
shall be the sum of (i) 1,114,560 shares of Buyer Common Stock, which is equal
to 19.9% of the Buyer Common Stock issued and outstanding immediately prior to
the Effective Time, minus (ii) the Escrow Shares (the “Closing Date Merger
Consideration Shares”).

(b) Contingent Merger Consideration Shares.

(i) In addition to the Closing Date Merger Consideration Shares, the
Stockholders shall, subject to the approval of at least a majority of the
outstanding shares of the issued and outstanding shares of Buyer Common Stock,
be entitled to the following additional merger consideration (collectively, the
“Contingent Merger Consideration Shares”) based upon the achievement by the
Buyer of the following financial milestones during the period beginning at the
Effective Time and ending on the date that is sixty (60) months following the
Closing Date (the “Contingent Earnout Period”):

(A) that number of shares of Buyer Common Stock equal to 3.98% of the Buyer
Common Stock issued and outstanding immediately prior to the Effective Time
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to the Buyer
Common Stock) if the aggregate Customer Revenue is at least $5,000,000 or the
Buyer has a Market Capitalization of at least $75,000,000 at any time during the
Contingent Earnout Period;

(B) that number of shares of Buyer Common Stock equal to 3.98% of the Buyer
Common Stock issued and outstanding immediately prior to the Effective Time
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to the Buyer
Common Stock) if the aggregate Customer Revenue is at least $10,000,000 or the
Buyer has a Market Capitalization of at least $150,000,000 at any time during
the Contingent Earnout Period;

(C) that number of shares of Buyer Common Stock equal to 3.98% of the Buyer
Common Stock issued and outstanding immediately prior to the Effective Time
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to the Buyer
Common Stock) if the aggregate Customer Revenue is at least $15,000,000 or the
Buyer has a Market Capitalization of at least $200,000,000 at any time during
the Contingent Earnout Period;

(D) that number of shares of Buyer Common Stock equal to 3.98% of the Buyer
Common Stock issued and outstanding immediately prior to the Effective Time
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar

 

12

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

recapitalization with respect to the Buyer Common Stock) if the aggregate
Customer Revenue is at least $20,000,000 or the Buyer has a Market
Capitalization of at least $250,000,000 at any time during the Contingent
Earnout Period; and

(E) that number of shares of Buyer Common Stock equal to 3.98% of the Buyer
Common Stock issued and outstanding immediately prior to the Effective Time
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to the Buyer
Common Stock) upon the consummation by the Buyer of the first equity financing
or series of related equity financings as a result of which the Buyer receives
an aggregate of at least $10,000,000 in gross proceeds at any time during the
Contingent Earnout Period; and

(F) upon the consummation of Change of Control of the Buyer at any time during
the Contingent Earnout Period, if, and only if, the Company has any Marketed
Products at the time such Change of Control transaction is consummated,
1,114,560 shares of Buyer Common Stock, which is equal to 19.9% of the Buyer
Common Stock issued and outstanding immediately prior to the Effective Time,
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to the Buyer
Common Stock) minus that number of the Contingent Merger Consideration Shares
previously issued by the Buyer pursuant to the preceding clauses (i) through
(v) of this Section 2.5(b).

(ii) If the employment of a Key Employee is terminated by the Buyer without
“Cause” (as defined in such Key Employee’s Key Employee Employment Agreement) or
if the Key Employee terminates his employment with the Buyer with “Good Reason”
(as defined in such Key Employee’s Key Employee Employment Agreement), then, if,
and only if, such termination by the Buyer without “Cause” or by the Key
Employee with Good Reason occurs during the Initial Term (as defined in such Key
Employee’s Key Employee Employment Agreement) and after a Qualified Public
Offering (as defined in such Key Employee’s Key Employee Employment Agreement),
subject to the approval of at least a majority of the outstanding shares of the
issued and outstanding shares of Buyer Common Stock, such Key Employee shall be
immediately entitled to his pro rata portion of the previously unissued
Contingent Merger Consideration Shares. Each Key Employee’s pro rata portion of
the Contingent Merger Consideration Shares is reflected on Schedule 2.5 of this
Agreement. Such Key Employee’s right to receive Contingent Merger Consideration
Shares pursuant to this Section 2.5(b)(ii) is subject to all provisions of this
Agreement applicable to the Contingent Merger Consideration Shares, including
without limitation the Buyer’s right to satisfy any Buyer Indemnitee Losses by
set-off against the Contingent Merger Consideration Shares to which such Key
Employee is entitled pursuant to Section 9.3(b). Upon issuance to a Key Employee
of his pro rata portion of the Contingent Merger Consideration Shares pursuant
to this Section

 

13

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

2.5(b)(ii), Buyer shall be deemed to have fully satisfied and discharged its
obligations with respect to such Key Employee’s portion of the Contingent Merger
Consideration Shares, and Buyer shall not be liable to such Key Employee in
respect thereof.

(c) Stockholders Entitled to Receive Merger Consideration. The Merger
Consideration shall be allocated and paid in accordance with Schedule 2.5
attached hereto and the provisions of this Article II. The Company and the
Principal Stockholders warrant that no Person has any other rights to any
portion of the Merger Consideration except as set forth in Schedule 2.5 hereof.

(d) The Buyer agrees that it shall submit to its stockholders at its next annual
meeting of the stockholders, which shall be held on or prior to May 31, 2012, a
proxy statement that includes a proposal for the issuance of the Contingent
Merger Consideration Shares to the Stockholders subject to and in accordance
with the terms hereof and a recommendation of the Buyer to approve such
issuance. If Buyer’s stockholders do not approve such issuance at such annual
stockholders meeting, then the Buyer agrees to submit a new proxy statement to
its shareholders seeking approval of such issuance at the next three annual
stockholders meetings (i.e., ending with the 2015 annual meeting of the
stockholders), unless and until such issuance has been approved.

2.6 Effect on Securities of the Company and Merger Sub.

(a) By virtue of the Merger and without any action on the part of any holder
thereof or any party hereto, as of the Effective Time, each share of Company
Stock issued and outstanding immediately prior to the Effective Time (except for
shares held in the Company’s treasury) shall be cancelled and converted into the
right to receive said Stockholder’s portion of the Merger Consideration in
accordance with Schedule 2.5 hereof, if any, without interest.

(b) Effect on Treasury Stock. As of the Effective Time, shares of Company Stock
in the Company’s treasury shall be cancelled and retired and shall cease to
exist, and no payment shall be made in respect thereof.

(c) Effect on Stockholders Rights; Transfer. As of the Effective Time, the
Stockholders of Company Stock shall cease to have any rights with respect to
such Company Stock, except the right to receive the applicable portion of the
Merger Consideration in accordance with Schedule 2.5 hereof. After the Effective
Time, there shall be no transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates or
affidavits, as the case may be, are presented to the Surviving Corporation, they
shall be cancelled and exchanged for the Merger Consideration as provided for,
and in accordance with, the provisions of Section 2.9.

(d) Effect on Company Securities. Immediately prior to the Closing, in
connection with the Merger, the Company shall cause all outstanding Company
Securities to be exercised or cancelled and terminated, so that the Company
shall have no further liability with respect to, and no Company Stock shall be
issuable under, such Company Securities as of the Closing.

 

14

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

(e) Effect on Securities of Merger Sub. As of the Effective Time, each share of
capital stock of the Merger Sub issued and outstanding immediately prior to the
Effective Time shall, without any action on the part of Merger Sub, be converted
on a one-for-one basis into shares of the corresponding class of capital stock
of the Surviving Corporation.

(f) Waivers. Prior to the Closing, the Company shall use its commercially
reasonable efforts to obtain any necessary waivers, consents or releases, in
form and substance reasonably satisfactory to the Buyer, from the holders of
Options or warrants issued by the Company required to give effect to the
transactions contemplated by this Section 2.6.

2.7 Dissenting Shares. Each Stockholder of the Company immediately prior to the
Effective Time has properly waived such Stockholder’s dissenters’ rights with
respect to the Transaction under the applicable provisions of the N.R.S.

2.8 The Closing Date. The closing of the Transaction (the “Closing”) shall take
place at the offices of Womble Carlyle Sandridge & Rice, LLP in Atlanta,
Georgia, at 10:00 a.m. local time on January 17, 2012, or at such other place or
on such other date as is mutually acceptable to the Parties. The date of the
Closing is referred to herein as the “Closing Date”.

2.9 Closing; Payment of Merger Consideration.

(a) Closing; Issuance of Closing Date Merger Consideration Shares. Subject to
the conditions set forth in this Agreement, the Parties agree that the following
transfers shall occur at the Closing:

(i) each of the Stockholders shall deliver to the Buyer fully-completed and
executed Letters of Transmittal, together with all attachments thereto, and
Certificates or, in the event that any Certificate shall have been lost, stolen
or destroyed, an affidavit of that fact and providing for indemnification by the
registered Stockholder of such lost, stolen or destroyed Certificate;

(ii) the Buyer shall deliver to the Stockholders’ Representative or the
Stockholders, if so directed by the Stockholders’ Representative, the Closing
Date Merger Consideration Shares, which shares shall be issued pursuant to the
Letter of Transmittal delivered to the Buyer by such Stockholder;

(iii) the Company shall deliver evidence that the amount of any Existing Debt
Payoff Amount has been paid by it; and

(iv) the Buyer shall deposit the Escrow Shares with the Escrow Agent, and the
Escrow Agent shall hold the Escrow Shares in a separate account (the “Escrow
Fund”), which shall be governed by the terms of the Escrow Agreement, for
purposes of the payment to the Buyer or the Stockholders’ Representative, as the
case may be, of indemnification claims of Buyer Indemnitees required by Article
IX; and

 

15

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

(v) the Company shall cause its legal counsel to deliver to the Buyer an opinion
letter relating to the Transaction, in form and substance reasonably acceptable
to the Buyer;

(vi) the Buyer, Merger Sub, the Stockholders and the Company, as applicable,
shall deliver such certificates and other agreements, documents and instruments
as reasonably requested by the other Party.

