**EXHIBIT 2.1****MERGER AGREEMENT**     This Merger Agreement (“**Agreement**”) is entered into as of September 1, 2006, by andamong Xcorporeal, Inc. (“**Shell**”), NQCI Acquisition Corporation, a Delaware corporation anda newly-created wholly-owned Subsidiary of Shell (“**Merger Subsidiary**”), and NationalQuality Care, Inc., a Delaware corporation (“**Company**”), (each a “**Party**” andcollectively the “**Parties**”).RECITALS     A. This Agreement contemplates a reverse triangular merger as defined in Section 368(a)(2)(E) ofthe Code of Merger Subsidiary with and into Company in a transaction qualifying as areorganization under Section 354 of the Code.     B. This Agreement further contemplates that, in the event that the merger transaction does notclose, Company may assign its Technology to Shell in consideration of Shell Shares.     C. The Closing of the transactions contemplated by this Agreement are subject to the filing andeffectiveness of a Registration Statement and Information Statements as set forth herein.     D. At the Closing, either the Company Stockholders will receive Shell Shares in exchange for theirCompany Shares, and the Company will become a wholly-owned Subsidiary of Shell, or the Company willreceive Shell Shares in consideration of the Technology Transaction.     **NOW, THEREFORE**, in consideration of the premises and the representations, warranties and covenantscontained herein, the Parties agree as follows.**1.****Basic Transaction****.**     A. Merger. On and subject to the terms and conditions of this Agreement, MergerSubsidiary will merge with and into Company (the “**Merger**”). Company will be thecorporation surviving the Merger (after the Closing, the “**Surviving Corporation**”). Theseparate corporate existence of Merger Subsidiary will cease as of the Merger.     B Technology Transaction. If the Merger is terminated before the Closing of theMerger in accordance with Section 6.A, the Closing of the Technology Transaction shallproceed in accordance with Section 6.B.     C. Documents. As soon as practicable following the execution of this Agreement, eachParty will deliver to the others the various certificates, instruments, and documents referred toherein.     D. Closing. The closing of one of the two mutually-exclusive transactionscontemplated by this Agreement, either in the form of the Merger or the Technology
 

 
Transaction,will take place as soon as practicable on the business day following the satisfaction or waiver ofall conditions to the obligations of the Parties to consummate the transaction, other thanconditions with respect to actions the respective Parties will take at the Closing itself, or suchother time as the Parties may mutually determine, (the “**Closing**”).     D. Voting Agreements.          (1) Stockholder Agreement. Concurrently herewith, each of the Majority Stockholderswill enter into the Voting Agreement (the “**Stockholder Agreement**”), in the form attached as**Exhibit A** hereto, absolutely and irrevocably ratifying, approving and consenting to: (a)the License Agreement between Company and Shell entered into concurrently herewith (the“**License Agreement**”) and (b) subject to Sections 2.B(7) and 3.J andeffective as of the Closing, this Agreement and the transactions contemplated by this Agreement,including without limitation the Merger or the Technology Transaction.          (2) CNL Agreement. Concurrently herewith, CNL will enter into the Agreement (the“**CNL Agreement**”), in the form attached as **Exhibit B** hereto (together with theStockholder Agreements, the “**Voting Agreements**”), absolutely and irrevocably ratifying,approving and consenting to: (a) the License Agreement; and (b) subject to Sections 2.Aand 3.J and effective as of the Closing, this Agreement and the transactions contemplatedby this Agreement, including without limitation the Merger or the Technology Transaction.          (3) Director Agreement. Concurrently herewith, Shell will enter into the agreement(the “**Director Agreement**”), in the form attached as **Exhibit C** hereto.,     E. Merger Certificate. At the Closing of the Merger, Shell will file with theSecretary of State of the State of Delaware a Certificate of Merger between Company and MergerSubsidiary, in the form attached hereto as **Exhibit D** (the “**Merger Certificate**”).     F. Effect of Merger or Technology Transaction.          (1) General. The Merger will become effective upon filing of the Merger Certificatewith the Secretary of State of the State of Delaware (the “**Effective Time**”). The Mergerwill have the effect set forth in the DGCL. The Surviving Corporation may, at any time after theClosing, take any action, including executing or delivering any document, in the name and on behalfof either Company or Merger Subsidiary in order to carry out and effectuate the transactionscontemplated by this Agreement.          (2) Certificate of Incorporation. The certificate of incorporation of SurvivingCorporation will be amended and restated at and as of the Closing to read as did the certificate ofincorporation of Merger Subsidiary immediately prior to the Closing, except that the name ofSurviving Corporation may be changed by Shell.          (3) Bylaws. The bylaws of Surviving Corporation will be amended and restated at andas of the Closing to read as did the bylaws of Merger Subsidiaryimmediately prior to the Closing, except that the name of Surviving Corporation may be changedby Shell.
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          (4) Directors. The directors of Company who shall be directors of SurvivingCorporation at and as of the Closing are as set forth in the attached **Exhibit E**.          (5) Conversion of Company Securities.               (a) Conversion of Shares. At and as of the Closing of the Merger, (a) all issued andoutstanding Company Securities (other than any Dissenting Shares) will, by virtue of the Merger andwithout any further action on behalf of Shell, Company or any Company Stockholder, automatically beconverted into and become validly issued, fully paid and non-assessable Shell Shares (the ratio ofCompany Shares to one (1) Shell Share is referred to herein as the “**Conversion Ratio**”),such that all holders of all Company Shares will collectively receive, on a fully diluted basis,after taking into account the conversion into Company Shares of all Convertible Debt, which shalloccur prior to and as a condition of Closing, an aggregate of forty-eight (48%) of all Shell Sharesoutstanding as of the date hereof, adjusted for any stock splits or dividends prior to the Closing,(b) each Dissenting Share will be converted into the right to receive payment from SurvivingCorporation with respect thereto in accordance with the provisions of the DGCL and, to the extentapplicable, the CGCL, and (c) all unissued and treasury Company Shares will be cancelled.               (b) Share Certificates.                    (i) Following the Closing of the Merger, upon surrender of an original stock certificaterepresenting Company Shares, Shell will cause to be issued a stock certificate for Shell Shares towhich such Person is entitled pursuant to the Conversion Ratio, bearing any necessary orappropriate restrictive legend. Shell will not pay any dividend or make any distribution on ShellShares with a record date at or after the Closing to any record holder of outstanding CompanyShares until the holder surrenders for exchange his, her, or its certificates that representedCompany Shares.                    (ii) If any certificate evidencing Shares shall has been lost, stolen or destroyed, upon themaking of an affidavit of that fact by the Person claiming the certificate to be lost, stolen ordestroyed and, if required by Shell or its Transfer Agent, the posting of an indemnity bond, insuch reasonable amount as the Transfer Agent may direct, as collateral security against any claimthat may be made with respect to the certificate, Shell will cause to be issued in exchange for thelost, stolen or destroyed certificate the applicable number of Shell Shares.               (c) Conversion of Warrants. All warrants to purchase Company Shares issued andoutstanding at the Closing of the Merger, as set forth in the attached **Exhibit F**(“**Company****Warrants**”) will, by virtue of the Merger and withoutany action on the part of Shell, Company or the holders of the Warrants, be converted into andwill become warrants to purchase Shell Shares (“**Shell Warrants**”) as part of the ConversionRatio, on the same terms and conditions as those set forth in **Exhibit F**.               (d) Conversion of Options. All options to purchase Company Shares outstanding at theClosing of the Merger, as set forth in the attached **Exhibit G** (“**Company Options**”)will, by virtue of the Merger and without any action on the part of Shell, Company or
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the holdersof the options, be assumed by Shell, and will become options to purchase Shell Shares (“**ShellOptions**”) as part of the Conversion Ratio, on the same terms and conditions as those set forthin **Exhibit G**.               (e) No fractional Shell Shares, or Shell Warrants or Shell Options to receive fractional ShellShares will be issued, and any right to receive a fractional share will be rounded to the nearestwhole Shell Share. As of the Closing of the Merger, the Company Shares, Company Warrants andCompany Options (collectively, “**Company Securities**”) will be deemed canceled and will ceaseto exist, and each holder of a Company Security will cease to have any rights with respect thereto,other than those expressly set forth in this Section 1.F(5). After the Closing of theMerger, transfers of Company Shares outstanding prior to the Closing will not be made on the stocktransfer books of Surviving Corporation.               (f) CNL Warrants. At the Closing of the Merger, CNL will be granted Shell Warrants topurchase a number of validly issued, fully paid and non-assessable Shell Shares equal to theaggregate number of Shell Shares into which any Company Warrants outstanding as of the Closing areconvertible, at prices per share equal to the prices per share of all such Company Warrants, andotherwise on terms equal to or better than the most favorable terms of such Company Warrants;*provided, however*, that the Shell Warrants granted to CNL pursuant to this Section1.F(5)(f) may be exercised only when the corresponding number of such converted CompanyWarrants are exercised.               (g) CNL Options. At the Closing of the Merger, CNL will be granted Shell Options topurchase a number of validly issued, fully paid and non-assessable Shell Shares equal to theaggregate number of Shell Shares into which any Company Options outstanding as of the Closing areconvertible, at prices per share equal to the prices per share of all such Company Options, andotherwise on terms equal to or better than the most favorable terms of such Company Options;*provided, however*, that the Shell Options granted to CNL pursuant to this Section 1.F(5)(g)may be exercised only when the corresponding number of such converted Company Options areexercised.               (h) Technology Shares. At the Closing of the Technology Transaction, Shell shallissue and deliver to the Company the number of Shell Shares set forth in Section 6.B(2).**2.****Conditions To Obligations To Close****.**     A. Conditions to Shell’s Obligation. The obligation of each of Shell and, in the caseof the closing of the Merger, Merger Subsidiary to consummate the transactions to be performed byit in connection with the Closing is subject to satisfaction of the following conditions:          (1) The representations and warranties set forth in Section 4 will be true and correctin all material respects as if made at and as of the Closing, except to the extent that suchrepresentations and warranties are qualified by the term “material,” or contain terms such as“Adverse Effect” or “Adverse Change,” in which case such representations and warranties as sowritten, including the term “material” or “Material,” will be true and correct in all respects atand as of the Closing;
