EXHIBIT 10.32


 


Portions Subject to Confidential Treatment Request Under Rule 406


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ASSET PURCHASE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by and among

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VGX PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADViSYS INC.,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RONALD O. BERGAN

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  and

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MARY ALICE BERGAN

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated February 21, 2007

  	
   

  



 





















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I
  PURCHASE AND SALE

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  Purchased Assets

  	
  1

  
	
  1.2

  	
  Excluded Assets

  	
  2

  
	
  1.3

  	
  Assumption of Liabilities

  	
  3

  
	
  1.4

  	
  Retained Liabilities

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  PURCHASE PRICE

  	
  4

  
	
   

  	
   

  
	
  2.1

  	
  Purchase Price

  	
  4

  
	
  2.2

  	
  Allocation of the Purchase
  Price

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  CLOSING; DELIVERIES

  	
  6

  
	
   

  	
   

  
	
  3.1

  	
  Closing

  	
  6

  
	
  3.2

  	
  Deliveries by the Purchaser

  	
  6

  
	
  3.3

  	
  Deliveries by the Company

  	
  7

  
	
  3.4

  	
  Deliveries by the
  Stockholders

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
  STOCKHOLDERS

  	
  7

  
	
   

  	
   

  
	
  4.1

  	
  Authority; Enforceability

  	
  7

  
	
  4.2

  	
  Consents; Non-Contravention

  	
  7

  
	
  4.3

  	
  Subsidiaries

  	
  8

  
	
  4.4

  	
  Organization

  	
  8

  
	
  4.5

  	
  Capitalization

  	
  8

  
	
  4.6

  	
  Books and Records; Financial
  Statements

  	
  8

  
	
  4.7

  	
  No Undisclosed Liabilities

  	
  9

  
	
  4.8

  	
  Compliance with Laws

  	
  9

  
	
  4.9

  	
  Litigation

  	
  10

  
	
  4.10

  	
  Absence of Certain Changes or
  Events

  	
  11

  
	
  4.11

  	
  Title to Assets

  	
  11

  
	
  4.12

  	
  Inventory; Accounts
  Receivable

  	
  12

  
	
  4.13

  	
  Intellectual Property

  	
  12

  
	
  4.14

  	
  Company Contracts

  	
  13

  
	
  4.15

  	
  Environmental Matters

  	
  13

  
	
  4.16

  	
  Employee Matters

  	
  14

  
	
  4.17

  	
  Employee Benefit Matters

  	
  15

  
	
  4.18

  	
  Taxes

  	
  16

  
	
  4.19

  	
  Transactions with Related
  Persons

  	
  16

  
	
  4.20

  	
  Insurance

  	
  17

  
	
  4.21

  	
  Customers and Suppliers

  	
  17

  
	
  4.22

  	
  Product Liability and Product
  Warranty

  	
  17

  



 


i

















 


	
  4.23

  	
  Brokers

  	
  17

  
	
  4.24

  	
  Disclosure

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

  	
  18

  
	
   

  	
   

  
	
  5.1

  	
  Authority;
  Enforceability

  	
  18

  
	
  5.2

  	
  Consents;
  Non-Contravention

  	
  18

  
	
  5.3

  	
  Brokers

  	
  18

  
	
  5.4

  	
  Litigation

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

  	
  19

  
	
   

  	
   

  
	
  6.1

  	
  Authority;
  Enforceability

  	
  19

  
	
  6.2

  	
  Consents;
  Non-Contravention

  	
  19

  
	
  6.3

  	
  Brokers

  	
  20

  
	
  6.4

  	
  Litigation

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII COVENANTS OF THE COMPANY AND THE STOCKHOLDERS

  	
  20

  
	
   

  	
   

  
	
  7.1

  	
  Fulfillment
  of Agreements

  	
  20

  
	
  7.2

  	
  Further
  Assurances

  	
  20

  
	
  7.3

  	
  Confidentiality

  	
  20

  
	
  7.4

  	
  Books and
  Records

  	
  21

  
	
  7.5

  	
  Conduct of
  Business

  	
  21

  
	
  7.6

  	
  Access

  	
  22

  
	
  7.7

  	
  Insurance

  	
  22

  
	
  7.8

  	
  Exclusivity

  	
  22

  
	
  7.9

  	
  Tax Matters

  	
  22

  
	
  7.10

  	
  Change of
  Name

  	
  22

  
	
  7.11

  	
  Guarantee

  	
  23

  
	
  7.12

  	
  Release

  	
  23

  
	
  7.13

  	
  Noncompetition,
  Nonsolicitation and Nondisparagement

  	
  23

  
	
  7.14

  	
  Liquidation
  and Dissolution Documents

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII COVENANTS OF THE PURCHASER

  	
  24

  
	
   

  	
   

  
	
  8.1

  	
  Fulfillment
  of Agreements

  	
  24

  
	
  8.2

  	
  Further
  Assurances

  	
  25

  
	
  8.3

  	
  Confidentiality

  	
  25

  
	
  8.4

  	
  Books and
  Records

  	
  25

  
	
  8.5

  	
  Arrangement
  with Administaff and Other Employee Matters

  	
  25

  
	
  8.6

  	
  Recent
  Financials

  	
  26

  
	
  8.7

  	
  Services of
  Dr. Kern

  	
  26

  
	
  (a)

  	
  Guarantee
  Obligations

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  CONDITIONS TO THE PURCHASER’S OBLIGATIONS

  	
  26

  
	
   

  	
   

  
	
  9.1

  	
  Representations
  and Warranties True and Correct

  	
  26

  



 


ii

















 


	
  9.2

  	
  Covenants
  and Agreements Performed

  	
  26

  
	
  9.3

  	
  Company
  Closing Certificate

  	
  26

  
	
  9.4

  	
  Stockholders
  Closing Certificate

  	
  27

  
	
  9.5

  	
  No
  Prohibition

  	
  27

  
	
  9.6

  	
  Consents

  	
  27

  
	
  9.7

  	
  Assignment

  	
  27

  
	
  9.8

  	
  Intellectual
  Property Assignments

  	
  27

  
	
  9.9

  	
  Subscription
  Agreement

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE X
  CONDITIONS TO THE STOCKHOLDERS’ AND THE COMPANY’S OBLIGATIONS

  	
  27

  
	
   

  	
   

  
	
  10.1

  	
  Representations
  and Warranties True and Correct

  	
  27

  
	
  10.2

  	
  Covenants
  and Agreements Performed

  	
  27

  
	
  10.3

  	
  Purchaser
  Closing Certificate

  	
  27

  
	
  10.4

  	
  No
  Prohibition

  	
  28

  
	
  10.5

  	
  Consents

  	
  28

  
	
  10.6

  	
  Payment of
  Closing Payment

  	
  28

  
	
  10.7

  	
  Assignment

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI
  TERMINATION PRIOR TO CLOSING; REORGANIZATION

  	
  28

  
	
   

  	
   

  
	
  11.1

  	
  Termination

  	
  28

  
	
  11.2

  	
  Effect on
  Obligations

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII
  SURVIVAL; INDEMNIFICATION AND OFFSET

  	
  28

  
	
   

  	
   

  
	
  12.1

  	
  Survival;
  Knowledge of Breach

  	
  28

  
	
  12.2

  	
  Indemnification

  	
  29

  
	
  12.3

  	
  Limitations

  	
  30

  
	
  12.4

  	
  Notice of
  Indemnity Claims

  	
  31

  
	
  12.5

  	
  Third-Party
  Claims

  	
  31

  
	
  12.6

  	
  Settlement
  of Indemnity Claims

  	
  32

  
	
  12.7

  	
  Right of
  Setoff

  	
  32

  
	
  12.8

  	
  Exclusive Remedy

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII
  MISCELLANEOUS

  	
  33

  
	
   

  	
   

  
	
  13.1

  	
  Entire
  Agreement

  	
  33

  
	
  13.2

  	
  Successors
  and Assigns

  	
  33

  
	
  13.3

  	
  Headings

  	
  33

  
	
  13.4

  	
  Amendment;
  Modification and Waiver

  	
  33

  
	
  13.5

  	
  Expenses

  	
  33

  
	
  13.6

  	
  Notices

  	
  33

  
	
  13.7

  	
  Governing
  Law

  	
  35

  
	
  13.8

  	
  No Third
  Party Beneficiaries

  	
  35

  
	
  13.9

  	
  Counterparts

  	
  35

  
	
  13.10

  	
  Drafting of
  Agreement

  	
  35

  



 


iii

















 


	
  13.11

  	
  Savings
  Clause

  	
  35

  
	
  13.12

  	
  Injunctive
  Relief

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV CERTAIN DEFINITIONS

  	
  35

  
	
   

  	
   

  
	
  14.1

  	
  “Administaff”

  	
  35

  
	
  14.2

  	
  “Administaff
  Agreement”

  	
  36

  
	
  14.3

  	
  “Affiliate”

  	
  36

  
	
  14.4

  	
  “Ancillary
  Agreements”

  	
  36

  
	
  14.5

  	
  “Business
  Day”

  	
  36

  
	
  14.6

  	
  “Claim”

  	
  36

  
	
  14.7

  	
  “Code”

  	
  36

  
	
  14.8

  	
  “Company
  Contract”

  	
  36

  
	
  14.9

  	
  “Contract”

  	
  36

  
	
  14.10

  	
  “EKD

  	
  36

  
	
  14.11

  	
  “Encumbrances”

  	
  36

  
	
  14.12

  	
  “Environment”

  	
  36

  
	
  14.13

  	
  “Environmental
  Claim”

  	
  36

  
	
  14.14

  	
  “Environmental
  Law”

  	
  36

  
	
  14.15

  	
  “ERISA”

  	
  36

  
	
  14.16

  	
  “FD&C
  Act”

  	
  37

  
	
  14.17

  	
  “FDA”

  	
  37

  
	
  14.18

  	
  “GAAP”

  	
  37

  
	
  14.19

  	
  “GHRH

  	
  37

  
	
  14.20

  	
  “Governing
  Documents”

  	
  37

  
	
  14.21

  	
  “Governmental
  Authority”

  	
  37

  
	
  14.22

  	
  “Governmental
  Authorization”

  	
  37

  
	
  14.23

  	
  “Hazardous
  Substance”

  	
  37

  
	
  14.24

  	
  “Intellectual
  Property”

  	
  37

  
	
  14.25

  	
  “IRS”

  	
  38

  
	
  14.26

  	
  “Knowledge
  of the Company”

  	
  38

  
	
  14.27

  	
  “Legal
  Requirement”

  	
  38

  
	
  14.28

  	
  “Losses”

  	
  38

  
	
  14.29

  	
  “Liabilities”

  	
  38

  
	
  14.30

  	
  “Material
  Adverse Effect”

  	
  39

  
	
  14.31

  	
  “Order”

  	
  39

  
	
  14.32

  	
  “Permitted
  Encumbrances”

  	
  39

  
	
  14.33

  	
  “Person”

  	
  39

  
	
  14.34

  	
  “Proceeding”

  	
  39

  
	
  14.35

  	
  “Restricted
  Business

  	
  39

  
	
  14.36

  	
  “Schedules”

  	
  39

  
	
  14.37

  	
  “Securities”

  	
  39

  
	
  14.38

  	
  “Straddle
  Period”

  	
  39

  
	
  14.39

  	
  “Tax”

  	
  39

  
	
  14.40

  	
  “Taxing
  Authority”

  	
  40

  
	
  14.41

  	
  “Tax Return”

  	
  40

  



 


iv

















 


	
  Exhibits

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Purchase Price Allocation

  
	
  Exhibit B

  	
  Assignment and Assumption Agreement

  
	
  Exhibit C

  	
  IP Assignment

  
	
  Exhibit D

  	
  Subscription Agreement

  
	
   

  	
   

  
	
  Schedules

  	
   

  
	
   

  	
   

  
	
  Schedule 1.1(f)

  	
  Assigned Contracts

  
	
  Schedule 4.2

  	
  Consents

  
	
  Schedule 4.3

  	
  Subsidiaries

  
	
  Schedule 4.4

  	
  Foreign Qualifications

  
	
  Schedule 4.5

  	
  Capitalization

  
	
  Schedule 4.8

  	
  Governmental Authorizations

  
	
  Schedule 4.10

  	
  Absence of Changes

  
	
  Schedule 4.13

  	
  Intellectual Property

  
	
  Schedule 4.15

  	
  Environmental Matters

  
	
  Schedule 4.16

  	
  Employee Matters

  
	
  Schedule 4.18

  	
  Employee Benefits Matters

  
	
  Schedule 4.19

  	
  Related Party Transactions

  
	
  Schedule 4.20

  	
  Insurance Policies

  
	
  Schedule 4.21

  	
  Customers and Suppliers

  
	
  Schedule 4.22

  	
  Warranty Policies

  
	
  Schedule 5.2

  	
  Consents

  
	
  Schedule 6.2

  	
  Consents

  
	
  Schedule 8.5

  	
  Excluded Employees

  



 


v

















 


DEFINED TERMS


 


Page


 


	
  Administaff

  	
  35

  
	
  Administaff Agreement

  	
  36

  
	
  Affiliate

  	
  36

  
	
  Agreement

  	
  1

  
	
  Ancillary Agreements

  	
  36

  
	
  Assigned Contracts

  	
  2

  
	
  Assigned Governmental Authorizations

  	
  2

  
	
  Assignment

  	
  27

  
	
  Assumed Liabilities

  	
  3

  
	
  Balance Sheets

  	
  8

  
	
  Business

  	
  1

  
	
  Business Day

  	
  36

  
	
  Cash Portion

  	
  4

  
	
  Claim

  	
  36

  
	
  Claim Notice

  	
  31

  
	
  Closing

  	
  6

  
	
  Closing Date

  	
  6

  
	
  Code

  	
  36

  
	
  Company

  	
  1

  
	
  Company Closing Certificate

  	
  26

  
	
  Company Confidential Information

  	
  20

  
	
  Company Contract

  	
  36

  
	
  Company Financial Statements

  	
  9

  
	
  Company Indemnitees

  	
  30

  
	
  Company Indemnitors

  	
  29

  
	
  Company Parties

  	
  21

  
	
  Company Threshold

  	
  30

  
	
  Contract

  	
  36

  
	
  Defense Notice

  	
  32

  
	
  Drop Dead Date

  	
  28

  
	
  EKD

  	
  36

  
	
  Employee Benefit Plans

  	
  15

  
	
  Employees

  	
  25

  
	
  Encumbrances

  	
  36

  
	
  Environment

  	
  36

  
	
  Environmental Claim

  	
  36

  
	
  Environmental Law

  	
  36

  
	
  ERISA

  	
  36

  
	
  Excluded Assets

  	
  2

  
	
  Extended Survival Period

  	
  29

  
	
  FD&C Act

  	
  37

  
	
  FDA

  	
  37

  
	
  Form 8594

  	
  6

  
	
  GAAP

  	
  37

  
	
  GHRH

  	
  37

  
	
  Governing Documents

  	
  37

  
	
  Governmental Authority

  	
  37

  



 


vi

















 


	
  Governmental Authorization

  	
  37

  
	
  Hazardous Substance

  	
  37

  
	
  Indemnified Party

  	
  31

  
	
  Indemnifying Party

  	
  31

  
	
  Indemnity Claim

  	
  31

  
	
  Intellectual Property

  	
  37

  
	
  Interim Balance Sheet

  	
  8

  
	
  Inventories

  	
  1

  
	
  IP Assignment

  	
  27

  
	
  IRS

  	
  38

  
	
  Knowledge

  	
  38

  
	
  Legal Requirement

  	
  38

  
	
  Liabilities

  	
  38

  
	
  Losses

  	
  38

  
	
  Material Adverse Effect

  	
  39

  
	
  Obligations

  	
  23

  
	
  Order

  	
  39

  
	
  Permitted Encumbrances

  	
  39

  
	
  Person

  	
  39

  
	
  Proceeding

  	
  39

  
	
  Purchase Price

  	
  4

  
	
  Purchased Assets

  	
  1

  
	
  Purchaser

  	
  1

  
	
  Purchaser Closing Certificate

  	
  27

  
	
  Purchaser Indemnitees

  	
  29

  
	
  Purchaser Parties

  	
  25

  
	
  Related Person

  	
  16

  
	
  Released Parties

  	
  23

  
	
  Releasors

  	
  23

  
	
  Restricted Business

  	
  39

  
	
  Restricted Period

  	
  23

  
	
  Restrictive Parties

  	
  23

  
	
  Retained Liabilities

  	
  3

  
	
  Schedules

  	
  39

  
	
  Securities

  	
  39

  
	
  Software

  	
  38

  
	
  Stock Portion

  	
  4

  
	
  Stockholders

  	
  1

  
	
  Stockholders Closing Certificate

  	
  27

  
	
  Straddle Period

  	
  39

  
	
  Survival Period

  	
  29

  
	
  Tax

  	
  39

  
	
  Tax Return

  	
  40

  
	
  Taxes

  	
  39

  
	
  Taxing Authority

  	
  40

  
	
  Third Party Claim

  	
  31

  
	
  Transaction

  	
  22

  



 


vii

















 


ASSET PURCHASE AGREEMENT


 


THIS ASSET PURCHASE AGREEMENT (this “Agreement”)
is made and entered into as of February 21, 2007, by and among VGX Pharmaceuticals, Inc. (the “Purchaser”),
ADViSYS Inc. (the “Company”), a Delaware corporation, and Ronald O.
Bergan and Mary Alice Bergan (Mr. and Ms. Bergan together, the “Stockholders”).