(b) Post-Closing; Issuance of Contingent Merger Consideration Shares. The Buyer
shall deliver an amount equal to the Stockholders’ Transaction Expenses to the
applicable Persons to whom such amounts are owed within fifteen (15) days
following the Closing Date. Subject to the conditions set forth in this
Agreement, the Parties agree that within fifteen (15) Business Days of
determination of the Customer Revenue pursuant to Section 2.11, the Buyer shall
deliver the Contingent Merger Consideration Shares to which the Stockholders are
entitled to the Stockholders’ Representative, or directly to the Stockholders if
so instructed by the Stockholders’ Representative. Upon the payment of the
Merger Consideration, including the delivery of the Contingent Merger
Consideration Shares to which the Stockholders are entitled, if any, to the
Stockholders’ Representative, Buyer shall be deemed to have fully satisfied and
discharged its obligations with respect to such portion of the Merger
Consideration delivered to the Stockholders’ Representative, Buyer shall not be
liable to any of the Stockholders in respect thereof and the Stockholders shall
look only to the Stockholders’ Representative for any such amounts.

2.10 Deduction for Taxes. Each of the Escrow Agent, the Surviving Corporation
and the Buyer shall be entitled to deduct and withhold from the portion of the
Merger Consideration, that number of shares of Buyer Common Stock equal in value
(based on the closing price of the Buyer Common Stock on the day immediately
preceding the date such shares are to be delivered) to such amounts as are
required to be withheld with respect to the making of such payment under the
Code, and the rules and regulations promulgated thereunder, or any provision of
United States federal, state or local Tax laws. To the extent that amounts are
so withheld, such withheld amounts shall be paid to the applicable Governmental
Authority and treated for all purposes of this Agreement as having been paid to
the holder thereof in respect of which such deduction and withholding was made.

2.11 Determination of Customer Revenue and Delivery of Contingent Merger
Consideration Shares.

(a) The Principal Stockholders and the Company hereby acknowledge and agree
that, notwithstanding anything else contained in the Agreement or any Ancillary
Agreement, none of the Buyer, Merger Sub or any of their respective Affiliates
have made or shall be deemed to have made any representation, warranty or
guarantee related to the Buyer’s, the Surviving Corporation’s or any of their
respective Affiliates’ or any of their respective employees’, officers’,
directors’ or agents’ ability to sell any Marketed Products; provided, however
that they shall use their reasonable commercial efforts to sell the Marketed
Products; provided, further that the Buyer or any of its Affiliates shall have
the right to discontinue marketing or offering for sale any products, as
determined by it in good faith. The Parties hereby acknowledge and agree that
none of Buyer, the Surviving Corporation or any of their respective Affiliates
shall have any obligation to sell any Marketed Products after the Closing and
none of

 

16

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

the Buyer, the Surviving Corporation or any of their respective Affiliates shall
be liable for any Loss or any other claims or actions against or related to the
strategy, operations, efforts or method used by Buyer, the Surviving Corporation
or their respective Affiliates or any of their Representatives to sell or
refrain from selling any Marketed Products after Closing.

(b) The Buyer shall provide to the Stockholders’ Representative not more than
thirty (30) calendar days following the expiration of the applicable period for
the calculation of the applicable Contingent Merger Consideration Shares a
certificate signed by an executive officer of the Buyer showing its calculation
of the Customer Revenue for the applicable period in reasonable detail (the
“Customer Revenue Calculation Notice”). The Surviving Corporation shall provide
the Stockholders’ Representative reasonable access to the books, records,
working papers and other information supporting such calculation of the Customer
Revenue. The Buyer's calculation of Customer Revenue shall be conclusive and
binding on the Parties absent manifest error unless the Stockholders deliver a
notice as specified below objecting to such calculation. The Stockholders’
Representative shall be provided access to the books and records of the Buyer
and the Company and if they disagree with Buyer’s calculation of the Customer
Revenue they may within ten days of their receipt of written notification of
such calculation deliver a notice to the Buyer disagreeing with such
calculation. If the parties are unable to agree upon the calculation they shall
retain a third party to review the calculation. If the third party determines
that the Customer Revenue has been understated by ten percent or more then the
Buyer will pay the fees of such third party and immediately issue any shares
that should be issued to the Stockholders based upon the third part calculation.
If the Customer Revenue has been overstated by ten percent or more then the
Stockholders shall pay the fees of such third party. In all other cases the
Buyer and the Stockholders’ Representative shall equally share the fee of such
third parry. Any understatement shall immediately be rectified by the Buyer.

2.12 Legends and Restrictions. The shares of Buyer Common Stock, and any
securities issued in respect thereof or exchange therefor, issued to the
Stockholders as Merger Consideration shall be imprinted with a conspicuous
legend in substantially the following form (unless otherwise permitted under
this Agreement):

“THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT TO REGISTRATIONS UNDER APPLICABLE
SECURITIES LAWS, OR (ii) IF, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY, THE PROPOSED TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE
SECURITIES LAWS WITHOUT REGISTRATION.”

Upon the request of a Stockholder or any successor holder of any shares of Buyer
Common Stock issued as Merger Consideration, accompanied by an opinion of
counsel selected by such Stockholder or successor holder, which opinion and
other counsel are reasonably satisfactory to the Buyer, to the effect that a
transfer by the holder will not violate the 1933 Act or applicable state or
other securities laws, the Buyer shall remove the legend from the Buyer Common
Stock held by the holder or shall issue to the holder a new certificate for
Buyer Common Stock without the transfer legend.

 

17

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

2.13 Tax Intent of the Parties. It is the intention of the parties that the
Merger be treated as a reorganization qualifying under Section 368(a) of the
Code. The Parties shall use their commercially reasonable efforts to take all
reasonable actions necessary to cause the Merger to qualify as a reorganization
pursuant to such section of the Code and shall treat the Merger accordingly on
their respective Tax Returns.

ARTICLE III

CONDITIONS TO CLOSING

[INTENTIONALLY OMITTED]

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

As a material inducement to the Buyer and the Merger Sub to enter into this
Agreement, the Company hereby represents and warrants to the Buyer and the
Merger Sub that, as of the date hereof and as of the Closing Date:

4.1 Organization and Corporate Power. The Company is a corporation, duly
organized, validly existing and in good standing under the Legal Requirements of
the State of Nevada, has the full corporate power and authority to own, operate
and lease its properties and assets and to carry on its business as now
conducted and presently proposed to be conducted, and is duly qualified to do
business as a foreign corporation in each of the jurisdictions listed in
Schedule 4.1 attached hereto, which constitute all of the jurisdictions in which
the failure to so qualify would have a material adverse effect on the Company.
The Company furnished to the Buyer complete and correct copies of its Articles
of Incorporation and Bylaws of the Company, each as in effect as of the date
hereof.

4.2 Authorization of Transaction. The Company has full power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which the
Company is a party and to consummate the Transaction. The execution, delivery
and performance by the Company of this Agreement and the Ancillary Agreements to
which the Company is a party and the consummation of the Transaction have been
duly and validly authorized and approved by all requisite action on the part of
the Company, including all action required to be taken by the Stockholders, and
no other approval or other proceedings (corporate or otherwise) on the part of
the Company or the Stockholders are necessary to approve and authorize the
execution, delivery or performance of this Agreement and the Ancillary
Agreements to which the Company is a party and the consummation of the
Transaction. Each Stockholder of the Company has properly waived such
Stockholder’s dissenters’ rights with respect the Transaction under the
applicable provisions of the N.R.S. This Agreement and each of the Ancillary
Agreements to which the Company is a party has been duly executed and delivered
by the Company, and constitutes a legal, valid and binding obligation of the
Company enforceable against it in accordance with its terms, except as
enforceability hereof or thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other Legal Requirements affecting creditors’
rights generally and limitations on the availability of equitable remedies.

 

18

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

4.3 Capitalization. The authorized, issued and outstanding shares of capital
stock of the Company immediately as of the Closing are set forth on Schedule
4.3. All the issued and outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid, nonassessable and are free of
preemptive right, and all shares of capital stock of the Company reserved for
issuance upon exercise or vesting of outstanding options or warrants to purchase
any shares of Company Stock will be, upon issuance, duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. As of the
Closing (a) there are no outstanding or authorized Company Securities; (b) there
are no voting trusts, proxies or any other agreements or understandings with
respect to the voting of the Company Stock; and (d) the Company is not subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any of shares of Company Stock.

4.4 No Investments. As of the Effective Time, the Company does not own or hold
the right to acquire any stock, partnership interest, joint venture interest or
other equity ownership interest in any other Person or other business.

4.5 Absence of Conflicts. Except as set forth on Schedule 4.5, neither the
execution and delivery by the Company of this Agreement and the Ancillary
Agreements to which the Company is a party nor the consummation or performance
of the Transaction in accordance with the terms of this Agreement and the
Ancillary Agreements will (with or without notice or lapse of time, or both):
(a) contravene, conflict with, or result in a violation of any provision of the
Articles of Incorporation or the Bylaws of the Company; (b) contravene, conflict
with, or result in a violation of, or give any Governmental Authority or other
Person the right to challenge the Transaction under, any Legal Requirement to
which the Company or its business, properties or assets may be subject;
(c) contravene, conflict with, or result in a violation or breach of any of the
terms or requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate or modify, any License that is held
by the Company; (d) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, or give rise to a purchase or comparable right
under, or result in the loss of any benefit or right under, any Contract
(including the Rosemont License) to which the Company is a party or by which any
of its properties or assets is bound, including, but not limited to, the
Contracts listed on Schedule 4.11; or (e) result in the imposition or creation
of any Lien upon or with respect to any of the properties or assets owned or
used by the Company.

4.6 Financial Statements. Prior to the Closing, the Company has delivered to the
Buyer the audited financial statements of the Company (audited balance sheet and
statements of operations, cash flow and stockholders’ equity) for the period
ended July 31, 2011 (the “Audited Financial Statements”) and current year
management prepared unaudited financial statements of the Company (balance sheet
and statement of operations) for the period ended November 30, 2011 (the
“Unaudited Financial Statements”, together with the Audited Financial
Statements, the “Financial Statements”). The Financial Statements are complete
and correct in all material respects and have been prepared in accordance with
GAAP from the accounting records of the Company applied on a consistent basis
throughout the periods indicated and with each other. The Financial Statements
fairly and accurately present the financial condition and operating results of
the Company in all material respects as of the respective dates and for the
respective periods indicated, and are consistent with the method in which they
are presented, all in accordance with GAAP. The Company also has delivered to
the Buyer copies of all letters from the Company’s auditors to its boards of
directors or audit committee since inception, together with copies of all
responses thereto.

