Document:

ex10-1.htm

    

      EXECUTION
COPY

       

      

       

      $235,000,000

       

      DYNEGY
HOLDINGS INC.

       

      7.50%
Senior Unsecured Notes due 2015

       

       

      PURCHASE
AGREEMENT

       

      December
2, 2009

       

      Credit
Suisse Securities (USA) LLC

       

      Citigroup
Global Markets Inc.

       

      As
Representatives of the several purchasers

       

      c/o
Credit Suisse Securities (USA) LLC

       

            Eleven
Madison Avenue,

       

            New
York, N.Y. 10010-3629

       

      Dear
Sirs:

       

      1.  Introductory.  Dynegy
Holdings Inc., a Delaware corporation (the “Company”), and Adio Bond, LLC,
a Delaware limited liability company (the “Selling Noteholder”), confirm
their agreement with the several purchasers named in Schedule A hereto (the
“Purchasers”), with
respect to the sale by the Selling Noteholder of $235,000,000 aggregate
principal amount of 7.50% Senior Unsecured Notes due 2015 (the “Offered Securities”) which
were issued under a fifth supplemental indenture dated as of December 1, 2009 to
the indenture dated September 26, 1996, as amended and restated as of March 23,
1998, as further amended and restated as of March 14, 2001, and as supplemented
by a first supplemental indenture dated as of July 25, 2003, a second
supplemental indenture dated as of April 12, 2006, a third supplemental
indenture dated as of May 24, 2007 and a fourth supplemental indenture dated as
of May 24, 2007 (collectively, the “Indenture”), between the
Company and Wilmington Trust Company (as successor to JPMorgan Chase Bank,
N.A.), as Trustee, on a private placement basis pursuant to an exemption under
the United States Securities Act of 1933 (the “Securities Act”), and hereby
agree with the several Purchasers as follows.

       

      The
Company and the Selling Noteholder have completed a series of transactions
described in the Preliminary Offering Circular and the Final Offering Circular
under the heading “Summary-LS Power Transactions” (such transactions, the “Transactions”). As part of the
Transactions and pursuant to a Purchase Agreement dated as of August 9, 2009
between the Company and the Selling Noteholder (the “Noteholder Purchase
Agreement”), the Company has issued and sold to the Selling Noteholder
the Offered Securities.

       

      The
holders of the Offered Securities will be entitled to the benefits of a
Registration Rights Agreement dated as of December 1, 2009 between the Company
and the Selling Noteholder (the “Registration Rights
Agreement”), pursuant to which the Company has agreed to file a
registration statement with the Securities and Exchange Commission (the “Commission”) to exchange the
Offered Securities for a new class of securities with substantially identical
terms as the Offered Securities issued under the Indenture and registered under
the Securities Act subject to the terms and conditions therein
specified.

       

      As used
herein, the term “Operative
Documents” refers to this Agreement, the Registration Rights Agreement,
the Indenture and the Offered Securities.

       

      2A.  Representations and Warranties of
the Company.  The Company represents and warrants to, and
agrees with, the Purchasers that:

       

      (a) A
preliminary offering circular dated as of December 1, 2009 (the “Preliminary Offering
Circular”) relating to the Offered Securities to be resold by the
Purchasers and a final offering circular (the “Final Offering Circular”)
disclosing the resale price and other final terms of the Offered Securities
dated as of the date of this Agreement (even if finalized and issued subsequent
to the date of this Agreement) have been or will be prepared by the
Company.  “General
Disclosure Package” means the Preliminary Offering Circular, together
with any Issuer Free Writing Communication (as hereinafter defined) existing at
the Time of Sale (as hereinafter defined) as evidenced by its being specified in
Schedule B to this Agreement (including the term sheet listing the final
terms of the Offered Securities and their offering, included in Schedule B
to this Agreement, which is referred to as the “Terms
Communication”).  Any reference herein to the Preliminary
Offering Circular, the Final Offering Circular or the General Disclosure Package
shall be deemed to refer to and include any Exchange Act Report incorporated by
reference therein (as defined).  “Time of Sale” means when
resales of Securities were first made pursuant to the General Disclosure
Package.  As of the date of this Agreement and as of the Closing Date,
the Final Offering Circular does not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.  At the Time of Sale and as of the Closing Date
neither (i) the General Disclosure Package, nor (ii) any individual Supplemental
Marketing Material (as hereinafter defined), when considered together with the
General Disclosure Package, included any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding two sentences do not apply to statements in or
omissions from the Preliminary Offering Circular or Final Offering Circular, the
General Disclosure Package or any Supplemental Marketing Material based upon
written information furnished to the Company by any Purchaser through Credit
Suisse Securities (USA) LLC (“Credit Suisse”) specifically
for use therein, it being understood and agreed that the only such information
is that described as such in Section 8(c) hereof.   On the date
of this Agreement, the Company’s annual report on Form 10-K most recently
filed with the Commission and all subsequent reports (collectively, the “Exchange Act Reports”) which
have been or subsequently are deemed to be incorporated by reference in the
Preliminary Offering Circular, the General Disclosure Package or the Final
Offering Circular do not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Such
documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder.

       

      “Free Writing Communication”
means a written communication (as such term is defined in Rule 405 under
the Securities Act) that constitutes an offer to sell or a solicitation of an
offer to buy the Offered Securities and is made by means other than the
Preliminary Offering Circular or the Final Offering Circular.  “Issuer Free Writing
Communication” means a Free Writing Communication prepared by or on
behalf of the Company, used or referred to by the Company or containing a
description of the final terms of the Offered Securities or of their offering,
in the form retained in the Company’s records. “Supplemental Marketing
Material” means any Issuer Free Writing Communication other than any
Issuer Free Writing Communication specified in Schedule B to this
Agreement.

       

      (b)  No
order or decree preventing the use of the General Disclosure Package, the Final
Offering Circular or any order asserting that the transactions contemplated by
this Agreement are subject to the registration requirements of the Securities
Act, has been issued and no proceeding for that purpose has commenced or is
pending or, to the knowledge of the Company, is contemplated.

       

      (c)  Each
of the Company and its subsidiaries has been duly incorporated or formed and is
an existing corporation, limited liability company, limited partnership or
general partnership in good standing under the laws of its state of
organization, with power and authority (corporate and other) to own its
properties and conduct its business as described in the General Disclosure
Package and the Final Offering Circular; and each of the Company and its
subsidiaries is duly qualified to do business as a foreign entity in good
standing in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification, except to the extent
the failure to so qualify or be in good standing could not reasonably be
expected to have a material adverse effect on the condition (financial or
other), business, properties, results of operations or, to the knowledge of the
Company, prospects of the Company and its subsidiaries, taken as a whole (a
“Material Adverse
Effect”). The Company has all requisite corporate power and authority to
enter into the Operative Documents and to consummate the transactions
contemplated thereby.

       

      
        
          
          

        

        
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      (d)  Neither
the Company nor any of its subsidiaries is (i) in default in the performance of
any obligation, agreement, covenant or condition contained in any indenture,
loan agreement, mortgage, lease or other agreement or instrument to which the
Company or its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, or (ii) in violation of its
respective charter or bylaws, operating agreement or other organizational
document that governs the existence or administration of such entity, in the
case of clause (i), except as could not reasonably be expected to have a
Material Adverse Effect.

      
         

      

      (e)(i)  As
of the date hereof, subject to changes in the ordinary course of business or as
contemplated by the General Disclosure Package and the Final Offering Circular,
the Company has the capitalization set forth in the General Disclosure Package
and the Final Offering Circular under the heading “Capitalization”; (ii) all of
the issued shares of capital stock of the Company and its subsidiaries have been
duly and validly authorized and issued and are fully paid and non-assessable;
and (iii) the capital stock of each subsidiary owned by the Company, directly or
through subsidiaries, is owned free from liens, encumbrances and material
defects, other than those described in the Exchange Act Reports.

       

      (f)  The
Offered Securities have been duly and validly authorized, executed, issued and
delivered, and constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture, enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors’ rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefore may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law). On the date
hereof, the Offered Securities conform to the description thereof contained in
the General Disclosure Package and the Final Offering Circular and on the
Closing Date the Offered Securities will conform to the description thereof
contained in the Final Offering Circular.

       

      (g)  The
Exchange Securities (as defined in the Registration Rights Agreement) have been,
or as of the Registered Exchange Offer (as defined in the Registration Rights
Agreement) will have been, duly and validly authorized by the Company and, when
duly executed by the Company in accordance with the terms of the Indenture,
assuming due authentication of the Exchange Securities by the Trustee, upon
exchange for the Initial Securities (as defined in the Registration Rights
Agreement), will be validly issued and delivered, and will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors’ rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefore may
be brought (regardless of whether such enforcement is considered in a proceeding
in equity or at law). The Exchange Securities will conform to the descriptions
thereof contained in the Registration Statement (as defined in the Registration
Rights Agreement).

       

      (h)  The
Indenture has been duly and validly authorized, executed and delivered by the
Company, constitutes the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefore may be
brought (regardless of whether such enforcement is considered in a proceeding in
equity or at law); and assuming the accuracy of the Selling Noteholder’s and the
Purchasers’ representations and warranties and the Selling Noteholder’s and the
Purchasers’ compliance with the agreements in Sections 4 and 5 hereof and
compliance with the limitations and restrictions contained under the heading
“Transfer Restrictions” in the Final Offering Circular, no qualification of the
Indenture under the Trust Indenture Act of 1939, as amended (the “TIA”) was required in
connection with the issuance and sale of the Offered Securities pursuant to the
Noteholder Purchase Agreement or is required in connection with the offer and
resale of the Offered Securities contemplated hereby; and the Indenture conforms
in all material respects to the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which is qualified
thereunder. On the date of this Agreement, the Indenture conforms to the
description thereof in the General Disclosure Package and the Final Offering
Circular, and on the Closing Date the Indenture will conform to the description
thereof in the Final Offering Circular.

       

      (i)  This
Agreement has been duly authorized, executed and delivered by the
Company.  The Registration Rights Agreement has been duly authorized,
executed and delivered and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors’ rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding therefore
may be brought (regardless of whether such enforcement is considered in a
proceeding in equity or at law).

       

      (j)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
there are no contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Purchaser or any subsequent purchaser for a brokerage commission, finder’s fee
or other like payment.

       

      (k)  No
consent, approval, authorization, or order of, or filing with, any governmental
agency or body or any court is or was required in connection with the issuance
and sale of the Offered Securities by the Company pursuant to the Noteholder
Purchase Agreement or in connection with the sale by the Selling Noteholder to
the Purchasers or the offer and resale of the Offered Securities by the
Purchasers contemplated hereby, except for (i) such as may be required under
foreign or state securities laws, blue sky laws and related regulations, (ii)
those that have been obtained or made on or prior to the Closing Date, (iii)
those that could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect and would not materially adversely affect the
ability of the Company to perform its obligations under the Operative Documents
and (iv) those disclosed in the General Disclosure Package and the Final
Offering Circular.

       

      (l)  The
execution, delivery and performance of the Operative Documents, and the issuance
and sale of the Offered Securities pursuant to the Noteholder Purchase Agreement
and the offer and resale of the Offered Securities and compliance with the terms
and provisions thereof, have not resulted and will not result in a breach or
violation of any of the terms and provisions of, or constitute a default under
(i) any statute, any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the Company or
any of its subsidiaries or any of their properties, (ii) any agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
properties of the Company or any of its subsidiaries is subject or (iii) the
charter or bylaws of the Company or any of its subsidiaries, except in the case
of (i) and (ii), for such breaches, violations or defaults as could not
reasonably be expected to have a Material Adverse Effect.

       

      (m)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
the Company and its subsidiaries possess adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by them and have not received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or its
subsidiaries, could individually or in the aggregate reasonably be expected to
have a Material Adverse Effect.

       

      (n)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
each of the Company and its subsidiaries is in compliance with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by
all governmental agencies, bodies or courts, except where the failure to comply
could not reasonably be expected to have a Material Adverse Effect.

       

      (o)  To
the knowledge of the Company, except as disclosed in the General Disclosure
Package and the Final Offering Circular, no labor dispute with the employees of
the Company and its subsidiaries, that could reasonably be expected to result in
a Material Adverse Effect is imminent.

       

      (p)  The
Company and its subsidiaries own or possess on reasonable terms, adequate
trademarks, trade names and other rights to patents, copyrights and other
intellectual property (collectively, “intellectual property rights”)
necessary to conduct the business now operated by them, or presently employed by
them, and have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property rights that,
if determined adversely to the Company or any of its subsidiaries, could
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.

       

      (q)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
neither the Company nor any of its subsidiaries is in violation of any statute,
rule, regulation, decision or order of any governmental agency or body or any
court, domestic or foreign having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, relating to the use,
disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “environmental laws”), owns or
operates any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim could
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect; and the Company is not aware of any pending investigation which
might lead to such a claim.

       

      (r)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
there are no pending actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or their respective properties that, if
determined adversely to the Company or its subsidiaries, could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect,
or would materially and adversely affect the ability of the Company to perform
its obligations under the Operative Documents; and except as disclosed in the
General Disclosure Package and the Final Offering Circular no such actions,
suits or proceedings are, to the Company’s knowledge, threatened or
contemplated.

       

      
        
          
          

        

        
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      (s)  The
financial statements of the Company together with the related schedules and
notes included or incorporated by reference in the General Disclosure Package
and the Final Offering Circular present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as of the
dates indicated and the results of their operations and cash flows and the
changes in their financial position for the periods specified; and such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis.  The pro forma financial information set forth or incorporated
by reference in the Offering Circular is, in all material respects, fairly
presented and prepared on a basis consistent with the historical financial
statements of the Company and its subsidiaries, except to the extent stated
therein, and gives effect to assumptions used in the preparation thereof which
have been made on a reasonable basis and in good faith.

       

      (t)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
since the date as of which the information is given in the General Disclosure
Package and the Final Offering Circular, there has been no material adverse
change, nor any development or event reasonably expected to result in a material
adverse change, in the condition (financial or other), business, properties,
results of operations or, to the knowledge of the Company, prospects of the
Company and its subsidiaries, taken as a whole and, except as disclosed in or
contemplated by the General Disclosure Package and the Final Offering Circular,
there has been no dividend or distribution of any kind declared, paid or made by
Company on any class of its capital stock.

       

      (u)  The
Company is subject to the reporting requirements of either Section 13 or
Section 15(d) of the Exchange Act and files reports with the Commission on
the Electronic Data Gathering, Analysis, and Retrieval (EDGAR)
system.

       

      (v)  The
Company is not an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the United States Investment Company Act of 1940 (the “Investment Company Act”); and
the Company is not and, after giving effect to the issuance and sale of the
Offered Securities pursuant to the Noteholder Purchase Agreement and the
application of the proceeds thereof as described in the General Disclosure
Package and the Final Offering Circular, will not be an “investment company” as
defined in the Investment Company Act.

       

      (w)  The
Company has established and maintains disclosure controls and procedures (as
defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), which (i) are
designed to ensure that material information relating to the Company and its
consolidated subsidiaries is made known to the principal executive officer and
its principal financial officer by others within those entities, particularly
during the periods in which the periodic reports required under the Exchange Act
are being prepared and (ii) have been evaluated for effectiveness as of a date
within 90 days prior to the date of the Company’s Annual Report on Form 10-K and
are effective in all material respects to perform the functions for which they
were established.

       

      (x)  Based
on the most recent evaluation of its disclosure controls and procedures, the
Company is not aware of (i) any material weakness in the design or operation of
internal controls which could adversely affect the ability of the Company to
record, process, summarize and report financial data or any material weaknesses
in internal controls or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in internal
controls.

       

      (y)  Since
the date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or in
other factors that could significantly affect internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses, except as disclosed in the General Disclosure Package and the Final
Offering Circular.

       

      (z)  Ernst
& Young LLP and PricewaterhouseCoopers LLP, who have each certified certain
financial statements of the Company and its subsidiaries, are each independent
public accountants with respect to the Company as required by the Securities Act
and the rules and regulations of the Commission and the Public Company
Accounting Oversight Board.

       

      (aa)   Except
as set forth in the General Disclosure Package and the Final Offering Circular,
(i) the Company is not subject to regulation under the Federal Power Act, as
amended (“FPA”), other
than in regard to Section 203 thereof and (ii) no subsidiary of the Company is
(A) subject to regulation under the FPA other than as customarily imposed on a
power marketer with market-based rate or specific cost-based rate authority, or
as a “qualifying facility” (“QF”) under the Public Utility
Regulatory Policies Act of 1978, as amended (16 U.S.C. Section 796 et seq.)
(“PURPA”), as provided
in 18 C.F.R. Section 292.601(c), or (B) with respect to each of the power
generation projects in which any of the Company or its subsidiaries has an
interest that is a QF, subject to any state law or regulation with respect to
rates or the financial or organizational regulation of electric utilities, other
than as contemplated by 18 C.F.R. Section 292.602(c).

       

      (bb)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
each of the power generation projects that is a QF under PURPA, in which the
Company or its subsidiaries has an interest, has certified to the FERC that it
meets the requirements for certification as a QF as set out in PURPA and the
regulations of the Federal Energy Regulatory Commission (“FERC”) promulgated thereunder,
as amended from time to time.

       

      (cc)  Each
of the Company and its subsidiaries that sells power at market-based rates
outside of the Electric Reliability Council of Texas, Inc. (“ERCOT”) has validly-issued
orders from the FERC authorizing it to engage in wholesale sales of electricity,
ancillary services in certain markets and, to the extent permitted under its
market-based rate tariff, other products and services at market-based rates. The
FERC has not issued any orders limiting the ability of each such entity to
engage in the wholesale sales of electricity at market-based prices, and has not
imposed any rate caps or mitigation measures other than rate caps and mitigation
measures generally applicable to similarly situated marketers or generators
selling electricity, ancillary services or other products at wholesale in the
geographic market where each such entity conducts its business.

       

      (dd)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
there are no pending complaints filed with the FERC seeking abrogation or
modification of a contract for the sale of power by the Company or any of its
subsidiaries.

       

      (ee)  No
securities of the same class (within the meaning of Rule 144A(d)(3) under
the Securities Act) as the Offered Securities are listed on any national
securities exchange registered under Section 6 of the Exchange Act or quoted in
a U.S. automated inter-dealer quotation system.

       

      (ff)  The
offer and sale of the Offered Securities by the Company to the Selling
Noteholder in the manner contemplated by the Noteholder Purchase Agreement was
exempt from the registration requirements of the Securities Act by reason of
Section 4(2) thereof, and, the offer and sale of the Offered Securities by the
Selling Noteholder to the Purchasers in the manner contemplated by this
Agreement will be exempt from the registration requirements of the Securities
Act by reason of Rule 144A thereunder.

       

      (gg)  Neither
the Company nor any of its affiliates, nor any person acting on its or their
behalf (it being understood that no representation is made with respect to the
Selling Noteholder, any Purchaser, any Purchaser’s affiliates or any of their
representatives) (i) has, within the six-month period prior to the date hereof,
offered or sold in the United States or to any U.S. person (as such terms are
defined in Regulation S under the Securities Act) the Offered Securities (other
than to the Selling Noteholder pursuant to the Noteholder Purchase Agreement) or
any security of the same class or series as the Offered Securities or (ii) has
offered or will offer or sell the Offered Securities (A) in the United States by
means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act or (B) with respect to any such
securities sold in reliance on Rule 903 of Regulation S under the Securities
Act, by means of any directed selling efforts within the meaning of Rule 902(c)
of Regulation S.  The Company has not entered and will not enter into
any contractual arrangement with respect to the distribution of the Offered
Securities except for this Agreement.

       

      (hh)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
there are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company or to require the Company to include such securities with the
Offered Securities registered pursuant to any registration
statement.

       

      (ii)  Neither
the Company nor any of its subsidiaries nor any agent thereof acting on the
behalf of them has taken, and none of them will take, any action that might
cause this Agreement or the issuance or sale of the Offered Securities to
violate Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System.

       

      (jj)  The
Company and each of its subsidiaries carry, or are covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of their
respective businesses and the value of their respective properties and as is
customary for companies engaged in similar businesses in similar
industries.

       

      (kk)  No
“nationally recognized statistical rating organization” as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act (i) has imposed (or has
informed the Company that it is considering imposing) any condition (financial
or otherwise) on the Company’s retaining any rating assigned to the Company or
any securities of the Company or (ii) has indicated to the Company that it
is considering (a) the downgrading, suspension or withdrawal of, or any review
for a possible change that does not indicate the direction of the possible
change in, any rating so assigned or (b) any change in the outlook for any
rating of the Company or any securities of the Company.

       

      (ll)  Except
for such matters as could not reasonably be expected to have a Material Adverse
Effect, the Company is in compliance with all presently applicable provisions of
ERISA; no “reportable event” (as defined in ERISA), has occurred with respect to
any “pension plan” (as defined in ERISA), for which the Company would have any
liability; the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any “pension plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the “Code”);
and each “pension plan” for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.

       

      
        
          
          

        

        
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      (mm)  The
Company has filed all material federal, state and local income and franchise tax
returns required to be filed through the date hereof and has paid all taxes due
thereon, except (i) those taxes that are not reasonably likely to result in a
Material Adverse Effect, (ii) those taxes, assessments or other charges that are
being contested in good faith by appropriate proceedings or (iii) as described
in the General Disclosure Package and the Final Offering Circular; and no tax
deficiency has been determined adversely to the Company or any of its
subsidiaries which has had (nor does the Company has any knowledge of any tax
deficiency in writing which, if determined adversely to the Company or any of
its subsidiaries, could reasonably be expected to have) a Material Adverse
Effect.

       

      (nn)  Prior
to the date hereof, neither the Company nor any of its affiliates has taken any
action which is designed to or which has constituted or which might have been
expected to cause or result in stabilization or manipulation of the price of any
security of the Company in connection with the sale and offering or resale of
the Offered Securities.

       

      (oo)  The
General Disclosure Package and the Final Offering Circular contains all the
information specified in, and meeting the requirements of, Rule 144A(d)(4) under
the Securities Act.

       

      (pp)  The
statements set forth in the Preliminary Offering Circular and the Final Offering
Circular under the caption “Description of Notes”, insofar as they purport to
constitute a summary of the terms of the Offered Securities, under the captions
“Material U.S. Federal Income Tax Considerations”, “Description of Certain
Indebtedness” and “Plan of Distribution”, insofar as they purport to describe
the provisions of the laws and documents referred to therein, are accurate and
fair summaries in all material respects.

       

      2B.  Representations and Warranties of
the Selling Noteholder.  The Selling Noteholder represents and
warrants to, and agrees with, the Purchasers that:

       

      (a)  The
Selling Noteholder has valid and unencumbered title to the Offered Securities
and has full right, power and authority to enter into this Agreement and to
sell, assign, transfer and deliver the Offered Securities hereunder; and upon
the delivery of and payment for the Offered Securities on the Closing Date, the
Purchasers will acquire valid and unencumbered title to the Offered
Securities.

       

      (b)  Assuming
that the Purchasers’ representations and warranties made in Section 4 hereof are
true and correct and that the Purchasers and the Company comply with the offer
and sale procedures set forth in the Offering Circular, no consent, approval,
authorization or order of, or filing with, any governmental agency or body or
any court is required to be obtained or made by the Selling Noteholder in
connection with the resale of the Offered Securities sold by the Selling
Noteholder, except such as have been obtained and made under the Act and such as
may be required under state securities laws.

       

      (c)  The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, or result in
the imposition of any lien, charge or encumbrance upon any property or assets of
the Selling Noteholder pursuant to, (i) any statute, any rule, regulation or
order of any governmental agency or body or any court having jurisdiction over
the Selling Noteholder or any of its properties, (ii) any agreement or
instrument to which the Selling Noteholder is a party or by which the Selling
Noteholder is bound or to which any of the properties of the Selling Noteholder
is subject or (iii) the charter, bylaws or other constituent documents of
the Selling Noteholder, except in the case of (i) and (ii), for such breaches,
violations or defaults as could not reasonably be expected to have a material
adverse effect on the resale of the Offered Securities.

       

      (d)  As
of the date of this Agreement and as of the Closing Date, the Final Offering
Circular does not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.  At the Time of Sale and as of the Closing Date neither
(i) the General Disclosure Package, nor (ii) any individual Supplemental
Marketing Material (as hereinafter defined), when considered together with the
General Disclosure Package, included any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.  The preceding two sentences do not apply to statements in
or omissions from the Preliminary Offering Circular or Final Offering Circular,
the General Disclosure Package or any Supplemental Marketing Material based upon
written information furnished to the Company or to the Selling Noteholder by any
Purchaser through Credit Suisse specifically for use therein, it being
understood and agreed that the only such information is that described as such
in Section 8(c) hereof.  Notwithstanding anything in this paragraph
(d) to the contrary, with respect to the Selling Noteholder, the provisions of
this paragraph (d) apply only to the extent that any statements in or omissions
from any Preliminary Offering Circular or Final Offering Circular, the General
Disclosure Package or any Supplemental Marketing Material are based upon written
information furnished to the Company by or on the behalf of the Selling
Noteholder specifically for use therein, it being understood and agreed that the
only such information furnished by the Selling Noteholder consists of the name
and address of the Selling Noteholder in the Preliminary Offering Circular and
Final Offering Circular.

       

      (e)  The
sale of the Offered Securities by the Selling Noteholder pursuant to this
Agreement is not prompted by any material information concerning the Company or
any of its subsidiaries that is not set forth the General Disclosure
Package.

       

      (f)  This
Agreement has been duly authorized, executed and delivered by the Selling
Noteholder.

       

      (g)  Except
as disclosed in the General Disclosure Package and the Final Offering Circular,
there are no contracts, agreements or understandings between the Selling
Noteholder and any person that would give rise to a valid claim against the
Selling Noteholder or any Purchaser or any subsequent purchaser for a brokerage
commission, finder’s fee or other like payment.

       

      (h)  The
Selling Noteholder has not taken, directly or indirectly, any action that is
designed to or that has constituted or that would reasonably be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Offered
Securities.

       

      (i)  Neither
the Selling Noteholder nor any other person acting on behalf of the Selling
Noteholder (other than the Purchasers, as to which the Selling Noteholder makes
no representation) has offered or sold to any person any Offered Securities,
other than Offered Securities offered or sold to the Purchasers
hereunder.

       

      (j)  The
Selling Noteholder agrees that it and each of its affiliates have not entered
into and will not prior to the Closing Date or the termination of this Agreement
enter into any contractual arrangement with respect to the distribution of the
Offered Securities except for this Agreement.

       

      3.  Purchase, Sale and Delivery of
Offered Securities.  On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Selling Noteholder agrees to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Selling Noteholder, at a purchase price of 86.500% of the principal
amount thereof plus accrued interest from December 1, 2009 to the Closing Date
(as hereinafter defined), the respective principal amounts of the Offered
Securities set forth opposite the names of the several Purchasers in
Schedule A hereto.