 


RECITALS:


 


WHEREAS, the Company is engaged in the business of (a) developing,
marketing, manufacturing, distributing or otherwise commercializing (i) veterinary
applications of GHRH
technology and (ii) EKDs for the delivery of plasmids into tissue, (b) performing
contract services, which services include process development, quality control,
quality assurance and validation services, as well as the manufacture of
plasmid-based biopharmaceuticals and (c) performing contract research
services (clauses (a) through (c), the “Business”);


 


WHEREAS, the Purchaser wishes to purchase, and the
Company wishes to sell, substantially all of the assets of the Business,
subject to certain liabilities of the Business, upon the terms and subject to
the conditions set forth herein; and


 


WHEREAS, the Stockholders are the principal
stockholders of the Company and, as a result thereof, will receive substantial
benefits in connection with the transactions contemplated hereby.


 


NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto hereby agree as follows:


 


ARTICLE I


PURCHASE AND SALE


 


1.1                                 Purchased
Assets.  At the Closing, the Company
shall sell, transfer, convey and deliver to the Purchaser, free and clear of
all Encumbrances other than Permitted Encumbrances, all of the Company’s right,
title and interest in and to all of the assets and properties of every kind and
description, tangible and intangible, that are used in or related to the
Business, wherever located (such transferred assets and properties, the “Purchased
Assets”).  The Purchased Assets shall
include the following:


 


(a)                                  All
cash and cash equivalents of the Company less an amount equal to the sum of
$10,000 (representing amounts retained by the Company to pay liquidation
expenses) and the amount of the Excluded Accounts;


 


(b)                                 All
accounts receivable of the Company;


 


(c)                                  All
inventories of raw materials, work-in-process, finished goods and other
supplies of the Company (the “Inventories”);


 


1

















 


(d)                                 All
equipment, machinery, furniture, fixtures and other tangible assets of the
Company;


 


(e)                                  The
Company Contracts set forth on Schedule 1.1(f) (such Company
Contracts, the “Assigned Contracts”);


 


(f)                                    All
transferable Governmental Authorizations of the Company (the “Assigned
Governmental Authorizations”);


 


(g)                                 All
of the Company’s Intellectual Property;


 


(h)                                 All
telephone numbers, facsimile numbers and email addresses used in the Business;


 


(i)                                     All
goodwill and going concern value of the Business;


 


(j)                                     All
Claims of the Company against any Person to the extent relating to the
Purchased Assets or Assumed Liabilities;


 


(k)                                  All
advertising materials, marketing plans, catalogues, brochures, promotional
material and cost and pricing information of the Company; and


 


(l)                                     All
data, records, books, ledgers, files, reports and plans maintained by the
Company in connection with the Business.


 


1.2                                 Excluded Assets.  Notwithstanding anything to the contrary
contained in Section 1.1 above, the Purchased Assets shall not
include the following assets and properties (such assets and properties, the “Excluded
Assets”):


 


(a)                                  All
shares of capital stock of the Company held in treasury;


 


(b)                                 Cash
in an amount equal to the sum of $10,000 (representing amounts retained by the
Company to pay liquidation expenses) and the amount of the Excluded Accounts;


 


(c)                                  All
rights of the Company under this Agreement and the Ancillary Agreements;


 


(d)                                 The
minute books, stock ledgers, Stockholders lists, similar corporate records and
corporate seals of the Company;


 


(e)                                  The
Company’s rights under the Employee Benefit Plans;


 


(f)                                    The
Company’s ownership interest in any Person listed on Schedule 4.3
hereto;


 


(g)                                 All
Company Contracts other than the Assigned Contracts;


 


(h)                                 All
Assigned Governmental Authorizations of the Company other than the Assigned
Governmental Authorizations; and


 


2














 


(i)            All
Claims of the Company against any Person to the extent relating to an Excluded
Asset or a Retained Liability.


 


1.3           Assumption
of Liabilities. At the Closing, the Company shall assign to the Purchaser,
and the Purchaser shall assume and agree to pay, perform and discharge, from
and after the Closing, only the following Liabilities of the Company (all such
Liabilities, the “Assumed Liabilities”):


 


(a)           Any
account payable (other than in respect of amounts owed to Vinson &
Elkins, legal counsel to the Company, and amounts owed to Jackson Walker,
patent counsel to the Company, in connection with the transactions contemplated
hereby (the “Excluded Payables”)) either (i) reflected on the Interim
Balance Sheet or (ii) incurred after the date of the Interim Balance Sheet
in the ordinary course of business that, in the case of either of clause (i) or
clause (ii), remains unpaid at and is not delinquent immediately prior to the
Closing;


 


(b)           Any
Liability arising after the occurrence of the Closing under the Assigned
Contracts (other than any Liability under the Assigned Contracts arising out of
or relating to a breach or violation of, or non-compliance with, any of the
covenants, obligations, representations, warranties or other provisions of any
such Assigned Contract that relates to periods prior to the occurrence of the
Closing or to the extent that such Liability would constitute a breach or
violation of, or non-compliance with, any covenant, obligations,
representation, warranty or other provision of this Agreement or any Ancillary
Agreement); and


 


(c)           Any
Liability arising after the occurrence of the Closing under the Assigned
Governmental Authorizations (other than any Liability under the Assigned
Governmental Authorizations arising out of or relating to a breach or violation
of, or non-compliance with, any of the Company’s obligations under any such
Assigned Governmental Authorization that relates to periods prior to the
occurrence of the Closing or to the extent that such Liability would constitute
a breach or violation of, or non-compliance with, any covenant, obligation,
representation, warranty or other provision of this Agreement or any Ancillary
Agreement).


 


1.4           Retained Liabilities.
The Retained Liabilities shall not be assumed by the Purchaser, and shall
remain the sole responsibility of, and shall be retained, paid, performed and
discharged solely by, the Company. “Retained Liabilities” shall mean
every Liability of the Company other than the Assumed Liabilities, including:


 


(a)           Any
Liability under (i) any Company Contract that does not constitute an
Assigned Contract; (ii) any Governmental Authorization that does not
constitute an Assigned Governmental Authorization; (iii) any Assigned
Contract to the extent not assumed pursuant to Section 1.3(b) hereof
or (iv) any Assigned Governmental Authorization to the extent not assumed
pursuant to Section 1.3(c) hereof;


 


(b)           Any
Liability of the Company arising under, or relating to the execution, delivery
or consummation of, this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby;


 


(c)           Any
Liability under or with respect to the insurance plans of the Company or the
Employee Benefit Plans;


 


3

















 


(d)           Any
Liability of the Company relating to, arising out of or incurred in connection
with the Retained Assets;


 


(e)           Any
Liability for the Excluded Accounts; and


 


(f)            Any
Liability for amounts due in respect of any Taxes imposed with respect to any
taxable period of the Company or relating to, arising out of or incurred in
connection with the operations of the Company or the ownership of the Purchased
Assets, including any Taxes asserted against the Company or the Purchased
Assets by reason of its or their inclusion in any consolidated, combined or
unitary Tax Return.


 


ARTICLE II


PURCHASE PRICE


 


2.1           Purchase
Price.


 


(a)           The
consideration payable to the Company for the purchase of the Purchased Assets
(the “Purchase Price”) shall be:


 


(i)            Cash in
an amount equal to $2,211,365.25 (the “Cash Portion”), to be delivered
to the Company at the Closing;


 


(ii)           924,219
shares (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations and similar events) of the Common Stock of the Purchaser (the
“Stock Portion”), to be delivered to the Company at the Closing;


 


(iii)          The
assumption by the Purchaser of the Assumed Liabilities at the Closing;


 


(iv)          200,000
shares (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations and similar events) of the Common Stock of the Purchaser, to
be issued to Company within 15 Business Days after the issuance of approvals
from all applicable Governmental Authorities, required to market in Australia a
porcine GHRH that constitutes a
Purchased Asset or is derived or developed from proprietary technology that
constitutes a Purchased Asset;


 


(v)           ******
shares (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations and similar events) of the Common Stock of the Purchaser, to
be issued to the Company within 15 Business Days after the first use by the
Purchaser of an EKD that constitutes a
Purchased Asset or is derived or developed from proprietary technology that
constitutes a Purchased Asset on a human subject in a clinical trial
conducted anywhere in the United States of America or the European Union in
accordance with applicable Legal Requirements governing such clinical trials;


 


(vi)          ******
shares (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations and similar events) of the Common Stock of the Purchaser, to
be issued to the Company within 15 Business Days after (A) the first
license granted by the Purchaser to any Person for the use of any EKD that constitutes a Purchased Asset or is
derived 


 


4

















 


or developed from proprietary
technology that constitutes a Purchased Asset and (B) the use by the licensee
of the licensed technology on a human subject in a clinical trial conducted
anywhere in the United States of America or the European Union in accordance
with applicable Legal Requirements governing such clinical trials;


 


(vii)         The
following contingent payments, if any:


 


(A)          An amount
equal to ****** of all upfront and milestone payments, net of all Excluded Proceeds,
received by or on behalf of the Purchaser from the Closing Date until the fifth
anniversary thereof in respect of any license granted by the Purchaser to any
other Person to manufacture, produce, distribute, market or otherwise
commercialize, for any application, any EKD or GHRH technology or product that constitutes a Purchased Asset or is
derived or developed from proprietary technology that constitutes a Purchased
Asset; and


 


(B)           An amount
equal to ****** of all royalties received by or on behalf of the Purchaser from
the Closing Date until the 10th anniversary thereof to the extent received on
account of sales of products under any license granted by the Purchaser to any
other Person to manufacture, produce, distribute, market or otherwise commercialize,
for any non-human application, any GHRH technology or product that constitutes a Purchased Asset or is
derived or developed from proprietary technology that constitutes a Purchased
Asset.


 


(b)           Each
obligation to issue shares of the Purchaser’s Common Stock issuable pursuant to
Sections 2.1(a)(iv) through (vi) above shall be contingent upon
the Company executing and delivering such subscription documents and other
Contracts with respect to such shares as the Purchaser shall reasonably
request.


 


(c)           All
amounts payable pursuant to Section 2.1(a)(vii) above shall be
paid by certified or cashier’s check, or by wire transfer of immediately
available funds to an account designated by the Company from time to time or
such other method as the Purchaser and the Company shall agree, or, with
respect to non-cash consideration, in such manner as the Purchaser shall in
good faith determine, within 15 Business Days after the end of each calendar
quarter in respect of all payments received by the Purchaser in such calendar
quarter.


 


(d)           For
purposes of calculating any payment required to be made pursuant to Section 2.1(a)(vii) above:


 


(i)            Non-cash
consideration that is received by or on behalf of the Purchaser shall be valued
at the fair market value thereof, as determined in good faith by the Purchaser;
and


 


(ii)           If any
cash payment received by or on behalf of the Purchaser is not an amount in U.S.
dollars, the payment shall be calculated by including the fair market value in
U.S. dollars of any such payment received as of the date received by the
Purchaser, as determined in good faith by the Purchaser.


 


(e)           As
used herein, “Excluded Proceeds” means all proceeds reasonably and
fairly attributable to bona fide (i) debt financing; (ii) equity (and
conditional equity, such as warrants, convertible debt and the like)
investments in the Purchaser at fair market value; (iii) reimbursements of
patent prosecution costs and patent maintenance expenses; (iv) 


 


5

















 


reimbursement for
the cost of research and/or development services provided on the basis of
full-time equivalent efforts of personnel not in excess of commercially
reasonable full-time equivalent rates, (v) any amount on which payments
have been paid under Section 2.1(a)(vii)(B) hereof.


 


2.2           Allocation
of the Purchase Price. At least 30 days before the required due date of Form 8594
under Section 1060 of the Code (or any successor form or successor
provision of any future Tax law) (“Form 8594”), the Purchaser, the
Stockholders and the Company shall agree upon an allocation of the Purchase
Price, which shall be allocated among the Purchased Assets in accordance with
the requirements of such Section 1060, using the unconsolidated assets of
the Company. The Purchaser and the Company shall each report the federal, state
and local income and other Tax consequences of the transactions contemplated by
this Agreement in a manner consistent with such allocation, including the
preparation and filing of Form 8594 with their respective federal income
Tax returns for the taxable year that includes the Closing Date, and neither
the Purchaser, the Stockholders, nor the Company shall take any position or
other action inconsistent with such allocation unless otherwise required by applicable
Legal Requirements. In the event that the agreed upon allocation is disputed by
any Governmental Authority, the party receiving notice of such dispute shall
promptly notify and consult with the other parties hereto concerning resolution
of such dispute, and shall keep such other parties apprised of the status of
such dispute and the resolution thereof.


 


ARTICLE III


CLOSING; DELIVERIES


 


3.1           Closing.
The consummation of the purchase and sale of the Purchased Assets and the
assignment and assumption of the Assumed Liabilities (the “Closing”)
shall take place at 10:00 a.m. (Philadelphia time) on the second Business
Day after the satisfaction or waiver of the conditions (excluding conditions
that, by their terms, cannot be satisfied until the Closing Date) set forth in Articles X
and XI hereof (the “Closing Date”), unless another time or date
is agreed to by the parties hereto. The Closing shall be held at the offices of
Duane Morris LLP, 30 South 17th Street, Philadelphia, PA  19103, unless another place is agreed to by
the parties hereto.


 


3.2           Deliveries by the
Purchaser. At the Closing, the Purchaser shall deliver or cause to be
delivered the following to the Company:


 


(a)           The
Cash Portion, by wire transfer of immediately available funds to an account
designated by the Company at least two Business Days prior to the Closing Date;


 


(b)           A
certificate representing the Stock Portion, issued by the Purchaser in favor of
the Company;


 


(c)           The
Purchaser Closing Certificate and the Ancillary Agreements required to be
executed by the Purchaser pursuant to Article X hereof, executed by
the Purchaser; and


 


(d)           Such
other Contracts, certificates and documents as shall be contemplated hereby or
as shall be reasonably requested by the Stockholders or the Company.


 


6

















 


3.3           Deliveries
by the Company. At the Closing, the Company shall deliver or cause to be
delivered the following to the Purchaser:


 


(b)           The
Company Closing Certificate and the Ancillary Agreements required to be
executed by the Company pursuant to Article IX hereof, executed by
the Company; and


 


(c)           Such
other Contracts, consents, certificates and documents as shall be contemplated
hereby or as shall be reasonably requested by the Purchaser.


 


3.4           Deliveries by the
Stockholders. At the Closing, the Stockholders shall deliver or cause to be
delivered the following to the Purchaser:


 


(a)           The
Stockholders Closing Certificate and the Ancillary Agreements required to be
executed by the Stockholders pursuant to Article IX hereof, executed
by the Stockholders; and


 


(b)           Such
other Contracts, consents, certificates and documents as shall be contemplated
hereby or as shall be reasonably requested by the Purchaser.


 


ARTICLE IV


REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS


 


The
Company and the Stockholders hereby jointly and severally represent and warrant
to the Purchaser as follows:


 


4.1           Authority;
Enforceability. The execution, delivery and performance by the Company of
this Agreement and each Ancillary Agreement to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary action on the part of the Company (including
Board of Directors and stockholder approval). 
This Agreement has been, and each Ancillary Agreement to which the
Company is a party will be, duly and validly executed and delivered by the
Company and constitutes, and will constitute, the valid and binding obligation
of the Company, enforceable against it in accordance with its respective terms,
except (a) as limited by Legal Requirements of general application
relating to bankruptcy, insolvency and relief of debtors or (b) as limited
by Legal Requirements governing specific performance, injunctive relief or
other equitable remedies and by general principles of equity. The Company has
the requisite power and authority to execute and deliver this Agreement and
each Ancillary Agreement to which it is a party and to consummate the
transactions contemplated hereby and thereby.


 


4.2           Consents;
Non-Contravention.


 


(a)           Except
as set forth on Schedule 4.2, no consent, approval, authorization,
exemption or waiver of, or notice or filing with, any Person is required to be
obtained, given or made, as applicable, by the Company in connection with the
execution, delivery and performance by the Company of this Agreement or any
Ancillary Agreement to which it is a party, or to consummate the transactions
contemplated hereby and thereby.