 

19

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

4.7 Absence of Undisclosed Liabilities.

(a) Except as set forth on Schedule 4.7, the Company has no Liabilities arising
out of transactions entered into prior to the Effective Time, except:
(i) Liabilities stated in the Unaudited Financial Statements, and
(iii) Liabilities that have arisen after the date of the Unaudited Financial
Statements in the Ordinary Course of Business.

(b) Without limiting the generality of the foregoing, except as set forth on
Schedule 4.7, the Company has complied in all material respects with all
material applicable Legal Requirements, and the Company has not received notice
or other written communication alleging a violation of any applicable Legal
Requirement.

4.8 Absence of Certain Developments. Except as disclosed on Schedule 4.8, since
July 31, 2011 through the date hereof, there has occurred no change which,
individually or in the aggregate, has resulted in a Material Adverse Change of
the Company. Except as set forth on Schedule 4.8 and except as expressly
required by this Agreement, since July 31, 2011, (x) the Company has operated
the business in all material respects in the Ordinary Course of Business and
(y) the Company has not:

(a) made any loans or advances to, or guarantees for the benefit of, any Person;

(b) incurred any Indebtedness other than in the Ordinary Course of Business;

(c) mortgaged, pledged or subjected, or allowed or suffered to become subject,
to any Lien, any material portion of its properties or assets;

(d) entered into, amended (including through waivers or other modifications) or
terminated, any Lease or contract (other than in the Ordinary Course of
Business);

(e) made or granted any bonus or any wage, salary or compensation increase
(including with respect to any severance or change in control payment) in excess
of $10,000 to any current or former director, officer, employee or consultant or
made or granted any increase in any employee benefit plan or arrangement, or
amended or terminated any existing employee benefit plan or arrangement or
adopted any new employee benefit plan or arrangement;

(f) made any capital expenditure or commitments for capital expenditures or any
investment in any other Person, or entered into any Lease or lease of capital
equipment;

(g) changed or authorized any change in the Articles of Incorporation or Bylaws
of the Company;

(h) declared, set aside or paid any dividends or made any other distributions
with respect to, or purchased, redeemed or otherwise acquired or agreed to
acquire, any shares of capital stock or other securities of the Company
(including any warrants, options or other rights to acquire capital stock or
other equity securities;

 

20

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

(i) changed or authorized any change in its accounting practices or policies or
method of accounting for any items in the preparation of the financial
statements of the Company;

(j) incurred any physical damage, destruction or other casualty loss, whether or
not covered by insurance, affecting any of its property;

(k) entered into any settlement, conciliation or similar contract involving
claims, or paid, discharged, settled, waived or satisfied any material
Liabilities or rights of the Company;

(l) any waiver of any material rights or claims of the Company;

(m) any cancellation, or agreement to cancel, any Indebtedness or other
obligation owing to the Company;

(n) any sale or transfer, or any agreement to sell or transfer, any material
assets, properties or rights of the Company; or

(o) entered into or approved any contract, arrangement or understanding to do,
engage in or cause or having the effects of, any of the foregoing.

4.9 Title to Assets.

(a) The Company does not own any land or other interest in real property.

(b) Schedule 4.9(b) sets forth the address of all Leased Premises and a true and
complete list of all Leases for each of the Leased Premises. The Company has
delivered to the Buyer a complete and correct copy of each such Lease. The
Leased Premises constitute all of the real property used, occupied or held for
use by the Company.

(c) Except as set forth on Schedule 4.9(c), the Company has good and marketable
title to (or in the case of assets identified as leased in the books and records
of the Company, a valid leasehold interest in) the Tangible Personal Property
that is shown on the Unaudited Financial Statements or acquired thereafter, free
and clear of all Liens.

4.10 Taxes. The Company has filed all Tax Returns that it was required to file
for all applicable Taxes, for all years and periods, and portions thereof for
which the due date (with extension) falls on or before the Closing Date, the
Company has not waived any statute of limitations or is currently the
beneficiary of any extension of time within which to file any Tax Return. All
such Tax Returns are complete and correct in all material respects, and proper
records have been maintain to substantiate the accuracy and correctness of all
such Tax Returns. There are no liens for Taxes (other than for Taxes not yet due
and payable) upon any of the assets of the Company. Except as set forth on
Schedule 4.10, with respect to Taxes of the Company, there are no Tax Contests
or investigations by any Governmental Authority pending or ongoing, no written
notice that a Tax Contest or investigation is pending or proposed has been
received from any Governmental Authority, and, to the Knowledge of the Company,
no Tax Contest or investigation has been threatened. No claim has ever been made
by an authority in a jurisdiction where the Company does not file Tax Returns
that the Company may be subject to

 

21

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

taxation by that jurisdiction. The Company has timely withheld and paid over to
the appropriate Governmental Authority all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any Person, including any
employee, equityholder or creditor, and the Company has properly completed and
timely filed all IRS Forms W-2, 1042 and 1099 (and similar forms) required with
respect thereto. Subject to the approval by the requisite Stockholders pursuant
to Section 280G(b)(5) of the Code, the Company has not made, and is not and will
not become obligated to make, any payments that will be nondeductible under
Section 280G of the Code. There are no unpaid Taxes of the Company relating to
or arising out of any period (or partial period) ending on or prior to the
Closing Date, except to the extent that such Taxes, being current Taxes not yet
due and payable, are properly accrued by the Company on the Unaudited Financial
Statements or have been properly accrued since the date of the Unaudited
Financial Statements in the Ordinary Course of Business, and since the date of
the Unaudited Financial Statements the Company has not incurred any Liability
for Taxes arising from extraordinary gains or losses, as that term is used in
GAAP, outside the Ordinary Course of Business. Except as set forth in
Schedule 4.10, there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any Tax Returns required to be
filed by the Company, or that include or are treated as including, the Company
with respect to any Tax assessment or deficiency or Tax Contest affecting the
Company.

4.11 Contracts and Commitments. Attached as Schedule 4.11 is the list of
Contracts provided by the Company to Buyer in the course of Buyer’s due
diligence. Except as described in Schedule 4.11 the Company is not a party to
any other material agreement, Contract or arrangement. All of the Contracts
listed on Schedule 4.11 are in full force and effect and are legal, valid, and
binding obligations of the Company, enforceable in accordance with their terms,
except to the extent such enforceability is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other law
affecting or relating to creditors’ rights generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law). The Company is in compliance with all terms and
requirements of each such Contract and, to the Knowledge of the Company, each
other Person that is party to any such Contract is in material compliance with
the terms and requirements of such Contract. To the Knowledge of the Company, no
event has occurred or circumstance existing that (with or without notice or
lapse of time) may contravene, conflict with or result in a violation or breach
of, or give the Company or any other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify any such Contract. There are no renegotiations,
attempts to renegotiate or outstanding rights to negotiate any amount to be paid
or payable to or by the Company under any such Contract other than with respect
to non-material amounts in the Ordinary Course of Business, and no Person has
made a written demand for such renegotiation. The Company has not released or
waived any of its rights under any Contract listed on Schedule 4.11.

4.12 Intellectual Property.

(a) Schedule 4.12(a) contains a complete and accurate list of the following, to
the extent they are Owned Company Intellectual Property: (i) all registered
Trademarks and applications therefor; (ii) all Patents; (iii) all registered
Copyrights and applications therefor; and (iv) all Domain Names, in each case
listing, if and as applicable, (A) the name of the applicant/registrant and
current owner, (B) the jurisdiction where the application/registration is

 

22

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

located and (C) the application or registration number. To the Knowledge of the
Company, all such Owned Company Intellectual Property is valid and enforceable.
All of the Intellectual Property Rights, to the extent they are Owned Company
Intellectual Property, are owned beneficially, and with respect to applications
and registrations therefor, of record, solely by the Company, and the Company is
solely responsible for the costs of acquisition, development, maintenance, and
prosecution of such Company Intellectual Property Rights, and all necessary
registration, maintenance, renewal and other relevant filing fees in connection
with such Company Intellectual Property Rights have been timely paid, and all
necessary documents, certificates and other relevant filings in connection with
any of the foregoing have been timely filed, with the relevant Governmental
Authorities and Internet domain name registrars in the United States or foreign
jurisdictions, as the case may be, for the purpose of maintaining such Company
Intellectual Property Rights. There are no actions that must be taken by the
Company within one hundred twenty (120) days of the Closing Date, including the
payment of any registration, maintenance or renewal fees or the filing of any
responses to office actions, documents, applications or certificates for the
purposes of obtaining, maintaining, perfecting or preserving or renewing any
Company Intellectual Property Rights.

(b) Schedule 4.12(b) contains a complete and accurate list of all Contracts
material to the Company as of the date hereof (i) under which the Company uses
or has the right to use any Licensed Company Intellectual Property, other than
licenses and related services agreements for commercially available Intellectual
Property or (ii) under which the Company has transferred, assigned or licensed
to others the right to use any Company Intellectual Property or Company
Intellectual Property Rights, other than, in the case of clauses (i) and (ii),
any customer, developer, distributor, referral, agency, consulting, promotion,
and reseller licenses and other agreements entered into in the ordinary course
of business consistent with past practice, in each case specifying the parties
to the agreement (such agreements, the “Company Intellectual Property
Agreements”). To the Knowledge of the Company, as of the date hereof, there are
no pending disputes regarding the scope of such Company Intellectual Property
Agreements, performance under the Company Intellectual Property Agreements, or
with respect to payments made or received under such Company Intellectual
Property Agreements. No Company Intellectual Property Agreements give ownership
or exclusive rights to any improvements or derivative works of any Licensed
Company Intellectual Property made by the Company, except where the Company has
a license or other rights to make use of such improvements or derivative works,
or such improvements or derivative works are not material to the business of the
Company.

(c) The Company owns all right, title and interest in the Owned Company
Intellectual Property, free and clear of all Liens other than (i) encumbrances,
licenses, restrictions or other obligations arising under any of the Company
Intellectual Property Agreements, and (iii) Liens that would not result in,
individually or in the aggregate, a Material Adverse Change. The Company owns or
have sufficient rights to use the Company Intellectual Property as currently
used and proposed to be used by the Company.