       

      The
Selling Noteholder will deliver to the Purchasers against payment of the
purchase price the Offered Securities, in the form of one or more permanent
global securities in definitive form (the “Global Securities”) deposited with
the Trustee as custodian for The Depository Trust Company (“DTC”) and registered in the
name of Cede & Co., as nominee for DTC, by causing DTC to credit the Offered
Securities to the account of the Purchasers at DTC.  Interests in any
permanent global securities will be held only in book-entry form through DTC,
except in the limited circumstances described in the Final Offering
Circular.

       

      Payment
for the Offered Securities shall be made by the Purchasers in Federal (same day)
funds by wire transfer to an account at a bank acceptable to Credit Suisse, on
December 7, 2009, or at such other time not later than seven full business days
thereafter as Credit Suisse and the Selling Noteholder determine, such time
being herein referred to as the “Closing Date”.

       

      4.  Representations by Purchasers;
Resale by Purchasers. (a)  Each Purchaser severally represents
and warrants to the Company and the Selling Noteholder that it is an “accredited
investor” within the meaning of Regulation D under the Securities Act and a
“qualified institutional buyer” as defined in Rule 144A under the Securities
Act.

       

      (b)  Each
Purchaser severally acknowledges that the Offered Securities have not been
registered under the Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except
pursuant to an exemption from the registration requirements of the Securities
Act.  Each Purchaser severally represents and agrees that it has
offered and sold the Offered Securities and will offer and sell the Offered
Securities (i) as part of their distribution at any time and (ii) otherwise
until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 144A (“Rule 144A”). Accordingly,
neither such Purchaser nor its affiliates, nor any persons acting on its or
their behalf, have engaged or will engage in any directed selling efforts with
respect to the Offered Securities.

       

      (c)  Each
Purchaser severally agrees that it and each of its affiliates has not entered
and will not enter into any contractual arrangement with respect to the
distribution of the Offered Securities except for any such arrangements with the
other Purchasers or affiliates of the other Purchasers or with the prior written
consent of the Company.

       

      (d)  Each
Purchaser severally agrees that it and each of its affiliates will not offer or
sell the Offered Securities by means of any form of general solicitation or
general advertising, within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
Each Purchaser severally agrees, with respect to resales made in reliance on
Rule 144A of any of the Offered Securities, to deliver, either with the
confirmation of such resale or otherwise prior to settlement of such resale, a
notice to the effect that the resale of such Offered Securities has been made in
reliance upon the exemption from the registration requirements of the Securities
Act provided by Rule 144A.

       

      
        
          
          

        

        
          - 4
-

           

        

        
          
          

        

      

      (e)  Each
Purchaser severally represents and agrees that (i) it has only communicated
or caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment activity
(within the meaning of section 21 of the Financial Services and Markets Act 2000
(the “FSMA”)) received
by it in connection with the issue or sale of any Offered Securities in
circumstances in which section 21(1) of the FSMA does not apply to the
Company and (ii) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation to the
Offered Securities in, from or otherwise involving the United
Kingdom.

       

      (f)  In
relation to each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a “Relevant Member State”), each
Purchaser severally represents and agrees that with effect from and including
the date on which the Prospectus Directive is implemented in that Relevant
Member State (the “Relevant
Implementation Date”) it has not made and will not make an offer of
Offered Securities to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the Offered Securities which has been
approved by the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the
competent authority in that Relevant Member State, all in accordance with the
Prospectus Directive, except that it may, with effect from and including the
Relevant Implementation Date, make an offer of Offered Securities to the public
in that Relevant Member State at any time:

       

      (i)           to
legal entities which are authorized or regulated to operate in the financial
markets or, if not so authorized or regulated, whose corporate purpose is solely
to invest in securities;

       

      (ii)           to
any legal entity which has two or more of (A) an average of at least 250
employees during the last financial year; (B) a total balance sheet of more than
€43,000,000 and (C) an annual net turnover of more than €50,000,000, as shown in
its last annual or consolidated accounts;

       

      (iii) to fewer than 100 natural or
legal persons (other than qualified investors as defined in the Prospectus
Directive) subject to obtaining the prior consent of the manager for any such
offer; or

       

      (iv)           in
any other circumstances which do not require the publication by the Company of a
prospectus pursuant to Article 3 of the Prospectus Directive.

       

      For the
purposes of this provision, the expression an “offer of Offered Securities to
the public” in relation to any Offered Securities in any Relevant Member State
means the communication in any form and by any means of sufficient information
on the terms of the offer and the Offered Securities to be offered so as to
enable an investor to decide to purchase or subscribe the Offered Securities, as
the same may be varied in that Member State by any measure implementing the
Prospectus Directive in that Member State and the expression “Prospectus
Directive” means Directive 2003/71/EC and includes any relevant implementing
measure in each Relevant Member State.

       

      5.  Certain Agreements of the Company
and the Selling Noteholder.  The Company and, to the extent set
forth below, the Selling Noteholder, agree with the several Purchasers
that:

       

      (a)  The
Company will advise Credit Suisse promptly of any proposal to amend or
supplement the Preliminary Offering Circular or Final Offering Circular and will
not effect such amendment or supplementation without Credit Suisse’s consent
(which consent shall not be unreasonably withheld or delayed). If, at any time
prior to the completion of the resale of the Offered Securities by the
Purchasers, there occurs an event or development as a result of which any
document included in the Preliminary Offering Circular or Final Offering
Circular, the General Disclosure Package or any Supplemental Marketing Material
included or would include an untrue statement of a material fact or omitted or
would omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at such time, not
misleading, the Company promptly will notify Credit Suisse of such event and
promptly will prepare, at its own expense, an amendment or supplement which will
correct such statement or omission. Neither Credit Suisse’s consent to, nor the
Purchasers’ delivery to offerees or investors of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6.

       

      (b)  The
Company will furnish to Credit Suisse copies of the Preliminary Offering
Circular, each other document comprising a part of the General Disclosure
Package and the Final Offering Circular, all amendments and supplements to such
documents and each item of Supplemental Marketing Material, in each case as soon
as available and in such quantities as Credit Suisse reasonably requests. At any
time when the Company is not subject to Section 13 or 15(d) of the Exchange Act,
and any Offered Securities remain “restricted securities” within the meaning of
the Securities Act, the Company will promptly furnish or cause to be furnished
to Credit Suisse (and, upon request, to each of the other Purchasers) and, upon
request of holders and prospective purchasers of the Offered Securities, to such
holders and purchasers, copies of the information required to be delivered to
holders and prospective purchasers of the Offered Securities pursuant to
Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection with resales
by such holders of the Offered Securities. The Company will pay the expenses of
printing and distributing to the Purchasers all such documents.

       

      (c)  The
Company will use all commercially reasonable efforts to obtain the qualification
of the Offered Securities for sale and the determination of their eligibility
for investment under the laws of such jurisdictions in the United States and
Canada as Credit Suisse designates and will continue such qualifications in
effect so long as required for the resale of the Offered Securities by the
Purchasers, provided that the Company will not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
such state.

       

      (d)  During
the period of one year after the Closing Date, the Company will, upon request,
furnish to Credit Suisse, each of the other Purchasers and any holder of Offered
Securities a copy of the restrictions on transfer applicable to the Offered
Securities.

       

      (e)  During
the period of five years hereafter, unless such documents are available
electronically via the EDGAR system maintained by the Commission, the Company
will furnish to Credit Suisse, and, upon request, to each of the other
Purchasers, as soon as practicable after the end of each fiscal year, a copy of
its annual report to stockholders for such year; and the Company will furnish to
Credit Suisse and, upon request, to each of the other Purchasers, (i) as
soon as available, a copy of each report and any definitive proxy statement of
the Company mailed to stockholders and (ii) the information required to be
provided to the Trustee for the Offered Securities pursuant to the
Indenture.

       

      (f)  Subject
to the Purchasers’ compliance with its representations and warranties and
agreements set forth in Section 4 hereof, the Company consents to the use of the
Preliminary Offering Circular, any other documents comprising any part of the
General Disclosure Package, the Final Offering Circular and any amendments and
supplements thereto required pursuant to Section 5(a) hereto, by the
Purchasers.

       

      (g)  During
the period of one year after the Closing Date, the Company will not, and will
not permit any of its affiliates (as defined in Rule 144 under the Securities
Act) to, resell any of the Offered Securities that have been reacquired by any
of them, unless such Offered Securities are resold in a transaction registered
under the Securities Act.

       

      (h)  During
the period of two years after the Closing Date, the Company will not be or
become an open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act.

       

      (i)  The
Company agrees to pay all expenses incidental to the performance of its
obligations under the Operative Documents including (i) the fees and expenses of
the Trustee and its professional advisers, (ii) all expenses in connection with
the execution, issue, authentication, packaging and initial delivery of the
Offered Securities and, as applicable, the Exchange Securities (as defined in
the Registration Rights Agreement), the preparation and printing of the
Preliminary Offering Circular, any other documents comprising any part of the
General Disclosure Package, the Final Offering Circular, all amendments and
supplements thereto, each item of Supplemental Marketing Material and any other
document relating to the issuance, offer, sale and delivery of the Offered
Securities and as applicable the Exchange Securities, (iii) for any expenses
(including fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities or the Exchange Securities for sale
under the state securities laws as provided in Section 5(c) and the
printing of memoranda relating thereto, (iv) for any fees charged by investment
rating agencies for the rating of the Offered Securities or the Exchange
Securities, (v) for expenses incurred in distributing the Preliminary Offering
Circular, any other documents comprising any part of the General Disclosure
Package, the Final Offering Circular (including any amendments and supplements
thereto) and any Supplemental Marketing Material to the Purchasers and (vi) the
reasonable fees and expenses of Latham & Watkins LLP, counsel to the Selling
Noteholder, relating to the offer and sale of the Offered
Securities.  The Company will also pay the costs and expenses of the
Company and its officers and employees for its reasonable costs and expenses, in
each case, relating to investor presentations on any “road show” in connection
with the offering and sale of the Offered Securities including, without
limitation, any travel expenses of the Company’s officers and employees and any
other expenses of the Company.

       

      (j)  In
connection with the offering, until Credit Suisse shall have notified the
Company, the other Purchasers and the Selling Noteholder, which notice shall be
promptly provided upon the written request of the Company or the Selling
Noteholder, of the completion of the resale of the Offered Securities, neither
the Company, the Selling Noteholder nor any of their respective affiliates has
or will, either alone or with one or more other persons, bid for or purchase for
any account in which they or any of their affiliates has a beneficial interest
any Offered Securities or attempt to induce any person to purchase any Offered
Securities; and neither they nor any of their affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active trading in, or
of raising the price of, the Offered Securities.

       

      (k)  Except
as stated in this Agreement, the General Disclosure Package or the Final
Offering Circular, none of the Company, the Selling Noteholder or any of their
respective affiliates have taken, nor will any of them take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Offered Securities.

       

      (l)  The
Offered Securities are eligible for clearance and settlement through
DTC.

       

      
        
          
          

        

        
          - 5
-

           

        

        
          
          

        

      

      (m)  The
Company agrees not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act), that
would be integrated with the sale of the Offered Securities in a manner that
would require the registration under the Securities Act of the sale to the
Selling Noteholder, the resale by the Selling Noteholder to the Purchasers or
the resale of the Offered Securities by the Purchasers.

       

      (n)  The
Company agrees to comply with all the terms and conditions of the Operative
Documents and all agreements set forth in the representation letter of the
Company to DTC relating to the approval of the Offered Securities by DTC for
“book entry” transfer.

       

      (o) For a
period of five consecutive business days following the date hereof, neither the
Company nor any of its subsidiaries will, directly or indirectly, take any of
the following actions with respect to any United States dollar-denominated debt
securities issued or guaranteed by the Company or such subsidiary and having a
maturity of more than one year from the date of issue or any securities
convertible into or exchangeable or exercisable for any such securities (“Lock-Up
Securities”):  (i) offer, sell, issue, contract to sell, pledge
or otherwise dispose of Lock-Up Securities, (ii) offer, sell, issue, contract to
sell, contract to purchase or grant any option, right or warrant to purchase
Lock-Up Securities, (iii) establish or increase a put equivalent position or
liquidate or decrease a call equivalent position in Lock-Up Securities within
the meaning of Section 16 of the Exchange Act or (iv) file with the Commission a
registration statement under the Securities Act, other than registration
statements contemplated by the Registration Rights Agreement, relating to
Lock-Up Securities or publicly disclose the intention to take any such action,
in each case, without the prior written consent of the Credit
Suisse.

       

      6.  Free Writing
Communications.  (a)  The Company and the Selling
Noteholder represent and agree that, unless they obtain the prior consent of
Credit Suisse, and each Purchaser severally represents and agrees that, unless
it obtains the prior consent of the Company, Credit Suisse and the Selling
Noteholder, it has not made and will not make any offer relating to the Offered
Securities that would constitute an Issuer Free Writing
Communication.

       

      (b)  The
Company consents to the use by any Purchaser of a Free Writing Communication
that (i) contains only (A) information describing the preliminary terms of
the Offered Securities or their offering or (B) information that describes
the final terms of the Offered Securities or their offering and that is included
in the Terms Communication or is included in or is subsequently included in the
Final Offering Circular or (ii) does not contain any material information
about the Company or its securities that was provided by or on behalf of the
Company, it being understood and agreed that any such Free Writing Communication
referred to in clause (i) or (ii) shall not be an Issuer Free Writing
Communication for purposes of this Agreement.

       

      7.  Conditions of the Obligations of the
Purchasers.  The obligations of the several Purchasers to
purchase and pay for the Offered Securities will be subject to the accuracy of
the representations and warranties on the part of the Company and the Selling
Noteholder herein as of the date hereof and on the Closing Date, to the accuracy
of the statements of officers of the Company and the Selling Noteholder made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Noteholder of their respective obligations hereunder and to the
following additional conditions precedent:

       

      (a)  The
Purchasers shall have received letters, dated the date of this Agreement,
of  Ernst & Young LLP and PricewaterhouseCoopers LLP, independent
public accountants of the Company, substantially in the form attached hereto as
Annex A and B respectively, confirming that they are independent public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder.  Each such letter shall be
in form and substance reasonably satisfactory to the Purchasers as agreed as of
the date hereof and shall cover the matters ordinarily covered by accountants’
“comfort letters” to initial purchasers in connection with offerings similar to
the offering of the Offered Securities.

       

      (b)  Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
(i) any change, or any development or event involving a prospective change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole which, in the
judgment of a majority in interest of the Purchasers, including Credit Suisse,
is material and adverse and makes it impractical or inadvisable to proceed with
completion of the offering or the resale of and payment for the Offered
Securities; (ii) any downgrading in the rating of any debt securities of
the Company by any “nationally recognized statistical rating organization” (as
defined for purposes of Rule 436(g) under the Securities Act), or any public
announcement that any such organization has under surveillance or review its
rating of any debt securities of the Company (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading, of such rating) or any announcement that the Company has been
placed on negative outlook as of or after the date of this Agreement; (iii) any
change in U.S. or international financial, political or economic conditions or
currency exchange rates or exchange controls as would, in the judgment of a
majority in interest of the Purchasers, including Credit Suisse, be likely to
prejudice materially the success of the proposed issue, sale or distribution of
the Offered Securities, whether in the primary market or in respect of dealings
in the secondary market; (iv) (A) any material suspension or material limitation
of trading in securities generally on the New York Stock Exchange or (B) any
setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market; (v) any general banking moratorium declared by U.S.
Federal or New York authorities; (vi) any major disruption of settlements of
securities or clearance services in the United States; or (vii) any attack on,
outbreak or escalation of hostilities or act of terrorism involving the United
States, any declaration of war by Congress or any other national or
international calamity or emergency if, in the judgment of a majority in
interest of the Purchasers, including Credit Suisse, the effect of any such
attack, outbreak, escalation, act, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the offering or sale of
and delivery and payment for the Offered Securities.

       

      (c)  The
Purchasers shall have received an opinion, dated the Closing Date, of Locke Lord
Bissell & Liddell LLP, counsel for the Company, substantially in the form of
the following:

       

      (i)  The
Company is validly existing as a corporation in good standing under the laws of
the State of Delaware, has the corporate power and authority under the Delaware
General Corporation Law and its certificate of incorporation and bylaws to own
its properties and conduct its business as described in the General Disclosure
Package and the Final Offering Circular.

       

      (ii)  Each
subsidiary of the Company listed on Exhibit 21.1 to the Company’s Annual Report
on Form 10-K most recently filed with the Commission is validly existing as an
entity in good standing under the laws of the jurisdiction of its
formation.

       

      (iii)  The
Company has or, as of the applicable time, had the corporate power and authority
to enter into each of the Operative Documents.

       

      (iv)  The
Offered Securities constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture and are enforceable against the
Company in accordance with their terms. The Offered Securities conform in all
material respects to the description thereof in the General Disclosure Package
and the Final Offering Circular.

       

      (v)  The
Exchange Securities, when duly executed, authenticated, issued and delivered as
provided in the Indenture and the Registration Rights Agreement, will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms.

       

      (vi)  The
Indenture is a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. The Indenture conforms in all material
respects to the description thereof in the General Disclosure Package and the
Final Offering Circular.

       

      (vii)  No
approval or authorization under the Federal Power Act, as amended, is required
for the execution and delivery by the Company of the Operative Documents and the
performance by the Company of the obligations thereunder.

       

      (viii)  No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body (each, a “Filing”) is required under any
laws for the due execution and delivery of the Operative Documents by the
Company and the performance by the Company of its obligations thereunder,
subject to the assumptions set forth in paragraph (xvi) and except (i) routine
Filings necessary in connection with the conduct of the Company’s business,
including routine Filings required to be made under the Exchange Act, (ii) such
other Filings as have been obtained or made, (iii) Filings required under
Federal and state securities laws as provided in the Operative Documents and
(iv) Filings required to maintain corporate and similar standing and
existence.

       

      (ix)  The
execution and delivery of the Operative Documents by the Company do not, and the
performance by the Company of its obligations thereunder will not, result in any
violation of any order, writ, judgment or decree known to such
counsel.

       

      (x)  The
execution and delivery of the Operative Documents by the Company does not, and
the performance by the Company of its obligations thereunder will not, (a)
violate the certificate of incorporation or bylaws of the Company,
(b) breach or result in a default of any currently existing agreement or
instrument listed as an exhibit to the Company’s Annual Report on Form 10-K most
recently filed with the Commission and all subsequent reports which have been
filed by the Company with the Commission or (c) violate the Delaware General
Corporation Law, New York State law or U.S. federal law or any rule or
regulation promulgated thereunder.

       

      (xi)  (a)
The execution and delivery of the Operative Documents by the Company, and the
performance by the Company of its obligations under the Operative Documents,
have been duly authorized by all necessary corporate action on the part of the
Company and (b) each Operative Document has been duly executed and delivered by
the Company.

       

      
        
          
          

        

        
          - 6
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      (xii)  The
Registration Rights Agreement is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.

       

      (xiii)  The
statements contained in the Preliminary Offering Circular and the Final Offering
Circular under the captions (a) “Description of Notes”, insofar as such
statements purport to constitute a summary of the terms of the Indenture and the
Offered Securities, (b) “Description of Certain Indebtedness” and “Plan of
Distribution”, insofar as such statements purport to constitute a summary of the
documents referred to therein and (c) “Material U.S. Federal Income Tax
Considerations”, insofar as such statements purport to constitute a summary of
the United States federal tax laws referred to therein, in each case, are
accurate and fairly summarize in all material respects the matters referred to
therein.

       

      (xiv)  The
Company is not and, after giving effect to the offering and sale of the Offered
Securities to the Selling Noteholder, will not be an “investment company” as
defined in the Investment Company Act of 1940, as amended.

       

      (xv)  The
Indenture conforms in all material respects to the requirements of the Trust
Indenture Act, and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.

       

      (xvi)  Assuming
without independent investigation, (i) the accuracy of the representations and
warranties of the Company set forth in the Agreement and in those certain
certificates delivered on the Closing Date (A) that the Offered Securities were
sold to the Selling Noteholder in accordance with the terms of and in a manner
contemplated by the Noteholder Purchase Agreement and the Final Offering
Circular and (B) that the Offered Securities are sold to the Purchasers by the
Selling Noteholder, and resold by the Purchasers in accordance with the terms of
and in the manner contemplated by the Agreement and the Final Offering Circular;
(ii) the accuracy of the representations and warranties of the Company set
forth in the Noteholder Purchase Agreement (other than as set forth in Section
2(f) thereof) and the Agreement (other than as set forth in Section 2A(ff));
(iii) the accuracy of the representations and warranties of (A) the Selling
Noteholder in the Noteholder Purchase Agreement and (B) the Purchasers set forth
in the Agreement; (iv) the due performance and compliance by the Company
and the Purchasers of their respective covenants and agreements set forth in the
Agreement; and (v) the Purchasers’ compliance with the Final Offering
Circular and the transfer procedures and restrictions described therein, it was
and is not necessary to register the Offered Securities under the Securities Act
or to qualify an indenture in respect thereof under the Trust Indenture Act in
connection with the issuance and sale of the Offered Securities by the Company
to the Selling Noteholder, the sale by the Selling Noteholder to the Purchasers
or in connection with the offer, resale and delivery of the Offered Securities
by the Purchasers in the manner contemplated by the Agreement and the Final
Offering Circular, it being expressly understood that such counsel expresses no
opinion in this paragraph or in paragraph (viii) as to any subsequent offer or
resale of any of the Offered Securities.

       

      Because
the primary purpose of such counsel’s professional engagement was not to
establish or confirm factual matters or financial, accounting or statistical
information, and because many determinations involved in the preparation of the
General Disclosure Package and the Final Offering Circular are of a wholly or
partially non-legal character, other than in paragraph (xiii) and the last
sentence of paragraph (iv), paragraph (v) and paragraph (vi), such counsel is
not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the General Disclosure
Package and the Final Offering Circular, and such counsel makes no
representation that it has independently verified the accuracy, completeness or
fairness of such statements.

       

      However,
in the course of such counsel’s acting as counsel to the Company in connection
with the preparation of the General Disclosure Package and the Final Offering
Circular, it has reviewed the General Disclosure Package and the Final Offering
Circular and has participated in conferences and telephone conversations with
representatives of the Company, representatives of the underwriters’ and
Purchaser’s counsel, representatives of the independent public accountants for
the Company and representatives of the underwriters and the Purchaser, during
which conferences and conversations the contents of the General Disclosure
Package and the Final Offering Circular and related matters were
discussed.

      
         

      

      Based on
such counsel’s participation in such conferences and conversations, such
counsel’s review of the  documents described above, such counsel’s
understanding of the U.S. federal securities laws and the experience such
counsel has gained in its practice thereunder, such counsel advises that it has
no reason to believe that the Final Offering Circular, or any amendment or
supplement thereto, as of its date and as of the Closing Date, contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; such counsel has no reason to believe that
the General Disclosure Package, as of the Time of Sale and as of the Closing
Date, contained any untrue statement of a material fact, or omitted to state any
material fact, necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; it being
understood that such counsel expresses no opinion as to the financial
statements, financial schedules or other financial and accounting data contained
or incorporated by reference in the General Disclosure Package or the Final
Offering Circular.

       

      (d)  The
Purchasers shall have received an opinion, dated the Closing Date, of J. Kevin
Blodgett, General Counsel and Executive Vice President, Administration, of
Dynegy Inc., that:

       

      (i)  All
of the outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and
non-assessable.

       

      (ii)  Each
subsidiary of the Company is validly existing in good standing under the laws of
its jurisdiction of organization; and all of the issued shares of capital stock
or other ownership interests of each such subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable and, except for
directors’ qualifying shares and except as otherwise disclosed in the General
Disclosure Package and Final Offering Circular, are owned directly or indirectly
of record by the Company, and to such counsel’s knowledge, free from liens,
encumbrances and material defects;

       

      (iii)  Except
as set forth in the General Disclosure Package and the Final Offering Circular,
there are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company or to require the Company to include such securities with the
Offered Securities registered pursuant to any registration statement;
and

       

      (iv)  To
such counsel’s knowledge, and other than as set forth in the General Disclosure
Package and the Final Offering Circular, there are no pending actions, suits or
proceedings against or affecting the Company or its subsidiaries or any of their
respective properties that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material Adverse
Effect, or would materially and adversely affect the ability of the Company to
perform its obligations under the Operative Documents, or which are otherwise
material in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are, to such counsel’s knowledge, threatened or
contemplated; and such counsel shall also state that he has no reason to believe
that the Final Offering Circular, or any amendment or supplement thereto, as of
the date hereof and as of the Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact  necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; such counsel has no reason to believe that the
documents specified in a schedule to such counsel’s letter, consisting of those
included in the General Disclosure Package and the Final Offering Circular, as
of the Time of Sale and as of the Closing Date, contained any untrue statement
of a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that such counsel need express no opinion as to the financial statements or
other financial data or any statistical data (including statistical data related
to capacity and other matters with respect to various power plants) contained in
the General Disclosure Package or the Final Offering Circular.

       

      (e)  The
Purchasers shall have received from Cravath, Swaine & Moore LLP, counsel for
the Purchasers, such opinion or opinions, dated the Closing Date, with respect
to the incorporation of the Company, the validity of the Offered Securities, the
Final Offering Circular, the General Disclosure Package, the exemption from
registration for the offer and sale of the Offered Securities by the Selling
Noteholder to the several Purchasers and the resales by the several Purchasers
as contemplated hereby and other related matters as Credit Suisse may require,
and the Company and the Selling Noteholder shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass upon
such matters.

       

      (f)  The
Purchasers shall have received a certificate, dated the Closing Date, of the
President and a principal financial or accounting officer of the Company in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties of the
Company in this Agreement are true and correct, that the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, and that, subsequent to the
date of the most recent financial statements in the General Disclosure Package
and the Final Offering Circular there has been no material adverse change, nor
any development or event that reasonably could be expected to result in a
prospective material adverse change, in the condition (financial or other),
business, properties, results of operations or prospects of the Company or any
of its subsidiaries except as set forth in the General Disclosure Package and
the Final Offering Circular.

       

      (g)  The
Purchasers shall have received a certificate, dated the Closing Date, of a
principal executive officer and a principal financial or accounting officer of
the Selling Noteholder in which such officers, to the best of their knowledge
after reasonable investigation, shall state that the representations and
warranties of such Selling Noteholder in this Agreement are true and correct and
that the Selling Noteholder has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date.

       

      (h)  The
Purchasers shall have received letters, dated the Closing Date, of Ernst &
Young LLP and PricewaterhouseCoopers LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in Annex A and B, respectively, will be a date not more than three days prior to
the Closing Date for the purposes of this subsection.