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          (2) Company will have performed and complied with all of its covenants hereunder in allmaterial respects through the Closing, except to the extent that such covenants are qualified bythe term “material,” or contain terms such as “Adverse Effect” or “Adverse Change,” in which caseCompany will have performed and complied with all of such covenants as so written, including theterm “material” or “Material,” in all respects through the Closing;          (3) There will not be any judgment, order, decree or injunction in effect that would (a)prevent consummation of any of the transactions contemplated by this Agreement, (b) cause any ofthe transactions contemplated by this Agreement to be rescinded following consummation, (c)adversely affect the right of Shell to own the capital stock of Surviving Corporation and tocontrol Surviving Corporation and its Subsidiaries, or (d) adversely affect the right of any ofSurviving Corporation and its Subsidiaries to own its assets and to operate its business;          (4) Company will have delivered to Shell a certificate to the effect that each of theconditions specified in Sections 2.A(1)-(3) is satisfied in all respects;          (5) In the case of the Closing of the Merger, Company will have delivered to Shell an executedcounterpart of the Merger Certificate;          (6) Shell will have received from counsel to Company an opinion in form and substance as setforth in **Exhibit H** attached hereto;          (7) At least twenty (20) calendar days will have passed since a definitive written informationstatement pursuant to Rule 14c-2 under the Exchange Act (“**Company Statement**”), which willinclude the information required to be disclosed under Rule 14f-1 under the Exchange Act, has beenfiled with the SEC and transmitted to every record holder of Company Shares from whom proxyauthorization or consent is not solicited;          (8) At least twenty (20) calendar days will have passed since a definitive written informationstatement pursuant to Rule 14c-2 under the Exchange Act (“**Shell Statement**”) has been filedwith the SEC and transmitted to every record holder of Company Shares from whom proxy authorizationor consent is not solicited;          (9) In the case of the Closing of the Merger, a registration statement relating to theoffering and issuance of the Shell Shares (“**Registration Statement**”) will have becomeeffective under the Securities Act, and no stop order suspending the effectiveness of theRegistration Statement or any part thereof shall have been issued and no proceeding for thatpurpose, and no similar proceeding in respect of the Company Statement shall have been initiated orthreatened in writing by the SEC or any other Governmental Authority; and all requests foradditional information on the part of the SEC or any other Governmental Authority shall have beencomplied with to the reasonable satisfaction of the parties hereto, or an exemption from theSecurities Act and applicable state securities laws is available;          (10) In the case of the Closing of the Merger, all of Company’s debt securities that give theholder of such debt security the right to purchase a specified number of Company Shares(“**Convertible Debt**”), as set forth in **Exhibit J**, shall have been converted toCompany Shares as
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part of the Conversion Ratio. All other Company debt obligations shall have beeneither retired by Company or converted to Company Shares prior to the Closing;          (11) In the case of the Closing of the Merger, Shell will have received the resignations,effective as of the Closing, of each director and officer of Company and its Subsidiaries, otherthan those set forth in **Exhibit E**attached hereto;          (12) As of the date of execution of this Agreement, Company shall have obtained an executedAffiliate Agreement in the form of **Exhibit I** hereto (the “**Affiliate Agreement**”)from all Persons who may be deemed to be an “Affiliate” of Company within the meaning of Rule 145promulgated under the Securities Act, as listed on Section 2.A(11) of the CompanyDisclosure Schedule. Shell shall be entitled to place legends, as specified in the AffiliateAgreement, on the certificates evidencing the Shell Shares to be received by any Affiliate ofCompany and to issue appropriate stop transfer instructions to the transfer agent for such ShellShares consistent with the terms of the Affiliate Agreement, regardless of whether such Person hasexecuted an Affiliate Agreement;          (13) As of the date of execution of this Agreement, Company, Shell, CNL and each of theMajority Stockholders shall have entered into the Voting Agreements;          (14) In the case of the Closing of the Merger, prior to the Closing the Parties and theDirectors named therein shall have executed an Asset Assignment and Debt Payment Agreement (the“**AADP Agreement**”), in the form attached as **Exhibit J** hereto, pursuant to which,among other provisions, LACD shall have assumed all of Company’s accounts payable and accountsreceivable which, together with LACD’s liabilities, accounts payable and accounts receivable, shallbe disclosed to Shell in writing within thirty (30) days of the date hereof;          (15) In the case of the Closing of the Merger, prior to the Closing Company shall have soldall assets of Los Angeles Community Dialysis, Inc., aCalifornia corporation and wholly-owned Subsidiary of Company (“**LACD**”), with theexception of LACD’s accounts receivable, and LACD shall have no outstanding liabilities of any kindexcept as scheduled in the AADP Agreement;          (16) The Parties shall have executed the License Agreement; and          (17) This Agreement shall have been adopted by the requisite vote of the stockholders of eachof Shell, and, if required, Merger Sub, and Company.Shell and Merger Subsidiary may waive any condition specified in this Section 2.A ifit or they execute a writing so stating at or prior to the Closing.     B. Conditions to Company’s Obligation. The obligation of Company to consummatethe transactions to be performed by it in connection with the Closing is subject to satisfaction ofthe following conditions:          (1) The representations and warranties set forth in Section 5 will be true and correctin all material respects at and as of the Closing, except to the extent that such
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representationsand warranties are qualified by the term “material,” or contain terms such as “Adverse Effect” or“Adverse Change,” in which case such representations and warranties as so written, including theterm “material” or “Material,” will be true and correct in all respects at and as of the Closing;          (2) Each of Shell and, in the case of the Closing of the Merger, Merger Subsidiary will haveperformed and complied with all of its covenants hereunder in all material respects through theClosing, except to the extent that such covenants are qualified by the term “material,” or containterms such as “Adverse Effect” or “Adverse Change,” in which case Shell and, in the case of theClosing of the Merger, Merger Subsidiary will have performed and complied with all of suchcovenants as so written, including the term “material” or “Material,” in all respects through theClosing;          (3) There will not be any judgment, order, decree or injunction in effect that would (a)prevent consummation of any of the transactions contemplated by this Agreement, or (b) cause any ofthe transactions contemplated by this Agreement to be rescinded following consummation;          (4) Shell will have delivered to Company a certificate to the effect that each of theconditions specified in Sections 2.B(1)-(3) is satisfied in all respects;          (5) In the case of the Closing of the Merger, Shell will have delivered to Company an executedcounterpart of the Merger Certificate;          (6) Company will have received from counsel to Merger Subsidiary an opinion in form andsubstance as set forth in **Exhibit K** attached hereto.          (7) At least twenty (20) calendar days will have passed since the Company Statement has beenfiled with the SEC and transmitted to every record holder of Company Shares from whom proxyauthorization or consent is not solicited;          (8) The Registration Statement will have become effective under the Securities Act, or anexemption from the Securities Act and applicable state securities laws is available;          (9) At least twenty (20) calendar days will have passed since the Shell Statement, if requiredunder applicable law, has been filed with the SEC and transmitted to every record holder of ShellShares from whom proxy authorization or consent is not solicited;          (10) As of the date of execution of this Agreement, CNL shall have entered into the CNLAgreement;          (11) The Parties shall have executed the License Agreement;          (12) In the case of the Closing of the Merger, prior to the Closing the Parties shall haveexecuted the AADP Agreement;
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          (13) This Agreement shall have been adopted by the requisite vote of the stockholders ofeach of Shell and Merger Sub, if required; and          (14) The Parties shall have executed the Director Agreement.Company may waive any condition specified in this Section 2.B if it executes a writing sostating at or prior to the Closing.**3.****Covenants****.**     The Parties agree as follows with respect to the period from and after the execution of thisAgreement until the Closing or termination of this Agreement:     A. General. Each of the Parties will use its best efforts to prepare, execute anddeliver all documents, take all actions and do all things necessary, proper, or advisable in orderto consummate and make effective the transactions contemplated by this Agreement as soon aspracticable, including the satisfaction, but not waiver, of all of the Closing conditions set forthin Section 2.     B. Notices. Company will give any notices (and will cause each of its Subsidiaries togive any notices) to third parties, and will use its best efforts to obtain (and will cause each ofits Subsidiaries to use its best efforts to obtain) any necessary third-party consents.     C. SEC and State Filings. Each of the Parties will, and will cause each of itsSubsidiaries to, give any notices to, make any filings with, and use its best efforts to obtain anyauthorizations, consents, and approvals of Governmental Authorities in connection with the mattersreferred to herein. Without limiting the generality of the foregoing:          (1) Company Statements. Company and Shell, if required, will prepare as soon aspracticable and timely file with the SEC preliminary and definitive Company Statements, in form andsubstance reasonably satisfactory to Shell and Company, respectively, and mail all necessary andappropriate definitive documents to all Company Stockholders and Shell Stockholders, respectively,and as soon as practicable after approval by the SEC or the expiration of applicable waitingperiods.          (2) Registration Statement. Shell will prepare as soon as practicable and timely filewith the SEC the Registration Statement on appropriate form with respect to the Merger or theTechnology Transaction, as the case may be, and the offering of the Shell Shares. Within ninety(90) days following the effectiveness of a resale registration statement on Form S-3 on behalf ofselling stockholder from whom Shell has raised in excess of twenty-five million dollars($25,000,000.00), Shell will: (a) prepare and file with the SEC a registration statement on FormS-3, with respect to any unregistered Shell Shares (i) underlying the Shell Warrants and ShellOptions or (ii) issued in connection with the Technology Transfer; and (b) use reasonable effortsto cause such registration statement to become and remain effective for a period of five (5) yearsfollowing the Closing.