(d) The Company has taken reasonable and appropriate steps to protect and
preserve the confidentiality of the Trade Secrets that comprise any part of the
Company Intellectual Property, and to the Knowledge of the Company, as of the
date hereof, there are no unauthorized uses, disclosures or infringements of any
such Trade Secrets by any Person. To the Knowledge of the Company, all use and
disclosure by the Company of Trade Secrets owned by

 

23

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

another Person have been pursuant to the terms of a written agreement with such
Person or was otherwise lawful, except to the extent that any use or disclosure
of any Trade Secret owned by another Person that was not done in accordance with
a written agreement would not result in, individually or in the aggregate, a
Material Adverse Change.

(e) As of the date hereof, (i) the Company has not infringed upon or otherwise
violated, or is infringing upon or otherwise violating, in any respect the
Intellectual Property Rights of any third party and (ii) no third party is
infringing or otherwise violating any Owned Company Intellectual Property.

(f) As of the date hereof, the Company has not received written notice of a
claim that the conduct of the Company’s business infringes, misappropriates, or
otherwise violates the Intellectual Property Rights of a third Person. As of the
date hereof, the Company is not subject to any Order that restricts or impairs
the use of any material Company Intellectual Property Rights, other than
restrictions or impairments that would not result in, individually or in the
aggregate, a Material Adverse Change.

(g) The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in (i) the Company granting to
any third party any rights or licenses to any Company Intellectual Property
Rights except as set forth in any of the Company Intellectual Property
Agreements, (ii) any third Person that is a party to a Company Intellectual
Property Agreement having the right to terminate the applicable Company
Intellectual Property Agreement, (iii) the imposition of any Lien on any Owned
Company Intellectual Property, or (iv) the Company or the Buyer being obligated
to pay any royalties, fees, honoraria or other amounts to any third party in
excess of those payable by the Company prior to the Closing Date pursuant to
contracts to which the Company is a party or by which it is bound.

4.13 Brokerage. Except as set forth on Schedule 4.13, no broker, finder or
investment banker acting on behalf of the Stockholders or the Company is
entitled to any fee, commission or other payment from the Stockholders or the
Company in connection with this Agreement or the Transaction.

4.14 Governmental Licenses and Permits. Schedule 4.14 contains a complete and
correct listing of all permits, licenses, franchises, certificates, approvals,
registrations, accreditations and other authorizations of Governmental
Authorities (including all licenses, permits and other authorizations that are
required pursuant to any Environmental Requirements for the occupancy of its
properties or facilities, or the operation of its businesses) (collectively, the
“Licenses”) owned or possessed by the Company, and to the Company’s Knowledge,
no other Licenses are required in the conduct of the business of the Company as
currently conducted or as proposed to be conducted. Except as set forth on
Schedule 4.14, all Licenses are in full force and effect and the Company is
operating and each of the Company has operated in compliance with all such
Licenses as well as the applicable orders, approvals and variances related
thereto, and are not in violation of any of the foregoing. Except as
specifically provided on Schedule 4.14, the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by any such
Licenses.

 

24

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

4.15 Employment and Labor Matters.

(a) Schedule 4.15(a) attached hereto sets forth a true, correct and complete
list of: (i) all written agreements with any employee, officer, director or
consultant of the Company, including without limitation all non-competition
agreements, (ii) their current fixed and variable rate of compensation and
benefits, (iii) their accrued vacation, if applicable, and (iv) all agreements
which provide for severance benefits to be paid or payable to any employee,
officer, director or consultant of the Company. The Company has not entered into
any other agreements with any director, officer or employee of the Company,
including without limitation, any agreement granting severance benefits or
benefits payable upon a change of control of the Company.

(b) There are no former employees of the Company, who are entitled to, or
receiving, COBRA Coverage as of the date of this Agreement.

(c) Since its formation, the Company has not been the subject of any union
activity or labor dispute, nor has there been any strike of any kind or similar
labor activity called, or threatened to be called, against the Company; and, to
the Knowledge of the Company, the Company has not violated in any material
respects any applicable federal or state law or regulation relating to labor or
labor practices with regard to the operations of the Company, including, without
limitation, all laws relating to labor relations, equal employment
opportunities, fair employment practices, prohibited discrimination and similar
employment activities, and the Company is not a party to any collective
bargaining agreement affecting the Company.

(d) With respect to the business conducted by the Company, there are no unpaid
wages, bonuses or commissions (other than those not yet due) nor does the
Company owe any Tax, penalty, assessment or forfeiture for failure to comply
with any of the foregoing.

(e) The Company does not maintain, contribute to or have any Liability or
potential Liability with respect to (i) any “employee benefit plan” (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”)), or (ii) any other plan, program, policy, practice,
arrangement or contract providing benefits or payments to current or former
employees (or to their beneficiaries or dependents) of the Company or to any
other Person (in each case of (i) and (ii), a “Plan”).

4.16 Insurance. Schedule 4.16 lists each insurance policy maintained by or for
the benefit of the Company with respect to the Company’s assets, properties or
businesses (including the name of the insurer, the policy number, and the
period, amount and scope of coverage). Such policies are in amounts and have
coverages as required by any contract to which the Company is a party or by
which any of its assets or properties is bound. All such insurance policies are
in full force and effect. The Company is not in default with respect to its
obligations under any such insurance policy or has received written notice of
cancellation or termination in respect of any such policy, and, to the Knowledge
of the Company, no cancellation or termination of any such policy is pending or
threatened by the current insurers of the Company.

4.17 Affiliate Transactions. To the Knowledge of the Company, except as
disclosed on Schedule 4.17, neither (a) any current or former officer, director,
manager, stockholder or unitholder of the Company, (b) any individual related by
blood, marriage or adoption to any of the foregoing individuals, (c) any trust
or comparable entity that is operated for the benefit of any

 

25

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

of the individuals referred to in each of the foregoing clauses, nor (d) any
entity in which any Person referred to in each of the foregoing clauses owns any
beneficial interest, (i) is a party to any agreement, contract, commitment or
transaction with the Company, or (ii) has any interest in any property, real or
personal or mixed, tangible or intangible, used in or pertaining to the
Company’s business.

4.18 Environmental and Safety Matters. The Company has obtained and complied in
all material respects with all Licenses that may be required pursuant to
Environmental Requirements or Safety Requirements for the occupation of its
facilities and the operation of the Company’s business; and the Company is, and
at all times been, in compliance in all material respects with all Environmental
Requirements and Safety Requirements. To the Knowledge of the Company, there is
no fact or circumstance which could form the basis for the assertion of any
claim against any Company under any Environmental Requirements, including CERCLA
or any similar Law, with respect to any on-site or off-site location, or under
any Safety Requirements.

4.19 Litigation and Compliance with Law.

(a) Except as set forth on Schedule 4.19, there are no Proceedings, pending or,
to the Company’s Knowledge, threatened against or affecting the Company, at Law
or in equity, or before or by any Governmental Authority or instrumentality
having jurisdiction over the Company. No notice of Proceeding, whether pending
or threatened, has been received by the Company, and, there is no basis
therefor.

(b) Except to the extent set forth on Schedule 4.19, (i) the Company has, at all
times, conducted its business in compliance with all Legal Requirements
applicable to the business or the assets of the Company (including, without
limitation, obtaining all necessary authorizations under the Federal Food, Drug
and Cosmetic Act of 1938, as amended (the “FDCA”), and all regulations of the
FDA), and (ii) the Company currently conduct the Company’s business operations
in compliance with all Legal Requirements applicable to the Company’s business
and assets.

(c) The Company has not received any written notice from the FDA or any other
Governmental Authority that all biological and drug products being manufactured,
distributed or developed by the Company or any preclinical or clinical trial
conducted to date by or on behalf of the Company fails to meet the protocols
requested by the FDA or otherwise necessary for inclusion as part of any IND or
NDA submission to the FDA. The Company has made available to the Buyer all
correspondence between the Company and the FDA through the Closing Date.

(d) 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
to invoke its policy with respect to “Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191
(September 10, 1991) and any amendments thereto. Additionally, neither the
Company nor any employee of the Company has been convicted of any crime or
engaged in any conduct that would reasonably be expected to result in
(i) debarment under 21 U.S.C. Section 335a or any similar state Law or
regulation or (ii) exclusion under 42 U.S.C. Section 1320a-7 or any similar
state Legal Requirement.

 

26

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

4.20 Books and Records. The books of account and other financial records to be
transferred to the Buyer pursuant hereto are in all material respects complete
and correct, are maintained in accordance with all Legal Requirements, and are
accurately reflected in the Financial Statements. The Company has provided to
the Buyer and its Representatives true and complete copies of or access to all
minute books or corporate records relating to the Company.

4.21 Bank Accounts, Letters of Credit and Powers of Attorney. Schedule
4.21 lists (a) all bank accounts, lock boxes and safe deposit boxes relating to
the business and operations of the Company (including the name of the bank or
other institution where such account or box is located and the name of each
authorized signatory thereto), (b) all outstanding letters of credit issued by
financial institutions for the account of the Company (setting forth, in each
case, the financial institution issuing such letter of credit, the maximum
amount available under such letter of credit, the terms (including the
expiration date) of such letter of credit and the party or parties in whose
favor such letter of credit was issued), and (c) the name and address of each
person who has a power of attorney to act on behalf of the Company. The Company
has heretofore delivered to the Buyer true, correct and complete copies of each
letter of credit and each power of attorney described in Schedule 4.21.

4.22 Customers and Suppliers.

(a) The Company has no revenues since inception.

(b) Schedule 4.22(b) sets forth a list of all suppliers to whom the Company made
payments aggregating $1,000 or more during the fiscal year ended December 31,
2011, or expects to aggregate $10,000 or more during the fiscal year ending
December 31, 2012, showing, with respect to each, the name, address and dollar
volume involved.

4.23 Accuracy of Information Furnished by the Company; Full Disclosure. No
written representation, statement or information made or furnished by the
Company to the Buyer, including without limitation, those contained in this
Agreement and the various attachments hereto, including the Schedules, and the
other information and statements previously furnished by the Company to the
Buyer, contains or shall contain any untrue statement of a material fact or
omits or shall omit any material fact necessary to make the information
contained therein in light of circumstances in which they were made, not
misleading. Except as contemplated by or disclosed in the Schedules, there is no
fact or circumstance known to the Company that could reasonably be expected to
result in a Material Adverse Change. The Company makes no other representation
or warranties other than as expressly set forth in this Agreement and the
Ancillary Agreements.