       

      (i)  On
the Closing Date, each Operative Document will conform, as to legal matters, in
all material respects to the description thereof contained in the General
Disclosure Package and the Final Offering Circular.

       

      
        
          
          

        

        
          - 7
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      (j)  The
Company and the Selling Noteholder will furnish the Purchasers with such
conformed copies of such opinions, certificates, letters and documents as the
Purchasers reasonably requests.  Credit Suisse may in its sole
discretion waive compliance with any conditions to the obligations of the
Purchasers hereunder.

       

      8.  Indemnification and
Contribution.  (a)  The Company will indemnify and
hold harmless each Purchaser, its officers, partners, members, directors and its
affiliates and each person, if any, who controls such Purchaser within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which such Purchaser may become subject,
under the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Preliminary Offering Circular or the Final
Offering Circular, in each case as amended or supplemented, or any Issuer Free
Writing Communication or Supplemental Marketing Material or the Exchange Act
Reports, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading,
including any losses, claims, damages or liabilities arising out of or based
upon the Company’s failure to perform its obligations under Section 5(a) of this
Agreement, and will reimburse each Purchaser for any legal or other expenses
reasonably incurred by such Purchaser in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Purchaser
through Credit Suisse specifically for use therein, it being understood and
agreed that the only such information consists of the information described as
such in subsection (c) below.

       

      (b)  The
Selling Noteholder will indemnify and hold harmless each Purchaser, its
officers, partners, members, directors and its affiliates and each person, if
any, who controls such Purchaser within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such Purchaser may become subject, under the Securities Act or
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Preliminary Offering Circular or the Final Offering Circular, in each case
as amended or supplemented, made in reliance on and in conformity with written
information that is furnished to the Company by or on the behalf of the Selling
Noteholder specifically for use therein, and will reimburse each Purchaser for
any out-of-pocket legal or other expenses reasonably incurred by such Purchaser
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by the Selling Noteholder
consists of the name and address of the Selling Noteholder in the Preliminary
Offering Circular and Final Offering Circular; provided, however, that the
Selling Noteholder will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through Credit Suisse
specifically for use therein, it being understood and agreed that the only such
information consists of the information described as such in subsection (c)
below.

       

      (c)  Each
Purchaser will severally and not jointly indemnify and hold harmless the Company
and its directors and officers, the Selling Noteholder and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities to which the Company or such
Selling Noteholder may become subject, under the Securities Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Preliminary
Offering Circular or the Final Offering Circular, in each case as amended or
supplemented, or any Issuer Free Writing Communication or Supplemental Marketing
Material or arise out of or are based upon the omission or the alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Purchaser through Credit Suisse specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by the
Company or such Selling Noteholder in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are incurred,
it being understood and agreed that the only such information furnished by any
Purchaser consists of the information in the Preliminary and Final Offering
Circular under the caption “Plan of Distribution” in paragraph two, the second
sentence of paragraph nine and paragraph ten; provided, however, that the
Purchasers shall not be liable for any losses, claims, damages or liabilities
arising out of or based upon the Company’s failure to perform its obligations
under Section 5(a) of this Agreement.

       

      (d)  Promptly
after receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under subsection (a), (b)
or (c) above, notify the indemnifying party of the commencement thereof; but the
failure to notify the indemnifying party shall not relieve it from any liability
that it may have under subsection (a), (b) or (c) above except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided further that the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under subsection (a), (b) or (c)
above. In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. If the indemnifying party has assumed the defense in any
such proceedings, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the contrary; (ii) the indemnifying party
has failed within a reasonable time to retain counsel reasonably satisfactory to
the indemnified party; (iii) the indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or in addition to those available to the indemnifying party; or (iv) the
named parties in any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them.  It is understood and agreed that
the indemnifying party shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all indemnified
parties, and that all such fees and expenses shall be reimbursed as they are
incurred.  Any such separate firm for any Purchaser, its affiliates,
directors and officers and any control persons of such Purchaser shall be
designated in writing by Credit Suisse, any such separate firm for the Company
and its directors and officers and any control persons of the Company shall be
designated in writing by the Company and any such separate firm of the Selling
Noteholder shall be designated in writing the Selling Noteholder. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes (i) an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action and (ii) does
not include a statement as to or an admission of fault, culpability or failure
to act by or on behalf of any indemnified party.

       

      (e)  If
the indemnification provided for in this Section is unavailable or insufficient
to hold harmless an indemnified party under subsection (a), (b) or (c) above,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a), (b) or (c) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and/or
the Selling Noteholder on the one hand and the Purchasers on the other from the
sale or resale of the Offered Securities, as the case may be, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
and/or the Selling Noteholder on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company, the Selling
Noteholder and the Purchasers shall be deemed to be in the same proportion as,
in the case of the Company, the total net proceeds received by the Company from
the Selling Noteholder under the Noteholder Purchase Agreement and, in the case
of the Selling Noteholder, to the total net proceeds from the resale of the
Offered Securities to the Purchasers received by the Selling Noteholder, in each
case bear to the total discounts and commissions received by the Purchasers from
the Selling Noteholder under this Agreement.  The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Selling
Noteholder or the Purchasers and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (e) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (e). Notwithstanding
the provisions of this subsection (e), no Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities purchased by it were resold exceeds the amount of any
damages which such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission.  The Purchasers’ obligations in this subsection (e) to
contribute are several in proportion to their respective purchase obligations
and not joint.

       

      (f)  The
obligations of the Company and the Selling Noteholder under this Section shall
be in addition to any liability which the Company and the Selling Noteholder may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls the Company or the Selling Noteholder,
respectively, within the meaning of the Securities Act or the Exchange Act; and
the obligations of the Purchasers under this Section shall be in addition to any
liability which the respective Purchasers may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
respective Purchasers within the meaning of the Securities Act or the Exchange
Act.

       

      9.  Default of
Purchasers.  If any Purchaser or Purchasers default in their
obligations to purchase Offered Securities hereunder and the aggregate principal
amount of the Offered Securities that such defaulting Purchaser or Purchasers
agreed but failed to purchase does not exceed 10% of the total principal amount
of the Offered Securities, Credit Suisse may make arrangements satisfactory to
the Company and the Selling Noteholder for the purchase of such Offered
Securities by other persons, including any of the Purchasers, but if no such
arrangements are made by the Closing Date, the non-defaulting Purchasers shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the Offered Securities that such defaulting Purchasers agreed but
failed to purchase. If any Purchaser or Purchasers so default and the aggregate
principal amount of the Offered Securities with respect to which such default or
defaults occur exceeds 10% of the total principal amount of the Offered
Securities and arrangements satisfactory to Credit Suisse, the Company and the
Selling Noteholder for the purchase of such Offered Securities by other persons
are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Purchaser, the
Company or the Selling Noteholder, except as provided in Section 10. As
used in this Agreement, the term “Purchaser” includes any person substituted for
a Purchaser under this Section. Nothing herein will relieve a defaulting
Purchaser from liability for its default.

       

      
        
          
          

        

        
          - 8
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      10.  Survival of Certain Representations
and Obligations.  The respective indemnities, agreements,
representations, warranties and other statements of the Selling Noteholder, the
Company or their respective officers and of the several Purchasers set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of any Purchaser, the Selling Noteholder, the Company or any of
their respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the Offered Securities. If
this Agreement is terminated pursuant to Section 9 or if for any reason the
purchase of the Offered Securities by the Purchasers is not consummated, the
Company shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Selling
Noteholder, the Company and the Purchasers pursuant to Section 8 shall
remain in effect. If the purchase of the Offered Securities by the Purchasers is
not consummated for any reason other than solely because of the occurrence of
any event specified in clause (iii), (iv)(A), (v), (vi) or (viii) of
Section 7(b), the Company will reimburse the Purchasers and the Selling
Noteholder for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.

       

      11.  Notices.  All
communications hereunder will be in writing and, if sent to the Purchasers will
be mailed, delivered, faxed or sent by courier and confirmed to the Purchasers,
c/o Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York,
N.Y. 10010-3629, Attention:  LCD-IBD, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at  1000 Louisiana
Street, Suite 5800, Houston, Texas 77002 Attention: General Counsel (Fax:
713-507-6808) or, if sent to the Selling Noteholder will be mailed, delivered or
telegraphed and confirmed to it at Adio Bond, LLC, Two Tower Center, 11th
Floor, East Brunswick, NJ 08816, Attention: Corporate Counsel (Fax (713)
356-2185) with a copy to Latham & Watkins LLP, 885 Third Avenue, New York,
NY 10022 Attention: Marc Jaffe and Wesley Holmes; provided, however, that any
notice to a Purchaser pursuant to Section 8 will be mailed, delivered, faxed or
sent by courier and confirmed to such Purchaser.

       

      12.  Successors.  This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and the controlling persons referred to in
Section 8, and no other person will have any right or obligation hereunder,
except that holders of Offered Securities shall be entitled to enforce the
agreements for their benefit contained in the second and third sentences of
Section 5(b) hereof against the Company as if such holders were parties
thereto.

       

      13.  Representation of
Purchasers.  Credit Suisse will act for the several Purchasers
in connection with this purchase, and any action under this Agreement taken by
Credit Suisse will be binding upon all the Purchasers.

       

      14.  Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same Agreement.

       

      15.  Absence of Fiduciary
Relationship.  The Company and the Selling Noteholder
acknowledge and agree that:

       

      (a)  The
Purchasers have been retained solely to act as purchasers in connection with the
purchase, offering and resale of the Offered Securities and that no fiduciary,
advisory or agency relationship between the Company or the Selling Noteholder
and the Purchasers has been created in respect of any of the transactions
contemplated by this Agreement or the Preliminary Offering Circular or Final
Offering Circular, irrespective of whether the Purchasers have advised or are
advising the Company or the Selling Noteholder on other matters;

       

      (b)  the
purchase price of the Offered Securities set forth in this Agreement was
established by the Selling Noteholder following discussions and arms-length
negotiations with the Purchasers and the Selling Noteholder is capable of
evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement;

       

      (c)  the
Company and the Selling Noteholder have been advised that the Purchasers and
their affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company or the Selling Noteholder and
that the Purchasers have no obligation to disclose such interests and
transactions to the Company or the Selling Noteholder by virtue of any
fiduciary, advisory or agency relationship; and

       

      (d)  the
Company and the Selling Noteholder waive, to the fullest extent permitted by
law, any claims they each may have against the Purchasers for breach of
fiduciary duty or alleged breach of fiduciary duty and agrees that the
Purchasers shall have no liability (whether direct or indirect) to the Company
or the Selling Noteholder in respect of such a fiduciary duty claim or to any
person asserting a fiduciary duty claim on behalf of or in right of the Company
or the Selling Noteholder, including stockholders, employees or creditors of the
Company or the Selling Noteholder.

       

      16.  Applicable
Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws other than Section 5-1401 of the New York General
Obligations Law.

       

      The
Company and the Selling Noteholder hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.

      
 

      [Remainder
of page intentionally left blank]

      
 

      
        
          
          

        

        
          - 9
-

           

        

        
          
          

        

      

      If the
foregoing is in accordance with the Purchasers’ understanding of our agreement,
kindly sign and return to the Company and the Selling Noteholder one of the
counterparts hereof, whereupon it will become a binding agreement among the
Company, the Selling Noteholder and the several Purchasers in accordance with
its terms.

       

      Very
truly yours,

      

      
        	
                                                     DYNEGY HOLDINGS
      INC.,

              
	
                                                     by

              
	 
      	
                                                            /s/ Richard J.
    Evans

              
	 
      	
                                                            Name:          Richard
      J. Evans

              
	 
      	
                                                            Title:    Vice
      President, Assistant Treasurer

              

      

      

      
        	
                                                     ADIO BOND,
      LLC,

              
	
                                                     by

              
	 
      	
                                                            /s/ James
    Bartlett

              
	 
      	
                                                            Name:          James
      Bartlett

              
	 
      	
                                                            Title:    President

              

      

      

      

      
        	
                The
      foregoing Purchase Agreement is hereby con-

                firmed
      and accepted as of the date first above written.

              	 
      
	 
      	 
      
	
                CREDIT
      SUISSE SECURITIES (USA) LLC, for itself and as a representative of the
      several Purchasers

              	 
      
	 
      	 
      
	
                By     /s/ Reiner
      Boehning

              	 
      
	
                   Name:  Reiner
      Boehning

                   Title:    Managing
      Director

              	 
      
	
                 

                CITIGROUP
      GLOBAL MARKETS INC., for itself and as a representative of the several
      Purchasers

              	 
      
	 
      	 
      
	
                By   /s/ Michael
      Dorenfeld

              	 
      
	
                    Name:  Michael
      Dorenfeld

                    Title:    Vice
      President

              	 
      

      

      
        
           

        

        
          - 10
-

           

        

        
           

        

      

      SCHEDULE
A

       

      

       

      
        	
                 

                Purchaser

              	
                
                  Principal
      Amount of

                  Offered
      Securities to be Purchased

                   

                

              
	
                Credit
      Suisse Securities (USA) LLC

              	
                $94,000,000

              
	
                Citigroup
      Global Markets Inc.

              	
                47,000,000

              
	
                ING
      Financial Markets LLC

              	
                23,500,000

              
	
                Calyon
      Securities (USA) Inc.

              	
                17,625,000

              
	
                BNP
      Paribas Securities Corp.

              	
                17,625,000

              
	
                Mitsubishi
      UFJ Securities (USA), Inc.

              	
                17,625,000

              
	
                WestLB
      AG (Duesseldorf)

              	
                17,625,000

              
	
                Total

              	
                
                                   $235,000,000

                   

                

              

      

      

       

       
 

      

      

       

      
        
           

        

        
          - 11
-

           

        

        
           

        

      

      SCHEDULE
B

       

      

       

      The
pricing term sheet attached hereto as Annex C

       

      
        
           

        

        
          - 12
-

           

        

        
           

        

      

      ANNEX
A

       

      Form
Comfort Letter was not included in final executed agreement.

       

      
        
           

        

        
          - 13
-

           

        

        
           

        

      

      ANNEX
B

       

      Form
Comfort Letter was not included in final executed agreement.

       

      
        
           

        

        
          - 14
-

           

        

        
           

        

      

      ANNEX
C

      
        
           

        

        
          - 15
-

           

        

        
           

        

      

      

      

      TERM
SHEET

       

      Dynegy
Holdings Inc.

       

      $235,000,000
7.5% Senior Unsecured Notes due 2015

       

      Term sheet dated December 2,
2009 to the Preliminary Offering Circular dated December 1, 2009 (the
“Preliminary Offering Circular”) of Dynegy Holdings Inc. (the
“Company”)

       

      This Term
Sheet is qualified in its entirety by reference to the Preliminary Offering
Circular.

       

      The
information in this Term Sheet supplements the Preliminary Offering Circular
and

       

      supersedes
the information in the Preliminary Offering Circular to the extent inconsistent
with

       

      the
information in the Preliminary Offering Circular.

       

      

      
        	
                $235,000,000
      7.5 % Senior Unsecured Notes due 2015

              
	
                Issuer:

              	 
      	
                Dynegy
      Holdings Inc.

              
	
                Security
      Description:

              	 
      	
                Senior
      Unsecured Notes

              
	
                Distribution:

              	 
      	
                144A
      with Registration Rights

              
	
                Face:

              	 
      	
                $235,000,000

              
	
                Gross
      Proceeds:

              	 
      	
                $205,625,000

              
	
                Coupon:

              	 
      	
                7.500%

              
	
                Maturity:

              	 
      	
                June
      1, 2015

              
	
                Offering
      Price:

              	 
      	
                87.500%

              
	
                Yield
      to Maturity:

              	 
      	
                10.560%

              
	
                Spread
      to Treasury:

              	 
      	
                +834
      basis points

              
	
                Benchmark:

              	 
      	
                UST
      4.125% due May 15, 2015

              
	
                Interest
      Payment Dates:

              	 
      	
                June
      1 and December 1

              
	
                Beginning:

              	 
      	
                June
      1, 2010

              
	
                CUSIP:

              	 
      	
                26816LBA9

              
	
                Trade
      Date:

              	 
      	
                December
      2, 2009

              
	
                Settlement
      Date:

              	 
      	
                December
      7, 2009 (T+3)

              
	
                Denominations:

              	 
      	
                2,000x1,000

              
	
                Joint
      Book-running Managers & Joint Lead Managers:

              	 
      	
                Credit
      Suisse Securities (USA) LLC

              
	 
      	 
      	
                Citigroup
      Global Markets Inc.

              
	
                Co-Managers:

              	 
      	
                ING
      Financial Markets LLC

              
	 
      	 
      	
                Caylon
      Securities (USA) Inc.

              
	 
      	 
      	
                BNP
      Paribas Securities Corp.

              
	 
      	 
      	
                Mitsubishi
      UFJ Securities (USA), Inc.

              
	 
      	 
      	
                WestLB
      AG (Duesseldorf)

              

      

      

- 16 -ex-10_1.htm

Adamis Pharmaceuticals Corporation 8-K

 

Exhibit 10.1

 

AGREEMENT AND PLAN OF REORGANIZATION

 

among

 

LA JOLLA PHARMACEUTICAL COMPANY

a Delaware corporation,

JEWEL MERGER SUB, INC.,

a Delaware corporation

and

ADAMIS PHARMACEUTICALS CORPORATION,

a Delaware corporation

__________________________

 

Dated as of December 4, 2009

 

 

  

  

  

TABLE OF CONTENTS

 

	  	
PAGE

	
ARTICLE I THE MERGER
	
2

	  	  
	  	
1.1
	
Merger of Merger Sub into Adamis
	
2

	  	  	  	  
	  	
1.2
	
Effect of the Merger
	
2

	  	  	  	  
	  	
1.3
	
Closing; Effective Time
	
2

	  	  	  	  
	  	
1.4
	
Certificate of Incorporation and Bylaws; Directors and Officers
	
2

	  	  	  	  
	  	
1.5
	
Reverse Split of La Jolla Common Stock
	
3

	  	  	  	  
	  	
1.6
	
Shares to be Issued; Effect on Capital Stock
	
4

	  	  	  	  
	  	
1.7
	
Calculation of the Exchange Ratio
	
6

	  	  	  	  
	  	
1.8
	
Dissenting Shares
	
6

	  	  	  	  
	  	
1.9
	
No Further Transfer of Adamis Capital Stock.
	
6

	  	  	  	  
	  	
1.10
	
Exchange of Certificates; Exchange Agent
	
6

	  	  	  	  
	  	
1.11
	
Further Action
	
8

	  	  	  	  
	
ARTICLE II REPRESENTATIONS AND WARRANTIES OF ADAMIS
	
8

	  	  
	  	
2.1
	
Organization and Good Standing
	
9

	  	  	  	  
	  	
2.2
	
Subsidiaries.
	
9

	  	  	  	  
	  	
2.3
	
Authority
	
9

	  	  	  	  
	  	
2.4
	
No Conflict
	
10

	  	  	  	  
	  	
2.5
	
Consents
	
10

	  	  	  	  
	  	
2.6
	
Governmental Authorizations
	
10

	  	  	  	  
	  	
2.7
	
Capitalization.
	
10

	  	  	  	  
	  	
2.8
	
SEC Reports; Financial Statements.
	
11

	  	  	  	  
	  	
2.9
	
Absence of Certain Changes
	
12

	  	  	  	  
	  	
2.10
	
Interested Party Transactions
	
13

	  	  	  	  
	  	
2.11
	
Intellectual Property.
	
13

	  	  	  	  
	  	
2.12
	
Taxes.
	
14

	  	  	  	  
	  	
2.13
	
Employee Benefit Plans.
	
16

	  	  	  	  
	  	
2.14
	
Employee Matters
	
17

	  	  	  	  
	  	
2.15
	
Insurance
	
17

	  	  	  	  
	  	
2.16
	
Compliance with Legal Requirements
	
17

 

 

 

i

 

 

	  	  	  	  
	  	
2.17
	
Environmental Matters
	
18

	  	  	  	  
	  	
2.18
	
Legal Proceedings
	
18

	  	  	  	  
	  	
2.19
	
Contracts; No Defaults.
	
18

	  	  	  	  
	  	
2.20
	
Labor Matters
	
19

	  	  	  	  
	  	
2.21
	
Unlawful Payments
	
19

	  	  	  	  
	  	
2.22
	
Financial Advisor
	
19

	  	  	  	  
	  	
2.23
	
Title to Assets; No Real Property.
	
19

	  	  	  	  
	  	
2.24
	
Representations Complete
	
19

	  	  	  	  
	
ARTICLE III REPRESENTATIONS AND WARRANTIES OF LA JOLLA AND MERGER SUB
	
20

	  	  
	  	
3.1
	
Organization and Good Standing
	
20

	  	  	  	  
	  	
3.2
	
Subsidiaries.
	
20

	  	  	  	  
	  	
3.3
	
Authority
	
21

	  	  	  	  
	  	
3.4
	
No Conflict
	
21

	  	  	  	  
	  	
3.5
	
Consents
	
21

	  	  	  	  
	  	
3.6
	
Governmental Authorizations
	
22

	  	  	  	  
	  	
3.7
	
Capitalization.
	
22

	  	  	  	  
	  	
3.8
	
SEC Reports; Financial Statements.
	
23

	  	  	  	  
	  	
3.9
	
Absence of Certain Changes
	
24

	  	  	  	  
	  	
3.10
	
Interested Party Transactions
	
24

	  	  	  	  
	  	
3.11
	
Intellectual Property.
	
24

	  	  	  	  
	  	
3.12
	
Taxes.
	
25

	  	  	  	  
	  	
3.13
	
Employee Benefit Plans.
	
27

	  	  	  	  
	  	
3.14
	
Employee Matters
	
28

	  	  	  	  
	  	
3.15
	
Insurance
	
28

	  	  	  	  
	  	
3.16
	
Compliance with Legal Requirements
	
28

	  	  	  	  
	  	
3.17
	
Environmental Matters
	
29

	  	  	  	  
	  	
3.18
	
Legal Proceedings
	
29

	  	  	  	  
	  	
3.19
	
Contracts; No Defaults.
	
29

	  	  	  	  
	  	
3.20
	
Labor Matters
	
30

	  	  	  	  
	  	
3.21
	
Unlawful Payments
	
30

	  	  	  	  
	  	
3.22
	
Financial Advisor
	
30

 

 

 

ii

 

 

	  	  	  	  
	  	
3.23
	
Title to Assets; No Real Property.
	
30

	  	  	  	  
	  	
3.24
	
Representations Complete
	
30

	  	  	  	  
	
ARTICLE IV CONDUCT BEFORE THE EFFECTIVE TIME
	
31

	  	  
	  	
4.1
	
Access and Investigation
	
31

	  	  	  	  
	  	
4.2
	
Operation of La Jolla’s Business.
	
31

	  	  	  	  
	  	
4.3
	
Operation of Adamis’s Business.
	
32

	  	  	  	  
	  	
4.4
	
Disclosure Schedule Updates
	
33

	  	  	  	  
	  	
4.5
	
No Solicitation.
	
33

	  	  	  	  
	
ARTICLE V ADDITIONAL AGREEMENTS
	
37

	  	  
	  	
5.1
	
Proxy Statement; Registration Statement.
	
37

	  	  	  	  
	  	
5.2
	
Adamis Stockholder Meeting; Change in the Adamis Board Recommendation.
	
38

	  	  	  	  
	  	
5.3
	
La Jolla Stockholder Meeting; Change in the La Jolla Board Recommendation; Adoption of Agreement by La Jolla as Sole Stockholder of Merger Sub.
	
40

	  	  	  	  
	  	
5.4
	
Regulatory Approvals
	
41

	  	  	  	  
	  	
5.5
	
Indemnification of Officers and Directors.
	
41

	  	  	  	  
	  	
5.6
	
Additional Agreements.
	
42

	  	  	  	  
	  	
5.7
	
Disclosure
	
43

	  	  	  	  
	  	
5.8
	
Directors; Officers
	
43

	  	  	  	  
	  	
5.9
	
Tax Matters.
	
43

	  	  	  	  
	  	
5.10
	
La Jolla Amendment
	
44

	  	  	  	  
	  	
5.11
	
Adamis’s Auditors
	
44

	  	  	  	  
	  	
5.12
	
La Jolla’s Auditors
	
44

	  	  	  	  
	  	
5.13
	
Legends
	
44

	  	  	  	  
	  	
5.14
	
Confidentiality
	
44

	  	  	  	  
	  	
5.15
	
FIRPTA Compliance
	
44

	  	  	  	  
	  	
5.16
	
Rule 16b-3
	
45

	  	  	  	  
	  	
5.17
	
Use of La Jolla Net Cash
	
45

	  	  	  	  
	
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
	
45

	  	  
	  	
6.1
	
Stockholder Approval
	
45

	  	  	  	  
	  	
6.2
	
No Restraints
	
45

	  	  	  	  
	  	
6.3
	
Governmental Authorization
	
45

 

 

 

iii

 

 

	  	  	  	  
	  	
6.4
	
No Governmental Proceedings Relating to Contemplated Transactions or Right to Operate Business
	
45

	  	  	  	  
	  	
6.5
	
Registration Statement
	
46

	  	  	  	  
	
ARTICLE VII ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF LA JOLLA AND MERGER SUB
	
46

	  	  
	  	
7.1
	
Accuracy of Representations
	
46

	  	  	  	  
	  	
7.2
	
Performance of Covenants
	
46

	  	  	  	  
	  	
7.3
	
No Material Adverse Effect
	
46

	  	  	  	  
	  	
7.4
	
Consents
	
46

	  	  	  	  
	  	
7.5
	
Agreements and Other Documents
	
47

	  	  	  	  
	  	
7.6
	
Sarbanes-Oxley Certifications
	
47

	  	  	  	  
	  	
7.7
	
SEC Reports
	
47

	  	  	  	  
	  	
7.8
	
Legal Opinion
	
47

	  	  	  	  
	
ARTICLE VIII ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATION OF ADAMIS
	
47

	  	  
	  	
8.1
	
Accuracy of Representations
	
47

	  	  	  	  
	  	
8.2
	
Performance of Covenants
	
47

	  	  	  	  
	  	
8.3
	
No Material Adverse Effect
	
48

	  	  	  	  
	  	
8.4
	
Consents
	
48

	  	  	  	  
	  	
8.5
	
Documents
	
48

	  	  	  	  
	  	
8.6
	
Sarbanes-Oxley Certifications
	
48

	  	  	  	  
	  	
8.7
	
Board of Directors
	
48

	  	  	  	  
	  	
8.8
	
Officers
	
48

	  	  	  	  
	  	
8.9
	
Certificate of Amendment
	
48

	  	  	  	  
	  	
8.10
	
SEC Reports
	
48

	  	  	  	  
	  	
8.11
	
Legal Opinion
	
48

	  	  	  	  
	
ARTICLE IX TERMINATION
	
49

	  	  
	  	
9.1
	
Termination
	
49

	  	  	  	  
	  	
9.2
	
Effect of Termination
	
51

	  	  	  	  
	  	
9.3
	
Expenses; Termination Fees.
	
