Binding Letter of Intent


    
      
        

      

    

     

    Exhibit
      10.1

    


    October
      28, 2005

    Confidential

    


    Kind
      Attn: Hans T. Schambye, PhD

    Chief
      Executive Officer

    


    Gastrotech
      Pharma A/S

    Nyhavn
      43B

    Copenhagen
      1051

    Denmark

    


    Dear
      Hans:

    


    I
      am
      pleased to submit this binding
      letter
      of
      intent (the “Binding
      LOI”)
      to
      Gastrotech Pharma A/S (“Gastrotech”)
      to
      acquire 100% of the fully diluted shares outstanding1 
      of
      Gastrotech
      (the
      "Shares").
      This
      Transaction, as defined hereunder, has been approved by the board of directors
      of both companies, the shareholders of Gastrotech, and is subject to the
      approval of the shareholders of DOR. Subject to fiduciary duty principles,
      the
      board of directors of DOR will unequivocally recommend this Transaction to
      its
      shareholders. 

    


    This
      letter and all the information contained herein are confidential and may not
      be
      disclosed to any third party for any purpose, and are subject to the terms
      of
      the confidentiality agreement entered into between DOR and Gastrotech
      (separately the “Party” or collectively the “Parties”).

    


    The
      following sets forth the principal terms and conditions of the Transaction
      consisting of DOR’s acquisition of 100% of the Shares.
      

    


    Transaction.
      Subject
      to mutual satisfaction with the terms and conditions of the Definitive Agreement
      and other conditions described herein and customary for similar transactions,
      Gastrotech will become a wholly-owned subsidiary of DOR.

     

    Consideration.
      In
      connection with the closing of the Transaction, DOR shall issue to the
      stockholders of Gastrotech $9 million in DOR common stock priced at the 10-day
      VWAP2 
      immediately prior to the close of the Transaction
      ("Closing").
      In no
      event shall DOR issue less than 20 million or more than 30 million shares of
      DOR
      common stock to Gastrotech’s shareholders. 

     

    Gastrotech
      stockholders will also be eligible for the following one-time contingent
      payments: 

     

    


    	i.  	
            US$4.0
              million3
              of
              DOR common stock due upon either of the lead product candidates (GTP-010
              or GTP-200/ GTP 3XX) commencing a Phase III clinical trial;
              

          


     

    	ii.  	
            US$6.0
              million3
              of
              DOR common stock due upon either of the lead product candidates (GTP-010
              or GTP-200/ GTP 3XX) filing an NDA; 

          


     

    	iii.  	
            US$10.0
              million, payable at the election of DOR in cash or shares of DOR common
              stock3,
              due upon either of the lead product candidates (GTP-010 or GTP-200/
              GTP
              3XX) reaching $50.0 million in sales in a full calendar year;
              and

          


     

    	iv.  	
            US$10.0
              million, payable at the election of DOR in cash or shares of DOR common
              stock3,
              due upon either of the lead product candidates (GTP-010 or GTP-200/
              GTP
              3XX) reaching $200.0 million in sales in a full calendar
              year.

          


     

    Warrants
      in Gastrotech. At
      Closing,
      all of
      the issued and outstanding Gastrotech warrants shall be exercised or exchanged
      for new DOR warrants. The exercise price and number of new DOR warrants shall
      be
      determined in accordance with the terms of the merger consideration at the
      close
      of the Transaction. Warrants held by Nordic Biotech will be cancelled or
      exercised prior to Closing.
      The new
      DOR warrants shall comply with all applicable Danish laws. Appendix
      A represents all outstanding warrants as per the date of this Binding
      LOI.
      

     

    Nordic
      Biotech Registration Rights. Within
      30
      days after DOR shareholders approve the issuance of DOR common stock to the
      shareholders of Gastrotech and/or of DOR issuing shares under sections i.-iv.
      of
“Consideration”, DOR will file a registration statement with the U.S. Securities
      and Exchange Commission (“SEC”) covering all of the DOR shares of common stock
      issued to all of the shareholders of Gastrotech pursuant to the terms of the
      Definitive Agreement. DOR will cover the expenses associated with filing the
      registration statement other than broker or similar commissions of the
      shareholders and legal fees of counsel to the Gastrotech shareholders.
      The shares issued to Nordic Biotech, however, will be subject to a lock-up
      arrangement pursuant to which Nordic Biotech will limit its public sale of
      such
      shares to twenty percent (20%) per quarter of the aggregate amount registered
      on
      all registration statements declared effective by the SEC.
      