 

27

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

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS

As a material inducement to the Buyer and the Merger Sub to enter into this
Agreement, each Principal Stockholder, individually with respect to himself,
herself or itself only, hereby represents and warrants to the Buyer and the
Merger Sub that, as of the date hereof and as of the Closing Date:

5.1 Organization and Power. With respect to each Principal Stockholder that is a
legal entity, such Principal Stockholder is duly organized, validly existing and
in good standing under the Legal Requirements of the jurisdiction of its
organization or formation, and has full power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which such Principal
Stockholder is a party and to perform its obligations hereunder and thereunder
and consummate the Transaction.

5.2 Authorization. The execution, delivery and performance by such Principal
Stockholder of this Agreement and the Ancillary Agreements to which such
Principal Stockholder is a party and the consummation of the Transaction have
been duly and validly authorized by all requisite action on the part of such
Principal Stockholder, and no approval or other proceedings on his, her or its
part are necessary to authorize the execution, delivery or performance of this
Agreement and such Ancillary Agreements. Such Principal Stockholder has the full
power to sell, exchange, assign, transfer and deliver its shares of Company
Stock to the Buyer or the Surviving Corporation, as the case may be, free and
clear of all Liens. This Agreement has, been duly executed and delivered by such
Principal Stockholder, and constitutes a legal, valid and binding obligation of
such Principal Stockholder enforceable against such Principal Stockholder in
accordance with its terms, except as enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and limitations on the availability of
equitable remedies. As of the Closing, the Ancillary Agreements to which such
Principal Stockholder is a party will have been duly executed and delivered by
such Principal Stockholder, and will constitute a legal, valid and binding
obligation of such Principal Stockholder enforceable against such Principal
Stockholder in accordance with its terms, except as enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other Legal Requirements affecting creditors’ rights generally and limitations
on the availability of equitable remedies.

5.3 Absence of Conflicts. Neither the execution and delivery by such Principal
Stockholder of this Agreement and the Ancillary Agreements to which such
Principal Stockholder is a party nor the performance by such Principal
Stockholder of its obligations hereunder and thereunder in accordance with the
terms of this Agreement and the Ancillary Agreements will not (with or without
the giving of notice or the lapse of time, or both):

(a) contravene, conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the charter, bylaws, partnership agreement or
similar organizational documents of such Principal Stockholder, if applicable;

(b) contravene, conflict with or result in a material violation or breach of, or
give any Governmental Authority or other Person the right to challenge the
Transaction under, any Legal Requirement applicable to such Principal
Stockholder or any of such Principal Stockholder’s assets or properties, or
require any consent or approval of or any notice or filing with any Governmental
Authority or other Person; or

(c) contravene, conflict with or result in a material breach or default under,
or give rise to any right of acceleration or termination of, any of the terms,
conditions or provisions of any note, bond, lease, license, contract or other
instrument or obligation to which such Principal Stockholder is a party or by
which any of such Principal Stockholder’s assets or properties is bound.

 

28

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

5.4 Title. As of the Closing, such Principal Stockholder is the sole record and
beneficial owner of the Company Stock set forth opposite such Principal
Stockholder’s name on Schedule 4.3 hereto. Except as set forth on Schedule 5.4,
such Principal Stockholder is not a party to any voting trust, proxy or other
contract or understanding between or among any Persons that affects or relates
to the voting or giving of written consent with respect to any outstanding
security of the Company.

5.5 Litigation. There is no Proceeding at law or in equity pending or, to the
Knowledge of such Principal Stockholder, threatened in writing against, and
there is no outstanding Order applicable to, such Principal Stockholder or the
Company that seeks to restrain, enjoin, prevent or prohibit the consummation of
any part of the Transaction.

5.6 Investment Representations.

(a) Such Principal Stockholder is an “accredited investor” within the meaning of
Rule 501 of Regulation D under the 1933 Act or such Principal Stockholder either
alone or with his purchaser representative has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks involved in acquiring shares of Buyer Common Stock in connection with the
Merger. Such Principal Stockholder either alone or with his purchaser
representative has sufficient knowledge and experience in investing in companies
similar to the Buyer so as to be able to evaluate the risks and merits of an
investment in Buyer Common Stock. Such Principal Stockholder is able to
financially bear the risks of loss of its entire investment in Buyer Common
Stock issuable hereunder.

(b) Such Principal Stockholder has carefully read this Agreement and the
Information Statement provided in connection herewith, including all exhibits
and appendices hereto and thereto. The Buyer has made available to such
Principal Stockholder and/or its attorney all documents and materials that it or
they have requested relating to an investment in the Buyer and has provided
answers to all of its or their questions concerning an investment in the Company
and such Principal Stockholder has carefully reviewed all such documents and
materials. In evaluating the suitability of an investment in the Buyer, such
Principal Stockholder has not relied upon any representations or other
information (whether oral or written) other than set forth in the Information
Statement provided in connection herewith.

(c) Such Principal Stockholder is acquiring the shares of Buyer Common Stock for
his or her own account as principal, and not as nominee or agent, for investment
purposes and not with a view to or for sale in connection with any distribution
thereof except for any distribution in compliance with the registration
provisions of the 1933 Act.

(d) Such Principal Stockholder understands that the shares of Buyer Common Stock
being issued in connection with the Merger are “restricted” under applicable
U.S. federal and state securities laws inasmuch as they are being acquired from
the Buyer in a transaction not involving a public offering and that, pursuant to
these laws and applicable regulations, the Principal Stockholder must hold the
shares of Buyer Common Stock indefinitely unless they are registered with the
Securities and Exchange Commission (the “SEC”), and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available. Such Principal Stockholder further acknowledges that
if an exemption from registration or qualification is available, it may be
conditioned on various requirements including the timing and

 

29

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

manner of sale, the holding period for the share of Buyer Common Stock, and on
requirements relating to the Buyer which are outside of the Principal
Stockholder’s control, and which the Buyer is under no obligation and may not be
able to satisfy. In this connection, such Principal Stockholder represents that
it is familiar with Rule 144 promulgated under the 1933 Act, as presently in
effect, and understands the resale limitations imposed thereby and by the 1933
Act

(e) Such Principal Stockholder understands that the representations and
warranties contained in this Section 5.6 are given with the intention that Buyer
may rely thereon for purposes of claiming such exemptions.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND MERGER SUB

As a material inducement to the Company and the Principal Stockholders to enter
into this Agreement, the Buyer and the Merger Sub hereby represent and warrant
to the Company and the Principal Stockholders that as of the date hereof and as
of the Effective Time:

6.1 Organization and Power. Each of the Buyer and the Merger Sub is a
corporation validly existing and in good standing under the laws of the State of
Delaware, with full power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party and to perform its obligations
hereunder and thereunder.

6.2 Authorization of Transaction. Each of the Buyer and the Merger Sub has full
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to consummate the Transaction. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements to which the Buyer or the Merger Sub is a party and the consummation
of the Transaction have been duly and validly authorized and approved by all
requisite action on the part of the Buyer and the Merger Sub and no other
proceedings (corporate or otherwise) on the part of the Buyer or the Merger Sub
are necessary to approve and authorize the execution and delivery of this
Agreement and the consummation of the Transaction. This Agreement has been duly
executed and delivered by the Buyer and the Merger Sub and constitutes the valid
and binding agreement of the Buyer and the Merger Sub enforceable against them
in accordance with its terms, except as enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other Legal
Requirements affecting creditors’ rights generally and limitations on the
availability of equitable remedies. As of the Closing, the Ancillary Agreements
to which the Buyer or the Merger Sub is a party will have been duly executed and
delivered by such Person, and will constitute a legal, valid and binding
obligation of such Person enforceable against it in accordance with its terms,
except as enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other Legal Requirements affecting
creditors’ rights generally and limitations on the availability of equitable
remedies.

6.3 Absence of Conflicts. Neither the execution and delivery of this Agreement
nor the consummation or performance of the Transaction, will (with or without
notice or lapse of time), (a) contravene, conflict with, or result in a
violation of any provision of the certificate of incorporation, bylaws or
comparable organizational documents of the Buyer or the Merger Sub;
(b) materially contravene, conflict with, or result in a material violation of,
or give any Governmental Authority or other Person the right to challenge the
Transaction under, any Legal

 

30

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

Requirement to which the Buyer, the Merger Sub or any of their Subsidiaries may
be subject; and (c) materially contravene, conflict with, or result in a
material violation of any of the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any License that is held by the Buyer, the Merger Sub or any of their
Subsidiaries.

6.4 Litigation. As of the date hereof, there are no Proceedings pending or, to
the Knowledge of the Buyer, threatened against or affecting the Buyer at law or
in equity, or before or by any Governmental Authority, which would materially
affect the performance of the Buyer or the Merger Sub or their obligations under
this Agreement or the Ancillary Agreements to which the Buyer or the Merger Sub
is a party or the consummation of the Transaction.

6.5 Brokers’ Fees. No agent, broker, finder, investment banker or other Person,
acting on behalf of the Buyer or any of its Affiliates, is or will be entitled
to any fee, commission or other payment from the Buyer or any of its Affiliates
in connection with this Agreement or the Transaction.

6.6 SEC Reports; Financial Statements. The Buyer has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Buyer under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof since December 31, 2009 (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Buyer has never been an issuer subject
to Rule 144(i) under the Securities Act. The financial statements of the Buyer
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with GAAP, except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Buyer as of and
for 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,
immaterial, year-end audit adjustments.

6.7 Absence of Certain Developments. Except as disclosed in the SEC Reports,
since September 30, 2011 through the date hereof, there has occurred no change
which, individually or in the aggregate, has resulted in a material adverse
change of the Buyer.

 

31

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

ARTICLE VII

TAX MATTERS COVENANTS

7.1 Stockholders Tax Indemnification. Notwithstanding Article IX hereto, each of
the Principal Stockholders shall, jointly and severally, indemnify and defend
the Buyer Indemnitees and hold them harmless from and against (without
duplication) any Losses attributable to (i) all Taxes (or the non-payment
thereof) of the Company for all Taxable periods ending on or before the Closing
Date and the portion through the Tax Effective Time of any Taxable period that
includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”),
(ii) all Taxes of any member of an Affiliated Group of which the Company or any
of its Subsidiaries (or any predecessor of any of the foregoing) is or was a
member on or prior to the Closing Date, including pursuant to Treasury
Regulation Section 1.1502-6 or any analogous or similar state, local, or
non-United States law or regulation, and (iii) any and all Taxes of any Person
(other than the Company) imposed on the Company as a transferee or successor, by
contract or pursuant to any law, rule or regulation, which Taxes relate to an
event or transaction occurring on or before the Closing Date.