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          (3) Blue Sky Filings. Shell will take all actions that may be necessary, proper, oradvisable under applicable state securities laws in connection with the offering and issuance ofthe Shell Shares.          (4) Further Cooperation. The filing Party in each instance will use its best effortsto respond to the comments of the SEC or any state Governmental Authorities on any filings and willmake any further filings, including amendments and supplements, in connection therewith that may benecessary, proper, or advisable. Shell will provide Company, and Company will provide Shell, withwhatever information and assistance in connection with the foregoing filings the filing Party mayrequest.     D. Section 16 Matters. Prior to Closing of the Merger, the Board of Directors ofCompany will adopt a resolution consistent with the interpretive guidance of the SEC stating thatthe disposition of Company Shares, Warrants or Options pursuant to this Agreement by any officer ordirector of the Company who is a covered person for purposes of Section 16 of the Exchange Act(together with the rules and regulations thereunder, “**Section 16**”) (each, a “**CompanyCovered Person**”) is intended to be an exempt transaction for purposes of Section 16 providedthat such Company Shares, Warrants or Options are listed in the Section 16 Information (as definedbelow). Company shall deliver to Shell such Section 16 Information in a timely fashion prior toClosing. Upon receiving Company’s Section 16 Information and prior to Closing, the Board ofDirectors of Shell will adopt a resolution consistent with the interpretive guidance of the SECstating that the acquisition of Shell Shares, Warrants or Options pursuant to this Agreement by anyCompany Covered Person who becomes a covered person of Shell for purposes of Section 16 is intendedto be an exempt transaction for the purposes of Section 16 provided that such Shell Shares,Warrants or Options are listed in the Section 16 Information. “**Section 16 Information**”shall mean information accurate in all material respects regarding the Company Covered Persons andthe number of Company Shares held by each Company Covered Person that are to be exchanged for ShellShares pursuant to this Agreement , and the number and description of the Company Warrants andOptions held by each such Company Covered Person which are to be converted into Shell Warrants andOptions hereunder.     E. Operation of Business. Company will not (and will not cause or permit any of itsSubsidiaries to) engage in any practice, take any action, or enter into any transaction outside theOrdinary Course of Business. Without limiting the generality of the foregoing, without the priorwritten consent of Shell, neither Company nor any of its Subsidiaries will:          (1) Authorize or effect any change in its charter or bylaws;          (2) Grant any options, warrants, or other rights to purchase or obtain any of its stock orissue, sell, or otherwise dispose of any of its capital stock (except upon the conversion orexercise of options, warrants, and other rights currently outstanding);          (3) Declare, set aside, or pay any dividend or distribution with respect to its stock (whetherin cash or in kind), or redeem, repurchase, or otherwise acquire any of its capital stock;
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          (4) Issue any note, bond, or other debt security or create, incur, assume, or guarantee anyindebtedness for borrowed money or capitalized lease obligation outside the Ordinary Course ofBusiness; *provided, however*, that Company may issue Convertible Debt to any of its directors andofficers so long as such Convertible Debt is converted to Company Shares prior to Closing inaccordance with Section 2.A(9) hereof, and that the Conversion Ratio will be automaticallyadjusted to take into account any additional Company Shares resulting therefrom so that the totalnumber of Shell Shares issued in exchange for Company Shares will not be increased;          (5) Make any capital investment in, make any loan to, or acquire the securities or assets ofany other Person outside the Ordinary Course of Business;          (6) Grant, extend or expand any employment terms for any of its directors, officers, andemployees outside the Ordinary Course of Business;          (7) Commit to any of the foregoing; or          (8) Issue any press release or public statement regarding the Company or any Products.The foregoing notwithstanding, Company may take the following actions prior to Closing: (a)increase its authorized shares of common stock to 125,000,000 Company Shares; *provided, however*,that such Company Shares shall be subject to the restrictions set forth in Sections 3.E(2)and (3) above; (b) perform its obligations and effectuate the transactions provided for inthe May 31, 2006 Purchase and Sale Agreement and Joint Escrow Instructions with Kidney DialysisCenter of West Los Angeles, LLC, (c) sell all assets of the acute dialysis care division, with theexception of its accounts receivable, for an amount sufficient to satisfy all of its outstandingliabilities, and (d) make distributions to the former stockholders of Company pursuant to the AADPAgreement. The provisions of this Section 3.E shall terminate in the event of the Closingof the Technology Transaction or the termination of this Agreement.     F. Expense Reimbursement. No later than the earlier of (i) thirty (30) days after thedate on which Shell has obtained total debt or equity investment of at least three million fivehundred thousand dollars ($3,500,000.00) or (ii) ninety (90) days after the date hereof, Licenseeshall reimburse Company’s reasonable and necessary expenses incurred in the ordinary course ofbusiness consistent with past practices (“**Company Expenses**”), during the period from thedate hereof to the Closing (as defined therein) or termination of this Agreement. All CompanyExpenses shall: (a) be only for the specific persons, services and expenses listed in reasonabledetail on the Budget contained in the Company Disclosure Schedule to the Merger Agreement, (b) bepayable hereunder only to the extent not paid pursuant to the Merger Agreement, (c) be mutuallyagreed upon in advance of being reimbursed with regard to all Professional Fees set forth in theBudget, and (d) include, but not be limited to, expenses already paid or accrued relating to humanclinical trials carried out or to be carried out on behalf of Licensor in Italy and the UnitedKingdom as set forth in the Budget.     G. Reasonable Access. Company and Shell will (and will cause each of theirSubsidiaries to) permit representatives of Shell and Company(including legal counsel and
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accountants) to have reasonable access, during normal business hours and on reasonable notice, toall information (including tax information) concerning the business, properties and personnel, ofor pertaining to Company and each of its Subsidiaries. Shell will treat and hold as such anyConfidential Information it receives from Company or any of its Subsidiaries in the course of thereviews contemplated by this Section 3.G, will not use any of the Confidential Informationexcept in connection with this Agreement or the License Agreement, and, if this Agreement isterminated for any reason whatsoever, agrees to return to Company all tangible embodiments (and allcopies) thereof that are in its possession.     H. Notice of Developments. Each Party will give prompt written notice to the othersof any material adverse development causing a breach of any of its own representations andwarranties in this Agreement. No disclosure by any Party pursuant to this Section 3.H,however, will be deemed to amend or supplement the Company Disclosure Schedule or the ShellDisclosure Schedule or to prevent or cure any misrepresentation, breach of warranty, or breach ofcovenant.     I. Exclusivity. Company will not, and will not cause or permit any of itsSubsidiaries, directors or officers to: (1) solicit, initiate, encourage or entertain thesubmission of any proposal or offer from any Person relating to the acquisition of all orsubstantially all of the capital stock or assets of Company or any of its Subsidiaries (includingany acquisition structured as a merger, consolidation, or share exchange); (2) participate in anydiscussions or negotiations regarding, furnish any information with respect to, assist orparticipate in, or facilitate in any other manner any effort or attempt by any Person to do or seekany of the foregoing, except in the case of directors to the extent their fiduciary duties mayrequire. Company will notify Shell immediately if any Person makes any proposal, offer, inquiry,or contact with respect to any of the foregoing (an “**Acquisition Proposal**”) or if the Boardof Directors of Company shall have approved, recommended executed or entered into an AcquisitionProposal, or resolved to do so. The foregoing notwithstanding, Company may solicit offers,participate in negotiations, and execute any necessary agreements related solely to the sale of theassets of LACD. The provisions of this Section 3.I shall terminate in the event of theClosing of the Technology Transaction or the termination of this Agreement.     J. Directors’ and Officers’ Indemnification and Insurance.     (1) From and after the Effective Time, Shell will, or will cause the Surviving Corporation to,(i) fulfill and honor in all respects the obligations to indemnify and hold harmless the Shell’s,the Surviving Corporation’s, Company’s and each of their Subsidiaries’ present and formerdirectors, officers and employees and their heirs, executors and assigns (each an “**IndemnifiedParty**,” and collectively, the “**Indemnified Personnel**”), to the same extent that suchindividuals are entitled to indemnification as of the date of this Agreement pursuant to applicablelaw, articles of incorporation, bylaws and indemnification or other agreements, if any, inexistence on the date hereof with, or for the benefit of, any such Indemnified Party arising out ofor pertaining to matters existing or occurring at or prior to the Effective Time and for acts oromissions existing or occurring at or prior to the Effective Time (including for acts or omissionsoccurring in connection with the approval of this Agreement and the consummation of thetransactions contemplated hereby), whether or not asserted or claimed prior thereto, and (ii)