     

    Gastrotech
      Financing.
      Between
      the signing of this Binding
      LOI
      and
      the
      Closing,
      Gastrotech may raise equity financing up to $2.0 million. Such financing shall
      be subject to the approval of DOR, which approval shall not be unreasonably
      withheld. In the event of such fund raising, DOR will issue additional shares
      of
      its common stock to Gastrotech Shareholders in an aggregate amount equal to
      the
      amount of such equity financing divided by the 10-day VWAP immediately prior
      to
      the close of the Transaction; 

     

     

    Definitive
      Agreement.
      The
      terms of the proposed Transaction shall be memorialized in the final definitive
      agreement (the "Definitive
      Agreement"),
      which
      shall be negotiated in good faith between the Parties, and will contain such
      representations, warranties, covenants, conditions, indemnities
      and
      limitations on the sellers' liability
      as are
      customary in a transaction of this kind. Both Parties will work in good faith
      to
      ensure that relevant Danish tax authorization for a tax-free share swap
      pertaining to this transaction is obtained. In addition to the approval of
      the
      shareholders of DOR, Closing
      shall be
      subject to, without limitation, all relevant governmental and regulatory agency
      approvals and other necessary consents and permits. 

     

     

    Key
      Management. 

     

    	·  	
            Michael
              T. Sember will be the CEO of the combined
              entity;

          


     

    	·  	
            Evan
              Myrianthopoulos will be the CFO of the combined
              entity;

          


     

    	·  	
            Hans
              T. Schambye will be the COO of the combined entity;
              and

          


     

    	·  	
            Prior
              to the execution of a definitive agreement, DOR will offer Gastrotech
              employees relevant positions within DOR’s
              operations.

          


     

     

    Name
      Change.
      DOR
      intends to change the name of the combined entity to a newly selected
      name.

     

     

    Corporate
      Offices. 

     

    	·  	
            Corporate
              headquarters will be located in Miami,
              Florida

          


     

    	·  	
            European
              subsidiary will be located in Copenhagen,
              Denmark

          


     

     

    Board
      of Directors.
      DOR
      intends to expand the board of directors of the post merger entity to nine
      members, with three positions being offered to nominees appointed by
the
      sellers of the Shares.
      At
      least one of these nominees should qualify as an independent board member.
      The
      DOR representatives are listed below:

     

    	1.  	
            Alexander
              P. Haig, Chairman of the Board of
              Directors

          


    	2.  	
            Steve
              Kanzer, Vice Chairman of the Board of
              Directors

          


    	3.  	
            Michael
              T. Sember

          


    	4.  	
            Evan
              Myrianthopoulos 

          


    	5.  	
            James
              S. Kuo 

          


    	6.  	
            T.
              Jerome Madison 

          


     

    Acquisition
      Agreement.
      Drafting
      of the Definitive Agreement will commence following the execution of
      this
      Binding
      LOI.

     

     

    Schedule.
      Both
      Parties shall cooperate fully and use their best efforts to complete the due
      diligence and sign the Definitive Agreement within forty-five (45) days
      following the date of this Binding
      LOI
      or such
      later date as provided in clause (i) of the Termination paragraph. The proxy
      or
      consent solicitation statement to obtain approval of DOR's shareholders of
      the
      Definitive Agreement shall be filed with the Securities and Exchange Commission
      as
      soon
      as reasonably practicable after signing the Definitive Agreement and, in any
      event, within
      thirty (30) days of signing the Definitive Agreement.

     

     

    


     

     

    Termination.
      This
Binding
      LOI
      will
      terminate on the earlier to occur of:

     

    (i)
      the
      date which is forty-five (45) days after the date of this Binding
      LOI,
      it
      being understood by the Parties that they will agree to extend the termination
      date to a new date acceptable to both Parties if an unforeseen event prevents
      either one or both of the Parties from signing the Definitive Agreement within
      such forty-five (45) day period; 

     

    (ii)
      the
      date the Definitive Agreement is executed by the Parties; 

     

    (iii)
      the
      date both parties mutually agree to not proceed with the Transaction;
      or

     

    (iv)
      the
      date on which a Party (the “Notifying Party”) notifies the other Party (the
“Breaching Party”) that the Notifying Party will not go ahead with the
      Transaction based on the Breaching Party’s breach of a material term contained
      herein. 