51

	  	  	  	  
	
ARTICLE X MISCELLANEOUS PROVISIONS
	
52

	  	  
	  	
10.1
	
Non-Survival of Representations and Warranties
	
52

	  	  	  	  
	  	
10.2
	
Amendment
	
52

 

 

 

iv

 

 

	  	  	  	  
	  	
10.3
	
Waiver.
	
52

	  	  	  	  
	  	
10.4
	
Entire Agreement; Counterparts; Exchanges by Facsimile
	
52

	  	  	  	  
	  	
10.5
	
Applicable Law; Jurisdiction
	
53

	  	  	  	  
	  	
10.6
	
Waiver of Jury Trial
	
53

	  	  	  	  
	  	
10.7
	
Notices
	
53

	  	  	  	  
	  	
10.8
	
Cooperation
	
54

	  	  	  	  
	  	
10.9
	
Severability
	
54

	  	  	  	  
	  	
10.10
	
Other Remedies; Specific Performance
	
54

	  	  	  	  
	  	
10.11
	
Construction.
	
55

 

 

  

v

  

AGREEMENT AND PLAN OF REORGANIZATION

 

THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made and entered into as of December 4, 2009, by and among La Jolla Pharmaceutical Company, a Delaware corporation (“La
Jolla”), Jewel Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of La Jolla (“Merger Sub”), and Adamis Pharmaceuticals Corporation, a Delaware corporation (“Adamis”).  Certain capitalized terms used in this Agreement are defined in Exhibit A attached hereto.

 

RECITALS

 

A.           The Board of Directors of La Jolla and Adamis have each determined that it is in the best interests of their respective stockholders for Adamis and La Jolla to enter into a business combination transaction pursuant to which Merger Sub will merge with and
into Adamis (the “Merger”), with Adamis continuing after the Merger as the surviving corporation and wholly owned subsidiary of La Jolla.

 

B.           Pursuant to the Merger, each outstanding share of common stock, $0.0001 par value per share, of Adamis (“Adamis Common Stock”) will, in accordance with the provisions
of this Agreement, be converted into the number of shares of La Jolla’s common stock, $0.01 par value per share (“La Jolla Common Stock”) equal to the Exchange Ratio. 

 

C.           In connection with, and immediately before the consummation of, the Merger, a reverse stock split of La Jolla Common Stock shall be consummated, pursuant to which each outstanding share of La Jolla Common Stock shall be converted into the number of shares
of La Jolla Common Stock determined as provided in Section 1.5 below.

 

D.           The Board of Directors of La Jolla (i) has approved and declared advisable this Agreement, the Merger and the other transactions contemplated by this Agreement, (ii) has determined that the Merger is in the best interests of La Jolla and its stockholders
and has determined to recommend the approval of this Agreement and the Merger to the stockholders of La Jolla, and (iii) has determined to recommend that La Jolla, in its capacity as the sole stockholder of Merger Sub, vote to adopt this Agreement and approve the Merger and such other actions as are contemplated by this Agreement.

 

E.           The Board of Directors of Adamis (i) has approved and declared advisable this Agreement, the Merger and the other transactions contemplated by this Agreement and (ii) has determined that the Merger is in the best interests of Adamis and its stockholders
and has determined to recommend the approval of this Agreement and the Merger to the stockholders of Adamis.

 

F.           The parties hereto intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended.

 

G.           As an inducement to La Jolla to enter into this Agreement, concurrently herewith certain stockholders of Adamis have entered into an agreement with La Jolla, in the form attached hereto (a “Voting
Agreement”), pursuant to which each such person has agreed, among other things, to vote the shares of capital stock of Adamis owned by such person to approve this Agreement and the transactions contemplated hereby.

 

  

1

  

 

AGREEMENT

 

The parties to this Agreement, intending to be legally bound, agree as follows:

 

ARTICLE I

THE MERGER

 

1.1           Merger of Merger Sub into Adamis.  Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the Delaware General Corporation Law (“DGCL”), at the Effective Time Merger Sub shall be merged with and into Adamis, and the separate existence of Merger Sub shall cease.  Adamis will continue as the surviving corporation following the Merger (the “Surviving Corporation”).

 

1.2           Effect of the Merger.  The Merger shall have the effects set forth in this
Agreement and the applicable provisions of the DGCL.  As a result of the Merger, Adamis will become a wholly-owned subsidiary of La Jolla.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Adamis and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of Adamis and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

 

1.3           Closing; Effective Time.  The consummation of the transactions contemplated
by this Agreement (the “Closing”) shall take place in San Diego, California, at 10:00 a.m., on a date and at a location to be agreed by La Jolla and Adamis (the “Closing Date”), which shall be no later than the third Business Day after the satisfaction or waiver of the last to be satisfied or waived of the conditions set forth in Articles
VI, VII and VIII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), or at such other time, date and place as La Jolla and Adamis may mutually agree in writing.  At the Closing, subject to the terms and conditions of this Agreement, the parties hereto shall cause the Merger to be consummated by executing and filing with the Secretary of State of the State of Delaware a Certificate of Merger with respect
to the Merger, satisfying the applicable requirements of the DGCL and in a form reasonably acceptable to La Jolla and Adamis.  The Merger shall become effective at the time of the filing of such Certificate of Merger with the Secretary of State of the State of Delaware or at such later time as may be specified in such Certificate of Merger (the time as of which the Merger becomes effective being referred to as the “Effective
Time”).

 

1.4           Certificate of Incorporation and Bylaws; Directors and Officers.  At the
Effective Time:

 

(a)           Adamis Certificate of Incorporation.  The Adamis Charter, as in effect immediately before the Effective Time, shall be amended in the Merger to read in its entirety as set forth
on Exhibit B-1 hereto and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended as provided by the DGCL and such certificate of incorporation;

 

  

2

  

(b)           Adamis Bylaws.  The Adamis Bylaws, as in effect immediately before the Effective Time, shall be amended to read in its entirety as set forth on Exhibit
B-2 hereto and, as so amended, shall be the bylaws of the Surviving Corporation, until thereafter amended as provided by the DGCL and such Bylaws;

 

(c)           Adamis Directors.  The directors of Adamis immediately before the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance
with the certificate of incorporation and bylaws of the Surviving Corporation; and

 

(d)           Adamis Officers.  The officers of Adamis immediately before the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified, or until their earlier death, resignation or removal.

 

1.5           Reverse Split of La Jolla Common Stock.

 

(a)           La Jolla Restated Certificate.  Immediately before the Effective Time, and subject to receipt of the requisite stockholder approval at the La Jolla Stockholder Meeting, La Jolla
shall cause to be filed an amendment to its certificate of incorporation and/or an Amended and Restated Certificate of Incorporation (the “La Jolla Restated Certificate”), whereby without any further action on the part of La Jolla, Adamis or any stockholder of La Jolla:

 

(i)           The shares of La Jolla Common Stock issued and outstanding immediately before the filing of the La Jolla Restated Certificate shall be combined in a reverse stock split, with each share thereafter representing a fractional share equal to the Reverse
Stock Split Ratio (the “Reverse Stock Split”);

 

(ii)           the total number of authorized shares of La Jolla Common Stock and La Jolla Preferred Stock shall be 225,000,000 and 8,000,000 shares, respectively.

 

(iii)           With respect to the determination of the La Jolla Net Cash as of the Closing Date and the number of Post-Effective La Jolla Stockholder Shares, within five (5) days before the Closing Date, La Jolla shall deliver to Adamis (the date of such delivery,
the “Net Cash Delivery Date”) an unaudited certification (the “Net Cash Certification”) of the calculation of the projected La Jolla Net Cash as of the Closing Date, with a detailed schedule showing each item taken into account in determining the amount of La Jolla Net Cash (including without limitation each Liability and each amount, if
any, reserved or taken into account with respect to Liabilities after the Closing Date).  Within two (2) days after the Net Cash Delivery Date, Adamis will notify La Jolla whether Adamis accepts the Net Cash Certification or whether Adamis disputes the Net Cash Certification, setting forth in reasonable detail the basis for such dispute.  If Adamis accepts the original Net Cash Certification, then the original Net Cash Certification shall be the basis for determining La Jolla Net Cash at the
Closing Date.  If Adamis disputes the initial Net Cash Certification, the parties shall attempt to resolve the dispute promptly.  If a final resolution of the dispute is reached within a ten-day period following Adamis’s objection, then the initial Net Cash Certification, such changes as have been agreed upon, shall be the final Net Cash Certification for all purposes under this Agreement.  If no final resolution of the dispute is reached within such ten-day period, then the
dispute shall be submitted to an independent auditing firm mutually selected by Adamis and La Jolla, who shall make a final determination with respect to such dispute within ten (10) Business Days after submission of the dispute or as soon 

 

  

3

  

as practicable thereafter.  The expenses of the auditing firm shall be allocated between the parties ratably on the inverse basis of the percentage of disputed amount that is awarded to Adamis (e.g., if 75% of the disputed amount is awarded to Adamis, then 75% of the expense shall be allocated to La Jolla).  The
La Jolla portion of such expenses will be treated as a Liability that reduces the amount of La Jolla Net Cash.  The independent accounting firm shall consider only the items in dispute.  The final determination by such auditing firm shall be binding upon the parties and the initial Net Cash Certification, with such changes as have been finally determined by such auditing firm, shall be the final Net Cash Certification for all purposes under this Agreement.

 

(b)           No Fractional Shares.  No fractional shares of La Jolla Common Stock shall be issued in connection with the Reverse Stock Split, and no certificates or scrip representing such
fractional shares shall be issued.  La Jolla will round down to the nearest whole share any fraction of a share that any La Jolla stockholder would otherwise receive (after aggregating all fractional shares issuable to such holder), and any holder of La Jolla Common Stock who would otherwise be entitled to receive a fraction of a share of La Jolla Common Stock (after aggregating all fractional shares of La Jolla Common Stock issuable to such holder) shall, in lieu of such fraction of a share and upon
surrender of such holder’s certificate representing such fractional shares of La Jolla Common Stock, instead receive from La Jolla an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of (i) such fraction, multiplied by (ii) the applicable price per share which shall be equal to the average closing price of La Jolla Common Stock (as reported on the Nasdaq Capital Market, or the OTC Bulletin Board or, if the La Jolla Common Stock is not traded on the Nasdaq Capital
Market or OTC Bulletin Board, then the Pink Sheets, and, if not traded on the Pink Sheets, then as determined in good faith by La Jolla’s Board of Directors) on the five trading days immediately prior to the effective date of the Reverse Stock Split (giving effect to the Reverse Stock Split).  In lieu of the foregoing, La Jolla may, in its discretion, elect to round up each fractional share (after aggregating all fractional shares issuable to such holder) to a whole share.  The aggregate
value of the fractional share payments and out-of-pocket expenses associated with the Reverse Stock Split and the post-Closing exchange of certificates (the “Reverse Split Expenses”) shall be disregarded in calculating the La Jolla Net Cash.

 

(c)           Reverse Stock Split and the Exchange Ratio.  The Exchange Ratio set forth herein assumes the effectiveness of the Reverse Stock Split set forth above.

 

1.6           Shares to be Issued; Effect on Capital Stock.  Subject to the terms and
conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of La Jolla, Merger Sub, Adamis or any stockholder of Adamis, the following shall occur:

 

(a)           Conversion of Adamis Common Stock.  Subject to the terms of Section 1.10(h), each share of Adamis Common Stock issued and outstanding immediately before the Effective Time (other
than any shares of Adamis Common Stock to be canceled pursuant to Section 1.6(b), if any, and excluding any Dissenting Shares (to the extent provided in Section 1.8)) will be converted automatically into the right to receive: (i) that number of shares of La Jolla Common Stock equal to the Exchange Ratio, and (ii) any cash, without interest, to be paid in lieu of any fractional share of Adamis Common Stock in accordance with Section 1.6(f).

 

  

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(b)           Cancellation of Treasury and La Jolla-Owned Shares.  Any shares of Adamis Capital Stock held as treasury stock or held or owned by Adamis or La Jolla immediately before the Effective
Time shall be canceled and shall cease to exist, and no consideration shall be delivered in exchange therefore.

 

(c)           Adamis Restricted Stock.  If any shares of Adamis Common Stock issued and outstanding immediately before the Effective Time are unvested or are subject to a repurchase option
or the risk of forfeiture or under any applicable restricted stock purchase agreement, stock restriction agreement, cancellation agreement or other agreement with Adamis (such shares, the “Adamis Restricted Stock”), then the shares of La Jolla Common Stock issued in exchange for such shares of Adamis Restricted Stock pursuant to Section 1.6(a) will to the same extent be unvested and subject to the same repurchase option or
risk of forfeiture, and the certificates representing such shares of La Jolla Common Stock shall accordingly be marked with appropriate legends to reflect such repurchase option or risk of forfeiture.  Adamis and La Jolla shall take all action that may be necessary to ensure that, from and after the Effective Time, La Jolla is entitled to exercise any such repurchase option or right of cancellation or other right set forth in any such restricted stock purchase agreement or other agreement.

 

(d)           Capital Stock of Merger Sub.  Each share of common stock of Merger Sub issued and outstanding immediately before the Effective Time shall automatically be converted into and
exchanged for one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.  Each stock certificate of Merger Sub evidencing ownership of any such shares shall, as of the Effective Time, evidence ownership of such shares of common stock of the Surviving Corporation.

 

(e)           Adjustments to Exchange Ratio.  If, between the date of this Agreement and the Effective Time, any outstanding shares of Adamis Common Stock or La Jolla Common Stock shall have
been changed into, or exchanged for, a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split, reverse split, combination or exchange of shares (other than the Reverse Stock Split) (such transaction or event being referred to as a “Recapitalization”), then the Exchange Ratio, the Reverse Stock Split Ratio and, if applicable, the per-share prices
set forth in the definition of the Post-Effective La Jolla Stockholder Shares shall, as applicable, be correspondingly adjusted to provide the holders of Adamis Capital Stock and Adamis Options and La Jolla Stock and La Jolla Options the same economic effect as contemplated by this Agreement before such event and any such adjustment to the Exchange Ratio shall be approved by Adamis and La Jolla.   No Recapitalization may be effected by one party with the prior written consent of the other party,
which consent will not be unreasonably withheld or delayed.

 

(f)           No Fractional Shares.  No fractional shares of La Jolla Common Stock shall be issued in connection with the Merger, and no certificates or scrip representing such fractional
shares shall be issued.  The holder of shares of Adamis Common Stock who would otherwise be entitled to receive a fraction of a share of La Jolla Common Stock (after aggregating all fractional shares of La Jolla Common Stock to be received by such holder) shall, in lieu of such fraction of a share and upon surrender of such holder’s certificate representing shares of Adamis Capital Stock (the “Adamis Stock Certificate”),
instead receive from La Jolla an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of (i) such fraction, multiplied by 

  

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(ii) the applicable price per share which shall be equal to the average closing price of La Jolla Common Stock (as reported on the Nasdaq Capital Market, or the OTC Bulletin Board or, if the La Jolla Common Stock is not traded on the Nasdaq Capital Market or the OTC Bulletin Board, then the Pink Sheets, and, if not traded on the Pink Sheets, then as determined in good faith by La Jolla’s Board of Directors) on the five trading
days immediately prior to the Effective Date (after giving effect to the Reverse Stock Split).

1.7           Calculation of the Exchange Ratio.  For purposes of this Agreement, the
“Exchange Ratio” shall be one (1) share of La Jolla Common Stock (assuming the effectiveness of the Reverse Stock Split) in exchange for one (1) share of Adamis Common Stock outstanding immediately before the Effective Time.

 

1.8           Dissenting Shares.  Notwithstanding any other provision of this Agreement
to the contrary, if Section 262 of the DGCL (or Chapter 13 of the California Corporations Code, to the extent applicable to Adamis by virtue of Section 2115 thereof) provides for appraisal rights with respect to the Merger, then any shares of Adamis Capital Stock that have not been voted in favor of adoption of this Agreement, and with respect to which a demand for payment and appraisal have been properly made in accordance with (a) Section 262 of the DGCL or (b) Chapter 13 of the California Corporations Code
(to the extent applicable to Adamis by virtue of Section 2115 thereof) (such shares referred to as “Dissenting Shares”), shall not be converted into or represent a right to receive La Jolla Common Stock pursuant to Section 1.6(a), but shall be converted into the right to receive such consideration as may be determined to be due with respect to such Dissenting Shares pursuant to the DGCL or the California Corporations Code,
as applicable; provided, however, that if a holder of Dissenting Shares (a “Dissenting Stockholder”) withdraws such holder’s demand for such payment and appraisal or becomes ineligible for such payment and appraisal then, as of the later of the Effective Time or the date of which such Dissenting Stockholder withdraws such demand or otherwise becomes ineligible
for such payment and appraisal, such holder’s Dissenting Shares will cease to be Dissenting Shares and will be converted into the right to receive La Jolla Common Stock as determined in accordance with Section 1.6(a).

 

1.9           No Further Transfer of Adamis Capital Stock.   At the Effective Time
all shares of Adamis Capital Stock outstanding immediately before the Effective Time shall automatically be exchanged, and all holders of Adamis Capital Stock that were outstanding immediately before the Effective Time shall cease to have any rights as stockholders of Adamis, except the right to receive the consideration described in Section 1.6(a) or Section 1.8, as applicable.  No further transfer of any such shares of Adamis Capital Stock shall be made on such stock transfer books after the Effective
Time.  Subject to Section 1.10(f) if, after the Effective Time, any shares of Adamis Capital Stock are presented to the Exchange Agent or to Adamis or La Jolla, such Adamis shares shall be canceled and shall be exchanged as provided in Section 1.10.

 

1.10           Exchange of Certificates; Exchange
Agent.  Prior to the Effective Time, La Jolla and Adamis will jointly select and designate a national bank, trust company or transfer agent to act as agent of La Jolla for purposes of, among other things, mailing and receiving transmittal letters and distributing the La Jolla Common Stock to the holders of Adamis Common Stock (the “Exchange Agent”).

 

  

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(b)           La Jolla to Provide Common Stock.  Promptly after the Effective Time, La Jolla shall supply or cause to be supplied or made available to the Exchange Agent for exchange in accordance
with this Section 1.10, through such reasonable procedures as La Jolla may adopt, instructions regarding issuance of certificates evidencing the shares of La Jolla Common Stock issuable pursuant to Section 1.6(a) in exchange for shares of Adamis Capital Stock outstanding immediately before the Effective Time (the “Exchange Shares”).

 

(c)           Exchange Procedures.  As promptly as practicable after the Effective Time, the Exchange Agent will mail to each holder of record of Adamis Capital Stock whose shares would be
converted into the right to receive shares of La Jolla Common Stock pursuant to Section 1.6(a), (i) a letter of transmittal in customary form; (ii) such other customary documents as may be required pursuant to such instructions; and (iii) instructions for use in effecting the surrender of Adamis Capital Stock in exchange for certificates (or, if La Jolla elects to have shares be represented in uncertificated form, then notifications of share ownership) representing shares of La Jolla Common Stock.  Upon
surrender of Adamis Capital Stock for cancellation to the Exchange Agent, together with such letter of transmittal and other documents, duly completed and validly executed in accordance with the instructions thereto, the holder of such Adamis Capital Stock shall be entitled to receive in exchange therefor (x) a certificate (or, for uncertificated shares, a notification of share ownership) representing the number of whole Exchange Shares into which the Adamis Common Stock represented thereby shall have been converted
into the right to receive as of the Effective Time, (y) any dividends or other distributions to which such holder is entitled pursuant to Section 1.10(d), and (z) cash in respect of any fractional shares as provided in Section 1.6(f), and the Adamis Capital Stock so surrendered shall forthwith be canceled.  Until so surrendered, each such outstanding share of Adamis Capital Stock will be deemed from and after the Effective Time, for all corporate purposes other than the payment of dividends, to evidence
the ownership of the number of full shares of La Jolla Common Stock into which such shares of Adamis Capital Stock shall have been so converted and the right to receive cash in lieu of the issuance of any fractional shares.  If any Adamis Stock Certificate shall have been lost, stolen or destroyed, La Jolla may, in its discretion and as a condition precedent to the issuance of any certificate (or notification of share ownership) representing La Jolla Common Stock, require the owner of such lost, stolen
or destroyed Adamis Stock Certificate to provide a reasonable affidavit and/or bond as indemnity against any claim that may be made against the Exchange Agent, La Jolla or the Surviving Corporation with respect to such Adamis Stock Certificate.

 

(d)           Distributions With Respect to Unexchanged Shares.  No dividends or other distributions with respect to La Jolla Common Stock with a record date after the Effective Time will
be paid to the holder of any unsurrendered Adamis Capital Stock with respect to the shares of La Jolla Common Stock represented thereby until the holder of record of such Adamis Capital Stock shall surrender such shares of Adamis Capital Stock.  Subject to applicable law, following surrender of any such Adamis Capital Stock, there shall be delivered to the record holder of Adamis Capital Stock a certificate representing whole shares of La Jolla Common Stock issued in exchange therefor (including any
cash in respect of any fractional shares), without interest at the time of such surrender, and the amount of any such dividends or other distributions with a record date after the Effective Time theretofore payable (but for the provisions of this Section) with respect to such shares of La Jolla Common Stock.

 

  

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(e)           Transfers of Ownership.  If any certificate (or notification of share ownership) for shares of La Jolla Common Stock is to be issued in a name other than that in which Adamis Stock
Certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that the Adamis Capital Stock so surrendered will be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange will have paid to La Jolla or any agent designated by it any transfer or other taxes required by reason of the issuance of a certificate (or notification of share ownership) for shares of La Jolla Common Stock in any name other than that of the registered
holder of the Adamis Capital Stock surrendered, or established to the satisfaction of La Jolla or any agent designated by it that such tax has been paid or is not payable, and shall provide such written assurances regarding federal and state securities law compliance as La Jolla may reasonably request.

 

(f)           Termination of Exchange Shares.  Any Exchange Shares which remain undistributed to the stockholders of Adamis twelve (12) months after the Effective Time shall be delivered to
La Jolla, upon demand, and any stockholders of Adamis who have not previously complied with this Section shall thereafter look only to La Jolla for payment of their claim for their portion of the Exchange Shares and any dividends or distributions with respect to the Exchange Shares.

 

(g)           No Liability.  Notwithstanding anything to the contrary in this Section, none of the Exchange Agent, La Jolla, Adamis or any party hereto shall be liable to any person for any
amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

(h)           Dissenting Shares.  The provisions of this Section shall also apply to Dissenting Shares that lose their status as such, except that the obligations of La Jolla under this Section
shall commence on the date of loss of such status and the holder of such shares shall be entitled to receive in exchange such shares to which such holder is entitled pursuant to Section 1.6.

 

1.11           Further Action.  If,
at any time after the Effective Time, any further action that is commercially reasonable and lawful is determined by La Jolla to be necessary or appropriate to carry out the purposes of this Agreement or to vest La Jolla with full right, title and possession of all shares of Adamis Capital Stock, the officers and directors of Adamis and La Jolla shall be fully authorized (in the name of Adamis and/or La Jolla or otherwise) to take such action.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF ADAMIS

 

Adamis represents and warrants to La Jolla that the statements contained in this Article II are true and correct as set forth herein and as qualified by the disclosure letter separately delivered to La Jolla concurrently herewith (the “Adamis Disclosure
Letter”).  The disclosures set forth in the Adamis Disclosure Letter shall be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article II.  The disclosures in any section or subsection of the Adamis Disclosure Letter shall qualify other sections and subsections in this Article II to the extent it is reasonably clear from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.

 

  

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2.1           Organization and Good Standing.  Adamis is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of incorporation, with requisite corporate power and authority to conduct its business as now being conducted and to own or use its properties and assets.  Adamis is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification,
except where the failure to be so qualified or in good standing would not have a Material Adverse Effect on Adamis.

 

2.2           Subsidiaries.

 

(a)           The Adamis Disclosure Letter sets forth all direct and indirect Subsidiaries of Adamis.  Adamis owns all of the equity of each Subsidiary.  Except as set forth on the Adamis Disclosure Letter, Adamis does not have any Subsidiaries
or affiliated companies and does not otherwise own any shares in the capital of or any interest in, or control, directly or indirectly, any corporation, partnership, limited liability company, association, joint venture or other business entity (each an “Entity”).  Except as set forth in Section 2.2(a) of the Disclosure Letter, Adamis has not agreed and is not obligated to make any future investment in or capital
contribution to any Entity, and Adamis has not guaranteed and is not responsible or liable for any obligation of any of the Entities in which it owns or has owned any equity interest.

 

(b)           Each Subsidiary of Adamis: (i) is a corporation duly organized and validly existing under the laws of its jurisdiction of incorporation, (ii) has all requisite corporate power and authority to own, operate or lease the properties and assets owned, operated
or leased by such Subsidiary and to carry on its business as it has been and is currently conducted by such Subsidiary and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such license and qualification necessary, except, in each of clauses (i), (ii) and (iii), such failures which, when taken together with all other such failures, would not have a Material Adverse Effect on Adamis and its Subsidiaries,
when considered together.

 

2.3           Authority.  Adamis has all requisite corporate power and authority to enter
into this Agreement and the other agreements to which it is a party expressly required to be executed and delivered in connection with the transactions contemplated hereby (collectively, the “Ancillary Agreements”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Adamis, subject only to the approval of this Agreement by the stockholders of Adamis.  The Board of Directors of Adamis has unanimously approved this Agreement and the Merger.  This Agreement has been (and the Ancillary Agreements will be at the Closing) duly executed and delivered by Adamis, and this Agreement constitutes (and the Ancillary Agreements
will constitute at the Closing) the valid and binding obligation of Adamis enforceable against Adamis in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors' rights generally, and subject to general principles of equity.

 

  

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2.4           No Conflict.  The execution and delivery by Adamis of this Agreement and the
Ancillary Agreements to which Adamis is a party, does not, and the consummation of the transactions contemplated hereby and thereby will not (i) conflict with, or result in any violation of, any provision of the Adamis Charter (in its current form and as it may be amended immediately before the Effective Time) or the Adamis Bylaws, (ii) except as would not reasonably be expected to have a Material Adverse Effect on Adamis, result in any violation of or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under any mortgage, indenture, lease, contract, grant, funding arrangement, or other agreement or instrument, permit, concession, franchise or license of Adamis, (iii) subject to obtaining the approval of Adamis’s stockholders and except as would not reasonably be expected to have a Material Adverse Effect on Adamis, conflict with, or result in any violation of any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Adamis or any of its properties or assets, or (iv) conflict with, or result in a violation of any resolution adopted by Adamis’s stockholders, Adamis’s board of directors or any committee of Adamis’s board of directors.