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include and caused to be maintained in effect in the Surviving Corporation’s (or any successor’s)certificate of incorporation and bylaws for a period of five years after the Effective Time,subject to any limitation imposed from time to time under applicable law, provisions regardingelimination of liability of directors, indemnification of officers, directors and employees, andadvancement of expenses, that are at least as favorable to the Indemnified Personnel as those setforth in the current articles of incorporation and bylaws of the Company in effect on the datehereof.     (2) In the event that any claim, action, suit, proceeding or investigation involving anyIndemnified Party is brought or initiated within five years after the Effective Time and arises outof or pertains to any actual or alleged action or omission in his or her capacity as an officer,director or employee of Company or any of its Subsidiaries occurring prior to the Effective Time,or arises out of or pertains to the transactions contemplated by this Agreement, in each case forwhich such Indemnified Party is indemnified under this Section 3.J, except as otherwiserequired by applicable law or contract or policy terms, (i) the Indemnified Personnel, may, attheir option, (A) elect to retain individual counsel at their own expense or (B), as a group, electto retain only one law firm to represent such Indemnified Personnel, which counsel shall be counselof Shell in addition to local counsel (provided that if the use of counsel of Shell would beexpected under applicable standards of professional conduct to give rise to a conflict between theposition of the Indemnified Personnel and that of Shell, the Indemnified Personnel shall beentitled instead to be represented, either as a group by one counsel, or individually by separatecounsel at their own expense, in addition to local counsel, selected by the Indemnified Personnel,and reasonably satisfactory to Shell), (ii) after the Effective Time, Shell and the SurvivingCorporation will pay the reasonable fees and expenses of all such counsel, promptly afterstatements therefor are received and (iii) Shell and the Surviving Corporation will cooperate inthe defense of any such matter; *provided, however*, that Shell and the Surviving Corporation willnot be liable for any settlement effected without their written consent (which consent will not beunreasonably withheld, delayed, or conditioned); and provided, further, that, in the event that anyclaim or claims for indemnification are asserted or made within such five-year period, all rightsto indemnification are asserted or made within such five-year period, all rights to indemnificationin respect of any such claim or claims will continue until the disposition of any and all suchclaims. Any Indemnified Personnel wishing to claim indemnification under this Section 3.J,upon learning of such claim, action, suit, proceeding or investigation, shall promptly notify Shelland the Surviving Corporation (provided that the failure to so notify Shell or the SurvivingCorporation shall not relieve such entity from any liability that it may have under thisSection 3.J, except to the extent that such failure prejudices such entity), and shalldeliver to Shell and the Surviving Corporation the undertaking contemplated by Section 145(e) ofthe DGCL.     (3) At the Closing of the Merger, Shell will, or will cause the Surviving Corporation to,secure a “tail” on the Company’s existing directors’ and officers’ insurance policies, which willprovide Company, each individual serving as a director or officer of Company as of the date of thisAgreement or of the Surviving Corporation at the Closing of the Merger, and such other Persons, ifany, currently covered by such existing directors’ and officers’ insurance policies with coverageon terms and in amounts that are no less favorable than those of the Company’s policies
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in effecton the date hereof, or obtain substantially similar coverage for such persons, for a period of atleast five (5) years from the Effective Time.     (4) Notwithstanding anything in the Agreement to the contrary, the provisions of thisSection 3.J are intended to be for the benefit of, and will be enforceable by, theIndemnified Personnel, their heirs and representatives, and may not be amended or repealed withoutthe prior written consent of the affected Indemnified Personnel, and are in addition to, and not insubstitution for, any other rights to indemnification or contribution that such IndemnifiedPersonnel may have by contract or applicable law.     (5) Notwithstanding anything in this Agreement to the contrary, in the event that Shell or theSurviving Corporation or any of their respective successors or assigns (i) consolidates with ormerges into any other person and is not the continuing or surviving corporation or entity of suchconsolidation or merger, or (ii) transfers or conveys all or substantially all its properties andassets to any person, then, and in each such case, Shell or Surviving Corporation shall causeproper provisions to be made so that the successors and assigns of Shell or the SurvivingCorporation, as the case may be, assume the obligations set forth in this Section 3.J.     K. Indemnification of Company and Majority Stockholders. Shell shall at all timesindemnify and hold harmless Company and the Majority Stockholders and their respective Affiliates,Subsidiaries, directors, officers, employees, representatives, attorneys and agents from any andall costs, expenses, losses, damages and liabilities incurred or suffered, directly or indirectly,by any of them (including, without limitation, legal fees and expenses) resulting from orattributable to:          (1) The breach of, or misstatement in, any one or more of the representations, warranties, orcovenants of either Shell or Merger Subsidiary made in or pursuant to this Agreement or any otherMerger Document;          (2) Any claims, demands, suits, investigations, proceedings or actions by any third partycontaining or relating to allegations that, if true, would constitute a breach of, or misstatementin, any one or more of the representations, warranties, or covenants of either Shell or MergerSubsidiary made in or pursuant to this Agreement or any other Merger Document; or          (3) Any claims, demands, suits, investigations, proceedings or actions by Company stockholdersagainst Company arising from or connected with the transactions contemplated by this Agreement orany other Merger Documents; *provided, however*, that Shell shall not have any obligation under thisSection 3.K(3) with respect to any claims, demands, suits, investigations, proceedings oractions to the extent any resulting liability is strictly and solely attributable to Company’sbreach of any material representation, warranty or obligation hereunder or Company’s grossnegligence or willful misconduct.     L. Defense of Claims. If any Party has received actual notice or any claim assertedor any action or administrative or other proceeding commenced in respect of which claim, action, orproceeding indemnity properly may be sought against another Party or Parties pursuant Section3.K above (such Party or Parties, individually and collectively, the “**Indemnitor**”), the
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Party or Parties seeking indemnity (such Party or Parties, individually and collectively, the“**Indemnitee**”) will give notice in writing to the Indemnitor.          (1) Within ten (10) days after the earlier of (a) receipt of such notice or (b) receipt ofactual notice by Indemnitor from sources other than Indemnitee, Indemnitor may give Indemniteewritten notice of its election to conduct the defense of such claim, action, or proceeding at itsown expense. If Indemnitor has given Indemnitee such notice of election to conduct the defense,Indemnitor may conduct the defense at its expense, but Indemnitee may nevertheless have the rightto participate in the defense at the expense of Indemnitor.          (2) If Indemnitor has not notified Indemnitee in writing (within the time period aboveprovided) of its election to conduct the defense of such claim, action, or proceeding, Indemniteemay (but need not) conduct the defense of such claim, action, or proceeding at the expense ofIndemnitor. Indemnitee may at any time notify Indemnitor of Indemnitee’s intention to settle,compromise, or satisfy any such claim, action, or proceeding (the defense of which Indemnitor hasnot previously elected to conduct) and may make such settlement, compromise, or satisfaction at theexpense of Indemnitor unless Indemnitor notifies Indemnitee in writing (within five (5) days afterreceipt of such notice of intention to settle, compromise, or satisfy) of its election to assume,at Indemnitor’s sole expense, the defense of any such claim, action, or proceeding and promptlytake appropriate action to implement such defense.          (3) Any settlement, compromise, or satisfaction made by Indemnitee or any such final judgmentor decree entered in any claim, action, or proceeding defended only by Indemnitee pursuant to thisSection 3.L, regardless of amount or terms, will be deemed to have been consented to by,and will be binding on, Indemnitor as fully as though Indemnitor had assumed the defense and afinal judgment or decree had been entered in such proceeding or action by a court of competentjurisdiction in the amount of such settlement, compromise, satisfaction, judgment, or decree.          (4) If Indemnitor has elected under this Section 3.L to conduct the defense of anyclaim, action, or proceeding, then Indemnitor will be obligated to pay the amount of any adversefinal judgment or decree rendered with respect to such claim, action, or proceeding. If Indemnitorelects to settle, compromise, or satisfy any claim, action, or proceeding defended by it, the costof any such settlement, compromise, or satisfaction will be borne entirely by Indemnitor and may bemade only with the prior written consent of Indemnitee, such consent not to be unreasonablywithheld.          (5) All Parties will use all reasonable efforts to cooperate fully with respect to the defenseof any claim, action, or proceeding covered by this Section 3.L.     (M) Issuance of Shell Shares. Shell will not issue any Shell Shares except for suchconsideration, having a value not less than the par value thereof, as determined from time to timeby the board of directors, or by the stockholders if the certificate of incorporation so provides,in accordance with Sections 152 and 153 of the DGCL.