     

    Expenses.
      DOR and
      Gastrotech shall each be responsible for their own respective legal, accounting,
      and other fees and expenses related to the Transaction. Gastrotech's
      expenses incurred in connection with the negotiation and consummation of the
      Transaction will be Gastrotech's responsibility and not a liability of DOR
      after
      the closing of the Transaction, and such expenses will not exceed
      $200,000.

     

    Covenants.

     

    A.  Exclusivity.
      For a
      period of forty-five (45) days from and after the date of this Binding
      LOI,
      Gastrotech shall
      not
      directly or indirectly, and shall not authorize or permit any of its
      subsidiaries or any of its or their      
      directors, officers, employees, agents or representatives to, directly or
      indirectly: 

     

    (i)
      solicit, initiate, facilitate or encourage any inquiries or the making of any
      proposal or offer with respect to any merger, reorganization, consolidation,
      share exchange, business combination, recapitalization, liquidation, dissolution
      or similar transaction involving it or any of its subsidiaries, or any purchase
      or sale of its assets or any purchase or sale of (with the exception of ongoing
      financing discussions with potential investors), or tender or exchange offer
      for
      its equity securities that, in each case, if consummated, would result in it
      terminating this Binding
      LOI
      or
      abandoning or failing to consummate the Transaction (an “Alternative
      Transaction”),
      

     

    (ii)
      negotiate with
      any
      person or entity with respect to any Alternative Transaction, 

     

    (iii)
      enter into any agreement, arrangement or understanding requiring it to
      consummate an Alternative Transaction, terminate
      this Binding
      LOI
      or
      abandon or fail to consummate the Transaction, or 

     

    (iv)
      accept an Alternative Transaction,

     

    This
      Binding
      LOI
      may only
      be terminated as set forth in the paragraph entitled “Termination” above. The
      exclusivity period and the terms of this Binding
      LOI
      may be
      extended by the mutual consent of the Parties. 

     

    Break-up
      Fee.
      Upon the
      termination of this Binding
      LOI
      pursuant
      to clause (iv) of the “Termination” paragraph, a Breaching Party will make a
      payment to the Notifying Party to cover the Notifying Party's fees, expenses
      and
      other costs in connection with the Transaction in the amount of one million
      U.S.
      dollars ($1,000,000) within thirty (30) days of such termination. The payment
      of
      such one million U.S. dollars ($1,000,000) shall constitute full and complete
      satisfaction of the Breaching Party’s liability to the Notifying Party and the
      Breaching Party shall have no further liability whatsoever to the Notifying
      Party. 

     

    Indemnification.
      20% of
      the upfront payment of $9.0 million of DOR common stock (as defined hereunder
      in
      the “Consideration” section of this letter) will be held in escrow for eighteen
      (18) months to serve as appropriate reserves against any potential claims or
      losses regarding breaches of covenants, representations, and warranties of
      Gastrotech. 

     

    Conduct
      of Business.
      During
      the term of this Binding
      LOI,
      with
      the exception of ongoing financing discussions with potential
      investors,
      Gastrotech
      shall conduct its business in the ordinary course, carry on its business and
      activities diligently and shall not make or institute any unusual or novel
      methods of purchase, sale, accounting, or operation that vary materially from
      the methods currently used by Gastrotech. Gastrotech shall not engage in any
      major expansion, make any material investment, or incur any material liability
      without the prior consent of DOR. 

     

    Product
      Development.
      Post
      closing, DOR will use commercially reasonable efforts to advance development
      of
      the Gastrotech product portfolio,
      as
      provided in the Definitive Agreement. 

     

    Entire
      Agreement.
      This
Binding
      LOI
      represents the entire agreement between the Parties hereto concerning the
      subject matter hereof and supersedes all prior and contemporaneous oral and
      written agreements, representations, and understandings concerning the subject
      matter hereof with the exception of the previously executed confidentiality
      and
      joint privilege agreements.

     

    Confidentiality;
      Publicity.
      Except
      as required by law, the existence and terms of this Binding
      LOI
      and the
      negotiations between the Parties relating to the Transaction shall be treated
      as
      confidential by the Parties. The terms of any public announcements of the
      proposed Transaction shall be agreed among the Parties; provided that DOR shall
      be permitted to make such disclosure as required by applicable law, it being
      understood and agreed by Gastrotech that upon the execution of this Binding
      LOI
      by all
      of the Parties, DOR shall be required under applicable United States securities
      laws to publicly disclose the terms of this LOI, including the identity of
      Gastrotech as a contracting party. Gastrotech shall be permitted to show
      the Binding
      LOI
      to
      potential investors provided such investors have entered into appropriate
      Confidentiality Disclosure Agreements with Gastrotech. Such investors shall
      be
      previously approved by DOR. Gastrotech is allowed to show the Binding
      LOI
      to
      Bioscience Managers Ltd.