 

2.5           Consent.  No consent, waiver, approval, order or authorization of, or registration,
declaration or filing with or notice to, any Governmental Entity or any party to any Material Contract of Adamis is required by or with respect to Adamis or any of its Subsidiaries in connection with the execution and delivery of this Agreement by Adamis and any Ancillary Agreement to which Adamis is a party or the consummation of the transactions contemplated hereby and thereby, except for (i) such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required
under applicable securities laws, (ii) the filing of the Certificate of Merger with the Delaware Secretary of State, and (iii) such consents, waivers, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, would not have a Material Adverse Effect on Adamis.

 

2.6           Governmental Authorizations.  Adamis has obtained each material federal,
state, county, local or foreign governmental consent, license, permit, grant, or other authorization of a Governmental Entity (a) pursuant to which Adamis currently operates or holds any interest in any of its properties, or (b) that is required for the operation of Adamis’s business or the holding of any such interest, and all of such authorizations are in full force and effect, except for such consents, licenses, permits, grants or other authorizations, which if not obtained would not have a Material
Adverse Effect on Adamis.

 

2.7           Capitalization.

 

(a)           The authorized capital stock of Adamis consists of 175,000,000 shares of Adamis Common Stock, $0.0001 par value, and 10,000,000 shares of Adamis Preferred Stock, $0.0001 par value, of which there were issued and outstanding, as of the date of this Agreement,
45,972,303 shares of Adamis Common Stock and no shares of Adamis Preferred Stock.  All of the outstanding shares of Adamis Capital Stock (i) have been duly authorized and validly issued, and are fully paid and non-assessable, (ii) except for rights of first refusal, exchange, repurchase, forfeiture and/or cancellation rights in favor of Adamis, are not subject to preemptive rights or rights of first refusal created by statue, the Adamis Charter, the Adamis Bylaws or any agreement to which Adamis is
a party or by which it is bound and (iii) have been issued in compliance in all material respects with federal and state securities laws.  There are no declared or unpaid dividends with respect to any shares of Adamis Capital Stock.  None of Adamis’s debt could be classified as equity for tax purposes.

 

  

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(b)           Section 2.7 of the Adamis Disclosure Letter sets forth: (i) the number of outstanding options and warrants to purchase shares of Adamis Common Stock; (ii) the number of shares reserved for further issuance under the Adamis 2009 Equity Incentive Plan;
(iii) with respect to each option and warrant outstanding as of the date of this Agreement, (A) the name of the holder of such option or warrant, (B) the total number of shares of Adamis Common Stock that are subject to such option or warrant and the number of shares of Adamis Common Stock with respect to which such option or warrant is immediately exercisable, (C) the date of which such option or warrant was granted and the term of such option or warrant, (D) the vesting schedule, if any, of such option or warrant,
(E) the exercise price per share of Adamis Common Stock purchasable under such option or warrant and (F) whether such option or warrant has been designated an “incentive stock option” as defined in Section 422 of the Code; and (iv) an accurate and complete description of the terms of each repurchase option which is held by Adamis and to which any of such shares is subject.

 

(c)           Except as set forth in Section 2.7 of the Adamis Disclosure Letter, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of the capital stock or other securities of Adamis;
(ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the capital stock or other securities of Adamis; (iii) contract under which Adamis is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities; or (iv) to Adamis’s Knowledge, condition or circumstance that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire
or receive any shares of capital stock or other securities of Adamis.

 

2.8           SEC Reports; Financial Statements.

 

(a)           As of their respective filing dates, all annual, quarterly or current reports, filed by Adamis with the SEC since January 1, 2009 (including those that Adamis may file subsequent to the date hereof) (such reports, as amended “Adamis SEC
Reports”) (i) were prepared in accordance in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder, except as may be reflected in any amendments to such reports that Adamis has filed with the SEC, (ii) as the same may have been amended, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading and (iii) were all the forms, reports and other documents required to be filed under the Exchange Act.  Since January 1, 2009, Adamis has filed with the SEC all reports that are required to have been filed.

 

(b)           No Subsidiary of Adamis is or has been required to file any form, report, registration statement or other document with the SEC.  The consolidated financial statements (including any related notes thereto) contained in the Adamis SEC Reports
(in the form, as applicable, in any amendments to such Adamis SEC Reports) (the “Adamis Financial Statements”): (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (ii) were prepared in 

  

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accordance with GAAP applied on a consistent basis throughout the periods covered, except as may be indicated in the notes to such financial statements and (in the case of unaudited statements) as permitted by Form 10-Q of the SEC, and except that unaudited financial statements may not contain footnotes and are subject to
year-end audit adjustments; and (iii) fairly present in all material respects the consolidated financial position of Adamis and its Subsidiaries as of the respective dates thereof and the consolidated results of operations and cash flows of Adamis and its Subsidiaries for the periods covered thereby.  The unaudited balance sheet of Adamis as of September 30, 2009, that is included in the Adamis Financial Statements is referred to herein as the “Adamis Current
Balance Sheet.”

 

(c)           Adamis maintains a system of internal accounting controls and disclosure controls and procedures sufficient, in the judgment of Adamis’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(d)           Adamis has not, in the twelve (12) months preceding the date hereof, received notice from the trading market or stock quotation system on which the Adamis Common Stock is listed or quoted or any other trading market or stock quotation system on which
the Adamis Common Stock was previously listed or quoted to the effect that Adamis is not in compliance with the listing or maintenance requirements of such trading market or stock quotation system.  Adamis is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

 

2.9           Absence of Certain Changes

.  Since the date of the Adamis Current Balance Sheet, except as set forth in the Adamis Disclosure Letter or as disclosed in the Adamis SEC Reports, there has not occurred (a) any change, event or condition (whether or not covered by insurance) that has resulted in, or would reasonably be expected to result
in, a Material Adverse Effect on Adamis; (b) any acquisition, sale or transfer of any material assets or material properties of Adamis or any creation of any security interest in such assets or properties; (c) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by Adamis or any revaluation by Adamis of any of its assets; (d) any declaration, setting aside, or payment of a dividend or other distribution with respect to the shares of Adamis or any
direct or indirect redemption, purchase or other acquisition by La Jolla of any of its shares of capital stock; (e) any Material Contract entered into by Adamis, or any material amendment or termination of, or default under, any Material Contract to which Adamis is a party or by which it is bound, in each case that would reasonably be expected to result in a Material Adverse Effect on Adamis; (f) any amendment or change to Adamis Charter or Adamis Bylaws; (g) any increase in or modification of the compensation
or benefits payable or to become payable by Adamis to any of its directors or employees; (h) any sale, issuance or authorization by Adamis of (1) any capital stock or other security, (2) any option or right to acquire any capital stock or any other security, or (3) any Convertible Securities; any formation by Adamis of any Subsidiary or any acquisition of any equity interest or other interest in any other Equity (other than Merger Sub); (i) any other material event that is not in the Ordinary Course
of Business; or (j) any agreement by Adamis to do any of the things described in the preceding clauses (a) through (i).

 

  

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2.10           Interested Party Transactions.  Except as set forth in the Adamis SEC
Reports or as set forth in Section 2.10 of the Adamis Disclosure Letter, Adamis is not indebted to any director, officer or employee of Adamis (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses), and no such person is indebted to Adamis.  Except as set forth in the Adamis SEC Reports or as set forth in Section 2.10 of the Adamis Disclosure Letter, Adamis is not a party to any transaction of the type that would be required to be disclosed pursuant to Item
404 of Regulation S-K promulgated by the SEC.  

 

2.11           Intellectual Property.

 

(a)           Adamis and each of its Subsidiaries owns or possesses the right to use the Intellectual Property that is owned by or licensed to Adamis and each of its Subsidiaries (the “Adamis
Patent and Proprietary Rights”), except where the failure to own or possess such rights would not have a Material Adverse Effect on Adamis or any of its Subsidiaries, considered together.

 

(b)           Neither Adamis nor any of its Subsidiaries has received any notice of any asserted rights with respect to any of the Adamis Patent and Proprietary Rights which, if determined unfavorably with respect to the interests of Adamis or any of its Subsidiaries
would have a Material Adverse Effect on Adamis or any of its Subsidiaries, considered together.

 

(c)           To Adamis’s Knowledge, neither Adamis nor any of its Subsidiaries has ever infringed (directly, contributorily, by inducement, or otherwise), misappropriated, or otherwise violated or made unlawful use of any right to Intellectual Property of
any other Person or engaged in unfair competition.  No infringement, misappropriation, or similar claim or Legal Proceeding is pending or, to Adamis’s Knowledge, threatened against Adamis, any of its Subsidiaries or any other Person who is or may be entitled to be indemnified, defended, held harmless, or reimbursed by Adamis or any of its Subsidiaries with respect to such claim or Legal Proceeding.  Neither Adamis nor any of its Subsidiaries has received notice or is otherwise aware
of any infringement of or conflict with asserted rights of others with respect to any of Adamis Patent and Proprietary Rights, which infringement or conflict (if the subject of any unfavorable decision, ruling or finding), individually or in the aggregate, would result in a Material Adverse Effect on Adamis or any of its Subsidiaries, considered together.

 

(d)           To Adamis’s Knowledge, neither Adamis nor any of its Subsidiaries has engaged in patent or copyright misuse or any fraud or inequitable conduct in connection with any Adamis Patent and Proprietary Rights, and no trademark or trade name owned,
used, or applied for by Adamis or any of its Subsidiaries conflicts or interferes with any trademark or trade name owned, used, or applied for by any other Person.

 

2.12           Taxes.

 

(a)           As used in this Agreement, the terms “Tax” and, collectively, “Taxes” mean
any and all U.S. federal, state, local or foreign taxes, assessments and other similar governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, stamp transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor Entity.

 

  

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(b)           Adamis and each of its Subsidiaries has prepared and timely filed all Tax Returns relating to any and all Taxes concerning or attributable to Adamis and such Tax Returns are true and correct in all material respects and have been completed in accordance
with applicable law.  Adamis has delivered or made available to La Jolla correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Adamis or any of its Subsidiaries filed or received since January 1, 2008 or, if later, since inception.  None of Adamis or any of its Subsidiaries is delinquent in the payment of any Taxes due and owing by Adamis and each of its Subsidiaries

 

(c)           Adamis and each of its Subsidiaries has withheld and timely paid all Taxes required to have been withheld and paid with respect to any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

 

(d)           There is no Tax deficiency outstanding or assessed or, to Adamis’s Knowledge, proposed against Adamis that is not reflected as a liability on the Adamis Current Balance Sheet, nor has Adamis executed any agreements or waivers extending any statute
of limitations on or extending the period for the assessment or collection of any Tax (other than extensions which have expired).  No claim has ever been made by an authority in a jurisdiction where Adamis does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.  There are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Adamis.  Neither Adamis nor any of its Subsidiaries has been a party to any “listed
transaction” as defined in Section 6707(C)(2) of the Code and Section 1.6011-4(b)(2) of the Treasury Regulations.

 

(e)           To Adamis’s Knowledge, Adamis has no liabilities for unpaid Taxes that have not been accrued for or reserved on the Adamis Financial Statements, whether asserted or unasserted, contingent or otherwise.  Neither Adamis nor any of its
Subsidiaries will incur any liability for Taxes through the Effective Date other than in the ordinary course of business or pursuant to this Agreement.

 

(f)           Neither Adamis nor any of its Subsidiaries has received from any Governmental Entity any (i) written notice indicating an intent to open an audit or other review, (ii) written request for information related to Tax matters, or (iii) written notice of
deficiency or proposed adjustment of or any amount of Tax proposed, asserted, or assessed by any Governmental Entity against Adamis.

 

(g)           Adamis is not a party to any tax-sharing agreement or similar arrangement with any other party, and Adamis has not assumed any obligation to pay any Tax obligations of, or with respect to any transaction relating to, any other person or agreed to indemnify
any other person with respect to any Tax.

 

  

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(h)           Adamis has not been a member of an affiliated group of corporations filing a consolidated federal income tax return other than a group of which Adamis was the parent.

 

(i)           Adamis has not been at any time a United States Real Property Holding Corporation within the meaning of Section 897(c)(2) of the Code.

 

(j)           Neither Adamis nor any of its Subsidiaries has filed a consent under section 341(f) of the Code concerning collapsible corporations.  Neither Adamis nor any of its Subsidiaries is a party to any contract, agreement, plan or arrangement, including
but not limited to the provisions of this Agreement, covering any employee or former employee of Adamis or any of its Subsidiaries that, individually or collectively, could give rise to the payment of (i) any “excess parachute payment” within the meaning of Section 280G of the Code (or any corresponding provisions of state, local or foreign Tax law) and (ii) any amount that will not be fully deductible as a result of Section 162(m) of the Code (or any corresponding provisions of state, local or foreign
Tax law).  None of the Adamis common stock is subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code.

 

(k)           Adamis will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion there) ending after the Closing Date as a result of any: (A) change in method of accounting for taxable
period ending on or prior to the Closing Date; (B) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions or any excess loss account described in Treasury Regulations under section 1502 of the Code (or any corresponding or similar provisions of state, local or foreign income Tax law); (D) installment sale or open transaction disposition
made on or prior to the Closing Date; (E) prepaid amount received on or prior to the Closing Date, or (F) election with respect to the discharge of indebtedness under Section 108(i) of the Code.

 

(l)           Adamis has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by section 355 or section 361 of the Code.

 

2.13           Employee Benefit Plans.

 

(a)           The Adamis Disclosure Letter contains a complete and accurate list (to the extent not already filed as an exhibit with the Adamis SEC Reports) of each Adamis Employee Agreement and each plan, program, policy, practice, contract, agreement or other arrangement
providing for performance awards, bonus, incentive, stock option, stock purchase, stock bonus, phantom stock, stock appreciation right, supplemental retirement, fringe benefits, cafeteria benefits or other benefits, whether written or unwritten, including without limitation each "employee benefit plan" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which is
sponsored, maintained, contributed to, or required to be contributed to by Adamis (or any subsidiary) and, with respect to any such plans which are subject to Code Section 401(a), any trade or business (whether or not incorporated) that is or at any relevant time was treated as a single employer with Adamis within the 

  

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meaning of Section 414(b), (c), (m) or (o) of the Code, (an “ERISA Affiliate”) for the benefit of any person who performs services for Adamis (or any subsidiary) or with respect to which Adamis or any ERISA Affiliate has or may have any
liability (including without limitation contingent liability) or obligation (collectively, the “Adamis Employee Plans”).  Adamis has furnished or made available to La Jolla true and complete copies of documents embodying each of the Adamis Employee Plans and, with respect to each Adamis Employee Plan that is subject to ERISA reporting requirements, Adamis has provided or made available copies of the Form 5500 reports
filed for the last two plan years.

 

(b)           Compliance.  Each Adamis Employee Plan has been administered in material compliance with its terms and with the requirements of applicable law; and Adamis and each ERISA Affiliate
have performed all material obligations required to be performed by them under, and are not in any material respect in default under or violation of, any of Adamis Employee Plans.  No Adamis Employee Plan is intended to be qualified under Section 401(a) of the Code.  No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any Adamis Employee Plan.  There
are no claims or Legal Proceedings pending, or, to Adamis’s Knowledge, threatened or reasonably anticipated (other than routine claims for benefits), against any Adamis Employee Plan or against the assets of any Adamis Employee Plan.  There are no audits, inquiries or Legal Proceedings pending or, to Adamis’s Knowledge, threatened by any Governmental Authority with respect to any Adamis Employee Plan.  For at least the three years preceding the date of this Agreement, neither Adamis
nor any of its Subsidiaries has incurred any penalty or tax with respect to any Adamis Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.  Adamis and each of its Subsidiaries have made all contributions and other payments required by and due under the terms of each Adamis Employee Plan.

 

(c)           No Title IV or Multiemployer Plan.  No Adamis Employee Plan is a "multiemployer plan" (as defined in Section 3(37) of ERISA) or a “pension plan” (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA.

 

(d)           Future Commitments.  No Adamis Employee Plan provides (except at no cost to Adamis or any of its Subsidiaries), or reflects or represents any liability of Adamis or any of its
Subsidiaries to provide, retiree life insurance, retiree health benefits or other retiree employee welfare benefits to any Person for any reason, except as may be required by COBRA or other applicable Legal Requirements.  Other than commitments made that involve no future costs to Adamis or any of its Subsidiaries, neither Adamis nor any of its Subsidiaries has represented, promised or contracted (whether in oral or written form) to any employee of Adamis or any other Person that such employee or other
Person would be provided with retiree life insurance, retiree health benefit or other retiree employee welfare benefits, except to the extent required by applicable Legal Requirements.

 

(e)           Effect of Transaction.  The consummation of the transactions contemplated by this Agreement will not (i) entitle any current or former employee or other service provider of Adamis
or any ERISA Affiliate to severance benefits or any other payment (including without limitation unemployment compensation, golden parachute, bonus or benefits under any Adamis Employee Plan), except as expressly provided in this Agreement; or (ii) accelerate the time of payment or vesting of any such benefits or increase the amount of compensation due any such employee or service provider.

 

  

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2.14           Employee Matters.  Adamis is in material compliance with all currently applicable
laws and regulations respecting terms and conditions of employment.  There are no proceedings pending or, to Adamis’s Knowledge, threatened, between Adamis, on the one hand, and any or all of its current or former employees, on the other hand, which would reasonably be expected to have a Material Adverse Effect on Adamis.  Except as may be reflected in the Adamis SEC Reports, Adamis has provided all employees with all wages, benefits, relocation benefits, stock options, bonuses and incentives,
and all other compensation that became due and payable through the date of this Agreement.

 

2.15           Insurance.  The Adamis Disclosure Letter sets forth all policies of insurance
maintained by, at the expense of or for the benefit of Adamis.  There is no material claim pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies.  All premiums due and payable under all such policies have been paid and, to Adamis’s Knowledge, Adamis is otherwise in compliance with the terms of such policies.  To Adamis’s Knowledge, there is no threatened termination of, or material premium
increase with respect to, any of such policies.

 

2.16           Compliance with Legal Requirements.  For all periods of time during which
the respective applicable statute of limitations periods have not expired, except as disclosed in the Adamis SEC Reports or in Section 2.16 of the Adamis Disclosure Letter, (i) Adamis and each of its Subsidiaries has complied in all material respects with, is not in material violation of, and has not received any written or, to Adamis’s Knowledge, other notices of violation with respect to, any applicable Legal Requirement or regulation with respect to the conduct of its business, or the ownership or operation
of its business; and (ii) neither Adamis nor any of its Subsidiaries has received any written or, to Adamis’s Knowledge, other notices or other communication from any Governmental Entity regarding (A) any actual, alleged, possible, or potential violation of, or failure to comply with, any applicable Legal Requirement, or (B) any actual, alleged, possible, or potential obligation on the part of Adamis or any of its Subsidiaries to undertake, or to bear all or any portion of the cost of, any remedial action
related to compliance or non-compliance with any applicable Legal Requirement, in each of the above cases which if determined adversely to Adamis or any of its Subsidiaries would reasonably be expected to have a Material Adverse Effect on Adamis or its Subsidiaries, considered together.

 

2.17           Environmental Matters.  To Adamis’s Knowledge, Adamis is, and at
all times has been, in compliance in all material respects with all Environmental Laws and is not subject to any material liability under any Environmental Law.  Adamis has not received, nor to Adamis’s Knowledge has any other Person for whose conduct it is or may be held responsible, received, any order, written notice, or other written communication from (i) any Governmental Entity or private citizen acting in the public interest, or (ii) the current or prior owner or operator of any Facilities,
asserting or alleging any actual or potential violation of or failure to comply with any Environmental Law, or any obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities.

 

2.18           Legal Proceedings.  Except as may be disclosed in the Adamis SEC Reports,
there is no pending Legal Proceeding that has been commenced by or against Adamis.  To Adamis’s Knowledge, no Person has threatened to commence any Legal Proceeding against Adamis.  Except as may be disclosed in the Adamis SEC Reports, there is no judgment, decree or order against Adamis, or, to Adamis’s Knowledge, any of its directors or officers (in their capacities as such), that could prevent, enjoin, or 

 

  

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materially alter or delay any of the transactions contemplated by this Agreement, or any Ancillary Agreement, or that would reasonably be expected to have a Material Adverse Effect on Adamis.  To Adamis’s Knowledge, no event has occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that would reasonably be expected to, give rise to or serve as a basis for the commencement of any such Legal Proceeding.

 

2.19           Contracts; No Defaults.

 

(a)           Each Material Contract of Adamis is set forth in Section 2.19(a) of the Adamis Disclosure Letter or filed as an exhibit to the Adamis SEC Reports, and is enforceable in accordance with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies; and

 

(b)           Adamis has not violated or breached, or committed any default under, any Material Contract, in each of the above cases where such violation, breach or default would have a Material Adverse Effect on Adamis. Except as set forth in the Adamis Disclosure
Letter or the Adamis SEC Reports, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) would reasonably be expected to, (i) result in a violation or breach of any of the provisions of any Material Contract of Adamis, (ii) give any Person the right to declare a default or exercise any remedy under any Material Contract of Adamis, (iii) give any Person the right to accelerate the maturity or performance of any Material Contract of Adamis, or (iv) give any
Person the right to cancel, terminate or modify any Material Contract, in each of the above cases where such violation, breach or default would have a Material Adverse Effect on Adamis.  Neither Adamis nor any of its Subsidiaries has received any notice or other written or, to Adamis’s Knowledge, oral communication regarding any actual or possible violation or breach of, or default under, any Material Contract of Adamis.

 

(c)           The Adamis Disclosure Letter sets forth a list of all material consents or waivers of, or notifications to, any Governmental Entity or any third party that are required or provided for under any Material Contract of Adamis or any of its Subsidiaries
in connection with the execution and delivery of this Agreement and the Ancillary Agreements by Adamis and the consummation of the transactions contemplated hereby and thereby.

 

2.20           Labor Matters.  Adamis is not a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor union or labor organization.  Adamis is not the subject of any Legal Proceeding asserting that Adamis has committed an unfair labor practice or seeking to compel it to bargain with any labor organization as to wages or conditions of employment.  There is no strike, work stoppage or other labor dispute involving Adamis pending or, to Adamis’s Knowledge, threatened against Adamis.

 

2.21           Unlawful Payments.  To Adamis’s Knowledge, none of Adamis, or any
officer, director, employee, agent or representative of Adamis has made, directly or indirectly, any bribe or kickback, illegal political contribution, payment from corporate funds which was incorrectly recorded on the books and records of Adamis, unlawful payment from corporate funds to governmental or municipal officials in their individual capacities for the purpose of affecting their action or the actions of the jurisdiction which
they represent to obtain favorable treatment in securing business or licenses or to obtain special concessions of any kind whatsoever, or illegal payment from corporate funds to obtain or retain any business.

 

  

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2.22           Financial Advisor.  Except as disclosed in writing to La Jolla before
the date of this Agreement, no broker, finder or investment banker is entitled to any commission or brokerage or finder’s fee in connection with the Merger or any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of Adamis.

 

2.23           Title to Assets; No Real Property.

 

(a)           Adamis owns, and has good, valid and marketable title to, all assets purported to be owned by it, including:  (i)  all assets reflected on its balance sheet as of the date of the Adamis Current Balance Sheet; (ii)  all
equity interests of its Subsidiaries, all Adamis Patent and Proprietary Rights and all of Adamis’s rights under the Material Contracts required to be identified in Section 2.19 of the Adamis Disclosure Letter; and (iii) all other assets reflected in Adamis’s books and records as being owned by Adamis.  All of said assets are owned by Adamis free and clear of any liens or other Encumbrances, except for (x) any lien for current taxes not yet due and payable, and (y) minor liens that have arisen
in the ordinary course of business and that do not (in any case or in the aggregate) materially detract from the value of the assets subject thereto or materially impair the operations of Adamis or any of its Subsidiaries.

 

(b)           Except as set forth in Section 2.23 of the Adamis Disclosure Letter, Adamis does not own any real property and Adamis is not party to any lease for real property either as a lessee or lessor.

 

2.24           Representations Complete.  This Agreement (as limited and qualified by
the Adamis Disclosure Letter) does not contain any representation, warranty or information that (i) contains an untrue statement of a material fact, or (ii) omits to state any material fact necessary in order to make the statements herein (in the light of the circumstances under which such statements have been made) not misleading.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF LA JOLLA AND MERGER SUB

 

La Jolla, and Merger Sub (with respect to the representations, warranties and covenants of Merger Sub), represent and warrant to Adamis that the statements contained in this Article III are true and correct as set forth herein and as qualified by the disclosure letter separately delivered to Adamis concurrently herewith
(the “La Jolla Disclosure Letter”).  The disclosures set forth in the La Jolla Disclosure Letter shall be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article III.  The disclosures in any section or subsection of the La Jolla Disclosure Letter shall qualify other sections and subsections in this Article III to the extent it is reasonably clear from a reading
of the disclosure that such disclosure is applicable to such other sections and subsections.

 

3.1           Organization and Good Standing.  La Jolla is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation, with requisite corporate power and authority to conduct its business as now being conducted and to own or use its properties and assets.  La Jolla is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires such qualification except where the failure to be so qualified or in good standing would not have a Material Adverse Effect on La Jolla.

 

  

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3.2           Subsidiaries.

 

(a)           The La Jolla Disclosure Letter sets forth all direct and indirect Subsidiaries of La Jolla.  La Jolla owns all of the equity of each Subsidiary.  Except as set forth on the La Jolla Disclosure Letter, La Jolla does not have any Subsidiaries
or affiliated companies and does not otherwise own any shares in the capital of or any interest in, or control, directly or indirectly, any Entity.  Except as set forth in Section 3.2(a) of the Disclosure Letter, La Jolla has not agreed and is not obligated to make any future investment in or capital contribution to any Entity, and La Jolla has not guaranteed and is not responsible or liable for any obligation of any of the Entities in which it owns or has owned any equity interest.

 

(b)           Each Subsidiary of La Jolla: (i) is a corporation duly organized and validly existing under the laws of its jurisdiction of incorporation, (ii) has all requisite corporate power and authority to own, operate or lease the properties and assets owned,
operated or leased by such Subsidiary and to carry on its business as it has been and is currently conducted by such Subsidiary and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such license and qualification necessary, except, in each of clauses (i), (ii) and (iii), such failures which, when taken together with all other such failures, would not have a Material Adverse Effect on La Jolla
and its Subsidiaries, when considered together.