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**4.****Company’s Representations And Warranties****.**     The Company represents and warrants to Shell that the statements contained in this Section4 are correct and complete as of the date of this Agreement and will be correct and complete asof the Closing, as though made then and as though the Closing were substituted for the date of thisAgreement throughout this Section 4, except as set forth in the disclosure scheduleattached to this Agreement as **Exhibit L** (the “**Company Disclosure Schedule**”)corresponding to the Section of this Agreement, to which any of the following representations andwarranties specifically relate, or as disclosed in another section of the Company DisclosureSchedule, if it is reasonably apparent on the face of the disclosure that it is applicable toanother Section of this Agreement, or in the Company Public Reports:     A. Organization, Qualification, and Corporate Power. Each of Company and itsSubsidiaries is a corporation duly organized, validly existing, and in good standing under the lawsof the jurisdiction of its incorporation. Each of Company and its Subsidiaries is duly authorizedto conduct business and is in good standing under the laws of each jurisdiction where suchqualification is required. Company and its Subsidiaries has full corporate power and authority tocarry on the business in which it is engaged and to own and use the properties owned and used byit.     B. Capitalization. The entire authorized capital stock of Company consists solely of125,000,000 Company Shares, of which 48,133,738 Company Shares are issued andoutstanding, and 5,000,000 shares of preferred stock, none of which are issued oroutstanding. All of the issued and outstanding Company Shares have been duly authorized and arevalidly issued, fully paid, non-assessable and free of preemptive rights, and were issued incompliance with all applicable state and federal securities laws. **Exhibits F and G** setforth a full and complete listing of all Company Securities. Except as set forth in such**Exhibits F and G**, there are no: (1) other outstanding or authorized shares, options,warrants, purchase rights, subscription rights, conversion rights, exchange rights, or othercontracts or commitments of any kind that could require Company to issue, sell, or otherwise causeto become outstanding any of its capital stock.; (2) equity securities, debt securities orinstruments convertible into or exchangeable for shares of such stock; or (3) outstanding orauthorized stock appreciation, phantom stock, profit participation, or similar rights with respectto Company.     C. Authorization of Transaction. Company has all requisite power and authority,including full corporate power and authority, to execute and deliver this Agreement and to performits obligations hereunder and to consummate the transactions contemplated hereby. The executionand delivery of this Agreement by Company and the consummation by Company of the transactionscontemplated hereby have been duly and validly authorized by all necessary corporate action byCompany and, except as set forth herein, no other corporate proceedings on the part of Company andno shareholder vote or consent are necessary to authorize this Agreement or to consummate thetransactions contemplated hereby. This Agreement has been duly and validly executed and deliveredby Company and each Majority Stockholder. This Agreement and all other agreements and obligationsentered into and undertaken in connection with the transactions contemplated hereby to whichCompany and each Majority Stockholder is a party constitute the valid and legally bindingobligations of Company and each such Majority
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Stockholder, enforceable against Company and eachsuch Majority Stockholder in accordance with their respective terms.     D. Non-Contravention. Neither the execution and delivery of this Agreement, nor theconsummation of the transactions contemplated hereby, will (i) violate any constitution, statute,regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of anygovernment, governmental agency, or court to which Company or any of its Subsidiaries is subject orany provision of the charter or bylaws of Company or any of its Subsidiaries, or (ii) conflictwith, result in a breach of, constitute a default under, result in the acceleration of, create inany party the right to accelerate, terminate, modify, or cancel, or require any notice under anyagreement, contract, lease, license, instrument, or other arrangement to which Company or any ofits Subsidiaries is a party or by which it is bound or to which any of its assets is subject (orresult in the imposition of any Lien upon any of its assets). Other than in connection with theprovisions of the DGCL, the CGLC to the extent applicable, the Exchange Act, the Securities Act,and state securities laws, neither Company nor any of its Subsidiaries needs to give any notice to,make any filing with, or obtain any authorization, consent, or approval of any government orgovernmental agency in order for the Parties to consummate the transactions contemplated by thisAgreement.     E. Filings with SEC. Except as set forth on the Company Disclosure Schedule, Companyhas timely made all filings with the SEC that it has been required to make under the Securities Actand the Exchange Act (collectively the “**Company Public Reports**”) since December 31, 2001,and, to the Knowledge of the current officers and directors of Company, since Company PublicReports were first required to be filed. Each of the Company Public Reports has complied with theSecurities Act and the Exchange Act in all material respects. None of the Company Public Reports,as of their respective dates, contained any untrue statement of a material fact or omitted to statea material fact necessary in order to make the statements made therein, in light of thecircumstances under which they were made, not misleading.     F. Financial Statements. Company has filed quarterly reports on Form 10-Q for thefiscal quarter ended March 31, 2006 and an annual report on Form 10-K for the fiscal year endedDecember 31, 2005 (“**Year End**”). The financial statements included in or incorporated byreference into these Company Public Reports (including the related notes and schedules) have beenprepared in accordance with GAAP throughout the periods covered thereby, present fairly thefinancial condition of Company and its Subsidiaries as of the indicated dates and the results ofoperations of Company and its Subsidiaries for the indicated periods and are correct and completein all respects, and are consistent with the books and records of Company and its Subsidiaries;*provided, however*, that the interim statements are subject to normal year-end adjustments.     G. Events Subsequent to Year End. Since Year End, there has not been any AdverseChange.     H. Undisclosed Liabilities. Neither Company nor any of its Subsidiaries has anyliability of any kind, whether known or unknown, whether asserted or unasserted, whether absoluteor contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and
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whether due orto become due, including any liability for taxes, except for (i) liabilities set forth on the faceof the balance sheet dated as of Year End (rather than in any notes thereto) and (ii) liabilitiesthat have arisen after Year End in the Ordinary Course of Business (none of which results from,arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach ofwarranty, tort, infringement, or violation of law). As of the Closing, neither Company nor any ofits Subsidiaries will have any liability of any kind, whether known or unknown, whether asserted orunasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated orunliquidated, and whether due or to become due.     I. Brokers’ Fees. Except as set forth on the Company Disclosure Schedule, neitherCompany nor any of its Subsidiaries has any liability or obligation to pay any fees or commissionsto any broker, finder, or agent with respect to the transactions contemplated by this Agreement.     J. Tax Treatment. Company operates at least one significant historic business line,or owns at least a significant portion of its historic business assets, in each case within themeaning of Treas. Reg. §1.368-1(d). Neither Company nor, to the Knowledge of Company, any of itsAffiliates has taken or agreed to take action that would prevent the Merger from constituting areorganization qualifying under the provisions of Section 354 of the Code.     K. Disclosures. The Company Statement will comply with the Exchange Act in allmaterial respects. The Company Statement will not contain any untrue statement of a material factor omit to state a material fact necessary in order to make the statements made therein, in lightof the circumstances under which they will be made, not misleading; *provided, however*, that Companymakes no representation or warranty with respect to any information that Shell will supplyspecifically for use in the Company Statement. None of the information that Company will supplyspecifically for use in the Shell Statement or the Registration Statement will contain any untruestatement of a material fact or omit to state a material fact necessary in order to make thestatements made therein, in light of the circumstances under which they will be made, notmisleading.     L. Litigation. There is no action, suit, legal or administrative proceeding orinvestigation pending, or to Company’s Knowledge threatened, against or involving Company (eitheras a plaintiff or defendant) before any court or governmental agency, authority, body orarbitrator. Neither Company nor to its Knowledge any officer, director or employee of Company, hasbeen permanently or temporarily enjoined by any order, judgment or decree of any court or anygovernmental agency, authority or body from engaging in or continuing any conduct or practice inconnection with the business, assets, or properties of Company. There in existence on the datehereof any order, judgment or decree of any court, tribunal or agency enjoining or requiringCompany to take any action of any kind with respect to its business, assets or properties.     M. Insurance. To the Knowledge of the current officers and directors of Company, nomaterial claims were made under any policies of insurance from the formation of the Company. Tothe Knowledge of Company, no material claims were made under any policies of insurance fromDecember 31, 1996 to December 31, 2001. Except as set forth on the Company Disclosure Schedule, nomaterial claims have been made under any policies of insurance since
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December 31, 2001. True,correct, and complete copies of all Company insurance policies have been made available to Shell.All current insurance policies are in full force and effect, are in amounts of a nature that areadequate and customary for Company’s business, and to the Knowledge of Company are sufficient forcompliance with all legal requirements and agreements to which it is a party or by which it isbound. All premiums due on current policies or renewals have been paid, and there is no materialdefault under any of the policies.     N. Tax Matters.          (1) Within the times and in the manner prescribed by law, Company has filed all federal, stateand local tax returns and all tax returns for other governing bodies having jurisdiction to levytaxes upon it which are required to be filed;          (2) Company has paid all taxes, interest, penalties, assessments and deficiencies which havebecome due, including without limitation income, franchise, real estate, and sales and withholdingtaxes;          (3) All tax returns filed, or to be filed by Company before the Closing, for all taxable yearssince December 31, 2001 constitute complete and accurate representations of the respective taxliabilities of Company for such years, to the Knowledge of Company all tax returns filed by Companyfor all taxable years from January 31, 1997 to December 31, 2001 constitute complete and accuraterepresentations of the respective tax liabilities of Company for such years, and to the Knowledgeof the current officers and directors of Company all tax returns filed by Company for all taxableyears from formation of the Company constitute complete and accurate representations of therespective tax liabilities of Company for such years.          (4) Company has not waived or extended any applicable statute of limitations relating to theassessment of federal, state or local taxes;          (5) No examinations of the federal, state or local tax returns of Company are currently inprogress nor threatened and no deficiencies have been asserted or to its Knowledge assessed againstCompany as a result of any audit by the Internal Revenue Service or any state or local taxingauthority and no such deficiency has been proposed or threatened;          (6) There are no pending or threatened audits, assessments or other actions relating to anyliability in respect of taxes of Company by any tax authority nor are there any matters underdiscussion with any tax authority with respect to taxes of Company;          (7) Company has not filed a consent pursuant to Section 341(f) of the Code relating tocollapsible corporations nor has Company agreed to have Section 341(f)(2) of the Code apply to anydisposition of a subsection (f) asset as such term is defined in Section 341(f)(4) of the Code; and          (8) Company has filed all required state and federal income tax returns for all periodsthrough December 31, 2003, and will file all such returns for all periods through December 31, 2005prior to Closing. Company does not and will not owe any taxes or penalties for any such periods.
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     O. Books and Records. The general ledger and books of account of Company, all minutebooks of Company, all federal, state and local income, franchise, property and other tax returnsfiled by Company, all reports and filings with the SEC by Company, all of which have been madeavailable to Shell, are in all material respects complete and correct and have been maintained inaccordance with good business practice and in accordance with all applicable procedures required bylaws and regulations.     P. Contracts and Commitments. True, complete, and correct copies or lists of thefollowing contracts and agreements, whether written or oral, have been made available to Shell:          (1) All loan agreements, indentures, mortgages, guaranties to which Company is a party or bywhich Company or any of its property is bound and any other agreement evidencing indebtedness inexcess of $10,000;          (2) All pledges, conditional sale or title retention agreements, security agreements,equipment obligations, personal property leases and lease purchase agreements to which Company is aparty or by which Company or any of its property is bound, evidencing indebtedness in excess of$10,000;          (3) All contracts, agreements, commitments, purchase orders or other understandings orarrangements to which Company is a party or by which Company or any of its property is bound thatinvolve payments or receipts by Company of more than $10,000 in the case of any single contract,agreement, commitment, understanding or arrangement under which full performance (includingpayment) has not been rendered by all parties thereto;          (4) All collective bargaining agreements, employment and consulting agreements providing forpayments in excess of $10,000 per year, executive compensation plans, bonus plans, deferredcompensation agreements, pension plans, retirement plans, employee stock option or stock purchaseplans and group life, health and accident insurance and other employee benefit plans, agreements,arrangements or commitments to which Company is a party or by which Company or any of its propertyis bound;          (5) All agency, distributor, sales representative, franchise or similar agreements providingfor payments in excess of $10,000 to which Company is a party or by which Company or any of itsproperty is bound;          (6) All agreements, understandings or arrangements in excess of $10,000 individually betweenor among Company and any director, officer, stockholder or, to Company’s Knowledge, affiliate orfamily member of such Person; and          (7) All contracts, agreements or other arrangements imposing a non-competition obligation onCompany.          (8) Every contract or agreement of any kind to which Company is a party will not bind orobligate Company in any manner as of the Closing Date.     Q. Compliance with Agreements and Laws.