 


(b)           Except
as set forth on Schedule 4.2, the execution, delivery and
performance by the Company of this Agreement and each Ancillary Agreement to
which it is a party or by which 


 


7

















 


it is bound and
the consummation of the transactions contemplated hereby and thereby does not
and will not, with or without the giving of notice or the lapse of time or
both, (i) contravene, conflict with or violate any Legal Requirement to
which the Company is subject; (ii) contravene, conflict with or violate
any Order applicable to the Company; (iii) contravene, conflict with or
violate any provision of the Governing Documents of the Company; (iv) contravene,
conflict with, violate, result in a breach of, constitute a default under,
result in or permit the termination or amendment of any provision of, or result
in or permit the acceleration of the maturity or cancellation of performance of
any obligation under, any Company Contract or (v) result in the creation
or imposition of any Encumbrance upon any of the Purchased Assets or give to any
other Person any interests or rights therein, other than, in both cases,
Permitted Encumbrances.


 


4.3           Subsidiaries.
Except as described on Schedule 4.3, the Company does not own or
control (as defined in Section 14.3 hereof), directly or
indirectly, any Securities of or other investment in any other Person, or has
any joint venture or similar arrangement with any other Person. Except as set
forth on Schedule 4.3, no Person listed on Schedule 4.3
pursuant to the foregoing sentence conducts any business, or owns or otherwise
has any rights to any assets or properties necessary for the conduct by the
Company of its business.


 


4.4           Organization.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite power
and authority to carry on the Business and to own, lease and/or use the
Purchased Assets. The Company is duly qualified to do business and is in good
standing as a foreign corporation in all jurisdictions listed on Schedule 4.4
hereto, which are the only jurisdictions where the nature of its assets and
properties or the Business makes such qualification necessary.


 


4.5           Capitalization. The
authorized Securities of the Company on the date hereof are as set forth on Schedule 4.5
hereto. Schedule 4.5 hereto sets forth the holder of each Security
of the Company and the number and type of Securities owned by each such holder.
The outstanding shares of the Company’s capital stock have been duly and
validly authorized and issued, are fully paid and nonassessable, and were
issued in accordance with all Legal Requirements, or pursuant to valid
exemptions therefrom. Except as set forth on Schedule 4.5 hereto,
there are no Contracts to which the Company is a party or is bound or, to the
Company’s and the Stockholders’ Knowledge, any holder of its Securities is a
party or is bound, relating to any Securities of the Company. Except as set
forth on Schedule 4.5, there are no preemptive rights, rights of
first refusal, put or call rights or obligations, or anti-dilution rights with
respect to the issuance, sale or redemption of the Company’s Securities.


 


4.6           Books
and Records; Financial Statements. The minute books and stock record books
of the Company are complete and correct. All books and records of the Company
have been maintained in accordance with an adequate system of internal
controls. The (a) unaudited consolidated balance sheets of the Company as
at December 31, 2005 and December 31, 2004, together with the notes
thereto (the “Balance Sheets”) and the related unaudited consolidated
Statements of Cash Flows and Income Statements for the fiscal years then ended,
together with the notes thereto and (b) unaudited balance sheet of the
Company as at November 30, 2006, together with the notes thereto (the “Interim
Balance Sheet”) and the related unaudited consolidated Statements of Cash
Flows and Income Statements of the Company for the period then ended, together
with the notes thereto (all of the foregoing in clauses (a) and (b) of
this 


 


8

















 


Section 4.6,
the “Company Financial Statements”): 
(i) are true and correct in all material respects; (ii) were
prepared in accordance with GAAP and, in the case of the interim Company
Financial Statements, on a basis consistent with the December 31, 2005
Company Financial Statements (except that the Company Financial Statements may
not contain all footnotes required by GAAP and normal recurring year-end
adjustments, the effect of which, individually or in the aggregate, would not
be material to the Company); (iii) fairly and accurately present in all
material respects the financial position, changes in stockholders equity,
results of operations and cash flows of the Company as of such dates and for
the periods then ended and (iv) represent only actual, bona fide
transactions.


 


4.7           No
Undisclosed Liabilities. The Company does not have any Liability that is
not reflected or reserved against the Balance Sheet or the Interim Balance
Sheet except (a) for those which are not required by GAAP to be included
on either such Balance Sheet, and (b) current Liabilities incurred in the
ordinary course of business subsequent to November 30, 2006 which,
individually or in the aggregate, are not material to the Company.


 


4.8           Compliance
with Laws.


 


(a)           The
Company is, and since December 31, 2003 has been, in material compliance
with all Legal Requirements applicable to it or to the conduct of the business
and, since December 31, 2003, the Company has not received any notice of
an actual, possible or alleged violation of any such Legal Requirement. To the
Knowledge of the Company, no event has occurred or circumstance exists that
(with or without notice or lapse of time or both) may constitute or result in a
violation by Company of, or a failure by the Company to comply with, any Legal
Requirement.


 


(b)           Set
forth on Schedule 4.8 are all Governmental Authorizations. Each
Governmental Authorization is in full force and effect in favor of the Company
and the Company is, and since December 31, 2003 has been, in compliance
with each Governmental Authorization. No event has occurred or circumstance
exists that (with or without notice or lapse of time or both) may constitute or
result in (i) a violation by the Company of, or failure by the Company to
comply with, any Governmental Authorization or (ii) the revocation,
suspension or termination of any Governmental Authorization. The Company has
not received, at any time since December 31, 2003, any notice of any
actual, possible or alleged violation of any Governmental Authorization.


 


(c)           Except
as set forth on Schedule 4.8:


 


(i)            The
Company has not sold any products prior to receiving any required or necessary
approvals or consents from any Governmental Authority, including the FDA under
the FD&C Act, or any equivalent Governmental Authority in any other
jurisdiction. The Company has not received any written notice of, and neither
the Company nor any Stockholder has any Knowledge of, any citations, decisions,
product recalls, medical device reports, information requests, Warning Letters,
Untitled Letters or Section 305 notices from the FDA or similar
Proceedings instituted by the FDA or any equivalent Governmental Authority in
any other jurisdiction.


 


9

















 


(ii)           All
preclinical tests and clinical trials conducted by or on behalf of the Company
were and, if still pending, are, being conducted in all material respects in
accordance with protocols filed with the applicable Governmental Authorities
for each such preclinical test and clinical trial, as the case may be, and in
compliance in all material respects with all applicable Legal Requirements. The
Company has provided Purchaser with access to all the studies it has conducted.


 


(iii)          The
Company has complied in all material respects with all applicable Legal
Requirements with respect to the design, manufacture, labeling, testing and
inspection of all of the Company’s products and the operation of manufacturing
facilities promulgated by the FDA or any equivalent Governmental Authority in
any other jurisdiction.


 


(iv)          To the
Knowledge of the Company and the Stockholders, there is no adverse Claim or
Proceeding relating to any FDA regulatory matter that is pending or threatened
against the Company or any of its officers or directors, nor is there any
violation of the FD&C Act by the Company that would cause the Company not
to be in compliance in all material respects with the FD&C Act.


 


(v)           The
Company has not engaged in any activities requiring (i) premarket approval
applications or premarket notification (510(k)) clearances from the FDA or (ii) investigational
device exemptions or investigational new drug applications from the FDA for any
clinical studies of its investigational devices or drugs. To the extent that
the Company has filed any such applications or notifications, such applications
and notifications, and all other regulatory filings made by the Company with
respect to its Products were, at the time of filing, true, complete and
accurate in all material respects.


 


4.9           Litigation.


 


(a)           There
is no (i) outstanding Order or Proceeding pending or, to the Knowledge of
the Stockholders and the Company, threatened, against or affecting the Company,
the Business, the Purchased Assets or the Assumed Liabilities except, in each
of the foregoing cases, for any such matter that would not have a Material
Adverse Effect or would not reasonably be expected to affect (i) the
validity or enforceability of this Agreement or any Ancillary Agreement; (ii) the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements or (iii) the compliance by the Company or the
Stockholders with the terms of this Agreement or any Ancillary Agreement to
which any of them is a party or by which any of them is bound.


 


(b)           To
the Knowledge of the Company and the Stockholders, there is no outstanding
Order or Proceeding pending or threatened against or affecting any of the
Company’s officers, directors or employees, the enforcement of or compliance
with which, in either of the foregoing cases, would have a Material Adverse
Effect or would reasonably be expected to affect (i) the validity or
enforceability of this Agreement or the Ancillary Agreements; (ii) the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements or (iii) the compliance by the Company or either
Stockholders with the terms of this Agreement or any Ancillary Agreement to
which any of them is a party or by which any of them is bound.


 


10

















 


4.10         Absence of Certain
Changes or Events. Except as set forth on Schedule 4.10, since July 1,
2006, the Company has conducted its business only in the ordinary course
consistent with past practice and there has been no Material Adverse Effect. Without
limiting the foregoing, except as set forth on Schedule 4.10, since
December 31, 2006, there has not been any:


 


(a)           Grant
of any increase in the salary or other compensation payable to, or any advance
(excluding advances for ordinary business expenses consistent with past
practice) or loan to, any officer, director or employee of the Company, or any
material change in any other benefits to which any of the officers and
employees of the Company may be entitled, or any other payment to or on behalf
of any officer, director or employee of the Company other than payment of
salary or reimbursement for reasonable expenses in the ordinary course of
business consistent with past practice;


 


(b)           Resignation
or termination of employment of any officer or key employee of the Company;


 


(c)           Change
or, to the Company’s Knowledge, threatened change, in the Company’s relations
with, or any loss or, to the Company’s Knowledge, threatened loss of, any of
the suppliers, vendors, distributors, clients or customers that are material to
the Business;


 


(d)           Sale
or other disposition or transfer of the Company’s assets or properties, except
for sales of inventory in the ordinary course of business consistent with past
practice;


 


(e)           Change
in any method of keeping the Company’s books of account or accounting
practices, including any change or modification to its existing credit,
collection or payment policies, procedures or practices;


 


(f)            Damage
or destruction of, or loss to, any of the Company’s material assets or
properties, whether covered by insurance or not;


 


(g)           Waiver
or release of any material Claim of the Company;


 


(h)           Amendment
or other change to any Company Contract or Governing Document of the Company,
except as otherwise set forth on Schedule 1.1(f) hereto;


 


(i)            Dividend,
distribution or other payment to any holder of the Company’s Securities (other
than as an employee of the Company in accordance with the Company’s policies);
or


 


(j)            Agreement
or commitment by the Stockholders or the Company to do any of the foregoing.


 


4.11         Title
to Assets. The Company has good and marketable title to all of the
Purchased Assets and, in the case of leased Purchased Assets, to its leasehold
interests, free and clear of all Encumbrances, except for Permitted Encumbrances.
The Purchased Assets constitute all of the assets and properties necessary to
operate the Business after the Closing in substantially the same manner as it
is conducted prior to the Closing. Except as set forth on Schedule 4.11,



 


11

















 


the Company does not own or lease, nor has it
ever owned or leased, any interest in any real property.


 


4.12         Inventory;
Accounts Receivable.


 


(a)           All
Inventories are usable and, with respect to finished goods, saleable by the
Company in the ordinary course of business, except for obsolete items and items
of below-standard quality, which have been written off or written down to net
realizable value in the Balance Sheets or the Interim Balance Sheet. The
Inventories are not excessive, and are reasonable based on the operations of
the Company.


 


(b)           All
of the accounts and notes receivable of the Company represent amounts
receivable for merchandise actually delivered or services actually provided
(or, in the case of non-trade accounts or notes represent amounts receivable in
respect of other bona-fide business transactions), have arisen in the ordinary
course of the Company’s business, are not subject to any defenses,
counterclaims or offsets and have been billed and are generally due within 30
days of billing. All such receivables are fully collectible in the normal and
ordinary course of business, except to the extent of a reserve in an amount not
in excess of the reserve for doubtful accounts reflected on the Balance Sheet
or the Interim Balance Sheet.


 


4.13         Intellectual
Property.


 


(a)           The
patents included in the Company’s Intellectual Property owned by or licensed to
the Company is set forth on Schedule 4.13 hereto. All of the
Company’s Intellectual Property is owned by the Company or is validly licensed
for use by the Company. Except as disclosed on Schedule 4.13, (i) the
Company has all necessary rights to use its Intellectual Property in its
operation of the Business as currently operated; (ii) all Patents and
registrations owned by or licensed to the Company and applications to
Governmental Authorities in respect of such Intellectual Property are valid and
in full force and effect and, to the extent applicable, all annuities, Taxes,
renewal fees and other maintenance fees in respect of such have been duly and
promptly paid; (iii) except as disclosed in the Schedules, the Company has
not granted any license or other permission to use, exploit, transfer or assert
Claims in the Intellectual Property; (iv) to the Knowledge of the Company,
the Company’s Intellectual Property is not being infringed, misappropriated or
otherwise violated by any other Person and (v) to the Knowledge of the
Company, no Person other than the Company has any right to, or intends to
allege that such Person has any right to, any of the Company’s Intellectual
Property other than pursuant to licenses and other agreements listed in the
Schedules. Each assignment of registered Intellectual Property assigned to the
Company has been recorded with the relevant Governmental Authority. The Company
has not received any notice asserting that the Company’s Intellectual Property
is infringing on any rights of any other Person. The Company’s Intellectual
Property is not subject to any obligation to make payment, or the obligation to
grant rights, to any Person in exchange, except (i) as otherwise set forth
in the Schedules and (ii) license fees due in connection with any commercial
off-the-shelf Software. Except as set forth on the Schedules, the Company is
not bound by, or party to, any Contract that would prevent, prohibit or
otherwise interfere with the ability of the Company to utilize its Intellectual
Property. No Claim is pending or, to the Knowledge of the Company and the
Stockholders, has been threatened, challenging the Company’s ownership of,
rights in or use of any of its Intellectual Property or alleging any


 


12














 


infringement,
misappropriation or violation of any other Person’s Intellectual Property,
either by the Company’s Intellectual Property or by the sale of any products or
services by the Company.


 


(b)                                 Each
former and current director, officer, manager, employee, agent, researcher,
consultant, contractor or other Person who has contributed to or participated
in the creation and development of any of the Company’s Intellectual Property
on behalf of the Company has either (i) been party to a “work-made-for-hire”
arrangement or Contract that has accorded the Company ownership of all of such
Person’s rights in such Intellectual Property or (ii) executed a written
assignment that assigns to the Company all of such Person’s rights to any
inventions, improvements, discoveries or information developed or discovered by
such Person in connection with providing services to the Company or otherwise
using the Company’s assets or properties. 
Each former and current director, officer, manager, employee, agent,
researcher, consultant, contractor or third party who has had or has access to,
contributed to or participated in the creation and/or development of any of the
Company’s Intellectual Property has executed a confidentiality and
nondisclosure agreement that protects the confidentiality of such Intellectual
Property in favor of the Company and prohibits such party from using such
Intellectual Property other than for the benefit of the Company.


 


4.14                           Company
Contracts.  Each Company Contract is
valid, binding and enforceable against the Company, and, to the Company’s
Knowledge, the other parties thereto, in accordance with its terms, and is in
full force and effect.  No event or
condition has occurred or become Known to the Company or is alleged to have
occurred that constitutes or (with notice or the passage of time or both) would
constitute a default by the Company or a basis of force majeure or other Claim
of any other party thereto of excusable delay, termination, nonperformance or
accelerated or increased rights.  To the Knowledge
of the Company, no event or condition has occurred or exists or is alleged to
have occurred or to exist that constitutes or (with notice or the passage of
time or both) would constitute a default by any Person (other than the Company)
or a basis of force majeure or other Claim of the Company of excusable delay,
termination, nonperformance or accelerated or increased rights.


 


4.15                           Environmental Matters.


 


(a)                                  Schedule 4.15
sets forth a list of all reports, studies, analyses, tests, monitoring results,
notices, memoranda or other documents possessed by the Company pertaining
compliance or non-compliance with Environmental Laws.


 


(b)                                 Except
as set forth on Schedule 4.15:


 


(i)                                     The
operations of the Company, including the use, handling, manufacture, treatment,
processing, storage, generation, release, discharge and disposal of Hazardous
Substances, are, and have at all times been, in material compliance with all
Environmental Laws;


 


(ii)                                  The
Company has obtained all Governmental Authorizations required under applicable
Environmental Laws, and the operations of all the Company are, and have at all
times been, in material compliance with the terms and conditions of any such
required Governmental Authorizations;


 


13

















 


(iii)                               There
are no pending or, to the Knowledge of the Company, threatened Environmental
Claims against the Company, and to the Knowledge of the Company there is no
basis on which to expect any Environmental Claim to be made against the
Company;


 


(iv)                              The
Company does not own or operate, or has it ever owned or operated, any
underground storage tanks; and


 


(v)                                 There
has been no actual, alleged or threatened release (as defined in 42 U.S.C. Section 9601)
of any Hazardous Substance(s) at or from any real properly currently or
formerly operated or leased by the Company, nor are any Hazardous Substances
present on, in or under any such real property, except for such Hazardous
Substances as are used in the ordinary course of business as it is now conducted
at such real property and in compliance with all applicable Environmental Laws.