     

    Governing
      Law.
      This
Binding
      LOI
      and the
      Definitive Agreement will be governed by and construed in accordance with
English
      law. 

     

    Remedies.
      In the
      event of a breach by any Party of this Binding
      LOI,
      the
      other Party will be entitled to injunctive and other equitable relief in
      addition to all other remedies available under law.

     

    Assignment.
      This
Binding
      LOI
      may not
      be assigned by either Party except with the prior written consent of the other
      Party.

     

    Counterparts.
      This
Binding
      LOI
      may be
      executed in counterparts.

     

    Broker/
      Finder Fees. Any
      Party
      or any shareholder of Gastrotech who engages or have engaged any person as
      broker or agent shall be responsible for the fees of such person (including
      broker's or finder's fees) in connection with the Transaction and shall
      indemnify and hold harmless the other Party or shareholder of Gastrotech, as
      applicable, from any claim arising
      out of such engagement.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


     

    


     

     

    


     

    
      	
               

              Agreed
                and Accepted on October 28, 2005:

            	
               

              Agreed
                and Accepted on October 28,
                2005:

            
	
               

              DOR
                BIO PHARMA, INC.

              By:
                /s/Mike
                Sember____________________

              Mike
                Sember

              Chief
                Executive Officer

            	
               

              GASTROTECH
                PHARMA A/S

              By:
                /s/Hans
                T. Schambye, PhD ___________

              Hans
                T. Schambye, PhD

              Chief
                Executive Officer

               

              By:
                /s/Olle
                Isaksson_____________________

              Olle
                Isaksson

              Chairman
                of the Board of Directors 

            
	 	 
	 	 
	 	 


    

     

    


     

     

    


     

     

     

    

      

      
        1
          Fully
          diluted shares outstanding is calculated as the number of basic common
          shares
          currently outstanding plus any shares resulting from the conversion of
          any
          outstanding convertible debt, convertible preferred shares, or any other
          convertible securities and the exercise of any outstanding options, warrants,
          or
          any other financial instruments that may further affect
          dilution.

      

      
        2
          VWAP -
          volume weighted average price

      

      
        3
          Based on
          the 10-day VWAP of DOR common stock immediately prior to the announcement
          of the
          corresponding milestone

      

    


    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    



     

    


     

     

    


     

    
      	
              CAPITALISATION
                TABLE

            	 	 	 	 
	
              Gastrotech
                Pharma A/S

            	 	 	 	 
	 	 	 	 	 	 
	 	
              SHAREHOLDER:

            	
              Present

            	
              Share
                of ownership

            	
              Diluted
                and

            	
              Diluted
                and

            
	 	
               

            	
              converted

            	
              converted
                

            
	 	
               

            	
              Shares

            	
              (%)

            	
              Shares

            	
              (%)

            
	 	
              John-Olov
                Jansson (A-Shares)

            	
              53,752

            	
              5.21%

            	
              53,752

            	
              1.46%

            
	 	
              Johan
                Svensson (A-Shares)

            	
              21,504

            	
              2.08%

            	
              21,504

            	
              0.58%

            
	 	
              Sahltech
                i Göteborg AB (A-Shares)

            	
              209,690

            	
              20.31%

            	
              209,690

            	
              5.69%

            
	 	
              Nordic
                Biotech K/S (B-Shares)

            	
              745,566

            	
              72.21%

            	
              2,967,665

            	
              80.48%

            
	 	
              Zinc
                Invest ApS (A-Shares)

            	
              1,966

            	
              0.19%

            	
              1,966

            	
              0.05%

            
	 	
               

            	
               

            	
               

            	
               

            	
               

            
	 	
               

            	
               

            	
               

            	
               

            	
               

            
	 	
              Total
                Shares

            	
              1,032,478

            	
              100.00%

            	
              3,254,577

            	
               

            
	 	
               

            	
               

            	
               

            	
               

            	
               

            
	 	
              Convertible
                Bonds

            	 	
               

            	
               

            	
               