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          (1) To its Knowledge, (a) Company has all requisite licenses, permits and certificates,including environmental, health and safety permits, from federal, state and local authoritiesnecessary to conduct its business and own and operate its assets including, without limitation allnecessary approvals, licenses, and permits from the FDA, except where the failure to have suchpermits would not reasonably be expected to have an Adverse Effect, true, correct, and completecopies or list of which has been made available to Shell; (b) Company is not in violation of anylaw, regulation or ordinance (including, without limitation, laws, regulations or ordinancesrelating to building, zoning, environmental, disposal of hazardous waste, land use or similarmatters) relating to its properties, the enforcement of which would have an Adverse Effect; and (c)the business of Company as conducted since December 31, 1996 has not violated, and as of theClosing does not violate, in any material respect, any federal, state, local or foreign laws,regulations or orders (including, but not limited to, any of the foregoing relating to FDA researchand development regulations and approval processes, employment discrimination, occupational safety,environmental protection, hazardous waste, conservation, or corrupt practices), the enforcement ofwhich would have an Adverse Effect. To the Knowledge of the current officers and directors ofCompany, the business of Company from formation did not violate, in any material respect, anyfederal, state, local or foreign laws, regulations or orders (including, but not limited to, any ofthe foregoing relating to FDA research and development regulations and approval processes,employment discrimination, occupational safety, environmental protection, hazardous waste,conservation, or corrupt practices), the enforcement of which would have an Adverse Effect.Company has not had notice or communication from any federal, state or local governmental orregulatory authority or otherwise of any such violation or noncompliance.          (2) To its Knowledge, Company is not in violation of any federal, state, county or municipalauthority law, ruling, order, decree, regulation, permit, or other environmental or hazardous wasterequirement applicable to Company relating to health, safety, pollution, hazardous waste,environmental or other similar matters, which has not been entirely corrected and which has orwould reasonably be expected to have an Adverse Effect.     R. Employee Relations.          (1) To its Knowledge, Company is in material compliance with all federal, state, and municipallaws respecting employment and employment practices, terms and conditions of employment, and wagesand hours, and is not engaged in any unfair labor practice, and there are no arrears in the paymentof wages or social security taxes.          (2) None of the employees of Company is represented by any labor union;          (3) There is no unfair labor practice complaint against Company pending before the NationalLabor Relations Board or any state or local agency;          (4) There is no pending labor strike or other material labor trouble affecting Company(including, without limitation, any known organizational drive); and          (5) There is no material labor grievance pending against Company.
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     S. Employee Benefit Plans.          (1) Company has no (a) employee benefit plans as defined in ERISA Section 3(3), (b) bonus,stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severanceor other similar employee benefit plans, or (c) material unexpired severance agreements with anycurrent or former employee of Company.          (2) With respect to such plans, individually and in the aggregate, no event has occurred and,to its Knowledge, there exists no condition or set of circumstances in connection with whichCompany could be subject to any liability that is reasonably likely to have an Adverse Effect underERISA, the Code or any other applicable law.          (3) With respect to such plans, individually and in the aggregate, there are no funded benefitobligations for which contributions have not been made or properly accrued and there are nounfunded benefit obligations that have not been accounted for by reserves, which obligations arereasonably likely to have an Adverse Effect.          (4) Except as set forth on the Company Disclosure Schedule, Company is not a party to any (a)agreement with any officer or other key employee of Company, (b) agreement with any officer ofCompany providing any term of employment or compensation guarantee extending for a period longerthan the Closing, or (c) agreement or plan, including any stock option plan, stock appreciationright plan, restricted stock plan or stock purchase plan, which will remain in effect or have anybenefits as of the Closing.     T. Indebtedness to and from Affiliates. Except as set forth on the Company DisclosureSchedule, Company is not indebted, directly or to its Knowledge indirectly, to any officer,director or greater than 10% stockholder of Company in any amount other than for salaries forservices rendered or reimbursable business expenses, and no such Person is indebted to Companyexcept for advances made to employees of Company in the ordinary course of business to meetreimbursable business expenses.     U. Banking Facilities. Its disclosure schedule sets forth a true, correct, andcomplete list of:          (1) Each bank, savings and loan or similar financial institution in which Company has anaccount or safety deposit box and the numbers of the accounts or safety deposit boxes maintained byCompany thereat; and          (2) The names of all signatories authorized to draw on each such account or to have access toany such safety deposit box facility.     V. Powers of Attorney and Suretyships. Company does not have (i) any general powersof attorney outstanding, whether as grantor or grantee thereof, or (ii) except as reflected in itsfinancial statements, any obligation or liability, whether actual, accrued, accruing, contingent orotherwise, as guarantor, surety, co-signer, endorser, co-maker, indemnitor, or otherwise in respectof the obligation of any person, corporation, partnership, joint venture,
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association, organizationor other entity, except as endorser or maker of checks or letters of credit, respectively, endorsedor made in the ordinary course of business.     W. Conflicts of Interest. Except as set forth in Section 4.T hereof or on theCompany Disclosure Schedule, no officer, director, or greater than ten percent (10%) stockholder ofCompany nor, to its Knowledge, any affiliate of any such Person, now has or within the last three(3) years had, either directly or indirectly:          (1) An equity or debt interest in any Person that furnishes or sells or during such periodfurnished or sold services or products to Shell, or purchases or during such period purchased fromCompany any goods or services, or otherwise during such period did business with Company; or          (2) A beneficial interest in any contract, commitment or agreement to which Company is or wasa party or under which Company is or was obligated or bound or to which its properties may be ormay have been subject, other than stock options and other contracts, commitments or agreementsbetween Company and such persons in their capacities as employees, officers, directors orstockholders of Company.     X. Stockholder Claims. There are no existing claims against Company by any current orformer stockholder of Company, and to the Knowledge of Company, no facts or circumstancesreasonably likely to result in any such claim.     Y. Affiliates. Except as set forth on the Company Disclosure Schedule,, there are nopersons other than the Parties who, to the Knowledge of Company, may be deemed to be Affiliates ofCompany.     Z. Intellectual Property.          (1) No claim has been asserted to Company that the conduct of the business of Company ascurrently conducted infringes upon or may infringe upon or misappropriates the IntellectualProperty rights of any third party, and to the Knowledge of Company, the conduct of the business ofCompany as currently conducted does not infringe upon or misappropriate the Intellectual Propertyrights of any third party;          (2) Except as set forth on the Company Disclosure Schedule, with respect to each item ofIntellectual Property owned by Company and material to the business, financial condition or resultsof operations of Company (the “**Company Owned Intellectual Property**”), Company is the soleand exclusive owner of the entire right, title and interest in and to such Company OwnedIntellectual Property and is entitled to use such Company Owned Intellectual Property in thecontinued operation of its business;          (3) With respect to each item of Intellectual Property licensed to Company that is material tothe business of Company as currently conducted (the “**Company Licensed IntellectualProperty**”), Company has the right to use such Company Licensed Intellectual Property in thecontinued operation of its business in accordance with the terms of the license agreement governingsuch Company Licensed Intellectual Property;
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          (4) The Company Owned Intellectual Property has not been adjudged invalid or unenforceable, inwhole or in part, by any governmental agency, authority, or court of competent jurisdiction; to theKnowledge of Company, the Company Owned Intellectual Property is valid and enforceable, and noPerson is engaging in any activity that infringes upon the Company Owned Intellectual Property; and          (5) With the exception of the execution of the License Agreement, neither the execution ofthis Agreement nor the consummation of any transaction pursuant hereto shall adversely affect anyof Company’s rights with respect to the Company Owned Intellectual Property or the Company LicensedIntellectual Property.**5.****Shell’s Representations And Warranties****.**     Each of Shell and Merger Subsidiary represents and warrants to Company that the statementscontained in this Section 5 are correct and complete as of the date of this Agreement andwill be correct and complete as of the Closing (as though made then and as though the Closing weresubstituted for the date of this Agreement throughout this Section 5, except as set forthin the except as set forth in the disclosure schedule attached this Agreement as **Exhibit M**(the “**Shell Disclosure Schedule**”) corresponding to the Section of this Agreement, to whichany of the following representations and warranties specifically relate, or as disclosed in anothersection of the Shell Disclosure Schedule, if it is reasonably apparent on the face of thedisclosure that it is applicable to another Section of this Agreement:     A. Organization. Each of Shell and Merger Subsidiary is a corporation (or otherentity) duly organized, validly existing, and in good standing under the laws of the jurisdictionof its incorporation (or other formation). Merger Subsidiary has had no business operations sinceinception, and has no assets or liabilities of any kind, whether known or unknown, whether assertedor unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated orunliquidated, and whether due or to become due.     B. Capitalization.          (1) The authorized capital stock of Shell, and the Shell Shares issued and outstanding as ofthe date of this Agreement, are as set forth in the Shell Public Reports. To Shell’s Knowledge,there are no: (a) other outstanding or authorized shares, options, warrants, purchase rights,subscription rights, conversion rights, exchange rights, or other contracts or commitments of anykind that could require Shell to issue, sell, or otherwise cause to become outstanding any of itscapital stock; (b) equity securities, debt securities or instruments convertible into orexchangeable for shares of such stock; or (c) outstanding or authorized stock appreciation, phantomstock, profit participation, or similar rights with respect to Shell.          (2) The entire authorized capital stock of Merger Subsidiary consists of one thousand (1,000)shares of common stock, none of which are issued or outstanding. There are no: (a) otheroutstanding or authorized shares, options, warrants, purchase rights, subscription rights,conversion rights, exchange rights, or other contracts or commitments of any kind that couldrequire Merger Subsidiary to issue, sell, or otherwise cause to become outstanding any of itscapital stock; (b) equity securities, debt securities or instruments convertible into or