 


4.16                           Employee
Matters.


 


(a)                                  Set
forth on Schedule 4.16 is a list of each employee of the Company
(which, for purposes hereof, shall include all individuals performing services
for the Company who are co-employed by the Company and Administaff under the
Administaff Agreement), including such employee’s job title, current
compensation paid or payable, accrued vacation, sick and personal time and
service credited for purposes of vesting and eligibility for severance pay or
participating in any Employee Benefit Plan. 
Except as disclosed on Schedule 4.16, the employment of each
employee of the Company is terminable at will and no employee of the Company
has been granted the right to continued employment or by the Company or to any
severance or other material compensation following termination of employment
with the Company.  To the Company’s
Knowledge, no employee of the Company, nor any consultant with whom the Company
has contracted, is in violation of any Order to which such Person is subject or
any material term of any employment Contract, proprietary information Contract
or any other Contract relating to the right of any such Person to be employed
by, or to contract with, the Company; and to the Company’s Knowledge, the
continued retention by the Company of any such Person will not result in any
such violation.


 


(b)                                 Except
as set forth on Schedule 4.16, each officer and employee of the
Company is devoting substantially all of such Person’s business time to the
conduct of the business of the Company. 
Except as set forth on Schedule 4.16, to the Stockholders’
and the Company’s Knowledge, no officer or employee of the Company is planning
to work less than full time with the Company.


 


(c)                                  No
employee of the Company is or, since December 31, 2003, has been:  (i) a party to or otherwise bound by any
collective bargaining Contract; (ii) a party to, involved in or, to the
Knowledge of the Stockholders and the Company, threatened by, any labor
dispute, union organizing drive or unfair labor practice charge; (iii) engaged
in any unfair labor practices or (iv) participated in any general work
stoppage or slowdown.


 


(d)                                 Except
as disclosed on Schedule 4.16, there are no outstanding material
Claims against the Company asserted by or on behalf of any present or former
employee or job applicant.  The Company
has not received any notice from any Person asserting any Claim


 


14

















 


against the
Company relating to discrimination, breach of Contract, occupational safety in
employment, wage and hour violations, the National Labor Relations Act or
employment practices in relation to the Business, whether or not such Claim
would be covered by employment practices liability insurance coverage.


 


(e)                                  Except
as disclosed on Schedule 4.16, there are no outstanding material Claims
either asserted by or against the Company for breach of the Administaff
Agreement or for indemnification or arbitration under the Administaff
Agreement.  The Company has not committed
any act of default under Article IX of the Administaff Agreement nor
breached any representation or warranty under Article XI of the
Administaff Agreement.  To the
Stockholders’ and the Company’s Knowledge, the Company is in full compliance
with the Texas Staff Leasing Services Act, Texas Labor Code, Chapter 91.


 


4.17                           Employee Benefit Matters.


 


(a)                                  Schedule 4.17
lists all qualified pension or profit sharing plans, deferred compensation,
bonus, group insurance contract or any other incentive, welfare or agreement,
commitment, arrangement or employee benefit plan (as defined in Section 3(3) of
ERISA) maintained by each the Company, or to which the Company has been or is
required to contribute or any Administaff Employee Benefit Plan that the
Company employees participate in or are covered under (hereinafter “Employee
Benefit Plans”).  The Company has
provided or made available to the Purchaser a complete copy of each Employee
Benefit Plan as well as, if applicable, a complete copy of each trust or other
funding arrangement, each summary plan description and summary of material
modifications, the most recent determination letter received by the Company
from the IRS and the most recent Form 5500 annual report filed for each
applicable Employee Benefit Plan.


 


(b)                                 The
Company has never maintained, contributed to or had any obligation under any
defined benefit pension plan, including any multiemployer pension benefit plan
(as defined in Section 4(37) of ERISA).


 


(c)                                  The
Company’s Employee Benefit Plans have been maintained, operated and
administered, in all material respects, in compliance with its terms and any
related documents and Contracts and the applicable provisions of ERISA, the
Code and other applicable Legal Requirements, except in any case in which such
the Company’s Employee Benefit Plan is currently required to comply with a
provision of ERISA or of the Code, but is not yet required to be amended to
reflect such provision, it has been administered in all material respects in
accordance with such provision of ERISA or the Code.


 


(d)                                 With
respect to each of the Company’s Employee Benefit Plans, there are no pending
or, to the Knowledge of the Company, threatened, Claims or Proceedings for
benefits that have been denied, or any similar Claims or Proceedings that may
result in Liability to the Company.


 


(e)                                  No
fiduciary, party in interest, or disqualified person with respect to any of the
Employee Benefit Plans has engaged in any transaction described in Section 406(a) or
406(b) of


 


15

















 


ERISA (and not
exempt under Section 408 of ERISA) or in any transaction described in Section 4975
of the Code.


 


(f)                                    Each
Employee Benefit Plan complies in all material respects with all applicable
Legal Requirements.


 


(g)                                 No
Employee Benefit Plan provides, with respect to employees of such the Company,
death or medical benefits beyond termination of service or retirement other
than (i) coverage mandated by Legal Requirements or (ii) benefits
under an Employee Benefit Plan qualified under Section 401(a) of the
Code.


 


(h)                                 The
Company has made or will accrue prior to the Closing Date all payments and
contributions (including insurance premiums) due and payable as of the Closing
Date to each of the Company’s Employee Benefit Plan as required to be made
under the terms of such Employee Benefit Plan.


 


4.18                           Taxes.  Except as set forth on Schedule 4.18:


 


(a)                                  (i) All
Tax Returns required to be filed by or on behalf of the Company have been duly
and timely filed with the appropriate Taxing Authority in all jurisdictions in
which such Tax Returns are required to be filed (after giving effect to any
valid extensions of time in which to make such filings) and all such Tax
Returns are true, complete and correct in all material respects and (ii) all
Taxes payable by or on behalf of the Company (whether or not shown on any Tax
Return), have been fully and timely paid. 
With respect to any period for which Tax Returns have not yet been filed
or for which Taxes are not yet due or owing, the Company has made due and
sufficient accruals for such Taxes in its financial statements and its books
and records.


 


(b)                                 The
Company has complied in all material respects with all Legal Requirements
relating to the payment and withholding of Taxes and has duly and timely
withheld and paid over to the appropriate Taxing Authority all amounts required
to be so withheld and paid under all applicable Legal Requirements.


 


(c)                                  No
Claim has been made by a Taxing Authority in a jurisdiction where the Company
does not file Tax Returns such that it is or may be subject to taxation by that
jurisdiction.


 


4.19                           Transactions with Related
Persons.  Except as set forth on Schedule 4.19,
no current or former employee, consultant, holder of Securities, officer of
director of the Company or any other current or former Affiliate of the Company
(each, a “Related Person”) has any Liability for borrowed money or any
other material Liability to the Company, nor does the Company have any such
Liability to any Related Person.  No
Related Person holds, directly or indirectly, any Securities in any Person (a) who
is an Affiliate of the Company; (b) with whom the Company has a material
business relationship or (c) who competes with the Company except, in the case
of clause (c), for ownership by a Related Person of less than one percent of
the outstanding Securities of a publicly traded company.  No Related Person has a direct or indirect
interest in any Company Contract.


 


16

















 


4.20                           Insurance.  Set forth on Schedule 4.20 is a
list of all policies of insurance to which the Company is a party or under
which the Company or any officer or director of the Company is or has been
covered at any time since December 31, 2003.  All such policies are outstanding and in full
force and effect.  No event or condition
has occurred or become Known to the Company or is alleged to have occurred that
constitutes (or with notice or the passage of time or both) would constitute, a
breach or default of any provision contained in any such policy, nor has there
been any failure to give any notice or present in a timely fashion any Claim
under any such policy or in the manner or detail required by such policy.  Except as set forth on Schedule 4.20:  (a) all of such coverages are provided
on an “occurrence” (as opposed to “claims made”) basis; (b) there are no
outstanding Claims under such policies; (c) there are no premiums or other
payments due by the Company under such policies that remain unpaid; (d) since
December 31, 2003, no notice of cancellation or non-renewal with respect
to, or disallowance of any material Claim under, any such policy has been
received by the Company and (e) the Company has not been refused any
insurance, nor has any of its coverages been limited by any insurance carrier
to which it has applied for insurance or with which it has carried insurance
during the last two years.  The amounts
of coverage under such policies of insurance are sufficient in amount to allow
the Company to repair or replace any of its assets or properties that might be
damaged or destroyed, and are sufficient to cover Liabilities to which the
Company may reasonably become subject.


 


4.21                           Customers
and Suppliers.


 


(a)                                  Schedule 4.21
sets forth the name and address of the ten largest customers of the Company
during the twelve-month period ended December 31, 2006 with the amount of
sales made to each such customer during such period.


 


(b)                                 Schedule 4.21
sets forth the name and address of the ten largest suppliers of the Company
during the 12-month period ended December 31, 2006, with the amount of
purchases made from each such supplier during such period.


 


(c)                                  The
Company has not received any advance, progress payment or deposit in respect of
any sales Contract, and the Company is not a party to or bound by any sales
Contract that will result, upon completion or performance thereof, in gross
margins materially lower than those normally experienced by the Company for the
services or products covered by such sales Contract.  No purchase Contract to which the Company is
a party or bound is in excess of the normal, ordinary and usual requirements of
the Business or at a price that is materially higher than prevailing market
prices for the same item at the time it was ordered.


 


4.22                           Product Liability and
Product Warranty.  Schedule 4.22
sets forth (a) a description of the Company’s warranty policy with respect
to products sold or services rendered by the Company and (b) a description
of the Company’s product and service liability and product and service warranty
experience since December 31, 2003, including any quality-related
complaints from customers who, in the aggregate, represented five percent or
more of the total sales of the Company during any such year.


 


4.23                           Brokers.  The Company has not retained any broker,
finder or investment banking firm or any other Person to act on its behalf in
connection with the transactions contemplated by


 


17

















 


this Agreement and, to the Company’s and the Stockholders’ Knowledge,
no other Person is entitled to receive any brokerage commission, finder’s fee
or other similar compensation in connection with the transactions contemplated
by this Agreement and the Ancillary Agreements.


 


4.24                           Disclosure.  No representation or warranty by the
Stockholders or the Company in this Agreement contains any untrue statement of
a material fact or fails to state a fact necessary to make the statements made
herein correct.


 


ARTICLE V


REPRESENTATIONS
AND WARRANTIES OF THE STOCKHOLDERS


 


Each Stockholder hereby jointly and severally
represents and warrants to the Purchaser as follows:


 


5.1                                 Authority;
Enforceability.  The execution,
delivery and performance by the Stockholders of this Agreement and each Ancillary
Agreement to which he or she is a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary action on the part of the Stockholder.  This Agreement has been, and each Ancillary
Agreement to which each Stockholder is a party will be, duly and validly
executed and delivered by such Stockholder and constitutes, and will
constitute, the valid and binding obligation of such Stockholder, enforceable
against him or her in accordance with its respective terms, except (a) as
limited by Legal Requirements of general application relating to bankruptcy,
insolvency and relief of debtors or (b) as limited by Legal Requirements
governing specific performance, injunctive relief or other equitable remedies
and by general principles of equity.  The
Stockholder has the requisite power and authority to execute and deliver this
Agreement and each Ancillary Agreement to which he or she is a party and to
consummate the transactions contemplated hereby and thereby.


 


5.2                                 Consents;
Non-Contravention.


 


(a)                                  Except
as set forth on Schedule 5.2, no consent, approval, authorization,
exemption or waiver of, or notice or filing with, any Person is required to be
obtained, given or made, as applicable, by either Stockholder in connection
with the execution, delivery and performance by such Stockholder of this
Agreement or any Ancillary Agreement to which he or she is a party, or to
consummate the transactions contemplated hereby and thereby.


 


(b)                                 Except
as set forth on Schedule 5.2, the execution, delivery and
performance by each Stockholder of this Agreement and each Ancillary Agreement
to which such Stockholder is a party or by which he or she is bound and the
consummation of the transactions contemplated hereby and thereby does not and
will not, with or without the giving of notice or the lapse of time or both, (i) contravene,
conflict with or violate any Legal Requirement to which either Stockholder is
subject or (ii) contravene, conflict with or violate any Order applicable
to either Stockholder.


 


5.3                                 Brokers.  Neither Stockholder has retained any broker,
finder or investment banking firm to act on his or her behalf in connection
with the transactions contemplated by this Agreement and, to the Stockholders’
Knowledge, no other Person is entitled to receive any


 


18

















 


brokerage commission, finder’s fee or other similar compensation in
connection with the transactions contemplated by this Agreement.


 


5.4                                 Litigation.  There is no (i) outstanding Order or
Proceeding pending or, to the Knowledge of the Stockholders, threatened,
against or affecting either Stockholder except for any such matter that would
not reasonably be expected to affect (i) the validity or enforceability of
this Agreement or any Ancillary Agreement; (ii) the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements or (iii) the
compliance by each Stockholder with the terms of this Agreement or any
Ancillary Agreement to which such Stockholder is a party or by which such
Stockholder is bound.


 


ARTICLE VI


REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER


 


The Purchaser hereby represents and warrants to the
Company and the Stockholders as follows:


 


6.1                                 Authority;
Enforceability.  The execution,
delivery and performance by the Purchaser of this Agreement and each Ancillary
Agreement to which it is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
action on the part of the Purchaser. 
This Agreement has been, and each Ancillary Agreement to which the
Purchaser is a party will be, duly and validly executed and delivered by the
Purchaser and constitutes, and will constitute, the valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
respective terms, except (a) as limited by Legal Requirements of general
application relating to bankruptcy, insolvency and relief of debtors or (b) as
limited by Legal Requirements governing specific performance, injunctive relief
or other equitable remedies and by general principles of equity.  The Purchaser has the requisite power and
authority to execute and deliver this Agreement and each Ancillary Agreement to
which it is a party and to consummate the transactions contemplated hereby and
thereby.


 


6.2                                 Consents;
Non-Contravention.


 


(a)                                  Except
as set forth on Schedule 6.2, no consent, approval, authorization,
exemption or waiver of, or notice or filing with, any Person is required to be
obtained, given or made, as applicable, by the Purchaser in connection with the
execution, delivery and performance by the Purchaser of this Agreement or any
Ancillary Agreement to which it is a party, or to consummate the transactions
contemplated hereby and thereby.


 


(b)                                 Except
as set forth on Schedule 6.2, the execution, delivery and
performance by the Purchaser of this Agreement and each Ancillary Agreement to
which it is a party or by which it is bound and the consummation of the
transactions contemplated hereby and thereby does not and will not, with or
without the giving of notice or the lapse of time or both, (i) contravene,
conflict with or violate any Legal Requirement to which the Purchaser is
subject; (ii) contravene, conflict with or violate any Order applicable to
the Purchaser or (iii) contravene, conflict with or violate any provision
of the Governing Documents of the Purchaser.


 


19

















 


6.3                                 Brokers.  The Purchaser has not retained any broker,
finder or investment banking firm to act on its behalf in connection with the
transactions contemplated by this Agreement and, to the Purchaser’s Knowledge,
no other Person is entitled to receive any brokerage commission, finder’s fee
or other similar compensation in connection with the transactions contemplated
by this Agreement.


 


6.4                                 Litigation.  There is no (i) outstanding Order or
Proceeding pending or, to the Knowledge of the Purchaser, threatened, against
or affecting the Purchaser except for any such matter that would not reasonably
be expected to affect (i) the validity or enforceability of this Agreement
or any Ancillary Agreement; (ii) the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements or (iii) the
compliance by the Purchaser with the terms of this Agreement or any Ancillary
Agreement to which the Purchaser is a party or by which the Purchaser is bound.


 


ARTICLE VII


COVENANTS OF
THE COMPANY AND THE STOCKHOLDERS


 


7.1                                 Fulfillment
of Agreements.  The Stockholders and
the Company shall use their respective best commercially reasonable efforts to
cause all of the conditions to the obligations of the Purchaser under Article IX
to be satisfied on or prior to the Closing. 
The Stockholders or the Company, as the case may be, shall promptly
notify the Purchaser of any event or fact coming to any of their attention
prior to the Closing that causes any of their representations or warranties,
covenants or obligations contained herein to be breached or become inaccurate,
as the case may be.  The Stockholders
shall cause the Company to satisfy and comply with all of its obligations and
covenants hereunder and under the Ancillary Agreements.