 

3.3           Authority.  Each of La Jolla and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and the Ancillary Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of La Jolla and Merger Sub, subject only to the approval of this Agreement
by the stockholders of La Jolla and Merger Sub.  The Board of Directors of La Jolla and Merger Sub have unanimously approved this Agreement and the Merger.  This Agreement has been (and the Ancillary Agreements will be at the Closing) duly executed and delivered by La Jolla and Merger Sub, and this Agreement constitutes and the Ancillary Agreements will constitute at the Closing) the valid and binding obligations of La Jolla and Merger Sub enforceable against each of La Jolla and Merger Sub
in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors' rights generally, and subject to general principles of equity.  Merger Sub has been formed solely for the purpose of executing and delivering this Agreement and consummating the transactions contemplated hereby.  Since the date of its incorporation, Merger Sub has neither engaged in nor transacted any business or activity of
any nature whatsoever other than activities related to its corporate organization and the execution and delivery of this Agreement and the related documents and instruments.  Merger Sub has no assets or properties or debts, liabilities or obligations of any kind whatsoever, and with the exception of this Agreement and the related documents and instruments, is not a party to any contract, agreement or undertaking of any nature.

 

  

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3.4           No Conflict.  The execution and delivery by La Jolla of this Agreement
and the Ancillary Agreements to which La Jolla is a party, does not, and the consummation of the transactions contemplated hereby and thereby will not (i) conflict with, or result in any violation of, any provision of the La Jolla Charter (in its current form and as it may be amended immediately before the Effective Time) or the La Jolla Bylaws, (ii) except as would not reasonably be expected to have a Material Adverse Effect on La Jolla, result in any violation of or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under any mortgage, indenture, lease, contract, grant, funding arrangement, or other agreement or instrument, permit, concession, franchise or license of La Jolla, (iii) subject to obtaining the approval of La Jolla’s stockholders and except as would not reasonably be expected to have a Material Adverse Effect on La Jolla, conflict with, or result in any violation of any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable to La Jolla or any of its properties or assets or (iv) conflict with, or result in a violation of any resolution adopted by La Jolla’s stockholders, La Jolla’s board of directors or any committee of La Jolla’s board of directors.

 

3.5           Consents.  No consent, waiver, approval, order or authorization of or registration,
declaration or filing with or notice to, any Governmental Entity or any party to any Material Contract is required by or with respect to La Jolla or any of its Subsidiaries in connection with the execution and delivery of this Agreement by La Jolla and any Ancillary Agreement to which La Jolla is a party or the consummation by La Jolla of the transactions contemplated hereby and thereby, except for (i) such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be
required under applicable securities laws, (ii) the filing of the Certificate of Merger with the Delaware Secretary of State and (iii) such consents, waivers, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, would not have a Material Adverse Effect on La Jolla.

 

3.6           Governmental Authorizations.  La Jolla has obtained each material federal,
state, county, local or foreign governmental consent, license, permit, grant, or other authorization of a Governmental Entity (a) pursuant to which La Jolla currently operates or holds any interest in any of its properties, or (b) that is required for the operation of La Jolla’s business or the holding of any such interest, and all of such authorizations are in full force and effect, except for such consents, licenses, permits, grants or other authorizations, which if not obtained would not have a Material
Adverse Effect on La Jolla.

 

3.7           Capitalization.

 

(a)           The authorized capital stock of La Jolla consists of 225,000,000 shares of Common Stock, $.01 par value, and 8,000,000 shares of Preferred Stock, $.01 par value, of which there were issued and outstanding as of the date of this Agreement, 65,722,648
shares of Common Stock and no shares of Preferred Stock.  The shares of La Jolla Common Stock to be issued pursuant to the Merger will be duly authorized, validly issued, fully paid, and non-assessable, free of any liens or encumbrances other than any liens or encumbrances created by or imposed by the holders thereof, and shall be issued in material compliance with all applicable federal and state securities laws.  All of the outstanding shares of La Jolla Common Stock (i) have been duly 

  

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authorized and validly issued, and are fully paid and non-assessable, (ii) except for rights of first refusal, exchange, repurchase, forfeiture and/or cancellation rights in favor of La Jolla, are not subject to preemptive rights or rights of first refusal created by statue, La Jolla Charter, La Jolla Bylaws or any agreement
to which La Jolla is a party or by which it is bound and (iii) have been issued in compliance in all material respects with federal and state securities laws.  There are no declared or unpaid dividends with respect to any shares of La Jolla Common Stock.  None of La Jolla’s debt could be classified as equity for tax purposes.

 

(b)           Section 3.7 of the La Jolla Disclosure Letter sets forth: (i) the number of outstanding options and warrants to purchase shares of La Jolla Common Stock; (ii) the number of shares reserved for further issuance under the La Jolla Equity Incentive Plans
and the La Jolla Employee Stock Purchase Plan; (iii) with respect to each option and warrant outstanding as of the date of this Agreement, (A) the name of the holder of such option or warrant, (B) the total number of shares of La Jolla Common Stock that are subject to such option or warrant and the number of shares of La Jolla Common Stock with respect to which such option or warrant is immediately exercisable, (C) the date of which such option or warrant was granted and the term of such option or warrant (D)
the vesting schedule, if any, of such option or warrant, (E) the exercise price per share of La Jolla Common Stock purchasable under such option or warrant and (F) whether such option or warrant has been designated an “incentive stock option” as defined in Section 422 of the Code; and (iv) an accurate and complete description of the terms of each repurchase option which is held by La Jolla and to which any of such shares is subject.

 

(c)           Except as set forth in Section 3.7 of the La Jolla Disclosure Letter, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of the capital stock or other securities of
La Jolla; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the capital stock or other securities of La Jolla;  (iii) contract under which La Jolla is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities; or (iv) to La Jolla’s Knowledge, condition or circumstance that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such
Person is entitled to acquire or receive any shares of capital stock or other securities of La Jolla.

 

3.8           SEC Reports; Financial Statements.

 

(a)           As of their respective filing dates, all annual, quarterly or current reports, filed by La Jolla with the SEC since January 1, 2009 (including those that La Jolla may file subsequent to the date hereof) (such reports, as amended the “La
Jolla SEC Reports”) (i) were prepared in accordance in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder, except as may be reflected in any amendments to such reports that La Jolla has filed with the SEC, (ii) as the same may have been amended, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not misleading and (iii) were all the forms, reports and other documents required to be filed under the Exchange Act.  Since January 1, 2009, La Jolla has filed with the SEC all reports that are required to have been filed.

 

  

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(b)           No Subsidiary of La Jolla is or has been required to file any form, report, registration statement or other document with the SEC.  The consolidated financial statements (including any related notes thereto) contained in the La Jolla SEC Reports
(in the form, as applicable, in any amendments to such La Jolla SEC Reports) (the “La Jolla Financial Statements”): (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered, except as may be indicated in the notes to such financial statements and (in the case
of unaudited statements) as permitted by Form 10-Q of the SEC, and except that unaudited financial statements may not contain footnotes and are subject to year-end audit adjustments; and (iii) fairly present in all material respects the consolidated financial position of La Jolla and its Subsidiaries as of the respective dates thereof and the consolidated results of operations and cash flows of La Jolla and its Subsidiaries for the periods covered thereby.  The unaudited balance sheet of La Jolla as
of September 30, 2009, that is included in the La Jolla Financial Statements is referred to herein as the “La Jolla Current Balance Sheet.”

(c)           La Jolla maintains a system of internal accounting controls and disclosure controls and procedures sufficient, in the judgment of La Jolla’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

3.9           Absence of Certain Changes.  Since the date of the La Jolla Current Balance
Sheet, except as set forth in the La Jolla SEC Reports or as set forth in Section 3.9 of the La Jolla Disclosure Letter, there has not occurred (a) any change, event or condition (whether or not covered by insurance) that has resulted in, or would reasonably be expected to result in, a Material Adverse Effect on La Jolla; (b) any acquisition, sale or transfer of any material assets or material properties of La Jolla or any creation of any security interest in such assets or properties; (c) any change in accounting
methods or practices (including any change in depreciation or amortization policies or rates) by La Jolla or any revaluation by La Jolla of any of its assets; (d) any declaration, setting aside, or payment of a dividend or other distribution with respect to the shares of La Jolla or any direct or indirect redemption, purchase or other acquisition by La Jolla of any of its shares of capital stock; (e) any Material Contract entered into by La Jolla, or any material amendment or termination of, or default under,
any Material Contract to which La Jolla is a party or by which it is bound, in each case that would reasonably be expected to result in a Material Adverse Effect on La Jolla; (f) any amendment or change to La Jolla Charter or La Jolla Bylaws; (g) any increase in or modification of the compensation or benefits payable or to become payable by La Jolla to any of its directors or employees; (h) any sale, issuance or authorization by La Jolla of (1) any capital stock or other security, (2) any option or right to acquire
any capital stock or any other security, or (3) any Convertible Securities; any formation by La Jolla of any Subsidiary or any acquisition of any equity interest or other interest in any other Equity (other than Merger Sub); (i) any other material event not in the Ordinary Course of Business; or (j) any agreement by La Jolla to do any of the things described in the preceding clauses (a) through (i).

 

  

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3.10           Interested Party Transactions.  Except as set forth in the La Jolla SEC Reports
or as set forth in Section 3.10 of the La Jolla Disclosure Schedule, La Jolla is not indebted to any director, officer or employee of La Jolla (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses), and no such person is indebted to La Jolla.  Except as set forth in the La Jolla SEC Reports or in Section 3.22 of the La Jolla Disclosure Letter, La Jolla is not a party to any transaction of a type that would be required to be disclosed pursuant to Item 404 of
Regulation S-K promulgated by the SEC.

 

3.11           Intellectual Property.

 

(a)           La Jolla and each of its Subsidiaries owns or possesses the right to use the Intellectual Property that is owned by or licensed to La Jolla (the “La Jolla Patent and Proprietary
Rights”), except where the failure to own or possess such rights would not have a Material Adverse Effect on La Jolla or any of its Subsidiaries, considered together.

 

(b)           Neither La Jolla nor any of its Subsidiaries has received any notice of any asserted rights with respect to any of the La Jolla Patent and Proprietary Rights which, if determined unfavorably with respect to the interests of La Jolla or any of its Subsidiaries
would have a Material Adverse Effect on La Jolla or any of its Subsidiaries, considered together.

 

(c)           To La Jolla’s Knowledge, neither La Jolla nor any of its Subsidiaries has ever infringed (directly, contributorily, by inducement, or otherwise), misappropriated, or otherwise violated or made unlawful use of any right to Intellectual Property
of any other Person or engaged in unfair competition.  No infringement, misappropriation, or similar claim or Legal Proceeding is pending or, to La Jolla’s Knowledge, threatened against La Jolla, any of its Subsidiaries or any other Person who is or may be entitled to be indemnified, defended, held harmless, or reimbursed by the Company or any of its Subsidiaries with respect to such claim or Legal Proceeding.  Neither La Jolla nor any of its Subsidiaries has received notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with respect to any of the La Jolla Patent and Proprietary Rights, which infringement or conflict (if the subject of any unfavorable decision, ruling or finding), individually or in the aggregate, would result in a Material Adverse Effect on La Jolla or any of its Subsidiaries, considered together.

 

(d)           To La Jolla’s Knowledge, neither La Jolla nor any of its Subsidiaries has engaged in patent or copyright misuse or any fraud or inequitable conduct in connection with any La Jolla Patent and Proprietary Rights, and no trademark or trade name owned,
used, or applied for by La Jolla or any of its Subsidiaries conflicts or interferes with any trademark or trade name owned, used, or applied for by any other Person.

 

3.12           Taxes.

 

(a)           La Jolla has prepared and timely filed all Tax Returns relating to any and all Taxes concerning or attributable to La Jolla and such Tax Returns are true and correct in all material respects and have been completed in accordance with applicable law.  La
Jolla has delivered or made available to Adamis correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by La Jolla or any of its Subsidiaries filed or received since January 1, 2008.  None of La Jolla or any of its Subsidiaries is delinquent in the payment of any Taxes due and owing by La Jolla and its Subsidiaries.

 

  

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(b)           La Jolla and each of its Subsidiaries has withheld and timely paid all Taxes required to have been withheld and paid with respect to any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

 

(c)           There is no Tax deficiency outstanding or assessed or, to La Jolla’s Knowledge, proposed against La Jolla that is not reflected as a liability on the La Jolla Current Balance Sheet nor has La Jolla executed any agreements or waivers extending
any statute of limitations on or extending the period for the assessment or collection of any Tax (other than extensions which have expired).  No claim has ever been made by an authority in a jurisdiction where La Jolla does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.  There are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of La Jolla.  Neither La Jolla nor any of its Subsidiaries has been a party to
any “listed transaction” as defined in Section 6707(C)(2) of the Code and Section 1.6011-4(b)(2) of the Treasury Regulations.

 

(d)           To La Jolla’s Knowledge, La Jolla has no liabilities for unpaid Taxes that have not been accrued for or reserved on the La Jolla Financial Statements, whether asserted or unasserted, contingent or otherwise.  Neither La Jolla nor any
of its Subsidiaries will incur any liability for Taxes through the Effective Time, other than in the ordinary course of business or pursuant to this Agreement.

 

(e)           Neither La Jolla nor any of its Subsidiaries has received from any Governmental Entity any (i) written notice indicating an intent to open an audit or other review, (ii) written request for information related to Tax matters, or (iii) written notice
of deficiency or proposed adjustment of or any amount of Tax proposed, asserted, or assessed by any Governmental Entity against La Jolla.

 

(f)           La Jolla is not a party to any tax-sharing agreement or similar arrangement with any other party, and La Jolla has not assumed any obligation to pay any Tax obligations of, or with respect to any transaction relating to, any other person or agreed to
indemnify any other person with respect to any Tax.

 

(g)           La Jolla has not been a member of an affiliated group of corporations filing a consolidated federal income tax return other than a group of which La Jolla was the parent.

 

(h)           La Jolla has not been at any time a United States Real Property Holding Corporation within the meaning of Section 897(c)(2) of the Code.

 

(i)           Neither La Jolla nor any of its Subsidiaries has filed a consent under Section 341(f) of the Code concerning collapsible corporations.  Neither La Jolla nor any of its Subsidiaries is a party to any contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement, covering any employee or former employee of La Jolla or any of its Subsidiaries that, individually or collectively, could give rise to the payment of (i) any “excess parachute payment” within the meaning of Section 280G of the Code (or any corresponding provisions of state, local or foreign Tax law) and (ii) any amount that will not be fully deductible as a result
of Section 162(m) of the Code (or any corresponding provisions of state, local or foreign Tax law).  None of the La Jolla common stock is subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code.

 

  

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(j)           La Jolla will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion there) ending after the Closing Date as a result of any: (A) change in method of accounting for
taxable period ending on or prior to the Closing Date; (B) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provisions of state, local or foreign income Tax law); (D) installment sale or open transaction disposition
made on or prior to the Closing Date; (E) prepaid amount received on or prior to the Closing Date; or (F) election with respect to the discharge of indebtedness under Section 108(i) of the Code.

 

(k)           La Jolla has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code.

 

3.13           Employee Benefit Plans.

 

(a)           The La Jolla Disclosure Letter contains a complete and accurate list (to the extent not already filed as an exhibit with the La Jolla SEC Reports) of each La Jolla Employee Agreement and each plan, program, policy, practice, contract, agreement or other
arrangement providing for performance awards, bonus, incentive, stock option, stock purchase, stock bonus, phantom stock, stock appreciation right, supplemental retirement, fringe benefits, cafeteria benefits or other benefits, whether written or unwritten, including without limitation each "employee benefit plan" within the meaning of Section 3(3) of ERISA, which is sponsored, maintained, contributed to, or required to be contributed to by La Jolla (or any subsidiary) and, with respect to any such plans which
are subject to Code Section 401(a), any trade or business (whether or not incorporated) that is or at any relevant time was treated as a single employer with La Jolla within the meaning of Section 414(b), (c), (m) or (o) of the Code (an “ERISA Affiliate”) for the benefit of any person who performs services for La Jolla (or any subsidiary) or with respect to which La Jolla or any ERISA Affiliate has or may have any liability
(including without limitation contingent liability) or obligation (collectively, the “La Jolla Employee Plans”).  La Jolla has furnished or made available to Adamis true and complete copies of documents embodying each of the La Jolla Employee Plans and, with respect to each La Jolla Employee Plan that is subject to ERISA reporting requirements, La Jolla has provided or made available copies of the Form 5500 reports
filed for the last two plan years.

 

(b)           Compliance.  Each La Jolla Employee Plan has been administered in material compliance with its terms and with the requirements of applicable law; and La Jolla and each ERISA
Affiliate have performed all material obligations required to be performed by them under, and are not in any material respect in default under or violation of, any of the La Jolla Employee Plans.  Any La Jolla Employee Plan that is intended to be qualified under Section 401(a) of the Code has obtained from the Internal 

  

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Revenue Service a favorable determination letter as to its qualified status under the Code, including all currently effective amendments to the Code.  No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section
408 of ERISA, has occurred with respect to any La Jolla Employee Plan.  There are no claims or Legal Proceedings pending, or, to La Jolla’s Knowledge, threatened or reasonably anticipated (other than routine claims for benefits), against any La Jolla Employee Plan or against the assets of any La Jolla Employee Plan.  There are no audits, inquiries or Legal Proceedings pending or, to La Jolla’s Knowledge, threatened by any Governmental Authority with respect to any La Jolla Employee
Plan.  For at least the three years preceding the date of this Agreement, neither La Jolla nor any of its Subsidiaries has incurred any penalty or tax with respect to any La Jolla Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.  La Jolla and each of its Subsidiaries have made all contributions and other payments required by and due under the terms of each La Jolla Employee Plan.

 

(c)           No Title IV or Multiemployer Plan.  No La Jolla Employee Plan is a "multiemployer plan" (as defined in Section 3(37) of ERISA) or a “pension plan” (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA.

 

(d)           Future Commitments.  No La Jolla Employee Plan provides (except at no cost to La Jolla or any of its Subsidiaries), or reflects or represents any liability of La Jolla or any
of its Subsidiaries to provide, retiree life insurance, retiree health benefits or other retiree employee welfare benefits to any Person for any reason, except as may be required by COBRA or other applicable Legal Requirements.  Other than commitments made that involve no future costs to La Jolla, La Jolla has not represented, promised or contracted (whether in oral or written form) to any employee of La Jolla or any other Person that such employee or other Person would be provided with retiree life
insurance, retiree health benefit or other retiree employee welfare benefits, except to the extent required by applicable Legal Requirements.

 

(e)           Effect of Transaction.  The consummation of the transactions contemplated by this Agreement will not (i) entitle any current or former employee or other service provider of La
Jolla or any ERISA Affiliate to severance benefits or any other payment (including without limitation unemployment compensation, golden parachute, bonus or benefits under any La Jolla Employee Plan), except as expressly provided in this Agreement; or (ii) accelerate the time of payment or vesting of any such benefits or increase the amount of compensation due any such employee or service provider.

 

3.14           Employee Matters.  La Jolla is in material compliance with all currently
applicable laws and regulations respecting terms and conditions of employment.  There are no proceedings pending or, to La Jolla’s Knowledge, threatened, between La Jolla, on the one hand, and any or all of its current or former employees, on the other hand, which would reasonably be expected to have a Material Adverse Effect on La Jolla.  Except as may be reflected in the La Jolla SEC Reports, La Jolla has provided all employees with all wages, benefits, relocation benefits, stock options,
bonuses and incentives, and all other compensation that became due and payable through the date of this Agreement.

 

3.15           Insurance.  The La Jolla Disclosure Letter sets forth all policies of
insurance maintained by, at the expense of or for the benefit of La Jolla.  There is no material claim pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies.  All premiums due and payable under all such policies have been paid and, to La Jolla’s Knowledge, La Jolla is otherwise in compliance with the terms of such policies.  To
La Jolla’s Knowledge, there is no threatened termination of, or material premium increase with respect to, any of such policies.

 

  

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3.16           Compliance with Legal Requirements.  For all periods of time during which
the respective applicable statute of limitations periods have not expired, and except as disclosed in the La Jolla SEC Reports or in Section 3.16 of the La Jolla Disclosure Letter, (i) La Jolla and each of its Subsidiaries has complied in all material respects with, is not in material violation of, and has not received any written or, to La Jolla’s Knowledge, other notices of violation with respect to, any applicable Legal Requirement or regulation with respect to the conduct of its business, or the ownership
or operation of its business; and (ii) neither La Jolla nor any of its Subsidiaries has received any written or, to La Jolla’s Knowledge, other notices or other communication from any Governmental Entity regarding (A) any actual, alleged, possible, or potential violation of, or failure to comply with, any applicable Legal Requirement, or (B) any actual, alleged, possible, or potential obligation on the part of La Jolla or any of its Subsidiaries to undertake, or to bear all or any portion of the cost of,
any remedial action related to compliance or non-compliance with any applicable Legal Requirement, in each of the above cases which if determined adversely to La Jolla or any of its Subsidiaries would reasonably be expected to have a Material Adverse Effect on La Jolla or its Subsidiaries, considered together.

 

3.17           Environmental Matters.  To La Jolla’s Knowledge, La Jolla is, and
at all times has been, in compliance in all material respects with all Environmental Laws and is not subject to any material liability under any Environmental Law.  La Jolla has not received, nor to La Jolla’s Knowledge has any other Person for whose conduct it is or may be held responsible, received, any order, written notice, or other written communication from (i) any Governmental Entity or private citizen acting in the public interest, or (ii) the current or prior owner or operator of any
Facilities, asserting or alleging any actual or potential violation of or failure to comply with any Environmental Law, or any obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities.

 

3.18           Legal Proceedings.  Except as may be disclosed in the La Jolla SEC Reports,
there is no pending Legal Proceeding that has been commenced by or against La Jolla.  To La Jolla’s Knowledge, no Person has threatened to commence any Legal Proceeding against La Jolla.  Except as may be disclosed in the La  Jolla SEC Reports, there is no judgment, decree or order against La Jolla or, to La Jolla’s Knowledge, any of its directors or officers (in their capacities as such), that could prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or any Ancillary Agreement, or that would reasonably be expected to have a Material Adverse Effect on La Jolla.  To La Jolla’s Knowledge, no event has occurred, and no claim, dispute or other condition or circumstance exists, that will, or that would reasonably be expected to, give rise to or serve as a basis for the commencement of any such Legal Proceeding.

 

3.19           Contracts; No Defaults.

 

(a)           Each Material Contract of La Jolla is set forth in Section 3.19(a) of the Disclosure Letter or filed as an exhibit to the La Jolla SEC Reports and is enforceable in accordance with its terms, subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies; and

 

  

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(b)           La Jolla has not violated or breached, or committed any default under, any Material Contract, in each of the above cases where such violation, breach or default would have a Material Adverse Effect on La Jolla.  Except as set forth in the
La Jolla Disclosure Letter or the La Jolla SEC Reports, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) would reasonably be expected to, (i) result in a violation or breach of any of the provisions of any Material Contract of La Jolla, (ii) give any Person the right to declare a default or exercise any remedy under any Material Contract of La Jolla, (iii) give any Person the right to accelerate the maturity or performance of any Material Contract
of La Jolla, or (iv) give any Person the right to cancel, terminate or modify any Material Contract, in each of the above cases where such violation, breach or default would have a Material Adverse Effect on La Jolla.  Neither La Jolla nor any of its Subsidiaries has received any notice or other written or, to La Jolla’s Knowledge, oral communication regarding any actual or possible violation or breach of, or default under, any Material Contract of La Jolla.

 

(c)           The La Jolla Disclosure Letter sets forth a list of all material consents or waivers of, or notifications to, any Governmental Entity or any third party that are required or provided for under any Material Contract of La Jolla or any of its Subsidiaries
in connection with the execution and delivery of this Agreement and the Ancillary Agreements by La Jolla and the consummation of the transactions contemplated hereby and thereby.

 

3.20           Labor Matters.  La Jolla is not a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor union or labor organization.  La Jolla is not the subject of any Legal Proceeding asserting that La Jolla has committed an unfair labor practice or seeking to compel it to bargain with any labor organization as to wages or conditions of employment.  There is no strike, work stoppage or other labor dispute involving La Jolla pending or, to La Jolla’s Knowledge, threatened against La Jolla.

 

3.21           Unlawful Payments.  To La Jolla’s Knowledge, none of La Jolla, or
any officer, director, employee, agent or representative of La Jolla has made, directly or indirectly, any bribe or kickback, illegal political contribution, payment from corporate funds which was incorrectly recorded on the books and records of La Jolla, unlawful payment from corporate funds to governmental or municipal officials in their individual capacities for the purpose of affecting their action or the actions of the jurisdiction which they represent to obtain favorable treatment in securing business or
licenses or to obtain special concessions of any kind whatsoever, or illegal payment from corporate funds to obtain or retain any business.

 

3.22           Financial Advisor.  Except as disclosed in writing to Adamis before the
date of this Agreement, no broker, finder or investment banker is entitled to any commission or brokerage or finder’s fee in connection with the Merger or any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of La Jolla.

 

3.23           Title to Assets; No Real Property.

 

(a)           La Jolla owns, and has good, valid and marketable title to, all assets purported to be owned by it, including:  (i)  all assets reflected on its balance sheet as of the date of the La Jolla Current Balance Sheet;  (ii)  all
equity interests of its 

 

  

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Subsidiaries, all La Jolla Patent and Proprietary Rights and all of La Jolla’s rights under the Material Contracts required to be identified in Section 3.19 of the La Jolla Disclosure Letter; and (iii) all other assets reflected in La Jolla’s books and records as being owned by La Jolla.  All of said
assets are owned by La Jolla free and clear of any liens or other Encumbrances, except for (x) any lien for current taxes not yet due and payable, and (y) minor liens that have arisen in the ordinary course of business and that do not (in any case or in the aggregate) materially detract from the value of the assets subject thereto or materially impair the operations of La Jolla or any of its Subsidiaries.

 

(b)           La Jolla does not own any real property and La Jolla is not party to any lease for real property either as a lessee or lessor.

 

3.24           Representations Complete.  This Agreement (as limited and qualified by
the La Jolla Disclosure Letter) does not contain any representation, warranty or information that (i) contains an untrue statement of a material fact, or (ii) omits to state any material fact necessary in order to make the statements herein (in the light of the circumstances under which such statements have been made) not misleading.