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exchangeable for shares of such stock; or (c) outstanding or authorized stock appreciation, phantomstock, profit participation, or similar rights with respect to Merger Subsidiary.     C. Authorization of Transaction. Each of Shell and Merger Subsidiary has allrequisite power and authority, including full corporate power and authority, to execute and deliverthis Agreement and to perform its obligations hereunder and to consummate the transactionscontemplated hereby. The execution and delivery of this Agreement by Shell and Merger Sub and theconsummation by Shell and Merger Subsidiary of the transactions contemplated hereby have been dulyand validly authorized by all necessary corporate action by Shell and Merger Subsidiary and, exceptas set forth herein, no other corporate proceedings on the part of Shell or Merger Subsidiary andno shareholder vote or consent are necessary to authorize this Agreement or to consummate thetransactions contemplated hereby. This Agreement has been duly and validly executed and deliveredby Shell and Merger Subsidiary. This Agreement and all other agreements and obligations enteredinto and undertaken in connection with the transactions contemplated hereby to which each of Shell,Merger Subsidiary and CNL is a party constitute the valid and legally binding obligations of eachof Shell, Merger Subsidiary and CNL, enforceable against Shell, Merger Subsidiary and CNL inaccordance with their respective terms.     D. Non-Contravention. Neither the execution and delivery of this Agreement, nor theconsummation of the transactions contemplated hereby, will (a) violate any constitution, statute,regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of anygovernment, governmental agency, or court to which either Shell or Merger Subsidiary is subject orany provision of the charter, bylaws, or other governing documents of either Shell or MergerSubsidiary or (b) conflict with, result in a breach of, constitute a default under, result in theacceleration of, create in any party the right to accelerate, terminate, modify, or cancel, orrequire any notice under any agreement, contract, lease, license, instrument, or other arrangementto which either Shell or Merger Subsidiary is a party or by which it is bound or to which any ofits assets is subject except where the violation, conflict, breach, default, acceleration,termination, modification, cancellation, or failure to give notice would not have a Adverse Effecton the ability of the Parties to consummate the transactions contemplated by this Agreement. Otherthan in connection with the provisions of the DGCL, the Exchange Act, the Securities Act, andapplicable state securities laws, neither Shell nor Merger Subsidiary needs to give any notice to,make any filing with, or obtain any authorization, consent, or approval of any government orgovernmental agency in order for the Parties to consummate the transactions contemplated by thisAgreement except where the failure to give notice, to file, or to obtain any authorization,consent, or approval would not have a Adverse Effect on the ability of the Parties to consummatethe transactions contemplated by this Agreement.     E. Filings with SEC. Except as set forth on the Shell Disclosure Schedule, to theKnowledge of the current officers and directors of Shell: Shell has timely made all filings withthe SEC that it has been required to make under the Securities Act and the Exchange Act(collectively the “**Shell Public Reports**”) since Shell Public Reports were first required tobe filed; each of the Shell Public Reports has complied with the Securities Act and the ExchangeAct in all material respects; none of the Shell Public Reports, as of their respective dates,contained any untrue statement of a material fact or omitted to state a material fact necessary in
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order to make the statements made therein, in light of the circumstances under which they weremade, not misleading.     F. Financial Statements. Shell has filed a quarterly report on Form 10-Q for thefiscal quarter ended March 31 or June 30, 2006, and an annual report on Form 10-K for the fiscalyear ended December 31, 2005 (“**Year End**”). Except as set forth on the Shell DisclosureSchedule, to the Knowledge of the current officers and directors of Shell, the financial statementsincluded in or incorporated by reference into the Shell Public Reports (including the related notesand schedules) have been prepared in accordance with GAAP throughout the periods covered thereby,present fairly the financial condition of Company and its Subsidiaries as of the indicated datesand the results of operations of Shell and its Subsidiaries for the indicated periods and arecorrect and complete in all respects, and are consistent with the books and records of Shell andits Subsidiaries; *provided, however*, that the interim statements are subject to normal year-endadjustments.     G. Events Subsequent to Year End. Except as set forth on the Shell DisclosureSchedule, to the Knowledge of the current officers and directors of Shell, there has not been anyAdverse Change since Year End.     H. OTCBB Eligibility. To the Knowledge of the current officers and directors ofShell, Shell meets all issuer and equity security requirements to permit an NASD member to quotethe Shell Shares on, the OTC Bulletin Board, other than the requirements of the Securities Act andapplicable state securities laws.     I. Form S-3 Eligibility. To the Knowledge of the current officers and directors ofShell, Shell meets all Registrant Requirements in order to use Form S-3 for the registration ofsecurities under the Act, including without limitation all requirements set forth in Section I.A ofthe General Instructions to Form S-3 promulgated by the SEC.     J. Undisclosed Liabilities. Except as set forth on the Shell Disclosure Schedule, tothe Knowledge of the current officers and directors of Shell, neither Shell nor Merger Subsidiaryhas any liability of any kind, whether known or unknown, whether asserted or unasserted, whetherabsolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, andwhether due or to become due, including any liability for taxes, except for (1) liabilities setforth on the face of the balance sheet dated as of Year End (rather than in any notes thereto) and(2) liabilities that have arisen after Year End in the Ordinary Course of Business (none of whichresults from, arises out of, relates to, is in the nature of, or was caused by any breach ofcontract, breach of warranty, tort, infringement, or violation of law).     K. Brokers’ Fees. Neither Shell nor Merger Subsidiary has any liability or obligationto pay any fees or commissions to any broker, finder, or agent with respect to the transactionscontemplated by this Agreement for which Company or any of its Subsidiaries could become liable orobligated.     L. Tax Treatment. It is the present intention of Shell to continue at least onesignificant historic business line of Company, or to use at least a significant portion ofCompany’s historic business assets in a business, in each case within the meaning of Treas. Reg.
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§1.368-1(d). Neither Shell or Merger Subsidiary nor, to the Knowledge of Shell, any of theirAffiliates has taken or agreed to take action that would prevent the Merger from constituting areorganization qualifying under the provisions of Section 354 of the Code.     M. Disclosure. The Shell Statement and the Registration Statement will comply withthe Securities Act in all material respects. The Shell Statement and the Registration Statementwill not contain any untrue statement of a material fact or omit to state a material fact necessaryin order to make the statements made therein, in light of the circumstances under which they willbe made, not misleading; *provided, however*, that Shell makes no representation or warranty withrespect to any information that Company will supply specifically for use in the Shell Statement orthe Registration Statement. None of the information that Shell and Merger Subsidiary will supplyspecifically for use in the Company Statement will contain any untrue statement of a material factor omit to state a material fact necessary in order to make the statements made therein, in lightof the circumstances under which they will be made, not misleading.     N. Litigation. There is no action, suit, legal or administrative proceeding orinvestigation pending, or to Shell’s Knowledge threatened, against or involving Shell (either as aplaintiff or defendant) before any court or governmental agency, authority, body or arbitrator.Neither Shell nor to its Knowledge any officer, director or employee of Shell, has been permanentlyor temporarily enjoined by any order, judgment or decree of any court or any governmental agency,authority or body from engaging in or continuing any conduct or practice in connection with thebusiness, assets, or properties of Shell, Merger Subsidiary, or Company. There in existence on thedate hereof any order, judgment or decree of any court, tribunal or agency enjoining or requiringShell to take any action of any kind with respect to its business, assets or properties.     O. Books and Records. The general ledger and books of account of Shell, all minutebooks of Shell, all federal, state and local income, franchise, property and other tax returnsfiled by Shell, all reports and filings with the SEC by Shell, all of which have been madeavailable to Company, are in all material respects complete and correct and have been maintained inaccordance with good business practice and in accordance with all applicable procedures required bylaws and regulations.     P. Stockholder Claims. There are no existing claims against Shell by any current orformer stockholder of Shell, and to Shell’s Knowledge, no facts or circumstances reasonably likelyto result in any such claims.     Q. Affiliates. Except for the Parties, there are no persons who, to the Knowledge ofShell, may be deemed to be Affiliates of Shell.     R. Operations of Merger Subsidiary. Merger Subsidiary is a direct, wholly ownedsubsidiary of Shell, was formed solely for the purpose of engaging in the transactions contemplatedby this Agreement, has engaged in no other business activities and has conducted its operationsonly as contemplated by this Agreement.