 


7.2                                 Further Assurances.  At any time or from time to time after the
Closing, the Stockholders and the Company shall, at the sole cost and expense
of the Purchaser, execute and deliver any further instruments or documents and
take all such further action as the Purchaser shall reasonably request to
evidence the consummation of the transactions contemplated hereby.  For purposes of the foregoing sentence, such
further actions shall include, but not be limited to, executing and filing any
documents necessary to memorialize, evidence and reflect the transfer of any and
all title, rights, and/or interests that the Company and/or the
Stockholders may have in the Intellectual Property, including but not limited
to, patent assignments, releases from security interests, any and all other
conveyances of any and all rights and/or interests in the Intellectual
Property. In addition,
after the Closing, the Company and the Stockholders shall cooperate with the
Purchaser in its efforts to continue and maintain for the benefit of the
Purchaser the business relationships of the Company existing prior to the
Closing and relating to the Business and the Company and the Stockholders shall
refer to the Purchaser all inquiries relating to the Business that are made to
any of them.


 


7.3                                 Confidentiality.


 


(a)                                  The
Stockholders and the Company acknowledge that they may have, or may have access
to, proprietary or confidential information that is related to the Business
(the “Company Confidential Information”); provided, however, that
Company Confidential Information shall not include any information (i) that
is or becomes a matter of public knowledge through no fault of the Stockholders
or the Company or (ii) to the extent it relates to the


 


20

















 


Excluded Assets or
the Retained Liabilities.  The
Stockholders, the Company and their respective Affiliates (together, the “Company
Parties”) shall keep all Company Confidential Information strictly
confidential, shall not disclose Company Confidential Information to any other
Person and, other than in connection with the operation of the Business in
accordance with this Agreement prior to the Closing, and shall not use the
Company Confidential Information for any purpose.  Notwithstanding the foregoing, any Company
Party may disclose Company Confidential Information to the extent required by
any Legal Requirement, in which event such Company Party shall provide the
Purchaser with prompt written notice of such requirement, so that the Purchaser
may seek an appropriate protective order or other remedy (as to which the
Company Parties shall provide reasonable cooperation).


 


(b)                                 Unless
otherwise consented to by the Purchaser, the Company Parties shall keep
strictly confidential, and shall not disclose to any Person, the terms or
existence of this Agreement, the Ancillary Agreements or the transactions contemplated
hereby or thereby; provided, however, that the Company Parties may disclose
such information to the extent required by any Legal Requirement, in which
event the applicable Company Party shall provide the Purchaser with prompt
written notice of such requirement, so that the Purchaser may seek an
appropriate protective order or other remedy (as to which the Company Parties
shall provide reasonable cooperation).


 


(c)                                  The
Stockholders and the Company shall be liable for any breach of this Section 7.3
by any of their Affiliates.


 


7.4                                 Books
and Records.  From the Closing Date
until the fifth anniversary thereof, the Stockholders and the Company shall
provide the Purchaser with access to the business records, contracts and other
information existing at the Closing Date and relating to the Purchased Assets,
the Assumed Liabilities and the conduct of the Business as is reasonably
necessary for (a) the preparation for or the prosecution or defense of any
Proceeding or investigation; (b) the preparation and filing of any Tax
return or election relating the Purchased Assets, the Assumed Liabilities or
the conduct of the Business and any audit by any Taxing Authority of any
returns of the Purchaser relating thereto and (c) the preparation and
filing of any other documents required by any Governmental Authority to be
prepared and filed by or on behalf of the Purchaser.  The Purchaser shall reimburse the party from
whom any such information and assistance shall be requested for all reasonable
out-of-pocket costs and expenses incurred by such party in providing such
information and in rendering such assistance. 
The access to files, books and records contemplated by this Section 7.4
shall be during normal business hours and upon reasonable notice and shall be
subject to such reasonable limitations as the party having custody or control
thereof may impose to preserve the confidentiality of information contained
therein.


 


7.5                                 Conduct of Business.  Prior to the Closing, except as expressly
permitted herein, or unless the Purchaser shall otherwise consent in writing,
the Company shall, and the Stockholders shall cause the Company to:  (a) carry on the Business in the
ordinary course and in substantially the same manner in which it has been
conducted; (b) use its commercially reasonable efforts to preserve intact
its present business organization and to keep available the services of its
present officers, independent contractors and employees; (c) preserve the
goodwill of the customers and suppliers of the Business and others having
material business relations with


 


21

















 


the Company; (d) perform and discharge
its Liabilities in a timely manner; (e) not take any action or omit to
take any action, which action or omission would result in a breach or
inaccuracy of any representation or warranty contained herein or any breach or
noncompliance with any of its agreements or obligations hereunder; (f) not
agree or commit to do any of the foregoing referred to in clauses (a) through
(e) and (g) promptly advise the Purchaser of any fact, condition,
occurrence or change that becomes Known to the Stockholders or the Company that
would cause of breach of this Section 7.5 or would have a Material
Adverse Effect.  After the Closing, the
Company shall continue to operate as an ongoing corporate entity for the
purpose of winding up its affairs until all of the Retained Liabilities are
discharged in full or adequate provision for contingent Retained Liabilities is
made.


 


7.6                                 Access.  Prior to the Closing, the Company and the
Stockholders shall provide the Purchaser and advisors and other representatives
full access during regular business hours and upon reasonable notice to the
Company’s properties, books and records and shall provide to the Purchaser such
financial and operating data and other information concerning the Business as
the Purchaser shall from time to time reasonably request.


 


7.7                                 Insurance.  The Company shall maintain in full force and
effect the policies of insurance listed on Schedule 4.20, or else
shall obtain, prior to the lapse of any such policy, the same coverage with
insurers of recognized standing and approved in writing by the Purchaser.


 


7.8                                 Exclusivity.  Neither the Stockholders nor the Company nor
any of their respective Affiliates shall, directly or indirectly:  (a) solicit, initiate or participate in
any manner in any discussions or negotiations regarding a possible sale or
other transfer of equity securities of the Company, or any sale of the
Purchased Assets by the Company, or any merger, consolidation or similar
transaction involving the Company or its equity securities (any of the
foregoing, a “Transaction”) with any Person other than the Purchaser; (b) provide
any information regarding the Company or any of the Stockholders in connection
with a possible Transaction with any Person other than the Purchaser or (c) enter
into any Contract with respect to a Transaction with a Person other than the
Purchaser; provided, however, that the foregoing shall not be deemed to preclude
the Company from sharing information with any of the foregoing Persons in
furtherance of a Transaction with the Purchaser.  The Company and the Stockholders shall be
liable for any breach of this Section 7.8 by their Affiliates.


 


7.9                                 Tax Matters.


 


(a)                                  The
Company shall file timely all Tax Returns required to be filed by it on, prior
to or after the Closing Date and shall pay or cause to be paid all Taxes when
due; and


 


(b)                                 The
Company shall be liable for and shall pay all sales, use, stamp, documentary,
filing, recording, transfer or similar fees or taxes or governmental charges or
a similar nature levied by any Taxing Authority (including any interest and
penalties) in connection with the sale of the Purchased Assets and the
assignment of the Assumed Liabilities.


 


7.10                           Change of Name.  From and after the Closing Date, neither the
Company nor the Stockholders shall have any right to use the present corporate
name of the Company or any trade names or trademarks included in the Purchased
Assets (whether or not registered and whether


 


22














 


existing under common law or otherwise).  Within three Business Days after the
occurrence of the Closing, the Company shall take all such action as is
necessary to change its corporate name.


 


7.11                           Guarantee.  The Stockholders hereby jointly and severally
irrevocably and unconditionally guarantee, as primary obligors and not as
sureties, the full and prompt payment and performance when due of all
obligations of the Company under this Agreement and all of the Ancillary
Agreements to which the Company is a party (such obligations, the “Obligations”).  This guarantee shall be continuing and
irrevocable, and shall be a guarantee of performance and not of
collection.  The Stockholders hereby
unconditionally waive promptness, diligence, notice of acceptance of this
guarantee and any other notice with respect thereto.  The Stockholders shall pay the Purchaser on
demand all reasonable fees and costs incurred by or on behalf of the Company in
successfully enforcing observance of the obligations of the Stockholders pursuant
to this Section 7.11.


 


7.12                           Release.  Effective
immediately after the Closing, the Stockholders, for themselves, their
successors and assigns, and all other Persons who may ever claim by, through or
under them (together with the Stockholders, the “Releasors”), forever
remise, release, acquit and discharge the Company, the Purchaser and
each of their respective past, present and future Stockholders, directors,
officers, Affiliates, employees,
agents, successors and assigns and each past, present and future investor,
director, officer, Affiliate, employee, agent, successor, assign, heir,
executor and administrator of each of all such Persons, as applicable
(together, the “Released Parties”), from any and all Claims and
Liabilities of any kind or nature whatsoever arising out of or relating to the
conduct of the Business, or any Liabilities that arose (whether or not due and
payable on the Closing Date), at any time prior to the occurrence of the
Closing, which any Releasor ever had, now has or by which any Releasor
hereafter can, shall or may have against any of the Released Parties by reason
of anything done, omitted or suffered to be done or omitted by any Person or by
reason of any matter, cause, thing or event whatsoever.


 


7.13                           Noncompetition, Nonsolicitation
and Nondisparagement.


 


(a)                                  For
a period of five years after the Closing Date (the “Restricted Period”),
neither the Company nor either Stockholder shall, anywhere in the world,
directly or indirectly (whether through an Affiliate, by giving direction to
any other Person or otherwise), lend its, his or her name to, invest in, own,
manage, operate, provide any financial assistance to (or otherwise finance),
control, advise, render services to, receive any financial benefit from or
guarantee the obligations of, any Person engaged in or planning to become
engaged in the Restricted Business.


 


(b)                                 During
the Restricted Period, neither the Company nor either Stockholder shall,
directly or indirectly (whether through an Affiliate, by giving direction to
any other Person or otherwise, and whether for such Person or any other
Person), employ, retain, recruit, solicit or otherwise interfere with or
attempt to entice away from the Purchaser or any of its Affiliates (the “Restrictive
Parties”) any Person who (i) at the time of such employment,
retention, recruitment, solicitation, interference or enticement is, or has
agreed to become, an employee, consultant or other independent contractor of
any Restrictive Party or (ii) at any time during the 12-month period preceding
such employment, retention, recruitment, solicitation, interference or
enticement was an employee, consultant or other independent contractor of any
Restrictive Party.


 


23

















 


(c)                                  During
the Restricted Period, neither the Company nor either Stockholder shall,
directly or indirectly, (whether through an Affiliate, by giving direction to
any other Person or otherwise, and whether for such Person or any other
Person), solicit or otherwise interfere with or attempt to entice away from any
Restrictive Party any Person who (i) at the time of such solicitation,
interference or enticement is, or has agreed to become, a customer, licensee,
licensor or supplier of any Restrictive Party, or is in, or has agreed to enter
into, any other material business relationship with any Restrictive Party or (ii) at
any time during the 12-month period preceding such solicitation, interference
or enticement was a customer, licensee, licensor or supplier of any Restrictive
Party or had a material business relationship with any Restrictive Party.


 


(d)                                 Neither
the Company nor either Stockholder shall, directly or indirectly (whether
through an Affiliate, giving direction to any other Person or otherwise),
disparage or criticize any Restrictive Party, the Business (either as formerly
conducted by the Company or as conducted by the Purchaser) or the business
conducted by any other Restrictive Party, or engage in any other action that is
intended to hinder the business relationships of any Restrictive Party.


 


(e)                                  The
running of the Restricted Period shall be tolled by any court of competent
jurisdiction or arbiter before whom any action is brought to enforce the
restrictive covenants set forth in this Section 7.13 during any
period of time of the Company’s or either Stockholder’s violation of such
covenant, and such period of time of violation shall be added to the end of the
Restricted Period for the particular covenant that has been violated, once such
violation ceases.


 


(f)                                    Notwithstanding
anything to the contrary contained in this Section 7.13, in no
event shall Ronald O. Bergan’s ownership interests in Aldevron LLC, its
subsidiary Genovac, and Copernicus Therapeutics, Inc., to the extent that
each of them continues to conduct its business as conducted on the date hereof,
constitute a breach by the Company or the Stockholders of their obligations
under subsections (a), (b) or (c) of this Section 7.13
hereof.


 


7.14                           Liquidation
and Dissolution Documents.  In the
event that the Company determines to liquidate and dissolve, the Company shall
provide the Purchaser with copies of all documentation relating to the
liquidation and dissolution and shall not sign, distribute for signature or
file any such documents, or take any similar action in furtherance of the
liquidation and dissolution, until the form and substance of such documents
shall be approved by the Purchaser, such approval not to be unreasonably
withheld.


 


ARTICLE VIII


COVENANTS OF
THE PURCHASER


 


8.1                                 Fulfillment
of Agreements.  The Purchaser shall
use best efforts to cause all of the conditions to the obligations of the
Stockholders and the Company under Article X to be satisfied on or
prior to Closing.  The Purchaser shall
promptly notify the Stockholders and the Company of any event or fact coming to
its attention prior to the Closing that causes any of its representations or
warranties, covenants or obligations contained herein to be breached or become
inaccurate, as the case may be.


 


24

















 


8.2                                 Further Assurances.  At any time or from time to time after the
Closing, the Purchaser shall, at the sole cost and expense of the Stockholders
and the Company, execute and deliver any further instruments or documents and
take all such further action as the Stockholders or the Company shall
reasonably request to evidence the consummation of the transactions
contemplated hereby.


 


8.3                                 Confidentiality.  Unless otherwise consented to by the
Stockholders and the Company, the Purchaser and its Affiliates (together, the “Purchaser
Parties”) shall keep strictly confidential, and shall not disclose to any
Person the terms or existence of this Agreement, the Ancillary Agreements or
the transactions contemplated hereby or thereby; provided, however, that the
Purchaser Parties may disclose such information to the extent required by any
Legal Requirement, in which event the applicable Purchaser Party shall provide
the Stockholders and the Company with prompt written notice of such
requirement, so that the Stockholders and/or the Company may seek an
appropriate protective order or other remedy (as to which the Purchaser Parties
shall provide reasonable cooperation). 
The Purchaser shall be liable for any breach of this Section 8.3
by any of its Affiliates.


 


8.4                                 Books
and Records.  From the Closing Date
until the fifth anniversary thereof, the Purchaser shall provide the
Stockholders and the Company with access to the business records, contracts and
other information existing at the Closing Date and relating to the Purchased
Assets, the Assumed Liabilities and the conduct of the Business prior to the
Closing as is reasonably necessary for (a) the preparation for or the
prosecution or defense of any Proceeding or investigation; (b) the
preparation and filing of any Tax return or election relating the Purchased
Assets, the Assumed Liabilities or the conduct of the Business prior to the
Closing and any audit by any Taxing Authority of any returns of the
Stockholders or the Company relating thereto and (c) the preparation and
filing of any other documents required by any Governmental Authority to be
prepared and filed by or on behalf of the Stockholders or the Company.  The party requesting such information and
assistance shall reimburse the Purchaser for all reasonable out-of-pocket costs
and expenses incurred by the Purchaser in providing such information and in
rendering such assistance.  The access to
files, books and records contemplated by this Section 8.4 shall be
during normal business hours and upon reasonable notice and shall be subject to
such reasonable limitations as the Purchaser may impose to preserve the
confidentiality of information contained therein.


 


8.5                                 Arrangement
with Administaff and Other Employee Matters.  The Purchaser shall offer full-time
employment to all employees of the Company as of the date hereof, other than
those whose employment was terminated prior to the occurrence of the Closing
and those employees of the Company listed on Schedule 8.5 hereto (such
employees who are offered employment, the “Employees”) upon terms
(including with respect to compensation, benefits, vacation and recognition of
service time and seniority) substantially similar to (or, at the option of the
Purchaser, more favorable to) the Employees as those on which the Employees
were employed by the Company as of the date hereof.  Employment of the Employees by the Purchaser
will be in accordance with the Purchaser’s employment practices and policies
and without a commitment to any particular term.  For purposes of this Section 8.5,
“Employees” shall include those individuals performing services for the Company
who are co-employed by the Company and Administaff under the Administaff
Agreement, and for purposes of satisfying 


 


25

















 


its obligations hereunder, the Purchaser may employ such employees in
conjunction with Administaff.