7.2 Closing of Taxable Period. The Stockholders and the Buyer shall, to the
extent permitted by applicable Legal Requirements, elect with the relevant
Governmental Authorities to close the Taxable period of the Company at 11:59
p.m. on the Closing Date. In the case of any Taxable period that includes (but
does not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes
based on or measured by income or receipts of the Company and the amount of any
sales, use, employment or withholding Taxes of the Company shall be determined
based on an interim closing of the books as of 11:59 p.m. on the Closing Date
(the “Tax Effective Time”) (and for such purpose, the Taxable period of any
partnership or other pass-through entity in which the Company holds a beneficial
interest shall be deemed to terminate at such time) and the amount of other
Taxes of the Company for a Straddle Period that relate to the Pre-Closing Tax
Period shall be deemed to be the amount of such Tax for the entire Taxable
period multiplied by a fraction the numerator of which is the number of days in
the Taxable period ending on and including the Closing Date and the denominator
of which is the number of days in such Straddle Period.

7.3 Responsibility for Filing Tax Returns. The Buyer shall prepare or cause to
be prepared and file or cause to be filed all Tax Returns of the Company that
are due after the Closing Date. Any expenses incurred by the Buyer in
preparation of said Tax Returns shall be borne by the Principal Stockholders and
that number of shares of Buyer Common Stock equal to such expenses (calculated
using the closing price of the Buyer Common Stock on the Business Day
immediately preceding the date such payment is to be made to the Buyer) shall be
deducted from the Escrow Shares as an adjustment to the Merger Consideration.
The Buyer and the Stockholders’ Representative shall consult and cooperate as to
any elections to be made on Tax Returns of the Company for periods ending on or
before 11:59 p.m. on the Closing Date.

7.4 Cooperation on Tax Matters.

(a) The Buyer and the Company, on the one hand, and the Principal Stockholders,
on the other hand, shall cooperate fully, as and to the extent reasonably
requested by the other Party, in connection with the filing of Tax Returns
pursuant to this Article VII and any Tax Contest. The Company and each Principal
Stockholder agree (A) to retain all books and records with respect to Tax
matters pertinent to the Company relating to any taxable period beginning before
the Closing Date until the expiration of the applicable statute of limitations
(and, to the extent notified by the Buyer or the Principal Stockholders, any
extensions thereof) of the respective Taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (B) to
give the other Parties reasonable written notice prior to

 

32

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

transferring, destroying or discarding any such books and records and, if the
other Party so requests, the Company or such Principal Stockholder, as the case
may be, shall allow the other Party to take possession of such books and
records.

(b) The Buyer and each Principal Stockholder further agree, upon request, to use
reasonable efforts to obtain any certificate or other document from any
Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the Transaction contemplated by this Agreement), and to
provide the other Party with all information that either Party may be required
to report pursuant to Section 6043 of the Code, Section 6043A of the Code, and
all Treasury Regulations promulgated thereunder.

7.5 Tax Contests. The Buyer shall control any Tax Contest, including determining
actions taken to pay, dispute, compromise or settle such Taxes, and the
Stockholders’ Representative shall have the right to participate in such Tax
Contest to the extent the proceedings relate to any matter which may give rise
to an indemnification payment by the Principal Stockholders under this Article
VII, or to the extent the proceedings may materially adversely affect the
Principal Stockholders’ Liability for Taxes relating to the Company; provided,
however, neither the Buyer nor the Company, may compromise or settle any such
Tax Contest in a manner that would reasonably be expected to adversely affect a
Principal Stockholder with respect to any Taxable period for which such
Principal Stockholder is responsible pursuant to this Article VII, without the
prior written consent of such Principal Stockholder (which consent shall not be
unreasonably withheld, conditioned or delayed). Any consent required under this
Article VII to be given by a Principal Stockholder may be given by the
Stockholders’ Representative, and if given, shall be binding on such Principal
Stockholder. In any Tax Contest where a Principal Stockholder elects to
participate, each Party shall bear its own costs for participating in such Tax
Contest, and all Parties shall cooperate in good faith before any final
resolution is reached.

7.6 Transfer Taxes. All transfer, documentary, sales, use, stamp, registration
and other similar Taxes, and all conveyance fees, recording charges and other
fees and charges (including any penalties and interest) incurred in connection
with the consummation of the Transaction shall be paid one-half by the Buyer and
one-half by the Stockholders.

ARTICLE VIII

EMPLOYMENT MATTERS AND OTHER COVENANTS

8.1 New Employment Arrangements. The Company shall cause each employment
agreement or other arrangement listed on Schedule 4.15(a) to be terminated at or
prior to the Effective Time, and the Company shall offer to the employees listed
on Schedule 8.1 attached hereto (each a “Key Employee,” and collectively, the
“Key Employees”) employment by the Buyer, each pursuant to an employment
agreement in form and substance mutually agreed to by the Buyer and such Key
Employee (each a “Key Employee Employment Agreement”). Each employee of the
Company who remains an employee of Buyer or the Surviving Corporation after the
Closing Date, including the Key Employees, shall be referred to hereafter as a
“Continuing Employee.” Continuing Employees shall be eligible to receive
benefits consistent with Buyer’s applicable human resources policies. Continuing
Employees shall execute any standard agreements required to be executed by
Buyer’s employees.

 

33

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

8.2 COBRA Coverage. Upon and at all times after the Effective Time, the
Surviving Corporation and Buyer shall be solely responsible for providing, and
shall assume the obligation to provide, COBRA Coverage with respect to any
employees of the Company or other Persons who will be entitled to COBRA
Coverage, as a result of the transactions contemplated by this Agreement or
otherwise, as required by COBRA and other applicable laws.

8.3 Appointment of Directors. Effective as of the Effective Time, the Buyer
shall cause Christopher Clement to be appointed as a member of the Board of
Directors of the Buyer, in addition to his appointment as Chief Operating
Officer of the Buyer. Following the Effective Time, the Buyer shall also cause
to be appointed as a member of the Board of Directors of the Buyer an individual
designated by the Stockholders’ Representative, subject to the approval of the
Board of Directors of the Buyer (which approval shall not be unreasonably
withheld or delayed), who satisfies the requirements for an independent director
under applicable federal securities laws and the applicable rules of any
national securities exchange upon which the Buyer Common Stock is listed.

ARTICLE IX

SURVIVAL, INDEMNIFICATION AND RELATED MATTERS

9.1 Survival. Except as otherwise expressly set forth in this Agreement, the
representations, warranties, covenants and agreements of the Company, the
Principal Stockholders, and the Stockholders in this Agreement and the Ancillary
Agreements, and the rights of the Parties to seek indemnification with respect
thereto, shall survive the Closing for eighteen (18) months following the
Closing Date, except for the representations, warranties and indemnity
obligations contained in Sections 4.1 (Organization and Corporate Power), 4.2
(Authorization of Transaction), 4.3 (Capitalization), 4.13 (Brokerage), and
Article VII (Tax Matters Covenants), which shall survive for thirty (30) days
past the applicable statute of limitations (taking into account any extensions);
and except as otherwise expressly set forth in this Agreement no claim for any
Losses may be brought on account of any of the foregoing beyond the applicable
survival period. The sections enumerated in the preceding sentence shall be
referred to herein collectively as the “Designated Representations.”
Notwithstanding the foregoing, any claims asserted in good faith and with
reasonable specificity (to the extent known at such time) and in writing by
notice from any Buyer Indemnitee prior to the expiration date of the applicable
survival period shall not thereafter be barred by the expiration of such
survival period and such claims shall survive until finally resolved. In any
such case, such representation, warranty, covenant or agreement shall survive,
only for the purposes of claims for indemnity related to such event and not for
the purposes of claims for indemnity related to any other event, until any claim
for indemnity related to such event is resolved.

9.2 Indemnification.

(a) Indemnity Obligation of the Principal Stockholders.

(i) Subject to the terms and conditions contained in this Article IX, each of
the Principal Stockholders, jointly and severally, shall indemnify, defend

 

34

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

and hold harmless the Buyer, the Company, any other Affiliate of the Buyer and
their respective Representatives (collectively, the “Buyer Indemnitees”)from and
against, and pay to the Company and, if appropriate, the other Buyer
Indemnitees, any loss, deficiency, damage, Liability, claim, action, obligation,
cost, Tax, expense or other charge (including interest, penalties, reasonable
legal, accounting, consultant and expert fees and expenses) (each, a “Loss” and
collectively “Losses”), which the Company or the other Buyer Indemnitees may
suffer, sustain or become subject to:

(A) as a result of the breach by the Company of any representation or warranty
made by the Company in this Agreement or any Ancillary Agreement;

(B) as a result of the breach by the Company of any covenant or other agreement
made by the Company in this Agreement or any Ancillary Agreement;

(C) in respect of Taxes in accordance with Article VII;

(D) as a result of any Third Party Proceeding arising out of or relating to the
Company prior to the Closing, whether or not disclosed on any Schedule;

(E) as a result of any Third Party Proceeding arising out of or relating to any
Actions by Stockholders in connection with or arising from the consummation of
the transactions contemplated herein;

(F) as a result of any Third Party Proceeding arising out of or relating to any
prior discussions, letters of intent or agreements entered into prior to the
Closing concerning the acquisition of the Company or any capital stock of the
Company, whether or not disclosed on any Schedule;

(G) relating to any Existing Indebtedness as of the Closing Date that is not
paid at Closing; and

(H) arising from or otherwise relating to any Stockholders’ Transaction
Expenses, whenever arising or submitted to the Company.

(ii) Subject to the terms and conditions contained in this Article IX, each
Principal Stockholder (as to himself, herself or itself only) shall indemnify,
defend and hold harmless the Buyer Indemnitees from and against, and pay to the
Buyer Indemnitees, any Loss that any Buyer Indemnitee may suffer, sustain or
become subject to arising from, relating to or otherwise in respect of any
breach by such Principal Stockholder of: (A) any representation or warranty made
by such Principal Stockholder in Article V or any Ancillary Agreement, or
(B) the covenants or other agreements made by the Principal Stockholders in this
Agreement or any Ancillary Agreement.

 

35

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

(b) [Intentionally Omitted].

(c) Procedure.