            
	 	
              Nordic
                Biotech K/S (price 26.6544)

            	
              187,586

            	
               

            	
              included
                under shares

            	
               

            
	 	
              Nordic
                Biotech K/S (price 26.6544)

            	
              187,586

            	
               

            	
              included
                under shares

            	
               

            
	 	
              Nordic
                Biotech K/S (price 26.6544)

            	
              187,586

            	
               

            	
              included
                under shares

            	
               

            
	 	
               

            	
               

            	
               

            	
               

            	
               

            
	 	
              Total
                (present and converted)

            	
              1,595,236

            	
               

            	
               

            	
               

            
	 	
               

            	
               

            	
               

            	
               

            	
               

            
	 	
              Warrants

            	
               

            	
               

            	
               

            	
               

            
	 	
              Nordic
                Biotech K/S (25% B-Warrants)

            	
              921,856

            	
              25.00%

            	
              included
                under shares

            	
               

            
	 	
              Nordic
                Biotech K/S (20% B-Warrants)

            	
              737,485

            	
              20.00%

            	
              included
                under shares

            	
               

            
	 	
              Olof
                G. P. Isaksson (A-Warrants) (*)

            	
              60,087

            	
               

            	
              60,087

            	
              1.63%

            
	 	
              Claes
                Post (A-Warrants) (**) (***)

            	
              32,794

            	
               

            	
              32,794

            	
              0.89%

            
	 	
              Birgitte
                Holst (A-Warrants) (**) (***)

            	
              19,446

            	
               

            	
              19,446

            	
              0.53%

            
	 	
              Henning
                Lie (A-Warrants) (*)(***)

            	
              2,000

            	
               

            	
              2,000

            	
              0.05%

            
	 	
              Lise
                A. Rygaard (A-Warrants) (*) (***)

            	
              51,696

            	
               

            	
              51,696

            	
              1.40%

            
	 	
              Hans
                Schambye (A-Warrants) (*) (***)

            	
              145,173

            	
               

            	
              145,173

            	
              3.94%

            
	 	
              David
                Cummings (A-Warrants) (*) (***) (¤¤)

            	
              5,000

            	
               

            	
              5,000

            	
              0.14%

            
	 	
              Kent
                Lundholm (A-Warrants) (*) (***) (¤¤)

            	
              5,000

            	
               

            	
              5,000

            	
              0.14%

            
	 	
              Josef
                E. Fischer (A-Warrants) (*) (***) (¤¤)

            	
              5,000

            	
               

            	
              5,000

            	
              0.14%

            
	 	
              Jens
                Juul Holst (A-Warrants) (*) (***) (¤¤)

            	
              5,000

            	
               

            	
              5,000

            	
              0.14%

            
	 	
              Tina
                Nielsen (A-Warrants) (*)(***) 

            	
              15,000

            	
               

            	
              15,000

            	
              0.41%

            
	 	
              Hiro
                Saito (A-Warrants) (*) (***) (¤¤¤)

            	
              5,000

            	
               

            	
              5,000

            	
              0.14%

            
	 	
              Tamas
                Bartfai (*) (1 year vesting period)

            	
              3,287

            	
               

            	
              3,287

            	
              0.09%

            
	 	
              Unused
                Company A-Warrants

            	
              78,365

            	
               

            	
              78,365

            	
              2.13%

            
	 	
              Total

            	
              2,092,189

            	
               

            	
              432,848

            	
               

            
	 	
               

            	
               

            	
               

            	
               

            	
               

            
	 	
               

            	
               

            	
               

            	
               

            	
               

            
	 	
              Grand
                Total 

            	
              3,687,425

            	
               

            	
               

            	
              100.00%

            
	 	 	 	 	 	 
	 	
              20-Jun-05

            	 	 	 	 
	 	 	 	 	 	 
	 	
              (*):
                Exercise price is DKK 42 per share of nominally DKK 1

            	 	 	 
	 	
              (**):
                Exercise price is DKK 25.82 per share of nominally DKK 1 

            	 	 	 
	 	
              (***):
                Three year vesting period

            	 	 	 	 
	 	
              (¤):
                Six months cliff from the signing of employment contract

            	 	 	 
	 	
              (¤¤):
                Six months cliff from the signing 

            	
              consultancy
                agreement

            	 	 
	 	
              (¤¤¤):
                Vesting of 1,666 warrant for agreement entered into with a Japanese
                third
                party independent of the Company