 


8.6                                 Recent
Financials.  Promptly after the
Company’s request therefor, the Purchaser shall provide the Company with copies
of the Purchaser’s balance sheets as of December 31, 2006 (unaudited) and December 31,
2005 (audited) and its income statement for the fiscal year ended December 31,
2006 (unaudited), subject to such confidentiality obligations with respect to
such information as the Purchaser shall reasonably request.  The Company may provide such information to
its option holders and warrant holders, subject to such confidentiality
obligations and other terms and conditions as the Purchaser shall reasonably
request.


 


8.7                                 Services
of Dr. Kern.  During the six-month
period following the Closing Date, the Purchaser will permit Douglas Kern and
his assistant to devote a reasonable amount of time to assisting with the
winding up and liquidation of the Company. 
Nothing contained in this Section 8.7 shall be deemed to
constitute any obligation of the Company with respect to the continued
employment of Dr. Kern or his assistant.


 


8.8                                 Guarantee
Obligations.  The Purchaser shall use
its commercially reasonable efforts to cause Douglas Kern to be released from
his obligations under the guarantee issued by him to Creekstone Woodlands, LLC,
the landlord for the Company’s head offices. 
The Purchaser hereby assumes Ronald O. Bergan’s obligation to reimburse Dr. Kern
for amounts paid by Dr. Kern to Creekstone Woodlands, LLC under the
guarantee.


 


ARTICLE IX


CONDITIONS TO
THE PURCHASER’S OBLIGATIONS


 


The obligations of the Purchaser to consummate the
transactions contemplated hereby at the Closing shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:


 


9.1                                 Representations
and Warranties True and Correct. 
Without giving effect to any disclosure made to the Purchaser pursuant
to Sections 7.1 or 7.5, all of the representations and
warranties of the Company and the Stockholders contained in this Agreement
shall be true and correct in all material respects (i) on and as of the
date of this Agreement and (ii) on and as of the Closing Date, as if made
on and as of the Closing Date, except in both cases for representations and
warranties that expressly relate to a date other than the date of this
Agreement or the Closing Date, as the case may be, which shall continue to be
true and correct as of the specified date and except for representations and
warranties that contain Material Adverse Effect or other materiality
qualifications, which shall be true and correct in all respects).


 


9.2                                 Covenants
and Agreements Performed.  The
Company and the Stockholders shall have performed or complied with, in all
material respects, all covenants and obligations required by this Agreement to
be performed or complied with by them prior to or on the Closing Date.


 


9.3                                 Company
Closing Certificate.  The Purchaser
shall have been furnished with a certificate executed by the Company (the “Company
Closing Certificate”), dated the Closing Date, certifying that the
conditions set forth in Sections 9.1 and 9.2 with respect to
the Company have been fulfilled at or prior to the Closing Date.


 


26

















 


9.4                                 Stockholders
Closing Certificate.   The Purchaser
shall have been furnished with a certificate executed by the Stockholders (the “Stockholders
Closing Certificate”), dated the Closing Date, certifying that the
conditions set forth in Sections 9.1 and 9.2 have been
fulfilled at or prior to the Closing Date.


 


9.5                                 No
Prohibition.  No Legal Requirement or
Order shall be in effect, or Proceeding pending or threatened, that restrains
or prevents, or would restrain or prevent, the Purchaser from consummating the
transactions contemplated hereby or would adversely affect the conduct of the
Business substantially in the manner that the Business was being conducted
immediately prior to the Closing.


 


9.6                                 Consents.  The Company and/or the Stockholders, as
applicable, shall have obtained the consents set forth on Schedules 4.2
and 5.2, all in forms reasonably acceptable to the Purchaser.


 


9.7                                 Assignment.  The Company shall have executed an Assignment
and Assumption Agreement with respect to the Purchased Assets and the Assumed
Liabilities substantially in the form of Exhibit B hereto (the “Assignment”).


 


9.8                                 Intellectual
Property Assignments.  The Company
shall have executed one or more Intellectual Property Assignments to transfer
the Company Intellectual Property from the Company to the Purchaser,
substantially in the form of Exhibit C hereto (the “IP
Assignments”).


 


9.9                                 Subscription
Agreement.  The Company shall have
executed the Subscription Agreement substantially in the form of Exhibit D
hereto.


 


ARTICLE X


CONDITIONS TO
THE STOCKHOLDERS’ AND THE COMPANY’S OBLIGATIONS


 


The
obligations of the Stockholders and the Company to consummate the transactions
contemplated hereby at the Closing shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions:


 


10.1                           Representations
and Warranties True and Correct. 
Without giving effect to any disclosure made to the Stockholders or the
Company pursuant to Section 8.1, all of the representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects (i) on and as of the date of this
Agreement and (ii) on and as of the Closing Date, as if made on and as of
the Closing Date.


 


10.2                           Covenants
and Agreements Performed.  The
Purchaser shall have performed or complied with, in all material respects, all
covenants and agreements required by this Agreement to be performed or complied
with by the Purchaser prior to or on the Closing Date.


 


10.3                           Purchaser
Closing Certificate.  The Company and
the Stockholders shall have been furnished with a certificate executed by an
officer of the Purchaser (the “Purchaser Closing Certificate”), dated
the Closing Date, certifying that the conditions set forth in Sections 10.1
and 10.2 have been fulfilled at or prior to the Closing Date.


 


27

















 


10.4                           No
Prohibition.  No Legal Requirement or
Order shall be in effect that restrains or prevents, or would restrain or
prevent, the Stockholders or the Company from consummating the transactions contemplated
hereby.


 


10.5                           Consents.  The Purchaser shall have obtained the
consents set forth on Schedule 6.2 in forms reasonably acceptable
to the Stockholders and the Company.


 


10.6                           Payment
of Closing Payment.  The Purchaser
shall have delivered the Cash Portion and the Stock Portion to the Company in
the manner set forth in Section 3.1(b).


 


10.7                           Assignment.  The Purchaser shall have executed the
Assignment.


 


ARTICLE XI


TERMINATION
PRIOR TO CLOSING; REORGANIZATION


 


11.1                           Termination.  This Agreement may be terminated at any time
prior to the Closing:


 


(a)                                  By
the written consent of the Purchaser, the Stockholders and the Company;


 


(b)                                 By
either the Purchaser, on the one hand, or the Company and the
Stockholders, on the other hand, by written notice given to the other, if the
Closing shall not occur on or before February 28, 2007 (the “Drop Dead
Date”) (other than through the failure of the party seeking to terminate
this Agreement to comply fully with such party’s covenants or obligations under
this Agreement); or


 


(c)                                  By
either the Purchaser, on the one hand, or the Company and the Stockholders, on
the other hand, by written notice given to the other, if there has been a
material breach of any provision of this Agreement by (i) the Company or
either Stockholder, in the case of notice from the Purchaser or (ii) the
Purchaser, in the case of notice from the Company and the Stockholders,
provided, however, that the Person receiving such notice shall have the
opportunity to cure any such breach for seven Business Days after the date the
notice is provided before any such termination shall be effective.


 


11.2                           Effect
on Obligations.  Termination of this
Agreement pursuant to Section 11.1 hereof shall terminate all
obligations of the parties hereunder, except for their obligations under Article XII
hereof and Sections 7.6 and 8.6 hereof; provided, however,
that termination pursuant to Section 11.1(c) hereof by reason
of a material breach by any Person of such Person’s obligations hereunder shall
not relieve such Person from any Liability arising from or related to such
breach under Article XII hereof or otherwise.


 


ARTICLE XII


SURVIVAL;
INDEMNIFICATION AND OFFSET


 


12.1                           Survival;
Knowledge of Breach.


 


(a)                                  The
covenants, agreements, representations and warranties contained herein shall
survive the Closing; provided, however, that the representations and warranties
contained herein shall survive only until the expiration of the 15-month period
following the Closing Date (the 


 


28

















 


“Survival
Period”), and no Claim for Losses resulting from any misrepresentation or
breach of warranty shall be brought or made after the Survival Period, except
that such 15-month time limitation shall not apply to:


 


(i)                                     Claims
for misrepresentations and breaches of warranties with respect to Sections 4.1,
4.2, 4.4, 4.23, 5.1, 5.2, 5.3, 6.1,
6.2 and 6.3 and the first sentence of Section 4.11,
which may be asserted without limitation;


 


(ii)                                  Claims
for misrepresentations and breaches of warranties with respect to Sections 4.15,
4.17 and 4.18, which may be asserted until 60 days after the
expiration of the applicable statute of limitations (the “Extended Survival
Period”); and


 


(iii)                               Claims
for misrepresentations and breach of warranties that have been asserted and
that are the subject of a written notice from a Company Indemnitee to the
Purchaser or from a Purchaser Indemnitee to a Company Indemnitor prior to the
expiration of the Survival Period or the Extended Survival Period, as
applicable, which notice specifies in reasonable detail the nature of the
Claim.


 


(b)                                 The
right to indemnification, payment for Losses or other remedy based on
representations, warranties, covenants and obligations in this Agreement shall
not be affected by any investigation conducted with respect to, or any
Knowledge acquired (or capable of being acquired) at any time, whether before
or after the execution and delivery of this Agreement or the Closing Date, with
respect to the accuracy or inaccuracy or compliance with, any such representation,
warranty, covenant or obligation.  The
waiver of any condition based on the inaccuracy of any representation or
warranty, or on the non-compliance with or breach of any covenant or
obligation, shall not affect the right to indemnification, payment for Losses
or other remedy based on such representation, warranties, covenants or
obligations.


 


12.2                           Indemnification.


 


(a)                                  The
Stockholders and the Company (together, the “Company Indemnitors”) shall
indemnify and defend the Purchaser and each of its directors, officers,
employees, agents and other Affiliates and their respective successors and
assigns (together, the “Purchaser Indemnitees”), and shall hold each of
them harmless from and against, all Losses that are incurred or suffered by any
of them in connection with, arising out of or resulting from:


 


(i)                                     Any
misrepresentation or breach of any warranty made by the Stockholders or the
Company in this Agreement or any Ancillary Agreement;


 


(ii)                                  Any
breach of any covenant or obligation of any of the Stockholders or the Company
in this Agreement or any Ancillary Agreement to which such Person is a party;


 


(iii)                               Any
noncompliance with any bulk-transfer provisions of the Uniform Commercial Code
(or any similar Legal Requirement) or fraudulent transfer law arising as a
result of the transactions contemplated hereby; and


 


(iv)                              Any
of the Retained Assets or Retained Liabilities.


 


29

















 


(b)                                 The
Purchaser shall indemnify the Company, the Stockholders and each of their
directors, officers, employees, agents and other Affiliates, as applicable
(together, the “Company Indemnitees”), and shall hold each of them
harmless from and against, all Losses that are incurred or suffered by any of
them in connection with, arising out of or resulting from:


 


(i)                                     Any
misrepresentation or breach of any warranty made by the Purchaser in this
Agreement or any Ancillary Agreement;


 


(ii)                                  Any
breach of any covenant or obligation of the Purchaser in this Agreement or any
Ancillary Agreement; or


 


(iii)                               Any
of the Purchased Assets or Assumed Liabilities.


 


12.3                           Limitations.


 


(a)                                  The
Purchaser shall not be entitled to recover under this Article XII
for Losses suffered by it under Section 12.2(a)(i) until the
aggregate amount that the Purchaser Indemnitees are entitled to recover in
respect of all such claims exceeds $150,000 (the “Company Threshold”);
provided, that upon such time as such Losses exceed the Company Threshold, the
Purchaser Indemnitees shall be entitled to recover in respect of all Losses
and; provided, further, that the Company Threshold shall not apply with respect
to Losses incurred by the Purchaser Indemnitees arising in respect of claims
for misrepresentations and breach of warranties relating to Sections 4.1, 4.2,
4.4, 4.18, 4.23, 5.1, 5.2, 5.3 and the first sentence of Section 4.11
;provided, however, that.


 


(b)                                 The
Company and the Stockholders may satisfy any payment obligation arising under
this Article XII by transferring to the appropriate Purchaser
Indemnitee shares of the Purchaser’s Common Stock received hereunder on the
date that such payment becomes due (such date, the “Payment Date”).  When payment is made by transferring the
Purchaser’s Common Stock, the shares shall be valued at their fair market value
on the Payment Date.  If the shares are
traded on any national exchange or quoted on any Nasdaq market, the shares
shall be valued at their closing price on the Payment Date; or if no closing
price is reported the average of the closing offering and bid prices on the Payment
Date.  If the shares are not traded on a
national exchange or quoted on a Nasdaq market, the Purchaser and the Company
and/or the Stockholders, as the case may be, shall attempt to agree upon a fair
market value as of the Determination Date for the shares within 20 days after
the payment is due.  If such parties are
not able to agree upon a value within such 20-day period, each such party (for
purposes hereof, with the Company and the Stockholders, to the extent
applicable, being one party) shall, within five days after the expiration of
the 20-day period referred to above, engage an accounting firm or appraiser
experienced in valuing shares of private companies (an “Appraiser”), and those
two Appraisers shall engage a third Appraiser. 
The Purchaser, the Company and Stockholders shall promptly provide all
three Appraisers with any information that they request, and the three
Appraisers shall attempt to agree in good faith upon a valuation within 60 days
after the third Appraiser shall be selected. 
If the three Appraisers cannot agree upon a valuation, the value shall
be the average of the individual valuations of the Appraisers.  The fees and expenses of each Appraiser
appointed by a party hereto shall be borne by the appointing party and the fees
and expenses of the third Appraiser appointed shall be shared equally by the
parties (for purposes 


 


30

















 


hereof, the
Company and the Stockholders shall be one party).  Notwithstanding anything to the contrary herein,
the liability of the Company pursuant to this Article XII shall not
exceed the 24,219 shares of Purchaser’s Common Stock and the liability of the
Stockholders pursuant to this Article XII shall not exceed 900,000
shares plus any shares or amounts actually received pursuant to Section 2.1(a)(iv) through
2.1(a)(vii) hereof, so that once the Company or the Stockholders,
as the case may be, have transferred such shares and, in the case of the
Stockholders, any such amounts, such party will have no further liability
hereunder; provided, however, that with respect to claims for
misrepresentations and breach of warranties relating to Sections 4.1, 4.2, 4.4,
4.18, 4.23, 5.1, 5.2, 5.3 and the first sentence of Section 4.11, the
maximum liability of the Company shall be increased so as to include an amount
equal to the Cash Portion.


 


(c)                                  No
limitation or condition of liability provided in this Article XII shall
apply to any misrepresentation or breach of warranty contained herein if such
misrepresentation or breach of warranty was made willfully or with intent to
deceive.  For purposes of calculating the
amount of any Losses incurred in connection with any misrepresentation, breach
of warranty or nonfulfillment of any covenant or agreement, any disclosures
made pursuant to Sections 7.2, 7.6 and 8.2 shall be disregarded.


 


12.4                           Notice
of Indemnity Claims.  If any
Purchaser Indemnitee or Company Indemnitee entitled to or seeking
indemnification hereunder (an “Indemnified Party”) (i) determines
that any event, occurrence, fact, condition or Claim gives rise, or could
reasonably be expected to give rise to, Losses for which such Indemnified Party
is or may be entitled to, or may seek, indemnification under this Agreement; (ii) otherwise
identifies an event, occurrence, fact, condition or Claim giving rise, or that
could reasonably be expected to give rise, to a right of indemnification
hereunder in favor of such Indemnified Party or (iii) with respect to any
Third Party Claim, becomes aware of the assertion of any Claim or of the
commencement of any Proceeding at law or in equity (any of the foregoing, an “Indemnity
Claim”), such Indemnified Party shall promptly notify the party obligated
to provide indemnification or from whom indemnification is being or will be
sought (the “Indemnifying Party”) in writing of such Indemnity Claim (a “Claim
Notice”), describing in reasonable detail the facts giving rise to the
claim for indemnification under this Agreement and shall include in such Claim
Notice the amount or the method of computation of the amount of such Indemnity
Claim (if then Known) and a reference to the provision of this Agreement upon
which such Indemnity Claim is based; provided, however, that the failure of any
Indemnified Party to give timely notice thereof shall not affect any of the
Indemnified Party’s rights to indemnification hereunder nor relieve the
Indemnifying Party from any of the Indemnified Party’s indemnification
obligations hereunder, except to the extent the Indemnifying Party is actually
prejudiced by such failure in the Indemnified Party’s defense of the Indemnity
Claim.  Any Claim Notice not relating to
a Third Party Claim shall specify the nature of the Losses and the estimated
amount thereof.