(i) If any Buyer Indemnitee seeks indemnification under this Section 9.2, such
party (the “Indemnified Party”) shall give written notice to the party or
parties from whom or which such Indemnified Party is seeking indemnification
under this Agreement (the “Indemnifying Party”) of the facts and circumstances
giving rise to the claim, which shall mean notice to the Stockholders’
Representative. In that regard, if any Proceeding shall be brought or asserted
in writing by any third party (“Third Party Proceeding”) for which an
Indemnified Party may seek indemnification pursuant to this Section 9.2, the
Indemnified Party shall promptly notify the Indemnifying Party of the same in
writing, specifying in reasonable detail (if known) the basis of such claim and
the facts pertaining thereto, and the Indemnifying Party, if it so elects by
written notice to the Indemnified Party prior to the expiration of the Dispute
Period, shall assume and control the defense thereof (and shall consult with the
Indemnified Party with respect thereto), including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of expenses.
Notwithstanding the foregoing, the failure of an Indemnified Party to give any
notice contemplated by this Section 9.2(c)(i) will not affect the rights or
obligations of any party hereunder except and only to the extent that, as a
result of such failure, the Indemnifying Party’s ability to remedy, contest,
defend or settle with respect to such Third Party Proceeding is actually
prejudiced thereby.

(ii) If the Indemnifying Party elects to assume and control the defense, prior
to the expiration of the Dispute Period as provided in Section 9.2(c)(i) above,
the Indemnified Party shall have the right to employ counsel separate from
counsel employed by the Indemnifying Party in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
employed by the Indemnified Party shall be at the expense of the Indemnified
Party, unless (A) the employment thereof has been specifically authorized by the
Indemnifying Party in writing, (B) there exists a conflict of interest between
the interests of the Indemnified Party and the Indemnifying Party, or (C) the
Indemnifying Party has failed to assume the defense and employ counsel. The
Indemnifying Party shall not be liable for any settlement of any Third Party
Proceeding that is effected without the written consent of the Indemnifying
Party.

(iii) If the Indemnifying Party notifies the Indemnified Party that it does not
dispute the claim described in notice contemplated by Section 9.2(c)(i) or fails
to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such notice, the Loss in the
amount specified in the notice will be conclusively deemed a Liability of the
Indemnifying Party under Section 9.2(a) and the Indemnifying Party shall pay the
amount of such Loss (subject to the provisions of this Article IX) to the
Indemnified Party on demand.

(d) [Intentionally Omitted].

 

36

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

(e) Limitations. The following provisions shall apply notwithstanding any other
provision contained in this Article IX:

(i) Except in respect of any Loss in connection with claims arising from fraud
willful misconduct or intentional breach of covenants or other agreements herein
by the Stockholders, the Principal Stockholders or the Company in connection
with the Transaction or a breach of a Designated Representation, the aggregate
Liability for indemnification pursuant to Sections 9.2(a)(i)(A) shall not exceed
the Cap Amount.

(ii) Except in respect of any Loss in connection with claims arising from fraud
willful misconduct or intentional breach of covenants or other agreements herein
by the Stockholders, the Principal Stockholders or the Company or a breach of a
Designated Representation, in no event shall any Party be liable pursuant to
Sections 9.2(a)(i)(A) or 9.2(a)(ii)(A) unless and until the aggregate amount of
all such Losses exceeds $75,000 (the “Basket”), after which point the Principal
Stockholders, as applicable, shall be liable for the amount of all such Losses.

(iii) Losses attributable to Taxes shall be resolved in accordance with Article
VII.

(f) Materiality/Knowledge. Each of the representations and warranties that
contains any “Material Adverse Change,” “in all material respects,” or other
materiality (or correlative meaning) qualification shall be deemed to have been
given as though there were no such qualification for purposes of determining the
amount of Losses under this Article IX, but not for purposes of determining the
accuracy of any representation or warranty. Each of the representations and
warranties that contains any “Knowledge”, “to the knowledge of” or other
knowledge (or correlative meaning) qualification shall be deemed to have been
given as though there were no such qualification for purposes of determining
whether a breach of such representation or warranty has occurred.

(g) Exclusive Remedies. Except for injunctive action or other equitable
remedies, or fraud or willful misconduct, the remedies provided in this Article
IX shall be exclusive remedies of the Parties after the Closing in respect of
any matter arising out of or in connection with this Agreement or any Ancillary
Agreement.

9.3 Escrow; Satisfaction of Losses.

(a) Distributions Related to Escrow Shares. The Escrow Shares shall be used to
satisfy pursuant to Section 9.3(b) any Losses of any Buyer Indemnitee for which
an Indemnified Party delivers an indemnification notice under Section 9.2(c) to
the Stockholders’ Representative on or prior to the date that is eighteen
(18) months immediately following the Closing Date. On the date that is eighteen
(18) months immediately following the Closing Date, the Buyer and Stockholders’
Representative shall cause the Escrow Agent to deliver to the Stockholders’
Representative, on behalf of the Principal Stockholders, an amount equal to
(i) the Escrow Shares, minus (ii) any and all amounts satisfied by Buyer by
set-off of the Escrow Shares for satisfaction of Losses pursuant to
Section 9.3(b), minus (iii) if any indemnification claim for

 

37

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

Losses of any Buyer Indemnitee contained in any indemnification notice delivered
pursuant to Section 9.1(c) prior to the date that is eighteen (18) months
immediately following the Closing Date is not finally resolved, an amount equal
to Buyer’s good faith estimate of the cumulative amount of all Losses disputed
in any such claims as of such time (the “Pending Claim Escrow Amount”). The
Pending Claim Escrow Amount shall be held as security and used by Buyer to
satisfy any such disputed claims on a dollar for dollar basis. If it is finally
determined pursuant to Section 9.2(c) that no Buyer Indemnitee is entitled to
any portion of the Pending Claim Escrow Amount or any portion of the Pending
Claim Escrow Amount is not used to set-off against any such pending claims (the
“Pending Claim Escrow Excess”), the Pending Claim Escrow Excess shall be
delivered to the Stockholders’ Representative, on behalf of the Principal
Stockholders. The Stockholders’ Representative shall distribute amongst the
Principal Stockholders any and all payments of the Escrow Shares received by the
Stockholders’ Representative to the Principal Stockholders pro rata, based upon
the percentages used to calculate the number of shares of each Principal
Stockholder’s Closing Date Merger Consideration Shares that were deposited in
the Escrow Fund; provided, if any amounts are set-off against the Escrow Shares
or the Pending Claim Escrow Amount for any Buyer Indemnitee Losses under
Section 9.2(a)(ii) or any breach of any representation, warranty or covenant
contained in a Letter of Transmittal, the Stockholders’ Representative shall
reduce the amounts that would otherwise be payable from the Escrow Shares to the
Principal Stockholder whose breach created such indemnification payment (it
being the intent of the Parties, as between the Stockholders, that such
Principal Stockholder should pay all amounts arising from such Principal
Stockholder’s breach).

(b) Satisfaction of Buyer Indemnitees Losses; Set-Off of Escrow Shares and
Contingent Merger Consideration Shares. Except with respect to the indemnity
obligations contained in Article VII, any indemnification obligations owed to
the Buyer Indemnitees shall be satisfied first by set-off against the Escrow
Shares or the Pending Claim Escrow Amount, as applicable, by reducing the Escrow
Shares or the Pending Claim Escrow Amount, as applicable, on a dollar for dollar
basis by the amount of such indemnification obligations, unless or until the
Escrow Shares, or Pending Claim Escrow Amount, if applicable, has been reduced
to zero. The value of the Escrow Shares for all purposes under this Article IX,
shall be calculated using the closing price of the Buyer Common Stock on the
Business Day immediately preceding the date on which such set-off or reduction
is to occur. Once the Escrow Shares and the Pending Claim Escrow Amount has been
reduced to zero, any remaining indemnification owing to a Buyer Indemnitee by
any Principal Stockholder pursuant to this Article IX shall be effected within
fifteen (15) Business Days after the determination thereof by wire transfer of
immediately available funds from such Principal Stockholder to an account
designated in writing by the applicable Buyer Indemnitee. Notwithstanding
anything else contained herein, the Buyer shall have the right, but not the
obligation, to satisfy any Buyer Indemnitee Losses by set-off against the
Contingent Merger Consideration Shares to which the Principal Stockholders are
entitled pursuant to Article II hereof on a dollar for dollar basis. The value
of the Contingent Merger Consideration Shares for all purposes under this
Article IX, shall be calculated using the closing price of the Buyer Common
Stock on the Business Day immediately preceding the date on which such set-off
is to occur.

 

38

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

ARTICLE X

ADDITIONAL AGREEMENTS

10.1 Press Releases and Announcements. No press releases or other announcements
to the employees, customers or suppliers of the Company related to this
Agreement, any Ancillary Agreement or the Transaction shall be issued without
the mutual approval of the Buyer and the Stockholders’ Representative; provided,
however, that the Buyer may issue a press release after the stock market closes
or before the stock market opens on the Closing Date. Notwithstanding anything
in this Agreement or any Ancillary Agreement to the contrary, nothing herein or
in any Ancillary Agreement shall prohibit the Buyer from making any filings with
or disclosures to any third party and/or any Governmental Authority (including
any national securities exchange) with respect to this Agreement, any Ancillary
Agreement or the Transaction, as may be required by applicable Legal
Requirements or by obligations pursuant to any listing agreement with or rules
of any national securities exchange.

10.2 Further Assurances. The Parties hereto each agree to execute such other
documents or agreements or do such other acts as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of the
Transaction. In addition, the Buyer agrees to cooperate reasonably with the
Stockholders’ Representative, at Stockholders’ Representatives expense, to the
extent the Stockholders’ Representative requests access to documents, employees
or data in the event that the Stockholders become the subject of an audit or
investigation by a Governmental Authority. From time to time, as and when
requested by a party hereto, each party hereto shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments, and
shall take, or cause to be taken, all such further or other actions, as such
other party may reasonably deem necessary to consummate the transactions
contemplated by this Agreement. The Principal Stockholders agree, for a period
of two (2) years after the Closing Date, upon the request of the Buyer, to
assist the Buyer in compiling historical information of the Company (including
the compilation of financial information or otherwise) and to comply with any
financial reporting obligations imposed by applicable legal requirements,
including the provision of audited financial statements for the calendar year
ended December 31, 2011 in accordance with GAAP.