 

ARTICLE IV

CONDUCT BEFORE THE EFFECTIVE TIME

 

4.1           Access and Investigation.  Subject to the terms of the Confidentiality
Agreement which the Parties agree will continue in full force following the date of this Agreement, during the period commencing on the date of this Agreement and ending at the Effective Time, unless this Agreement is earlier terminated pursuant to the terms hereof (the “Pre-Closing Period”), upon reasonable notice each Party shall, and shall use commercially reasonable efforts to cause such Party’s Representatives to:
(a) provide the other Party and such other Party’s Representatives with reasonable access during normal business hours to such Party’s Representatives, personnel and assets and to all existing books, records, Tax Returns, work papers and other documents and information relating to such Party and its Subsidiaries; (b) provide the other Party and such other Party’s Representatives with such copies of the existing books, records, Tax Returns, work papers, product data, and other documents and information
relating to such Party and its Subsidiaries, and with such additional financial, operating and other data and information regarding such Party and its Subsidiaries as the other Party may reasonably request; and (c) permit the other Party’s officers and other employees to meet, upon reasonable notice and during normal business hours, with the chief financial officer and other officers and managers of such Party responsible for such Party’s financial statements and the internal controls of such Party
to discuss such matters as the other Party may deem necessary or appropriate. Notwithstanding the foregoing, any Party may restrict the foregoing access to the extent that any Legal Requirement applicable to such party requires such Party or its Subsidiaries to restrict or prohibit access to any such properties or information or if such restriction is needed to protect attorney-client privilege.  No information or knowledge obtained in any investigation pursuant to Section 4.1 shall affect or be deemed
to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Merger.

 

4.2           Operation of La Jolla’s Business.

 

  

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(a)           Except as contemplated by this Agreement or with the prior written consent of Adamis, during the Pre-Closing Period, each of La Jolla and its Subsidiaries shall: (i) use commercially reasonable efforts to conduct its business and operations in the Ordinary
Course of Business and in compliance with all applicable Legal Requirements and the requirements of all Contracts that constitute Material Contracts of La Jolla; (ii) use its commercially reasonable efforts to preserve intact its current business organization, use commercially reasonable efforts to keep available the services of its current key employees, officers and other employees and maintain its relations and goodwill with all suppliers, customers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with La Jolla or its Subsidiaries; (iii) not amend or permit the adoption of any amendment to its certificate of incorporation or bylaws, or effect or permit itself to become a party to any Acquisition Transaction, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction; (iv) use its commercially reasonable efforts to keep in full force all insurance policies identified in the La Jolla Disclosure Letter; (v) not form any
Subsidiary or acquire any equity interest or other interest in any other Entity; (vi) not (A) lend money to any Person, or (B) incur or guarantee any indebtedness for borrowed money; (vii) not (A) make or change any election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, (B) enter into any closing agreement, settle any Tax claim or assessment relating to La Jolla or any of its Subsidiaries, (C) surrender any right to claim a refund of Taxes, (D) consent
to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to La Jolla or any of its Subsidiaries, or (E) take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of materially increasing the Tax liability of La Jolla or any of its Subsidiaries or materially decreasing any Tax attribute of La Jolla or
any of its Subsidiaries as of the Effective Date; or (viii) not agree or commit to take any of the actions described in clauses (iii) through (vii) above.

 

(b)           La Jolla shall promptly notify Adamis of: (A) any notice or other communication from any Person alleging that the Consent of such Person is or may be required in connection with any of the Contemplated Transactions; and (B) any event that would reasonably
be expected to have a Material Adverse Effect on La Jolla.

 

4.3           Operation of Adamis’s Business.

 

(a)           Except as contemplated by this Agreement or with the prior written consent of La Jolla, during the Pre-Closing Period, each of Adamis and its Subsidiaries shall: (i) use commercially reasonable efforts to conduct its business and operations in the Ordinary
Course of Business and in compliance with all applicable Legal Requirements and the requirements of all Contracts that constitute Material Contracts of Adamis; (ii) use its commercially reasonable efforts to preserve intact its current business organization, use commercially reasonable efforts to keep available the services of its current key employees, officers and other employees and maintain its relations and goodwill with all suppliers, customers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with Adamis or its Subsidiaries; (iii) not amend or permit the adoption of any amendment to its certificate of incorporation or bylaws, or effect or permit itself to become a party to any Acquisition Transaction, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction; (iv) use its commercially reasonable efforts to keep in full force all insurance policies identified in the Adamis Disclosure Letter; (v) not form any Subsidiary 

 

  

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or acquire any equity interest or other interest in any other Entity; (vi) not (A) lend money to any Person, or (B) incur or guarantee any indebtedness for borrowed money; (vii) not (A) make or change any election, change an annual accounting period, adopt or change any accounting method, (B) file any amended Tax Return,
enter into any closing agreement, settle any Tax claim or assessment relating to Adamis or any of its Subsidiaries, (C) surrender any right to claim a refund of Taxes, (D) consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to Adamis or any of its Subsidiaries, or (E) take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent
or other action would have the effect of materially increasing the Tax liability of Adamis or any of its Subsidiaries or materially decreasing any Tax attribute of Adamis or any of its Subsidiaries as of the Effective Date; or (viii) not agree or commit to take any of the actions described in clauses (iii) through (vii) above.  Notwithstanding the foregoing, Adamis shall be permitted during the Pre-Closing Period to negotiate, enter into and consummate the following types of transactions: (X) any debt
financing transaction for up to $2,000,000 of aggregate principal, (Y) any equity financing transaction involving the issuance of up to 20% of the Adamis Common Stock outstanding as of the date of this Agreement, and (Z) the acquisition of one or more businesses, interests in businesses, technologies, intellectual property or products or issuing equity or debt instruments in connection therewith, provided that the aggregate consideration paid or potentially payable in connection with all such transactions shall
not either exceed $1,000,000 or result in the issuance or potential issuance of more than 20% of the Adamis Common Stock outstanding as of the date of this Agreement.

 

(b)           Adamis shall promptly notify La Jolla of: (A) any notice or other communication from any Person alleging that the Consent of such Person is or may be required in connection with any of the Contemplated Transactions; and (B) any event that would reasonably
be expected to have a Material Adverse Effect on La Jolla.

 

4.4           Disclosure Schedule Updates.  During the Pre-Closing Period, Adamis on
the one hand, and La Jolla on the other, shall promptly notify the other Party in writing, by delivery of an updated Adamis Disclosure Letter or La Jolla Disclosure Letter, as the case may be, of: (i) the discovery by such Party of any event, condition, fact or circumstance that occurred or existed on or before the date of this Agreement and that caused or constitutes a material inaccuracy in any representation or warranty made by such Party in this Agreement; (ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would cause or constitute a material inaccuracy in any representation or warranty made by such Party in this Agreement if: (A) such representation or warranty had been made as of the time of the occurrence, existence or discovery of such event, condition, fact or circumstance; or (B) such event, condition, fact or circumstance had occurred, arisen or existed on or before the date of this Agreement; (iii) any material breach of any covenant or
obligation of such Party; and (iv) any event, condition, fact or circumstance that could reasonably be expected to make the timely satisfaction of any of the conditions set forth in Articles VI, VII or VIII. No notification given pursuant to this Section shall change, limit or otherwise affect any of the representations, warranties, covenants or obligations of the notifying Party contained in this Agreement or its Disclosure Schedule for purposes of Section 7.1 or 7.2, in the case of Adamis, or Section 8.1 or
8.2 in the case of La Jolla.

 

4.5           No Solicitation.

 

  

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(a)           Except as set forth below, each Party agrees that neither it nor any of its Subsidiaries shall, nor shall it nor any of its Subsidiaries authorize or permit any of their Representatives to directly or indirectly:

(i)           solicit, initiate, knowingly encourage, induce or facilitate the communication, making, submission or announcement of any Acquisition Proposal or Acquisition Inquiry or take any action that could reasonably be expected to lead to an Acquisition Proposal
or Acquisition Inquiry;

 

(ii)           furnish any information regarding such Party to any Person in connection with or in response to an Acquisition Proposal or Acquisition Inquiry;

 

(iii)           engage in discussions or negotiations with any Person with respect to any Acquisition Proposal or Acquisition Inquiry;

 

(iv)           approve, endorse or recommend any Acquisition Proposal or, with respect to La Jolla, effect any Change in the La Jolla Board Recommendation or, with respect to Adamis, effect any Change in the Adamis Board Recommendation; or

 

(v)           execute or enter into any letter of intent or similar document or any Contract contemplating or otherwise relating to any Acquisition Proposal or enter into any agreement in principle requiring such Party to abandon, terminate or fail to consummate
the Merger or breach its obligations hereunder or propose or agree to do any of the foregoing.

 

(b)           Exceptions to Adamis No Solicitation.

 

(i)           Notwithstanding anything contained in this Section, before obtaining the Required Adamis Stockholder Vote, Adamis may furnish nonpublic information regarding Adamis to, and enter into discussions or negotiations with, any Person in response to an unsolicited,
bona fide written Acquisition Proposal made or received after the date of this Agreement, which Adamis’s Board of Directors determines in good faith constitutes, or is reasonably likely to result in, a Superior Proposal (and is not withdrawn) if: (A) neither Adamis nor any Representative of Adamis shall have failed to comply with this Section; (B) the Board of Directors of Adamis concludes in good faith, after consultation with outside counsel, that the failure to take such action would result in a breach
of the fiduciary duties of the Board of Directors of Adamis under applicable law; (C) within 24 hours following the furnishing of any such nonpublic information to, or entering into discussions with, such Person, Adamis gives La Jolla written notice of the identity of such Person and of Adamis’s intention to furnish nonpublic information to, or enter into discussions with, such Person or has furnished, or entered into discussions with, such Person; (D) Adamis receives from such Person an executed confidentiality
agreement containing provisions (including nondisclosure provisions, use restrictions, non-solicitation provisions, no hire provisions and “standstill” provisions) at least as favorable to Adamis as those contained in the Confidentiality Agreement; and (E) within 24 hours following the furnishing of any such nonpublic information to such Person, Adamis furnishes such nonpublic information to La Jolla (to the extent such nonpublic information has not been previously furnished by Adamis to La Jolla).
Without limiting the generality of the foregoing, Adamis acknowledges and agrees that in the event any Representative of Adamis takes any action that, if taken by Adamis, would constitute a failure to comply with this Section by Adamis, the taking of such action by such Representative shall be deemed to constitute a failure to comply with this Section by Adamis for purposes of this Agreement.

 

  

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(ii)           Notwithstanding anything to the contrary set forth in this Agreement, if at any time before obtaining the Required Adamis Stockholder Vote, Adamis receives an unsolicited bona fide written Acquisition Proposal that did not relate to a breach of this
Section and which the Board of Directors of Adamis determines in good faith constitutes a Superior Proposal, and each of Adamis, its Subsidiaries and their Representatives have otherwise complied with its obligations under this Section 4.5, the Board of Directors of Adamis may, on three (3) Business Days’ prior written notice (a “Notice of Superior Proposal”) to La Jolla (which notice shall include the forms of agreements
pursuant to which the Superior Proposal would be implemented or, if no such agreements have been proposed, a written summary of the material terms and conditions of such Superior Proposal) (it being understood that Adamis must deliver a new Notice of Superior Proposal and thereafter negotiate as provided herein in the event of any modification to an Acquisition Proposal if such modification results in the determination that such Acquisition Proposal is a Superior Proposal), take any action otherwise prohibited
by Section 4.5(a)(i), (a)(ii), (a)(iii), (a)(iv) or (a)(v) and cause Adamis to terminate this Agreement pursuant to Section 9.1(g) if (i) the Board of Directors of Adamis, after consultation with outside counsel, shall have first determined in good faith that there is a reasonable risk that the failure to take such action would result in a breach of its fiduciary duties under the DGCL, and (ii) Adamis shall have notified La Jolla of such determination and offered to discuss in good faith with La Jolla (and, if
La Jolla accepts, thereafter negotiates in good faith), for a period of no less than three (3) Business Days, any adjustments in the terms and conditions of this Agreement proposed by La Jolla, and the Board of Directors of Adamis shall have resolved, after taking into account the results of such discussions and proposals by La Jolla, if any, that the Acquisition Proposal remains a Superior Proposal.

 

(c)           Exceptions to La Jolla No Solicitation.

 

(i)           Notwithstanding anything contained in this Section, before obtaining the Required La Jolla Stockholder Vote, La Jolla may furnish nonpublic information regarding La Jolla to, and enter into discussions or negotiations with, any Person in response to
an unsolicited, bona fide written Acquisition Proposal made or received after the date of this Agreement, which La Jolla’s Board of Directors determines in good faith constitutes, or is reasonably likely to result in, a Superior Proposal (and is not withdrawn) if: (A) neither La Jolla nor any Representative of La Jolla shall have failed to comply with this Section; (B) the Board of Directors of La Jolla concludes in good faith, after consultation with outside counsel, that the failure to take such action
would result in a breach of the fiduciary duties of the Board of Directors of La Jolla under applicable law; (C) within 24 hours following the furnishing of any such nonpublic information to, or entering into discussions with, such Person, La Jolla gives Adamis written notice of the identity of such Person and of La Jolla’s intention to furnish nonpublic information to, or enter into discussions with, such Person or has furnished, or entered into discussions with, such Person; (D) La Jolla receives from
such Person an executed confidentiality agreement containing provisions (including nondisclosure provisions, use restrictions, non-solicitation provisions, no hire provisions and “standstill” provisions) at least as favorable to La Jolla as those contained in the Confidentiality Agreement; and (E) within 24 hours following the furnishing of any such nonpublic information to such Person, La Jolla furnishes such nonpublic information to Adamis (to the extent such nonpublic information has

 

  

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not been previously furnished by La Jolla to Adamis). Without limiting the generality of the foregoing, La Jolla acknowledges and agrees that in the event any Representative of La Jolla takes any action that, if taken by La Jolla, would constitute a failure to comply with this Section by La Jolla, the taking of such action
by such Representative shall be deemed to constitute a failure to comply with this Section by La Jolla for purposes of this Agreement.

 

(ii)           Notwithstanding anything to the contrary set forth in this Agreement, if at any time before obtaining the Required La Jolla Stockholder Vote, La Jolla receives an unsolicited bona fide written Acquisition Proposal that did not relate to a breach of
this Section and which the Board of Directors of La Jolla determines in good faith constitutes a Superior Proposal, and each of La Jolla, its Subsidiaries and their respective Representatives have otherwise complied with its obligations under this Section 4.5, the Board of Directors of La Jolla may on three (3) Business Days’ prior written Notice of Superior Proposal to Adamis (which notice shall include the forms of agreements pursuant to which the Superior Proposal would be implemented or, if no such
agreements have been proposed, a written summary of the material terms and conditions of such Superior Proposal) (it being understood that La Jolla must deliver a new Notice of Superior Proposal and thereafter negotiate as provided herein in the event of any modification to an Acquisition Proposal if such modification results in the determination that such Acquisition Proposal is a Superior Proposal), take any action otherwise prohibited by Section 4.5(a)(i), (a)(ii), (a)(iii), (a)(iv) or (a)(v) and cause La
Jolla to terminate this Agreement pursuant to Section 9.1(h) if (i) the Board of Directors of La Jolla shall have first determined in good faith, after consultation with outside counsel, that there is a reasonable risk that the failure to take such action would result in a breach of its fiduciary duties under the DGCL, and (ii) La Jolla shall have notified Adamis of such determination and offered to discuss in good faith with Adamis (and, if Adamis accepts, thereafter negotiates in good faith), for a period of
no less than three (3) Business Days, any adjustments in the terms and conditions of this Agreement proposed by Adamis, and the Board of Directors of La Jolla shall have resolved, after taking into account the results of such discussions and proposals by Adamis, if any, that the Acquisition Proposal remains a Superior Proposal.

 

(d)           If any Party or any Representative of such Party receives an Acquisition Proposal or Acquisition Inquiry at any time during the Pre-Closing Period, then such Party shall promptly (and in no event later than 24 hours after such Party becomes aware of
such Acquisition Proposal or Acquisition Inquiry) advise the other Party orally and in writing of such Acquisition Proposal or Acquisition Inquiry (including the identity of the Person making or submitting such Acquisition Proposal or Acquisition Inquiry, and the terms thereof).  Such Party shall keep the other Party fully informed with respect to the status and terms of any such Acquisition Proposal or Acquisition Inquiry and any modification or proposed modification thereto and related agreements,
draft agreements and modifications thereof.

 

(e)           Each Party shall immediately cease and cause to be terminated any existing discussions with any Person that relate to any Acquisition Proposal or Acquisition Inquiry as of the date of this Agreement, and shall instruct its Representatives accordingly.  Each
Party shall not terminate, release or permit the release of any Person from, or waive or permit the waiver of any provision of or right under, any confidentiality, non-solicitation, no hire, “standstill” or similar agreement (whether entered into before or after the date of this Agreement) to which such Party is a party or under which such Party has any rights, and shall enforce or cause to be enforced each such agreement to the fullest extent possible.

 

  

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(f)           Nothing contained in this Section, Section 5.2 (with respect to Adamis) or Section 5.3 (with respect to La Jolla) shall prohibit either of Adamis or La Jolla from taking and disclosing to its stockholders a position with respect to a tender offer contemplated
by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or from making any disclosure to its respective stockholders if, in the good faith judgment of the Board of Directors of Adamis or La Jolla (as the case may be), after consultation with outside counsel, that the failure to so disclose would result in a breach of its fiduciary duties under the DGCL; provided that disclosure to stockholders pursuant to Rule 14e-2 relating to an Acquisition Proposal or Acquisition Inquiry shall be deemed to be a Change
in Adamis Board Recommendation or Change in the La Jolla Board Recommendation (as the case may be) unless the Board of Directors of Adamis or La Jolla (as the case may be) expressly, and without qualification, concurrently with such disclosure reaffirms the Adamis Board Recommendation or La Jolla Board Recommendation (as the case may be).

ARTICLE V

ADDITIONAL AGREEMENTS

 

5.1           Proxy Statement; Registration Statement.

 

(a)           As promptly as practicable after the execution of this Agreement, La Jolla and Adamis shall jointly prepare, and La Jolla shall file, a joint registration statement and proxy statement on Form S-4 consisting of a proxy statement of Adamis in connection
with the Merger, a proxy statement of La Jolla in connection with the Proposals (the “Proxy Statement”) and the Registration Statement to register under the Securities Act the issuance of shares of La Jolla Common Stock in connection with the Merger.  The Proxy Statement shall, among other things, include the La Jolla Board Recommendation and (i) solicit the approval of and include the recommendation of the Board
of Directors of La Jolla to La Jolla’s stockholders that they vote in favor of the Merger, (ii) solicit the approval of and include the recommendation of the Board of Directors of La Jolla to La Jolla’s stockholders that they vote in favor of the La Jolla Charter Amendment; and (iii) solicit the approval of and include the recommendation of the Board of Directors of La Jolla to La Jolla’s stockholders that they vote in favor of the La Jolla Name Change Amendment; and (iv) solicit the approval
of and include the recommendation of the Board of Directors of La Jolla to La Jolla’s stockholders that they vote in favor of the Plan Amendment.  Adamis shall promptly furnish to La Jolla all information concerning Adamis and its Subsidiaries, and shall use its commercially reasonable efforts to cause to be finished all information with respect to its stockholders, that is required to be disclosed in the Registration Statement and the Proxy Statement.  All information in the Registration
Statement and Proxy Statement concerning Adamis shall be subject to the prior review and approval of Adamis.

 

(b)           La Jolla and Adamis shall use reasonable efforts to cause the Proxy Statement and La Jolla shall use reasonable efforts to cause the Registration Statement to comply with the applicable rules and regulations promulgated by the SEC, and shall respond
promptly to any comments of the SEC or its staff and shall use reasonable best efforts to resolve any comments of SEC on the Proxy Statement or the Registration Statement as promptly as reasonably practicable.  La Jolla and Adamis shall each use commercially reasonable efforts to cause the definitive Proxy Statement and Registration Statement to be mailed to their stockholders as promptly as practicable after review by the SEC has been completed.  La Jolla shall notify Adamis promptly upon
the receipt of 

  

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any comments from the SEC or its staff or any other government officials and of any request by the SEC or its staff or any other government officials for amendments or supplements to the Proxy Statement or Registration Statement and shall supply Adamis with copies of all correspondence between La Jolla or any of its representatives,
on the one hand, and the SEC, or its staff or any other government officials, on the other hand, with respect to the Proxy Statement and the Registration Statement.  Both Parties and their respective counsel shall be given a reasonable opportunity to review and comment upon the Proxy Statement and Registration Statement and related materials, any proposed amendment or supplement to the Proxy Statement or Registration Statement and any response to any comments from the SEC or other correspondence before
its filing with the SEC or dissemination to La Jolla’s stockholders or Adamis’s stockholders, and such materials shall be mutually satisfactory before filing or dissemination.  Whenever any event occurs which is required to be set forth in an amendment or supplement to the Proxy Statement or Registration Statement, Adamis or La Jolla, as the case may be, shall promptly inform the other of such occurrence and cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to stockholders of La Jolla or Adamis, such amendment or supplement as promptly as possible.  Without limiting the foregoing, each of the parties shall promptly provide the other party with corrections to any information provided by it for use in the Proxy Statement and Registration Statement, if and to the extent any such information shall be or have become false or misleading in any material respect, and La Jolla shall take all reasonable steps necessary to correct the same and to cause
the Proxy Statement and Registration Statement as so corrected to be disseminated to La Jolla’s stockholders and Adamis’s stockholders, in each case to the extent required by applicable law or otherwise deemed appropriate by the parties.

 

(c)           Before the Effective Time, La Jolla shall use reasonable best efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after filing, and commercially reasonable efforts to obtain all regulatory
approvals needed to ensure that the La Jolla Common Stock to be issued in the Merger will (to the extent required) be registered or qualified or exempt from registration or qualification under the securities law of every state of the United States (or such fewer states as the Parties may mutually agree).

 

5.2           Adamis Stockholder Meeting; Change in the Adamis Board Recommendation.

 

(a)           Adamis shall take all action necessary under all applicable Legal Requirements to call, give notice of and hold a meeting of the holders of Adamis Capital Stock to vote on the approval of the Merger, adoption of this Agreement, and related matters (the
“Adamis Stockholder Meeting”).  The Adamis Stockholder Meeting shall be held as promptly as reasonably practicable after the effectiveness of the Registration Statement.  Adamis shall ensure that all proxies and consents solicited in connection with the Adamis Stockholder Meeting are solicited in compliance with all applicable Legal Requirements.

 

(b)           Adamis agrees that, subject to Sections 4.5 and 5.2(d): (i) the Board of Directors of Adamis shall recommend that the holders of Adamis Capital Stock vote to approve the Merger and adopt this Agreement and the other matters contemplated by this Agreement,
and shall use commercially reasonable efforts to solicit such approval (the recommendation of the board of directors of Adamis that the stockholders of Adamis vote to adopt this Agreement and such other matters contemplated 

  

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by this Agreement being referred to as the “Adamis Board Recommendation”); (ii) the Proxy Statement shall include a statement to the effect that the Board of
Directors of Adamis recommends that the stockholders of Adamis vote to approve such proposals; and (iii) the Board of Directors of Adamis shall not make or effect any change, withdrawal, qualification or modification of the Adamis Board Recommendation.

 

(c)           Subject to Section 4.5, Adamis shall take all action that is both reasonable and lawful to solicit the approval of its stockholders of the proposals submitted to the Adamis stockholders for approval and shall take all other action reasonably necessary
or advisable to secure the vote or consent of the stockholders of Adamis required by the DGCL to obtain such approvals.  If, on the date of the Adamis Stockholder Meeting or any subsequent adjournment thereof pursuant to this Section, Adamis has not received proxies representing a sufficient number of shares of Adamis Common Stock to approve the proposals submitted to the Adamis stockholders for approval, Adamis shall, if requested by La Jolla, adjourn the Adamis Stockholder Meeting until such date
or dates as Adamis determines in good faith (subject to La Jolla’s prior approval not to be unreasonably withheld, delayed or conditioned) the Required Adamis Stockholder Vote is reasonably likely to be obtained, and shall continue to use its commercially reasonable efforts, together with its proxy solicitor, to assist in the solicitation of proxies from stockholders relating to Adamis stockholder approval.

 

(d)           Notwithstanding anything to the contrary contained in Section 5.2(b), at any time before the adoption of this Agreement by the Required Adamis Stockholder Vote, the Board of Directors of Adamis may effect a Change in the Adamis Board Recommendation
in accordance with the provisions of Section 4.5(b), provided that La Jolla must receive not less than three (3) Business Days prior written notice from Adamis confirming that Adamis’s Board of Directors has determined to make a Change in the Adamis Board Recommendation.  For purposes of this Agreement, “Change in Adamis Board Recommendation” means any: (i) withholding, withdrawal, qualification or modification
of (or any proposal or resolution to withhold, withdraw, qualify or modify) the Adamis Board Recommendation in any manner adverse to La Jolla; (ii) action or statement by Adamis, any of its Subsidiaries or any of their respective Representatives in connection with the Adamis Stockholder Meeting contrary to the Adamis Board Recommendation; (iii) taking any position other than opposition (including making no recommendation), by Adamis’s Board of Directors with respect to an Acquisition Proposal that has been
publicly disclosed or otherwise become known to any Person other than Adamis, La Jolla and their respective Representatives after a reasonable amount of time has elapsed for Adamis’s Board of Directors to review and make a recommendation with respect thereto (and in no event more than ten Business Days after being publicly disclosed or otherwise become known to any Person other than Adamis, La Jolla and their respective Representatives); (iv) failure of Adamis’s Board of Directors to (A) if a tender
offer, take-over bid or exchange offer that constitutes or would constitute an Acquisition Proposal (other than by La Jolla) is commenced, recommend that the Adamis stockholders not accept such tender offer, take-over bid or exchange offer after a reasonable amount of time has elapsed for Adamis’s Board of Directors to review and make a recommendation with respect thereto (and in no event more than ten Business Days following commencement of such tender offer, take-over bid or exchange offer), or (B) reaffirm
in writing the Adamis Board Recommendation in connection with a disclosure pursuant to Section 4.5(f) or otherwise within two Business Days of a request by La Jolla to do so; or (v) approval, adoption or recommendation, or publicly disclosed proposal to approve, adopt or recommend, an Acquisition Proposal.

 

  

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(e)           Adamis’s obligation to call, give notice of and hold Adamis Stockholder Meeting in accordance with Section 5.2(a) shall not be limited or otherwise affected by any Change in the Adamis Board Recommendation or the commencement, disclosure, announcement
or submission of a Superior Proposal or Acquisition Proposal.

 

5.3           La Jolla Stockholder Meeting; Change in the La Jolla Board Recommendation; Adoption of Agreement by La Jolla as Sole Stockholder of Merger Sub.