 


12.5                           Third-Party
Claims.  Any obligation to provide
indemnification hereunder with respect to any Proceeding by or against any
Person other than any party hereto, including any Governmental Authority (a “Third
Party Claim”), shall be subject to the following terms and conditions:


 


31

















 


(a)                                  Upon
receipt of a Claim Notice in respect of any Third Party Claim that involves
(and continues to involve) solely monetary damages, the Indemnifying Party
shall be entitled, at its option and its sole cost and expense and upon written
notice (the “Defense Notice”) to the Indemnified Party within 15 days of
its receipt of such Claim Notice, to assume and control the defense,
compromise, settlement and investigation of such Third Party Claim, and to
employ and engage counsel reasonably acceptable to the Indemnified Party;
provided, however, that the Indemnified Party may, at its option, participate
in such defense, compromise, settlement and investigation at its sole cost and
expense; provided, further, however, that if there exists a conflict of
interest between the Indemnified Party, on the one hand, and the Indemnifying
Party, on the other hand, or if the Indemnified Party has been advised by
counsel that there may be one or more defenses available to it that are
different from or additional to those available to the Indemnifying Party, then
the Indemnified Party shall be entitled to retain its own counsel at the cost
and expense of the Indemnifying Party.


 


(b)                                 If
the Indemnifying Party exercises the right to undertake the defense and
investigation of any Third Party Claim as provided in Section 12.5(a),
then (i) the Indemnified Party shall provide reasonable cooperation to the
Indemnifying Party in such efforts; (ii) the Indemnifying Party shall keep
the Indemnified Party reasonably informed of the progress of the defense of any
such Third Party Claim and (iii) the Indemnifying Party shall diligently
pursue the Third Party Claim.  If the
Indemnifying Party fails to undertake the defense and investigation of any such
Third Party Claim as provided in Section 12.5(a), (x) the
Indemnified Party against which such Indemnity Claim has been asserted shall
have the right to undertake the defense, compromise, settlement and
investigation of such Indemnity Claim on behalf of, and at the reasonable cost
and expense of and for the account and risk of, the Indemnifying Party; (y) the
Indemnifying Party shall cooperate with the Indemnified Party in such efforts
and (z) the Indemnified Party shall keep the Indemnifying Party reasonably
informed of the progress of the defense of any such Indemnity Claim.


 


12.6                           Settlement
of Indemnity Claims.  The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party settle or compromise any Indemnity Claim or consent to the
entry of any final Judgment that does not include as an unconditional term
thereof the delivery by the claimant or plaintiff of a written release or
releases from all Liability in respect of such Indemnity Claim of all
Indemnified Parties affected by such Indemnity Claim and the sole relief for
which are monetary damages that are paid in full by the Indemnifying Party.


 


12.7                           Right
of Setoff.  Upon notice to the Company specifying in reasonable detail the basis
therefor, the Purchaser may set off any amount to which it is entitled under
this Article XIII against amounts otherwise payable to the Company
under Section 2.1 hereof.


 


12.8                           Exclusive
Remedy. The indemnification provisions of this Article XII shall be
the sole and exclusive remedy of each party hereto for any breach of any
representation, warranty or pre-closing covenant and each party hereby waives
its right to seek any other remedy therefor. 
Notwithstanding the foregoing, no party hereto waives such party’s right
to bring an action based on fraud or seeking an equitable remedy.


 


32














 


ARTICLE XIII


MISCELLANEOUS


 


13.1         Entire
Agreement.  This Agreement together
with the Ancillary Agreements and the certificates delivered hereunder
constitutes the sole understanding of the parties with respect to the subject
matter hereof.


 


13.2         Successors
and Assigns.  The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto; provided however,
that this Agreement may not be assigned (either by operation of law or
otherwise) (a) by either Stockholders or the Company without the prior
written consent of the Purchaser or (b) by the Purchaser without the prior
written consent of the Stockholders and the Company.  Notwithstanding the foregoing, the Company
may assign this Agreement and the Ancillary Agreements to its Stockholders in
connection with a liquidation of the Company pursuant to terms and conditions
reasonably satisfactory to the Purchaser. Any attempted assignment in violation
of this Section 13.2 shall be null and void.


 


13.3         Headings.  The headings of the Articles, Sections, and
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
hereof.


 


13.4         Amendment;
Modification and Waiver.  No
amendment, modification, or waiver of the terms of this Agreement shall be
binding unless the same shall be in writing and duly executed by all of the
parties hereto, except that any terms of this Agreement may be waived in writing
at any time by the party that is entitled to the benefits of such waived
term.  No single waiver of any term of
this Agreement shall be deemed to or shall constitute, absent an express
statement otherwise, a continuous waiver of such term or a waiver of any other
term hereof.  No delay on the part of any
party in exercising any right, power, or privilege hereunder shall operate as a
waiver thereof.


 


13.5         Expenses.  Except as otherwise expressly provided
herein, each of the parties hereto shall bear the expenses incurred by that
party incident to this Agreement and the transactions contemplated hereby,
including all fees and disbursements of counsel and accountants retained by
such party, whether or not the transactions contemplated hereby shall be consummated.


 


13.6         Notices.  Any notice, request, instruction, or other
document to be given hereunder by any party hereto to any other party shall be
in writing and shall be given by delivery in person, by electronic facsimile
transmission, by a nationally recognized overnight courier or by registered or
certified mail, postage prepaid (and shall be deemed given when delivered if
delivered by hand, when transmission confirmation is received if sent by
facsimile, three days after mailing if mailed, one Business Day after deposited
for domestic delivery with a nationally recognized overnight courier service if
delivered by overnight courier, and three Business Days after deposited for
international delivery with an internationally recognized overnight courier service),
as follows:


 


33

















 


if to the Company, to:


 


ADViSYS, Inc.


2700 Research Forest Drive, Suite 180


The Woodlands, TX 77381


Attention:  Ronald O. Bergan


Fax No.:  282-296-7333


 


with a copy (which shall not constitute notice) to:


 


Vinson & Elkins LLP


2300 First City Tower 


1001 Fannin Street 


Houston, TX 77002 


Attention:  Michael C. Blaney


Fax No.:  713-615-5487


 


if to Ronald O. Bergan or Mary Alice Bergen, to his or her attention
at:


 


3300 North 7th Avenue


Fargo, ND 58108


 


with a copy (which shall not constitute notice) to:


 


Johnson, Rodenberg & Lauinger


107 Roberts Street


P.O. Box 2427


Fargo, ND 58108-2427


Attention:  Bruce D. Johnson


Fax No.:  701-235-6678


 


if to the Purchaser to:


 


VGX
Pharmaceuticals, Inc.


450 Sentry Parkway


Blue Bell, PA 19422


Attention:  Kevin Rassas


Fax No.:  267-440-4242


 


with a copy (which shall not constitute notice) to:


 


Duane Morris LLP


30 South 17th Street 


Philadelphia, PA 19103


Attention:  Kathleen M. Shay


Fax No.:  215-979-1020


 


34

















 


or at such other address for a party as shall be specified by like
notice.


 


13.7         Governing
Law.  This Agreement shall be
construed in accordance with and governed by the laws of the Commonwealth of
Pennsylvania applicable to agreements made and to be performed wholly within
that jurisdiction.


 


13.8         No
Third Party Beneficiaries.  This
Agreement is intended and agreed to be solely for the benefit of the parties
hereto and their permitted successors and assigns, and no other Person,
including any employee of the Company shall be entitled to rely on this
Agreement or accrue any Claim pursuant to, under, by, or through this
Agreement.


 


13.9         Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.


 


13.10       Drafting
of Agreement.  Each party
acknowledges that such party has had the opportunity to participate in the
drafting of this Agreement and to review this Agreement with legal counsel of
its choice, and there shall be no presumption that ambiguities shall be
construed or interpreted against the drafter, and no presumptions made or
inferences drawn because of the inclusion of a term not contained in a prior
draft or the deletion of a term contained in a prior draft.


 


13.11       Savings
Clause.  If any one or more of the
terms hereof shall be adjudged, adjudicated, declared or deemed by a
Governmental Authority to be invalid, illegal or void or unenforceable in any
particular respect, this Agreement shall be construed as if the invalid,
illegal, void or unenforceable term or part thereof had never been contained
herein, and the remaining portions of this Agreement shall nonetheless continue
in full force and effect.  If one or more
of the terms, or part thereof, of this Agreement shall, for any reason, be
adjudged, adjudicated, declared or deemed by any Governmental Authority to be
excessive, then such terms shall be deemed reformed to the maximum limitations
permitted by applicable law, and this Agreement shall be construed, by limiting
and reducing its terms, so as to be enforceable to the extent compatible with
the applicable law.


 


13.12       Injunctive
Relief.  The covenants set forth in Sections
7.3 and 7.13 of this Agreement are a reasonable and necessary
protection of the legitimate interests of the Purchaser and any failure of
Company or either Stockholder to comply with the requirements of such Sections
will cause the Purchaser irreparable injury. 
The remedy at law for any breach or threatened breach of either such Section will
be inadequate and, accordingly, the Purchaser shall, in addition to any other
rights and remedies that the Purchaser may have, be entitled to seek an
injunction or temporary restraining order to prevent such breach or threatened
breach and to enforce specifically such Sections with any court of competent
jurisdiction, in addition to any other remedy to which the Purchaser is
entitled at law or in equity.


 


ARTICLE XIV


CERTAIN DEFINITIONS


 


14.1         “Administaff”
means Administaff Companies II, L.P.


 


35

















 


14.2         “Administaff
Agreement” means that certain Client Services Agreement entered into
between Administaff and the Company on March 17, 2003.


 


14.3         “Affiliate”
means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with, such Person.  For the purposes of this definition, “control”
(including, with correlative meaning, the terms “controlling,” “controlled by”
and “under common control with”) shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.


 


14.4         “Ancillary
Agreements” means (a) the Assignment; (b) the IP Assignments; (c) the
Subscription Agreement and (d) any other document specifically identified
therein as an Ancillary Agreement.


 


14.5         “Business
Day” means any day other than a day on which banks in Philadelphia,
Pennsylvania are required or authorized to be closed.


 


14.6         “Claim”
means any claim, suit, demand, cause of action, chose in action, right of
recovery or right of set-off of whatever kind or description asserted by the
claimant against any Person.


 


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


 


14.8         “Company
Contract” means any Contract to which Company is a party or by which it is
bound.


 


14.9         “Contract”
means any agreement, purchase order, sales order, contract or similar
instrument, arrangement or commitment.


 


14.10       “EKD”
means electrokinetic delivery system.


 


14.11       “Encumbrances”
means liens, security interests, pledges, equities, proxies, claims, charges,
adverse claims, mortgages, rights of first refusal, preemptive rights,
restrictions, encumbrances, easements, covenants, licenses, options or title
defects of any kind whatsoever.


 


14.12       “Environment”
means soil, surface waters, ground water, land, surface or subsurface strata
and ambient air.


 


14.13       “Environmental
Claim” shall mean any Claim, Proceeding, Order, directive, summons,
complaint or citation asserted, filed or otherwise made by any Governmental
Authority relating to Environmental Laws or Hazardous Substances.


 


14.14       “Environmental
Law” means all foreign, federal, state and local laws, regulations, rules,
codes, ordinances, common law, Orders and consent agreements relating to
pollution, Hazardous Substances or the discharge, emission or release of
materials into the Environment.


 


14.15       “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.


 


36

















 


14.16       “FD&C
Act” shall mean the Federal Food, Drug & Cosmetics Act, as
amended, or any successor statute, including all regulations promulgated
thereunder.


 


14.17       “FDA”
shall mean the United States Food and Drug Administration, or any successor
agency thereto.


 


14.18       “GAAP”
means United States generally accepted accounting principles for financial reporting
in the United States, applied on a consistent basis.


 


14.19       “GHRH”
means growth hormone releasing hormone.


 


14.20       “Governing
Documents” means, with respect to the Company or the Purchaser, the
articles or certificate of incorporation and the bylaws of the applicable
corporation; (b) all Security holders’ Contracts, voting Contracts, voting
trust Contracts, joint venture Contracts, registration rights Contracts or
other Contracts or documents relating to the organization, management or
operation of such corporation or relating to the rights, duties and obligations
of the Security holders of any such corporation and (c) any amendment or
supplement to any of the foregoing.


 


14.21       “Governmental
Authority” means any government, court, department, authority, commission,
board, bureau, agency or official or other regulatory, administrative
authority, whether (in each case) federal, foreign, state or local.


 


14.22       “Governmental
Authorization” means any permit, license or other authorization given or
otherwise made available by or under the authority of any Governmental
Authority or pursuant to any Legal Requirement and required to:  (a) conduct the Business as currently
conducted or (b) occupy, maintain, operate or use the Company’s assets or
properties as currently maintained, operated or used.


 


14.23       “Hazardous
Substance” shall mean any substance which is a “hazardous substance,” “hazardous
waste,” “toxic substance,” “toxic waste,” “pollutant,” “contaminant” or words
of similar import under any Environmental Law including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. §9601 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. §1251 et seq.),
and the Clean Air Act (42 U.S.C. §7401 et
seq.), and including, without limitation, any substance which
contains polychlorinated biphenyls or gasoline, diesel fuel or other petroleum
hydrocarbons or volatile organic compounds.


 


14.24       “Intellectual
Property” means all intellectual property, confidential information, and
proprietary information and any improvements, modifications and enhancements
thereto, compilations and derivatives thereof, and all licenses related
thereto, including, but not limited to, (a) letters patents and patent
applications (including all reissuances, continuations, continuations-in-part,
revisions, extensions and reexaminations thereof), including, without
limitation, regional patents, certificates of invention and utility models,
rights of license or otherwise under letters patent, certificates of invention
and utility models patent disclosures and inventions (whether or not patentable
and whether or not reduced to practice) (“Patents”); (b) trademarks,
service marks, trade dress, trade names, logos, Internet domain names, brand
names, brand marks, fictitious names assumed names and corporate names,
together with any


 


37

















 


adaptations combinations, derivations and translations thereof and the
goodwill of the business associated with and symbolized by such trademarks,
service marks, trade dress, trade names and corporate names, in each case
whether or not registered; (c) published and unpublished works of
authorship and mask works, whether copyrightable or not, including all
statutory and common law copyrights associated therewith; in each case, whether
or not registered; (d) all registrations, applications, reissues,
divisionals, continuations, continuations-in-part, extensions and renewals for
any of the terms listed in clauses (a), (b) and (c); (e) trade
secrets and confidential business information; (f) websites; (g) all
versions of computer programs, whether in source code or object code assembly
language, compiler language, machine code, and all other computer instructions,
code, and languages embodied in computer software of any nature whatsoever and
all error corrections, updates, upgrades, enhancements, translations,
modifications, adaptations, further developments, derivative works thereto; (“Software”);
(h) lists of customers and potential customers (including any lists of
electronic mail addresses or other contact information of customers and
potential customers); formulae; compositions; know-how; research and development
information; manuscripts; drawings; specifications; list of suppliers and
service providers; pricing and cost information and records; test reports;
manuals; financial, business, sales and marketing information and proposals,
research, data, and plans; technical and computer data; databases;
documentation; promotional materials and related information and (i) all
copies and tangible embodiments thereof, including without limitation, any
Software and databases; and other intellectual property, confidential
information and proprietary rights, in each case in any medium, including
digital, and in any jurisdiction, together with all causes of action, judgment,
settlements, claims and demands of any nature related thereto, including the
right to prosecute any past infringements or other violations thereof.


 


14.25       “IRS”
means the Internal Revenue Service.


 


14.26       “Knowledge
of the Company” and words of similar import means (i) for matters
addressed in Sections 4.8, 4.13 and 4.14 hereof, the
actual knowledge of Ronald O. Bergan, Douglas R. Kern, Ruxandra Draghia Akli,
Henry Hebel and JoAnne Greenwell, after reasonable inquiry with respect to such
matters and (ii) for all other matters, the actual knowledge of such
individuals.


 


14.27       “Legal
Requirement” means any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle
of common law, code, regulation, statute or treaty.


 


14.28       “Losses”
means any and all losses, Liabilities, damages (including incidental and
consequential damages), penalties, obligations, awards, fines, deficiencies,
interest, Claims, diminution in value, costs and expenses whatsoever (excluding
attorneys’, consultants’ and other professional fees and disbursements)
resulting from, arising out of or incident to any matter for which
indemnification is provided under this Agreement.


 


14.29       “Liabilities”
means with respect to any Person, means any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed,
liquidated or unliquidated, secured or unsecured, joint or several, due or to
become due, vested or unvested, executory, determined,


 


38

















 


determinable or otherwise, and whether or not the same is required to
be accrued on the financial statements of such Person.


 


14.30       “Material
Adverse Effect” means any circumstance or event that, individually or in
the aggregate with any other circumstance or event could reasonably be expected
to be, or is, material and adverse to the business, properties, operations,
earnings, prospects, condition (financial or otherwise), assets, properties,
results of operations or Liabilities of the Company.


 


14.31       “Order”
means any award, decision, injunction, judgment, order, ruling, subpoena or
verdict entered, issued, made or rendered by any Governmental Authority or any
arbitrator.