10.3 Expenses. Except as otherwise provided herein, the Buyer and the Merger Sub
on the one hand and the Company and the Stockholders on the other hand will pay
all of their own fees, costs and expenses (including fees, costs and expenses of
legal counsel, investment bankers, brokers or other representatives and
consultants and appraisal fees, costs and expenses) incurred in connection with
the negotiation of this Agreement, the performance of their obligations
hereunder and the consummation of the Transaction.

10.4 Stockholders’ Representative. Each Principal Stockholder hereby irrevocably
constitutes and appoints Christopher Clement (the “Stockholders’
Representative”), as such Principal Stockholder’s agent and attorney-in-fact,
with full power and authority to act, including full power of substitution, in
his, her or its name and on his, her or its behalf with respect to all matters
arising from or in any way relating to this Agreement and any other agreement
entered into in connection with this Agreement (including the Ancillary
Agreements) or the Transaction, including to do all things and to perform all
acts required or deemed advisable, in its sole discretion, in connection with
the Transaction as fully as such Principal Stockholder could if then personally
present and acting alone. Without limitation, (i) any communication or other
delivery

 

39

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

validly delivered to the Stockholders’ Representative shall be deemed to have
been validly delivered to each Principal Stockholder, (ii) any consent given or
waiver of any provision of this Agreement or any other agreement entered into in
connection with this Agreement, by the Stockholders’ Representative shall be
binding upon each and every Principal Stockholder, and (iii) except as otherwise
provided in Section 11.1, the Stockholders’ Representative is hereby authorized
to execute for and on behalf of each Principal Stockholder any amendment to this
Agreement or any other agreement entered into in connection with this Agreement.
This appointment of agency and this power of attorney is coupled with an
interest and shall be irrevocable and shall not be terminated by any Principal
Stockholder or by operation of law. Neither the Stockholders’ Representative nor
any agent employed by it shall incur any Liability to any Principal Stockholder
by virtue of the failure or refusal of the Stockholders’ Representative for any
reason to consummate the Transaction or relating to the performance of its other
duties hereunder or any of its omissions or actions with respect thereto. The
Principal Stockholders, jointly and severally, agree to indemnify the
Stockholders’ Representative, his successors, assigns, agents, attorneys and
affiliates (the “Stockholders’ Representative Parties”) and to hold the
Stockholders’ Representative Parties harmless against any and all losses,
Liabilities or expenses incurred without bad faith on the part of the
Stockholders’ Representative and arising out of or in connection with his duties
as Stockholders’ Representative, including the reasonable costs and expenses
incurred by the Stockholders’ Representative in defending against any claim or
Liability in connection herewith.

ARTICLE XI

MISCELLANEOUS

11.1 Amendment. This Agreement may be amended or modified in whole or in part at
any time by an agreement in writing among the Company, the Buyer, the Merger Sub
and the Stockholders’ Representative; provided, however, that any amendment
which adversely and disproportionately affects a particular Principal
Stockholder relative to the other Principal Stockholders shall also require the
written approval of such Principal Stockholder.

11.2 Waiver. Any term or provision of this Agreement may be waived in writing at
any time by the Buyer, the Company, the Merger Sub and the Stockholders’
Representative; provided, however, that any waiver which adversely and
disproportionately affects a particular Principal Stockholder relative to the
other Principal Stockholders, shall also require the written approval of such
Principal Stockholder. Any waiver effected pursuant to this Section 11.2 shall
be binding. No failure to exercise, and no delay in exercising, any right, power
or privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude the exercise of any other
right, power or privilege. No waiver of any breach of any covenant or agreement
hereunder shall be deemed a waiver of a preceding or subsequent breach of the
same or any other covenant or agreement.

11.3 Notices. All notices, requests, demands, claims and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the date of
delivery when personally delivered, (b) one (1) Business Day after being sent by
reputable overnight courier service (charges prepaid), or (c) on the date of the
next Business Day following the date indicated on the return receipt if
delivered by registered or certified mail (postage prepaid, return receipt
requested). Such notices, demands and other communication shall be sent to the
intended recipient at the following address:

if to Buyer or Merger Sub

DARA BioSciences, Inc.

8601 Six Forks Road

Suite 160

Raleigh, NC 27615

Attention: Chief Executive Officer

 

40

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

with a copy to:

Womble Carlyle Sandridge & Rice LLP

271 17th Street, N.W., Suite 2400

Atlanta, Georgia 30363

Attention: G. Donald Johnson

if to the Company

Oncogenerix, Inc.

3069 Pionalelli Crescent

Mount Pleasant, South Carolina 29466

Attention: Christopher Clement

with a copy to:

Gracin & Marlow, LLP

Chrysler Building

405 Lexington Avenue, 26th Floor

New York, New York 10174

Attention: Hank Gracin, Esq and Leslie Marlow, Esq

or to such other address or to the attention of such other Person as the
recipient Party has specified by prior written notice to the sending Party.

11.4 Binding Agreement; Assignment. This Agreement and all the provisions hereof
will be binding upon and inure to the benefit of the Parties and their
respective successors, heirs, beneficiaries, representatives and permitted
assigns; provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned (i) by the Company without
the prior written consent of the Buyer; (ii) by any Principal Stockholder
without the prior written consent of the Company and the Buyer; or (iii) by the
Buyer without the prior written consent of the Company, except that upon written
notice to the Company and the Stockholders’ Representative, the Buyer may
(A) make a collateral assignment of its rights hereunder to any lender to the
Buyer or any of its Affiliates or (B) assign its rights and obligations
hereunder to one or more of its wholly-owned Affiliates so long as the Buyer
remains liable for all of its obligations under this Agreement.

11.5 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law and if the rights or obligations of any Party hereto under
this Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed

 

41

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

and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance here from. Upon such
determination that any term or provision is illegal, invalid or incapable of
being enforced, the Company, the Buyer and the Stockholders’ Representative
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner so
that the Transaction may be fulfilled to the extent possible.

11.6 No Strict Construction. The language used in this Agreement will be deemed
to be the language jointly chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any Person.
No provision of this Agreement will be interpreted in favor of, or against,
either of the parties hereto by reason of the extent to which either such Party
or its counsel participated in the drafting thereof or by reason of the extent
to which any such provision is inconsistent with any prior draft hereof or
thereof.

11.7 Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no captions had been used in this Agreement.

11.8 Entire Agreement. This Agreement (including the Ancillary Agreements and
the Exhibits and Schedules hereto and thereto) and the Confidentiality Agreement
constitutes the entire agreement among the Parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both oral
and written, among the Parties with respect to the subject matter hereof;
provided that, this Agreement shall not supersede or in any way modify the terms
of the Confidentiality Agreement, which agreement shall remain in full force and
effect.

11.9 Counterparts. This Agreement may be executed in one or more counterparts
(including by facsimile), each of which shall be deemed an original but all of
which taken together will constitute one and the same instrument.

11.10 Governing Law; Venue.

(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.

(b) Each of the Parties (i) consents to submit itself to the exclusive personal
jurisdiction of the courts of the State of Delaware, located in the County of
New Castle, or the United States District Court for the District of Delaware
(and appellate courts from any of the foregoing), in the event any dispute
arises out of this Agreement or the Transaction, (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) agrees that any action relating to this
Agreement or the Transaction shall be brought exclusively in the courts of the
State of Delaware, located in the County of New Castle, or the United States
District Court for the District of Delaware (and appellate courts from any of
the foregoing).

 

42

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

11.11 Waiver of Jury Trial. EACH OF THE BUYER, THE PRINCIPAL STOCKHOLDERS, THE
STOCKHOLDERS’ REPRESENTATIVE, ON BEHALF OF THE STOCKHOLDERS, AND THE COMPANY
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE BUYER OR THE COMPANY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

11.12 Parties in Interest. This Agreement is for the sole benefit of the Parties
hereto and their permitted assigns and, except as provided under Article VII and
Article IX, nothing herein express or implied shall give or be construed to give
to any Person, other than the Parties hereto and such permitted assigns, any
legal or equitable rights hereunder.

11.13 Exhibits and Schedules. The Exhibits and Schedules constitute a part of
this Agreement and are incorporated into this Agreement for all purposes.

11.14 Certain Interpretive Matters and Definitions. Unless the context otherwise
requires, (i) all references to Sections, Articles or Schedules are to Sections,
Articles or Schedules of or to this Agreement, (ii) each term defined in this
Agreement has the meaning assigned to it, (iii) “or” is disjunctive but not
necessarily exclusive, (iv) words in the singular include the plural and vice
versa, (v) words of any gender include each other gender; the terms “hereof,”
“herein,” “hereby” and derivative or similar words refer to this entire
Agreement, (vi) each accounting term not otherwise defined herein has the
meaning assigned to it in accordance with GAAP, (vii) the term “obligations”
means all such matters of any nature, whether fixed or contingent, known or
unknown, or arising under contract, law, equity or otherwise, and (viii) the
word “including” and similar terms following any statement will not be construed
to limit the statement to matters listed after such word or term, whether or not
a phrase of nonlimitation such as “without limitation” is used. All references
to “$” or dollar amounts will be to lawful currency of the United States of
America. Any representation or warranty contained herein as to the
enforceability of a contract shall be subject to the effect of any bankruptcy,
insolvency, reorganization, moratorium or other similar Legal Requirement
affecting the enforcement of creditors’ rights generally and to general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

[Signature Pages Follow]

 

43

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

SIGNATURE PAGES TO THE AGREEMENT AND PLAN OF MERGER

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

BUYER: DARA BIOSCIENCES, INC. By:  

/s/ David J. Drutz

Name:   David. J. Drutz, M.D. Title:   Chief Executive Officer MERGER SUB:
ONCOGENERIX ACQUISITION CORPORATION By:  

/s/ David J. Drutz

Name:   David. J. Drutz, M.D. Title:   Chief Executive Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

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

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

COMPANY: Oncogenerix, Inc. By:  

/s/ Christopher Clement

Name:   Christopher Clement Title:   President and Chief Executive Officer
PRINCIPAL STOCKHOLDERS:

/s/ Christopher Clement

CHRISTOPHER CLEMENT

/s/ David Benharris

DAVID BENHARRIS

/s/ Michael Radomsky

MICHAEL RADOMSKY STOCKHOLDERS’ REPRESENTATIVE:

/s/ Christopher Clement

CHRISTOPHER CLEMENT

[END OF SIGNATURE PAGES]