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**6.****Termination of Merger Transaction****.**     A. Termination. Any of the Parties may terminate the Merger Transaction with theprior authorization of its board of directors, before or after stockholder approval, only asprovided in this Section 6.A below:          (1) Shell may terminate the Merger Transaction by giving written notice to Company withinninety (90) days following the date of this Agreement if Shell is not reasonably satisfied with theresults of its due diligence regarding the Company.          (2) Shell may terminate the Merger Transaction by giving written notice to Company at any timeprior to the Closing of the Merger in the event of an Uncured Breach by Company.          (3) Company may terminate the Merger Transaction by giving written notice to Shell and MergerSubsidiary at any time prior to the Closing of the Merger in the event of an Uncured Breach byShell or Merger Subsidiary.          (4) Company may terminate the Merger Transaction if the Closing of the Merger shall not havebeen consummated on or before December 1, 2006, and either Party may terminate the MergerTransaction if the Closing of the Merger shall not have been consummated on or before close ofbusiness on Friday, December 29, 2006; provided, however, that the right toterminate the Merger Transaction under this Section 6.A(4) shall not be available to anyparty whose Uncured Breach has been the cause of, or resulted in, the failure of the Closing of theMerger to have been consummated on or before such date. For the avoidance of doubt,notwithstanding any other provision of this Agreement, under no circumstances, other than as causedby its own Uncured Breach, will Shell have any obligation to issue or deliver any Shell Sharesafter December 31, 2006, unless the Parties mutually agree to extend such date.          (5) Either Party may terminate the Merger Transaction, if a Governmental Authority ofcompetent jurisdiction shall have issued an order or taken any other action, in each case which hasbecome final and non-appealable, and which permanently restrains, enjoins or otherwise prohibitsthe Closing of the Merger.     B. Effect of Termination. If the Merger Transaction is terminated pursuant toSection 6.A:          (1) Company shall absolutely, unconditionally, validly and irrevocably sell, transfer, grantand assign to Shell all of the Technology, including, but not limited to, the sole and exclusiveright, in perpetuity and throughout the Territory, to use, improve, expand and otherwise exploitthe Technology, to make (and have made), use, and sell the Licensed Products, and otherwise topractice the inventions and the art that is embodied or described in the Licensor Patents, theLicensor Patent Applications, and any improvements thereto made in whole or in part by Licensor(whether or not patented) in connection with the Technology (each such capitalized term as definedin the License Agreement), (the “**Technology Transaction**”);
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          (2) At the Closing of the Technology Transaction and in consideration of the transfer providedfor in Section 6.B(2)(a), Shell shall deliver to Company validly issued, fully paid andnon-assessable Shell Shares in one of the following amounts:               (i) If notice of termination is given pursuant to Section 6(A)(2) or (4), Nine MillionSix Hundred Thousand (9,600,000) Shell Shares; or               (ii) If notice of termination is given pursuant to Section 6(A)(1), (3) or (5), TwelveMillion Four Hundred Eighty Thousand (12,480,000) Shell Shares;*Provided, however*, that if the total number of Shell Shares outstanding as of the date of thisAgreement is other than Ten Million Four Hundred Thousand (10,400,000), the number of Shell Sharesprovided for in this Section 6.B(2) will be proportionately adjusted in accordance with theConversion Ratio as set forth in Section 1.F(5)(a); and*Provided, further*, that if it is later determined by an arbitrator or court of competentjurisdiction that a notice of termination was improper, or that the Agreement was terminated on adifferent basis or pursuant to a different provision, the number of Shell Shares to be issuedpursuant to this Section 6.B(2) will be retroactively adjusted to the correct umberpursuant to one of the foregoing subsections, and any difference between the Shell Shares issuedand the Shell Shares determined to be correct will be issued or returned for cancellation by theappropriate Party to the other within ninety (90) days of any such final determination; and          (3) Except for the provisions of Sections 1, 7 and 8 of the License Agreement, which shallremain in full force and effect and be deemed incorporated herein by reference, the LicenseAgreement shall thereafter be terminated and be of no further force or effect whatsoever.**7.****Definitions****.**     “Adverse Effect” or “Adverse Change” means any effect or change that would be,or could reasonably be expected to be, materially adverse to the business, assets, financialcondition, operating results, operations, or business prospects of Company, or to the ability ofCompany to consummate timely the transactions contemplated by this Agreement, regardless of whetheror not such adverse effect or change can be or has been cured at any time or whether Shell hasknowledge of such effect or change on the date hereof, including any adverse change, event,development, or effect arising from or relating to: (a) general business or economic conditions,including such conditions related to the business of Company, (b) national or internationalpolitical or social conditions, including the engagement by the United States in hostilities,whether or not pursuant to the declaration of a national emergency or war, or the occurrence of anymilitary or terrorist attack upon the United States, or any of its territories, possessions, ordiplomatic or consular offices or upon any military installation, equipment or personnel of theUnited States, (c) financial, banking, or securities markets, including any general suspension oftrading in, or limitation on prices for, securities on any national exchange or trading market, (d)changes in GAAP, (e) changes in laws, rules, regulations, orders, or other binding directivesissued by any governmental entity, and (f) the taking of any action contemplated by this Agreementand the other agreements contemplated hereby.
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     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgatedunder the Exchange Act.     “CGCL” means the Corporations Code of the State of California, as amended.     “CNL” means Consolidated National, LLC, a California limited liability company.     “Code” means the Internal Revenue Code of 1986, as amended, or any succeeding law.     “Company Share” means any share of the common stock, $0.01 par value per share, ofCompany.     “Company Stockholder” means any Person who holds any Company Shares.     “Confidential Information” means material non-public information concerning thebusiness and affairs of Company and its Subsidiaries, that is confidential or proprietary innature, relating to (a) Company’s proprietary technology, including any patent applications, tradesecrets, methods, data, processes, formulas, instrumentation, techniques, know-how, procedures,enhancements or improvements, or (b) Company’s products or services, systems, finances, methods ofoperation, strategy, business plans, prospective or existing contracts or other businessarrangements, that Company uses reasonable efforts to identify as Confidential Information whenprovided. Confidential Information does not include information that is or becomes: (i) part ofthe public domain through no act or omission of the receiving Party, (ii) developed independentlyby the receiving Party, or (iii) lawfully provided to the receiving Party by a third party notsubject to an obligation of confidentiality or otherwise prohibited from transmitting theinformation.     “DGCL” means the General Corporation Law of the State of Delaware, as amended.     “Dissenting Share” means any Company Share held of record by any stockholder who hasexercised applicable appraisal rights under the DGCL.     “Exchange Act” means the Securities Exchange Act of 1934, as amended.     “FDA” means the Food and Drug Administration, or any successor agency.     “GAAP” means United States generally accepted accounting principles as in effect fromtime to time, consistently applied.     “Governmental Authority” means any national, state, municipal, local or foreigngovernment, any instrumentality, subdivision, court, administrative agency or commission or otherauthority thereof, or any quasi-governmental or private body exercising any regulatory, taxing,importing or other governmental or quasi-governmental authority.     “Intellectual Property” means (a) United States, non-United States and internationalpatents, patent applications and statutory invention registrations, (b) trademarks, service marks,trade dress, logos, trade names, corporate names and other source identifiers, and registrationsand applications for registration thereof, (c) copyrightable works, copyrights, and registrations
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and applications for registration thereof, and (d) confidential and proprietary information,including trade secrets and know-how.     “IRS” means the Internal Revenue Service.     “Knowledge” means actual knowledge after reasonable investigation.     “Lien” means any mortgage, pledge, lien, encumbrance, charge, or other securityinterest, other than (a) liens for taxes not yet due and payable or for taxes that the taxpayer iscontesting in good faith through appropriate proceedings, (b) purchase money liens and lienssecuring rental payments under capital lease arrangements, and (c) other liens arising in theOrdinary Course of Business and not incurred in connection with the borrowing of money.     “Majority Stockholders” means Victor Gura, M.D., Robert M. Snukal and LeonardoBerezovsky, M.D., individually and as Trustee of all Trusts holding Company Shares of which he is aTrustee.     “Merger Documents” means this Agreement, the Affiliate Agreements, the VotingAgreements, the Registration Statement, the Company Statement, the Shell Statement, the AADPAgreement, all SEC filings, all filings made pursuant to applicable state securities laws, and anyother documents executed or filed in connection with the transactions contemplated herein (butexcluding the License Agreement).     “Ordinary Course of Business” means the ordinary course of business consistent withpast custom and practice, including with respect to nature, quantity and frequency.     “Person” means an individual, a partnership, a corporation, a limited liabilitycompany, an association, a joint stock company, a trust, a joint venture, an unincorporatedorganization, any other business entity, or a governmental entity (or any department, agency, orpolitical subdivision thereof).     “SEC” means the Securities and Exchange Commission.     “Securities Act” means the Securities Act of 1933, as amended.     “Shell Securities” means any Shell Share and any security exercisable or convertibleinto Shell Shares.     “Shell Share” means any share of the common stock of Shell.     “Shell Stockholder” means any Person who holds any Shell Shares.     “Stockholder Approval” means the effective affirmative vote of the holders of amajority of the Company Shares or Shell Shares, as the case may be, in favor of this Agreement andthe Merger.     “Subsidiary” means, with respect to any Person, any corporation, limited liabilitycompany, partnership, association, or other business entity of which (a) if a corporation, a
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majority of the total voting power of shares of stock entitled (without regard to the occurrence ofany contingency) to vote in the election of directors, managers, or trustees thereof is at the timeowned or controlled, directly or indirectly, by that Person or one or more of the otherSubsidiaries of that Person or a combination thereof or (b) if a limited liability company,partnership, association, or other business entity (other than a corporation), a majority of thepartnership or other similar ownership interests thereof is at the time owned or controlled,directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combinationthereof and for this purpose, a Person or Persons owns a majority ownership interest in such abusiness entity (other than a corporation) if such Person or Persons will be allocated a majorityof such business entity’s gains or losses or will be or control any managing director or generalpartner of such business entity (other than a corporation). The term “Subsidiary” willinclude all Subsidiaries of such Subsidiary.     “Uncured Breach” means an unexcused breach of any material representation, warranty orcovenant contained in this Agreement, in any material respect, following written notice reasonablyspecifying the breach and the demanded manner of cure, if and when the breach has continued withoutcure for a period of thirty (30) days after the notice of breach.**8.****General****.**     A. Press Releases and Public Announcements. No Party will issue any press release ormake any public announcement relating to the subject matter of this Agreement without the priorwritten approval of the other Parties; *provided, however*, that any Party may make any publicdisclosure it believes in good faith based upon advise of counsel is required by applicable law orany listing or trading agreement concerning its publicly traded securities (in which case thedisclosing Party will use its best efforts to advise the other Party prior to making thedisclosure).     B. No Third-Party Beneficiaries. This Agreement will not confer any rights orremedies upon any Person other than the Parties and their respective successors and permittedassigns.     C. Succession and Assignment. This Agreement will be binding upon and inure to thebenefit of the Parties named herein and their respective successors and permitted assigns. No Partymay assign either this Agreement or any of its rights, interests, or obligations hereunder withoutthe prior written approval of the other Parties.     D. Headings. The section headings contained in this Agreement are inserted forconvenience only and will not affect in any way the meaning or interpretation of this Agreement.     E. Notices. All notices, requests, demands, claims, and other communicationshereunder will be in writing. Any notice, request, demand, claim, or other communication hereunderwill be deemed duly given (i) when delivered personally to the recipient, (ii) one (1) business dayafter being sent to the recipient by reputable overnight courier service, (iii) one (1) businessday after being sent to the recipient by facsimile transmission or electronic mail, or (iv) four(4) business days after being mailed to the recipient by certified or registered mail, returnreceipt requested and postage prepaid, and addressed to the intended recipient as set forth below:
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If to Shell or Merger Subsidiary:Xcorporeal, Inc.