 


14.32       “Permitted
Encumbrances” means (a) liens for Taxes not yet due and payable or (b) minor
imperfections of title, none of which, individually or in the aggregate,
detracts from the value of the affected assets or properties, or impairs the
use of the affected assets or properties or impairs the operation of the
Business.


 


14.33       “Person”
means an individual, corporation, partnership, association, limited liability
company, trust, unincorporated organization, Governmental Authority, other
entity or group.  For purposes of this
definition, “group” means when two or more persons act as a partnership,
limited partnership, syndicate, or other group for the purpose of acquiring,
holding, or disposing of Securities of an issuer.


 


14.34       “Proceeding”
means any action, arbitration, audit, hearing, investigation, litigation or
suit commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Authority or arbitrator.


 


14.35       “Restricted
Business” means (a) the Business and (b) to the extent not
otherwise covered by the definition of “Business”, the business of providing,
developing, selling, manufacturing, marketing or otherwise commercializing, as
applicable, (i) electroporation services or devices; (ii) EKDs; (iii) constant
current devices; (iv) plasmid DNA products; (v) DNA delivery devices;
(vi) GHRH (including species-specific GHRH for veterinary applications); (vii) formulation
technologies including poly-L-glutamate and (viii) insulin-like growth
factor 1 (IGF1) for human and veterinary applications.


 


14.36       “Schedules”
means all of the Schedules made a part of this Agreement.


 


14.37       “Securities”
with respect to any Person means any equity securities of such Person,
including securities convertible into, exchangeable for, or carrying the right
to acquire any equity securities of the Person, or subscriptions, warrants,
options, rights (including anti-dilution rights), or other arrangements or
commitments obligating such Person to issue of any equity securities or any
interest therein of such Person.


 


14.38       “Straddle
Period” means any complete Tax period that begins before and ends after the
Closing Date.


 


14.39       “Tax”
means any of the Taxes, where “Taxes” means (i) all federal, state,
local or foreign taxes, charges, fees, imposts, levies or other assessments,
including all income, gross receipts, capital, sales, use, ad valorem, value
added, transfer, franchise, profits, inventory,


 


39

















 


capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever or (ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any Taxing Authority in connection with any item
described in clause (i) and (iii) any transferee liability in respect
of any items described in clauses (i) or (ii) payable by reason of
Contract, assumption, transferee liability, operation of law, Treasury
Regulation Section 1.1502 6(a) (or any predecessor or successor thereof
of any analogous or similar provision under any Legal Requirement) or
otherwise.


 


14.40       “Taxing
Authority” means the IRS and any other Governmental Authority responsible
for the administration of any Tax.


 


14.41       “Tax
Return” means any return, report or statement required to be filed with
respect to any Tax (including any elections, declarations, schedules or
attachments thereto, and any amendment thereof) including any information
return, claim for refund, amended return or declaration of estimated Tax, and
including, where permitted or required, combined, consolidated or unitary
returns for any group of entities that includes the Company or any of its
Affiliates.


 


[SIGNATURE PAGE FOLLOWS]


 


40

















 


IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.


 


 


	
   

  	
  VGX
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph Kim

  
	
   

  	
  Name:

  	
  Joseph Kim

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADVISYS
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas R. Kern

  
	
   

  	
  Name:

  	
  Douglas R. Kern

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mary Alice Bergan

  
	
   

  	
  Mary Alice Bergan

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Ronald O. Bergan

  
	
   

  	
  Ronald O. Bergan

  



 

















 


EXHIBIT A


 


Purchase Price Allocation


 














 


EXHIBIT B


 


ASSIGNMENT AND ASSUMPTION AGREEMENT


 


THIS ASSIGNMENT AND
ASSUMPTION AGREEMENT (this “Assignment”), dated as of February 21, 2007,
between VGX Pharmaceuticals, Inc., a Delaware corporation (the “Assignee”),
and ADViSYS, Inc., a Delaware corporation (the “Assignor”).


 


Recitals:


 


WHEREAS, the Assignor, the
Assignee, Ronald Bergan and Mary Alice Bergan have entered into an Asset
Purchase Agreement dated as of even date herewith (the “Agreement”);


 


WHEREAS, pursuant to the
Agreement, the Assignor has agreed to sell, assign, convey, transfer and
deliver the Purchased Assets to the Assignee;


 


WHEREAS, pursuant to the
Agreement, the Assignee has agreed to assume the Assumed Liabilities; and


 


WHEREAS, capitalized terms
used but not otherwise defined herein shall have the meanings ascribed to them
in the Agreement.


 


NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:


 


1.                                       Assignment of Purchased Assets.  The
Assignor, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound, hereby sells,
transfers, conveys and delivers to the Assignee, and the Assignee does hereby
accept from the Assignor, all of the right, title and interest of the Assignor
in and to all of the Purchased Assets free and clear of all Encumbrances, other
than the Permitted Encumbrances.


 


2.                                       Assumption of Liabilities.  The
Assignee hereby assumes and agrees to pay, perform and discharge the Assumed
Liabilities.


 


3.                                       Modification and Waiver.  No
amendment, modification, or alteration of the terms or provisions of this
Assignment shall be binding unless the same shall be in writing and duly
executed by the parties hereto, except that any of the terms or provisions of
this Assignment may be waived in writing at any time by the party that is
entitled to the benefits of such waived terms or provisions.  No single waiver of any of the provisions of
this Assignment shall be deemed to or shall constitute, absent an express
statement otherwise, a continuous waiver of such provision or a waiver of any
other provision hereof (whether or not similar).  No delay on the part of any party in
exercising any right, power, or privilege hereunder shall operate as a waiver
thereof.


 

















 


4.                                       Governing Law.  This
Agreement shall be construed in accordance with and governed by the laws of the
Commonwealth of Pennsylvania applicable to agreements made and to be performed
wholly within that jurisdiction.


 


5.                                       Disputes.  The respective rights of the
Assignor, on the one hand, and the Assignee, on the other, with respect to the
Purchased Assets and the Assumed Liabilities assigned and assumed hereby shall
be governed by the Agreement.  In the
event of a conflict between this Assignment and the Agreement, the Agreement
shall control.  All disputes between the
Assignor and the Assignee arising out of the obligations of the parties under
this Assignment or concerning the meaning or interpretation of any provisions
contained herein shall be resolved in accordance with the Agreement.


 


6.                                       Counterparts.  This
Assignment may be executed in one or more counterparts, each of which shall for
all purposes be deemed to be an original and all of which shall constitute the
same instrument.


 

















 


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


 


	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Joseph Kim

  
	
   

  	
  Name: Joseph Kim

  
	
   

  	
  Title:
  President & Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVISYS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Douglas R. Kern

  
	
   

  	
  Name: Douglas R. Kern

  
	
   

  	
  Title:
  President & Chief Executive Officer

  



 

















 


EXHIBIT C


 


IP
Assignment


 

















 


EXHIBIT D


 


SUBSCRIPTION AGREEMENT


 


THIS SUBSCRIPTION AGREEMENT
is made as of February 21, 2007, between VGX Pharmaceuticals, Inc.
(the “Company”), a Delaware corporation, and ADViSYS, Inc., a Delaware
corporation (the “Subscriber”).


 


WHEREAS, on the date hereof,
the Company and the Subscriber entered into that certain Asset Purchase
Agreement pursuant to which the Company agreed to purchase from the Subscriber,
and the Subscriber agreed to sell to the Company the Purchased Assets, subject
to the Asset Purchase Agreement; and


 


WHEREAS, in satisfaction of
a portion of the purchase price for the Purchased Assets the Company will issue
924,219 shares of the Company’s Common Stock to the Subscriber;


 


WHEREAS, capitalized terms
used but not otherwise defined herein shall have the meaning set forth in the
Asset Purchase Agreement.


 


NOW, THEREFORE, in
consideration of the foregoing, and of the mutual provisions and covenants
contained herein, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the Company and the Subscriber, intending to be
legally bound, hereby agree as follows:


 


1.                                       Issuance of the Shares.  In
partial consideration of the purchase of the Purchased Assets by the Company
from the Subscriber, the Company agrees to issue to the Subscriber 924,219 shares
of the Company’s Common Stock (the “Initial Shares”).  For purposes of this Agreement, the term “Shares”
shall include the Initial Shares and any other shares of Common Stock or equity
securities held by the Subscriber on or after the date hereof.


 


2.                                       Investment Representations.  The
Subscriber hereby represents and warrants to the Company as follows:


 


(a)                                  The Subscriber is aware of the Company’s
business affairs and financial condition and has had the opportunity to discuss
the Company’s business, management and financial affairs with its
management.  The Subscriber has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the
Company.  The Subscriber acknowledges
that its investment in the Company is highly speculative and entails a
substantial degree of risk.


 


(b)                                 The Subscriber is acquiring the Shares for
investment for the Subscriber’s own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act of 1933, as amended (the “Securities
Act”), and the Subscriber has no present intention of selling, granting any
participation in, or otherwise distributing the Shares.  The Subscriber does not presently have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to any of the Shares.


 

















 


(c)                                  The Subscriber understands that no public
market now exists for any of the securities issued by the Company and that the
Company has made no assurances that a public market will ever exist for the
Company’s securities.  The Subscriber
acknowledges that the Shares constitute “restricted securities” under the
Securities Act and must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available, and that the Company is under no obligation to register the Shares.


 


3.                                       Validity of Issuance.  The
Initial Shares are validly issued, fully paid and nonassessable.


 


4.                                       Capitalization.  Exhibit A
sets forth the authorized, issued and outstanding capital stock of the Company
and a list of the holders of such capital stock as of the date of this
Agreement.  Except as set forth on Exhibit A,
the Company has not issued and is not obligated to issue any warrants, options
or other rights to purchase or acquire any shares of its capital stock, or any
securities convertible into such shares or any warrants, options or other
rights to acquire any such convertible securities.


 


5.                                       Legends.  The
certificate evidencing the Shares shall be endorsed with the following legend
(in addition to any legend required under applicable securities laws or
corporate laws or any other contract between the Subscriber and the Company):


 


THE SHARES EVIDENCED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR
EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS.


 


THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE COMPANY’S RIGHTS OF FIRST REFUSAL AND A
MARKET STAND-OFF RESTRICTION IN CONNECTION WITH ANY PUBLIC OFFERING BY THE
COMPANY, WHICH ARE CONTAINED IN A STOCK SUBSCRIPTION AGREEMENT.  A COPY OF THE STOCK SUBSCRIPTION AGREEMENT IS
ON FILE WITH THE SECRETARY OF THE COMPANY.


 


6.                                       Right of First Refusal.


 


(a)                                  The Subscriber shall give to the Company at
least 60 days’ prior written notice of any proposed sale or other transfer by
the Subscriber of any of the Shares. 
Such notice shall describe the proposed sale or other transfer, the name
and address of each party to the transaction and the price and other terms
thereof.  Such notice shall constitute an
offer from the Subscriber (the “Offer”) to sell the Shares to the Company at
the same price and on the same other terms, which Offer by its terms shall
remain open for a period of 30 days from the date of receipt of the Subscriber’s
notice.


 


(b)                                 If the Company does not accept the Offer
within such 30-day period, the Subscriber will have 60 days from the end of the
30-day period to complete the transaction with the persons specified in the
Offer on terms and conditions that are no more favorable to such


 

















 


persons or less favorable to
the Subscriber than those set forth in the Offer.  If the transaction is not completed during
such 60-day period, the procedures specified in this Agreement will thereafter
apply to any proposed sale of such Shares. 
As a condition to the transfer of any Shares other than to the Company
in accordance with this Section 6, the Subscriber shall cause the
transferee to execute and deliver to the Company an investment representation
letter, which contains representations, warranties and agreements substantially
identical to those set forth in this Section 6 and Sections 7 and
8  of this Agreement.


 


(c)                                  If all or a part of the consideration for the
Shares under the Offer is not readily available to the Company (e.g., real
estate or securities for which there is no established trading market) or
otherwise cannot be precisely duplicated by the Company, a purchase by the
Company will be made for a consideration and upon terms that constitute the
reasonable economic equivalent of the price and terms of the Offer.  For these purposes, the promissory note of
the Company will be considered the reasonable economic equivalent of the
promissory note of the proposed transferee, notwithstanding any differences in
financial condition.


 


(d)                                 The Company may assign its right to purchase
Shares under this Section 6, in whole or in part, to any other person.


 


7.                                       Market Standoff Agreement.  In
the event that the Company shall file a registration statement under the
Securities Act (if at all) to register shares of its Common Stock or other
securities, the undersigned agrees that the undersigned will not, to the extent
requested by the Company and the underwriter of such securities, and during the
period of duration specified by the Company and such underwriter following the
effective date of each such registration statement, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by the undersigned at any time during such period except Shares, if any,
included in such registration (and the undersigned understands that there is no
obligation on the part of the Company to register any securities of the Company
held by the undersigned); provided, however, that: (a) all officers,
directors and 1% or greater shareholders of the Company enter into similar
agreements; and (b) such market stand-off time period may not exceed 180
days from the effective date of the registration statement.  Notwithstanding the foregoing, the
obligations described in this Section 7 shall not apply to a registration
relating solely to employee benefit plans on Form S-l or Form S-8
promulgated under the Securities Act or similar forms that may be promulgated
in the future, or a registration relating solely to a Securities Exchange
Commission Rule 145 transaction on Form S-4 or similar forms that may
be promulgated in the future.  In order
to enforce the foregoing covenant, the Company may impose stop transfer
instructions with respect to the securities of the undersigned until the end of
such market stand-off period.


 


8.                                       Drag-Along Rights.  In
the event the Board of Directors of the Company approves a Sale
Transaction (defined below), the Subscriber shall be obligated to, upon the
request of the Board of Directors:  (a) sell,
transfer and deliver, or cause to be sold, transferred and delivered, to the
Company, his or her Shares on substantially the same terms applicable to the
Sale Transaction (with appropriate adjustments to reflect the conversion of
convertible securities, the redemption of redeemable securities and the
exercise of exercisable securities as well as the relative preferences and
priorities of preferred stock, if any); and (b) execute and


 

















 


deliver such instruments of
conveyance and transfer and take such other action as the Board of Directors
may reasonably require in order to carry out the terms and provisions of this Section 8
(including, without limitation, voting the Subscriber’s Shares in favor of the
Sale Transaction).  For purposes of this Section 8,
“Sale Transaction” means (i) an acquisition of the Company by another
entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger, consolidation or
sale of capital stock of the Company) that would result in the transfer of 50%
or more of the outstanding voting power of the Company or in which
the stockholders of the Company immediately prior to such transaction
would own, as a result of such transaction, less than a majority of the voting
securities, in the same relative proportions, of the successor or
surviving entity immediately thereafter, or (ii) a sale of all or substantially
all of the assets of the Company.


 


9.                                       Equitable Relief.  In
the event of a breach by the Subscriber of any term of this Agreement, in
addition to all of the other remedies that may be available under applicable
law, the Company shall have the right to equitable relief, including, without
limitation, the right to enforce specifically the terms of this Agreement by
obtaining injunctive relief against any violation or non-performance hereof.


 


10.                                 General Provisions.


 


(a)                                  Any notice to be given under the terms of
this Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Subscriber shall be addressed to
the Subscriber at the address given beneath its signature hereto.  Either party may hereafter designate a
different address for notices to be given to such party by a notice given
pursuant to this Section 10(a).  Any
notice shall have been deemed duly given when addressed as aforesaid and
deposited (with postage prepaid) in the United States mail, sent by overnight
courier (with charges prepaid), or sent by confirmed facsimile.


 


(b)                                 This Agreement shall be governed, construed
and enforced in accordance with the internal laws of the State of Delaware.


 


(c)                                  Any provision of this Agreement may be
amended and the observance thereof may be waived only by the prior written
consent of the Company and the Subscriber. 
No course of dealing between or among any persons having any interest in
this Agreement shall be deemed effective to modify, amend or discharge any part
of this Agreement or the Shares or any rights or obligations of any person
under or by reason of this Agreement.


 


(d)                                 The Subscriber agrees upon request to execute
any further documents or instruments necessary or desirable to carry out the
purposes or intent of this Agreement.


 

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the date
first set forth above.


 


	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph Kim

  
	
   

  	
  Name:

  	
  Joseph Kim

  
	
   

  	
  Title:

  	
  President & Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVISYS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas R. Kern

  
	
   

  	
  Name:

  	
  Douglas R. Kern

  
	
   

  	
  Title:

  	
  President & Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address and Facsimile
  Number of

  Subscriber:

  
	
   

  	
   

  
	
   

  	
  2700 Research Forest
  Drive, Suite 180

  
	
   

  	
  The Woodlands, TX 77381

  
	
   

  	
  Fax No.: 282-296-7333