 

(a)           La Jolla shall take all action necessary under applicable Legal Requirements to call, give notice of and hold a meeting of the holders of La Jolla Common Stock to vote on the Merger and the Reverse Split, the La Jolla Charter Amendment and the La Jolla
Name Change Amendment and the Plan Amendment (such meeting, the “La Jolla Stockholder Meeting”).  La Jolla shall use its commercially reasonable efforts to ensure that all proxies solicited in connection with the La Jolla Stockholder Meeting are solicited in compliance with all applicable Legal Requirements.

 

(b)           La Jolla agrees that, subject to Sections 4.5 and 5.3(d): (i) the Board of Directors of La Jolla shall recommend that the holders of La Jolla Common Stock vote to approve the Merger, and (A) the issuance of shares of La Jolla Common Stock in the Merger
and the Reverse Split, (B) adopt the La Jolla Charter Amendment, (C) adopt the La Jolla Name Change Amendment, (D) adopt the Plan Amendment, and (E) such other matters as may be reasonably necessary to effect the Merger and the other Contemplated Transactions, and shall use commercially reasonable efforts to solicit such approval or adoption, as the case may be (proposals “(A)” through “(E)” being the “Proposals”),
(ii) the Proxy Statement shall include a statement to the effect that the Board of Directors of La Jolla recommends that the stockholders of La Jolla vote to approve the Proposals (such recommendation being referred to herein as the “La Jolla Board Recommendation”); and (iii) the Board of Directors of La Jolla shall not make or effect any Change in the La Jolla Board Recommendation.

 

(c)           Subject to Section 4.5, La Jolla shall take all action that is both reasonable and lawful to solicit the approval of its stockholders of the Proposals and shall take all other action reasonably necessary or advisable to secure the vote or consent of
the stockholders of La Jolla required by the DGCL to obtain such approvals.  If, on the date of La Jolla Stockholder Meeting or any subsequent adjournment thereof pursuant to this Section, La Jolla has not received proxies representing a sufficient number of shares of La Jolla Common Stock to approve the Proposals, La Jolla shall, if requested by Adamis, adjourn the La Jolla Stockholder Meeting until such date or dates as La Jolla determines in good faith (subject to Adamis’s prior approval not
to be unreasonably withheld, delayed or conditioned) the Required La Jolla Stockholder Vote is reasonably likely to be obtained, and shall continue to use its commercially reasonable efforts, together with its proxy solicitor, to assist in the solicitation of proxies from stockholders relating to La Jolla stockholder approval.

 

(d)           Notwithstanding anything to the contrary contained in Section 5.3(b), at any time before the adoption of this Agreement by the Required La Jolla Stockholder Vote, the Board of Directors of La Jolla may effect a Change in the La Jolla Board Recommendation
in accordance with the provisions of Section 4.5(c), provided that Adamis must receive not less than three (3) Business Days’ prior written notice from La Jolla confirming that La Jolla’s Board of Directors has determined to make a Change 

  

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in the La Jolla Board Recommendation.  For purposes of this Agreement, “Change in the La Jolla Board Recommendation” means any: (i) withholding, withdrawal, qualification or modification of (or any proposal or resolution to
withhold, withdraw, qualify or modify) the La Jolla Board Recommendation in any manner adverse to Adamis; (ii) action or statement by La Jolla, any of its Subsidiaries or any of their respective Representatives in connection with the La Jolla Stockholder Meeting contrary to the La Jolla Board Recommendation; (iii) taking any position other than opposition (including making no recommendation), by La Jolla’s Board of Directors with respect to an Acquisition Proposal that has been publicly disclosed or otherwise
become known to any Person other than La Jolla, Adamis and their respective Representatives after a reasonable amount of time has elapsed for La Jolla’s Board of Directors to review and make a recommendation with respect thereto (and in no event more than ten Business Days after being publicly disclosed or otherwise become known to any Person other than La Jolla, Adamis and their respective Representatives); (iv) failure of La Jolla’s Board of Directors to (A) if a tender offer, take-over bid or exchange
offer that constitutes or would constitute an Acquisition Proposal (other than by Adamis) is commenced, recommend that the La Jolla stockholders not accept such tender offer, take-over bid or exchange offer after a reasonable amount of time has elapsed for La Jolla’s Board of Directors to review and make a recommendation with respect thereto (and in no event more than ten Business Days following commencement of such tender offer, take-over bid or exchange offer), or (B) reaffirm in writing the La Jolla
Board Recommendation in connection with a disclosure pursuant to Section 4.5(f) or otherwise within two Business Days of a request by Adamis to do so; or (v) approval, adoption or recommendation, or publicly disclosed proposal to approve, adopt or recommend, an Acquisition Proposal.

 

(e)           La Jolla’s obligation to call, give notice of and hold the La Jolla Stockholder Meeting in accordance with Section 5.3(a) shall not be limited or otherwise affected by any Change in the La Jolla Board Recommendation or the commencement, disclosure,
announcement or submission of a Superior Proposal or Acquisition Proposal.

 

(f)           La Jolla, as sole stockholder of Merger Sub, shall adopt this Agreement as soon as practicable following the Execution Date by action by written consent, as permitted by the DGCL 228 in lieu of an actual meeting of the stockholders of Merger Sub.

 

5.4           Regulatory Approvals.  Each Party shall use commercially reasonable efforts
to file or otherwise submit, as soon as practicable after the date of this Agreement, all applications, notices, reports and other documents reasonably required to be filed by such Party with or otherwise submitted by such Party to any Governmental Entity with respect to the Merger and the other Contemplated Transactions, and to submit promptly any additional information requested by any such Governmental Entity.

 

5.5           Indemnification of Officers and Directors.

 

(a)           From and after the Effective Time through the third anniversary of the date the Effective Time occurs, La Jolla shall and shall cause the Surviving Corporation to, fulfill and honor in all respects the obligations of La Jolla and Adamis pursuant to
any indemnification provisions under their respective certificates of incorporation and bylaws as in effect on the date of this Agreement (the persons entitled to be indemnified pursuant to such provisions being referred to collectively as the “D&O Indemnified Parties”).

 

  

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(b)           The certificate of incorporation and bylaws of La Jolla and the Surviving Corporation, as the case may be, shall contain provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of present and former directors
and officers of La Jolla than are presently set forth in the certificate of incorporation and bylaws of La Jolla, which provisions shall not be amended, modified or repealed for a period of three (3) years time from the Effective Time in a manner that would adversely affect the rights thereunder of the D&O Indemnified Parties.

 

(c)           La Jolla shall take no actions to terminate or curtail the directors’ and officers’ tail liability insurance coverage that is in place at the Effective Time insuring those directors and officers of La Jolla serving prior to the Effective
Time.

 

(d)           La Jolla shall pay all expenses, including reasonable attorneys’ fees, that may be incurred by the D&O Indemnified Parties in connection with their enforcement of their rights provided in this Section 5.5 pursuant to any indemnification provisions
under their respective certificates of incorporation and bylaws as in effect on the date of this Agreement.

 

(e)           The provisions of this Section are intended to be in addition to the rights otherwise available to the D&O Indemnified Parties by law, charter, statute, by-law or agreement, and shall operate for the benefit of, and shall be enforceable by, each
of the D&O Indemnified Parties, their heirs and their representatives.

 

(f)           La Jolla shall cause the Surviving Corporation to perform all of the obligations of the Surviving Corporation under this Section.

 

5.6           Additional Agreements.

 

(a)           Subject to Sections 4.5, 5.2(d), 5.3(d) and 5.6(b), the Parties shall use commercially reasonable efforts to cause to be taken all actions necessary to consummate the Merger and make effective the other Contemplated Transactions.  Without
limiting the generality of the foregoing, but subject to Section 5.6(b), each Party to this Agreement: (i) shall make all filings and other submissions (if any) and give all notices (if any) reasonably required to be made and given by such Party in connection with the Merger and the other Contemplated Transactions; (ii) shall use commercially reasonable efforts to obtain each Consent (if any) reasonably required to be obtained (pursuant to any applicable Legal Requirement or Material Contract) by such Party in
connection with the Merger or any of the other Contemplated Transactions or for such Contract to remain in full force and effect; (iii) shall use commercially reasonable efforts to lift any injunction prohibiting, or any other legal bar to, the Merger or any of the other Contemplated Transactions; and (iv) shall use commercially reasonable efforts to satisfy the conditions precedent to the consummation of this Agreement.  Each Party shall provide to the other Party a copy of each proposed filing with
or other submission to any Governmental Entity relating to any of the Contemplated Transactions, and shall give the other Party a reasonable time before making such filing or other submission in which to review and comment on such proposed filing or other submission.  Each Party shall promptly deliver to the other Party a copy of each such filing or other submission made, each notice given and each Consent obtained by such Party during the Pre-Closing Period.

 

  

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(b)           Notwithstanding anything to the contrary contained in this Agreement, no Party shall have any obligation under this Agreement: (i) to dispose of or transfer or cause any of its Subsidiaries to dispose of or transfer any assets; (ii) to discontinue or cause
any of its Subsidiaries to discontinue offering any product or service; (iii) to license or otherwise make available, or cause any of its Subsidiaries to license or otherwise make available to any Person any Intellectual Property; (iv) to hold separate or cause any of its Subsidiaries to hold separate any assets or operations (either before or after the Closing Date); (v) to make or cause any of its Subsidiaries to make any commitment (to any Governmental Entity or otherwise) regarding its future operations;
or (vi) to contest any Legal Proceeding or any order, writ, injunction or decree relating to the Merger or any of the other Contemplated Transactions if such Party determines in good faith that contesting such Legal Proceeding or order, writ, injunction or decree might not be advisable.

 

5.7           Disclosure.  Without limiting any of either Party’s obligations under
the Confidentiality Agreement, each Party shall not, and shall not permit any of its Subsidiaries or any Representative of such Party to, issue any press release or make any public disclosure regarding the Merger or any of the other Contemplated Transactions unless: (a) the other Party shall have approved such press release or disclosure (which approval shall not be unreasonably withheld); or (b) such Party shall have determined in good faith, upon the advice of outside legal counsel, that such disclosure is
required by applicable Legal Requirements and, to the extent practicable, before such press release or disclosure is issued or made, such Party advises the other Party of, and consults with the other Party regarding, the text of such press release or disclosure; provided, however, that each of Adamis and La Jolla may make any public statement in response to specific questions by the press, analysts, investors or those attending industry conferences or financial analyst conference calls, so long as any such statements
are consistent with previous press releases, public disclosures or public statements made by Adamis or La Jolla in compliance with this Section 5.7.

 

5.8           Directors; Officers.  Prior to the Effective Time, and subject to the receipt
of any required stockholder vote, La Jolla shall take all action necessary (i) to cause the number of members of the Board of Directors of La Jolla to be fixed at a number to be determined by Adamis, effective at the Effective Time; (ii) to obtain the resignations, effective at the Effective Time, of the directors of La Jolla determined by Adamis, (iii) cause each of the individuals nominated by Adamis, which individuals may be persons who are at the time directors of Adamis and such additional persons as are
reasonably acceptable to La Jolla, to be appointed as a director of La Jolla, effective at the Effective Time, (iv) to have the Board of Directors of La Jolla appoint as officers of La Jolla, effective at the Effective Time, such persons as nominated by Adamis, which individuals may be persons who are at the time officers of Adamis and such additional persons who are reasonably acceptable to La Jolla; and (v) all officers of La Jolla shall be terminated immediately prior to Closing (such termination being deemed
to be without cause) and any severance payments due in connection with such termination shall be paid at Closing.

 

5.9           Tax Matters.

 

(a)           La Jolla, Merger Sub and Adamis shall use their respective commercially reasonable efforts to cause the Merger to qualify, and except as specifically contemplated by this Agreement, shall use their respective commercially reasonable efforts not to,
and not to permit or cause any affiliate or any subsidiary to, knowingly take any actions or cause any action to be taken which would prevent the Merger from qualifying, as a “reorganization” under Section 368(a) of the Code.

 

  

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(b)           This Agreement is intended to constitute, and the parties hereto hereby adopt this Agreement as, a “plan of reorganization” within the meaning Treasury Regulation Sections 1.368-2(g) and 1.368-3(a). La Jolla, Merger Sub and Adamis shall
report the Merger as reorganization within the meaning of Section 368(a) of the Code, unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code.

 

5.10           La Jolla Amendment.  Subject to Section 5.3(d), La Jolla agrees to recommend
to its stockholders that the Certificate of Incorporation of La Jolla be amended, by means of one of more amendments to be mutually agreed upon by La Jolla and Adamis: (i) to change the corporate name of La Jolla to a name designated by Adamis before the definitive La Jolla Proxy Statement is mailed to its stockholders (the “La Jolla Name Change Amendment”); (ii) to amend the La Jolla Pharmaceutical Company 2004 Equity Incentive
Plan (the “La Jolla Stock Plan”) to increase the number of shares reserved for issuance under the La Jolla Stock Plan (the “Plan Amendment”); and (iii) to approve the Reverse Stock Split, and to make such other changes thereto as may be determined by Adamis.

 

5.11           Adamis’s Auditors.  Adamis
will use its commercially reasonable efforts to cause its management and its independent auditors to facilitate on a timely basis (i) the preparation of financial statements (including pro forma financial statements if required) for inclusion in the Registration Statement and Proxy Statement to comply with Legal Requirements, and (ii) the review of Adamis’s audit work papers for up to the past three years or such lesser period of which Adamis has been in existence, including the examination of selected
interim financial statements and data.

 

5.12           La Jolla’s Auditors.  La
Jolla will use its commercially reasonable efforts to cause its management and its independent auditors to facilitate on a timely basis (i) the preparation of financial statements (including pro forma financial statements if required) for inclusion in the Registration Statement and Proxy Statement to comply with Legal Requirements, and (ii) the review by Adamis and its Representatives of La Jolla’s audit work papers for up to the past three years, including the examination of selected interim financial
statements and data.

 

5.13           Legends.  La Jolla shall be entitled to place such appropriate legends
on the certificates evidencing any shares of La Jolla Common Stock to be received in the Merger by equity holders of Adamis as La Jolla reasonably determines is required or appropriate under applicable laws.

 

5.14           Confidentiality.  Each of La Jolla and Adamis hereby agrees that the information
obtained in any investigation pursuant to this Agreement, or pursuant to the negotiation and execution of this Agreement or the effectuation of the transaction contemplated hereby shall be governed by the terms of the Confidential Disclosure Agreement dated as of October 8, 2009, previously executed by and between Adamis and La Jolla (the “Confidentiality Agreement”).

 

  

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5.15           FIRPTA Compliance.  On the Closing Date, Adamis shall deliver to La Jolla
a properly executed statement in a form reasonably acceptable to La Jolla for purposes of satisfying La Jolla’s obligations under Treasury Regulation Section 1.1445-2(c)(3).

 

5.16           Rule 16b-3.  The Board of Directors of La Jolla, or a committee of non-employee
directors thereof (as such term is defined for purposes of Rule 16b-3(d) under the Exchange Act) shall, reasonably promptly after the date hereof, and in any event before the Effective Time, adopt a resolution providing that the receipt, by those officers and directors of Adamis who may be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to La Jolla Common Stock following the Effective Time, of La Jolla Common Stock in the Merger is intended to be an exempt transaction under
such Rule 16b-3.

 

5.17           Use of La Jolla Net Cash.  Adamis shall not, and La Jolla commencing at
the Effective Time shall not, use any of the La Jolla Net Cash, as reflected on the Net Cash Certification, to pay either (a) any Adamis indebtedness for borrowed money in existence at the Effective Time, or (b) any Adamis deferred compensation and/or accrued bonuses in existence at the Effective Time.

 

ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY

 

The obligations of each Party to effect the Merger and otherwise consummate the transactions to be consummated at the Closing are subject to the satisfaction or, to the extent permitted by applicable law, the written waiver by each of the Parties, at or before the Closing, of each of the following conditions:

 

6.1           Stockholder Approval.  This Agreement and the Merger shall have been duly
adopted by the Required Adamis Stockholder Vote, and the Proposals and such other matters as may be reasonably necessary to effect the Merger and the other Contemplated Transactions shall have been duly approved or adopted, as the case may be, by the Required La Jolla Stockholder Vote.

 

6.2           No Restraints.  No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have been issued by any court of competent jurisdiction or other Governmental Entity and remain in effect, and there shall not be any Legal Requirement which has the effect of making the consummation of the Merger illegal.

 

6.3           Governmental Authorization.  Any Governmental Authorization or other Consent
required to be obtained by any of the Parties under any applicable antitrust or competition law or regulation or other Legal Requirement shall have been obtained and shall remain in full force and effect.

 

6.4           No Governmental Proceedings Relating to Contemplated Transactions or Right to Operate Business.  There
shall not be any Legal Proceeding pending, or overtly threatened in writing by an official of a Governmental Entity in which such Governmental Entity indicates that it intends to conduct any Legal Proceeding or taking any other action: (a) challenging or seeking to restrain or prohibit the consummation of the Merger or any of the other Contemplated Transactions; (b) relating to the Merger  

 

  

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and seeking to obtain from La Jolla, Merger Sub or Adamis any damages or other relief that would have a Material Adverse Effect on the Combined Company; (c) seeking to prohibit or limit in any material and adverse respect a Party’s ability to vote, transfer, receive dividends with respect to or otherwise exercise ownership
rights with respect to the stock of La Jolla; (d) that could have a Material Adverse Effect on the right or ability of the Combined Company to own the assets or operate the business of the Combined Company; or (e) seeking to compel Adamis, La Jolla or any Subsidiary of La Jolla to dispose of or hold separate any assets that are material to the Combined Company as a result of or following the Merger or any of the Contemplated Transactions.

 

6.5           Registration Statement.  The Registration Statement shall have become effective
in accordance with the provisions of the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceedings for that purpose shall have been initiated by the SEC and not concluded or withdrawn and all state securities or “blue sky” authorizations necessary to carry out the transactions contemplated hereby shall have been obtained and be in effect.

 

ARTICLE VII

ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF LA JOLLA AND MERGER SUB

 

The obligations of La Jolla and Merger Sub to effect the Merger and otherwise consummate the transactions to be consummated at the Closing are subject to the satisfaction or the written waiver by La Jolla, at or before the Closing, of each of the following conditions:

 

7.1           Accuracy of Representations.  The representations and warranties of Adamis
contained in this Agreement shall have been true and correct as of the date of this Agreement and shall be true and correct on and as of the Closing Date with the same force and effect as if made on the Closing Date except (A) in each case, or in the aggregate, where the failure to be true and correct would not reasonably be expected to have a Material Adverse Effect on the Combined Company, or (B) for those representations and warranties which address matters only as of a particular date (which representations
shall have been true and correct, subject to the qualifications as set forth in the preceding clause (A), as of such particular date).

 

7.2           Performance of Covenants.  Each of the covenants and obligations in this
Agreement that Adamis is required to comply with or to perform at or before the Closing shall have been complied with and performed by Adamis in all material respects, except where the failure to perform such covenants or obligations would not have a Material Adverse Effect on the Combined Company.

 

7.3           No Material Adverse Effect.  From the Execution Date through the Effective
Time, there shall not have occurred any Material Adverse Effect on Adamis that shall be continuing as of the Effective Time and that would have a Material Adverse Effect on the Combined Company.

 

  

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7.4           Consents.  All of the Consents set forth on Schedule 7.4 shall have been obtained
and shall be in full force and effect. 

 

7.5           Agreements and Other Documents.  La Jolla shall have received the following
agreements and other documents, each of which shall be in full force and effect:

 

(a)           a certificate of Adamis executed on its behalf by the Chief Executive Officer and Chief Financial Officer of Adamis confirming that the conditions set forth in Sections 7.1, 7.2, 7.3 and 7.4 have been duly satisfied; and

 

(b)           certificates of good standing (or equivalent documentation) of Adamis in its jurisdiction of incorporation and the various foreign jurisdictions in which it is qualified (except where the failure to have obtained such certificates would not result in
a Material Adverse Effect on the Combined Company), certified charter documents, a certificate as to the incumbency of officers and the adoption of resolutions of the Board of Directors of Adamis authorizing the execution of this Agreement and the consummation of the Contemplated Transactions to be performed by Adamis hereunder.

 

7.6            Sarbanes-Oxley Certifications.  Neither
the principal executive officer nor the principal financial officer of Adamis shall have failed to provide, with respect to any Adamis SEC Document filed (or required to be filed) with the SEC on or after the date of this Agreement, any necessary certification in the form required under Rule 13a-14 under the Exchange Act and 18 U.S.C. §1350.

 

7.7           SEC Reports.  Adamis
shall have timely filed with the SEC all reports and other documents required to be filed under the Securities Act or Exchange Act.

 

7.8           Legal Opinion.  La Jolla shall have received a legal opinion of Weintraub
Genshlea Chediak LLP, counsel to Adamis, in substantially the form set forth as Exhibit 7.8.

 

ARTICLE VIII

ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATION OF ADAMIS

 

The obligations of Adamis to effect the Merger and otherwise consummate the transactions to be consummated at the Closing are subject to the satisfaction or the written waiver by Adamis, at or before the Closing, of each of the following conditions:

 

8.1           Accuracy of Representations.  The representations and warranties of La
Jolla and Merger Sub contained in this Agreement shall have been true and correct as of the date of this Agreement and shall be true and correct on and as of the Closing Date with the same force and effect as if made on the Closing Date except (A) in each case, or in the aggregate, where the failure to be true and correct would not reasonably be expected to have a Material Adverse Effect on the Combined Company, or (B) for those representations and warranties which address matters only as of a particular date
(which representations shall have been true and correct, subject to the qualifications as set forth in the preceding clause (A), as of such particular date).

 

8.2           Performance of Covenants.  All of the covenants and obligations in this
Agreement that La Jolla or Merger Sub is required to comply with or to perform at or before the

 

  

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Closing shall have been complied with and performed in all material respects, except where the failure to perform such covenants or obligations would not have a Material Adverse Effect on the Combined Company.

 

8.3           No Material Adverse Effect.  From the Execution Date through the Effective
Time, there shall not have occurred any Material Adverse Effect on La Jolla that continues as of the Effective Time and that would have a Material Adverse Effect on the Combined Company.

 

8.4           Consents.  All the Consents set forth on Schedule 8.4 shall have been obtained
and shall be in full force and effect.

 

8.5           Documents.  Adamis shall have received the following documents:

 

(a)           a certificate of La Jolla executed on its behalf by the Chief Executive Officer and Vice President of Finance of La Jolla confirming that the conditions set forth in Sections 8.1, 8.2 and 8.4 have been duly satisfied;

 

(b)           certificates of good standing (or equivalent documentation) of each of La Jolla and Merger Sub in its jurisdiction of incorporation and the various foreign jurisdictions in which it is qualified (except where the failure to have obtained such certificates
would not result in a Material Adverse Effect on the Combined Company), certified charter documents, a certificate as to the incumbency of officers and the adoption of resolutions of the Boards of Directors of La Jolla and Merger Sub authorizing the execution of this Agreement and the consummation of the Contemplated Transactions to be performed by La Jolla and Merger Sub hereunder; and

 

(c)           Written resignations in forms reasonably satisfactory to Adamis, dated as of the Closing Date and effective as of the Closing, executed by the directors and officers of La Jolla .

 

8.6           Sarbanes-Oxley Certifications.  Neither the principal executive officer
nor the principal financial officer of La Jolla shall have failed to provide, with respect to any La Jolla SEC Document filed (or required to be filed) with the SEC on or after the date of this Agreement, any necessary certification in the form required under Rule 13a-14 under the Exchange Act and 18 U.S.C. §1350.

 

8.7           Board of Directors.  La Jolla shall have caused the Board of Directors
of La Jolla to be constituted as set forth in Section 5.8 of this Agreement.

 

8.8           Officers.  Each of the individuals identified by Adamis prior to the Effective
Time shall have been appointed officers of La Jolla as of the Effective Time.

 

8.9           Certificate of Amendment.  Amendments to the La Jolla Restated Certificate
of Incorporation, consisting of the increase in the number of authorized shares and the Reverse Stock Split (the “La Jolla Charter Amendment”), as contemplated by this Agreement, shall have become effective under the DGCL.

 

8.10           SEC Reports.  La
Jolla shall have timely filed with the SEC all reports and other documents required to be filed under the Securities Act or Exchange Act.

 

  

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8.11           Legal Opinion.  Adamis shall have received a legal opinion of Goodwin Procter
LLP, counsel to La Jolla, in substantially the form set forth as Exhibit 8.11.

 

ARTICLE IX

TERMINATION

 

9.1           Termination.  This Agreement may be terminated before the Effective Time
(whether before or after receipt of the Required Adamis Stockholder Vote or Required La Jolla Stockholder Vote, unless otherwise specified below):

 

(a)           by mutual written consent duly authorized by the Boards of Directors of La Jolla and Adamis;

 

(b)           by either La Jolla or Adamis if the Merger shall not have been consummated by March 31, 2010 (the “Outside Date”); provided, however, that the right to terminate
this Agreement under this Section 9.1(b) shall not be available to any Party whose failure to fulfill or diligently pursue fulfillment of any material obligation under this Agreement has been a principal cause of or resulted in the failure of the Merger to occur on or before the Outside Date;

 

(c)           by either La Jolla or Adamis if a court of competent jurisdiction or other Governmental Entity shall have issued a nonappealable final order, decree or ruling or taken any other nonappealable final action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; provided, however, that neither Party may terminate this Agreement pursuant to this Section 9.1(c) unless that party first shall have used its reasonable best efforts to procure the removal, reversal, dissolution, setting aside or invalidation of any such order, decree, ruling or action;

 

(d)           by either La Jolla or Adamis if (i) the La Jolla Stockholder Meeting (including any adjournments and postponements thereof) shall have been held and completed and La Jolla’s stockholders shall have taken a final vote on the Merger, the La Jolla
Charter Amendment and (ii) any of the Merger or the La Jolla Charter Amendment shall not have been approved or adopted at the La Jolla Stockholder Meeting (and shall not have been approved or adopted at any adjournment or postponement thereof) by the Required La Jolla Stockholder Vote; provided, however, that the right to terminate this Agreement under this Section 9.1(d) shall not be available to La Jolla where the failure to obtain the Required La Jolla Stockholder Vote shall have been caused by the action
or failure to act of La Jolla and such action or failure to act constitutes a breach by La Jolla of this Agreement;

 

(e)           by Adamis (at any time before the receipt of the Required La Jolla Stockholder Vote) if a La Jolla Triggering Event shall have occurred;

 

(f)           by La Jolla (at any time before the receipt of the Required La Jolla Stockholder Vote) if an Adamis Triggering Event shall have occurred;

 

(g)           by Adamis in accordance with the terms and subject to the conditions of Section 4.5(b)(ii);

 

  

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(h)           by La Jolla in accordance with the terms and subject to the conditions of Section 4.5(c)(ii);

 

(i)           by Adamis, upon a material breach of any representation, warranty, covenant or agreement on the part of La Jolla or Merger Sub set forth in this Agreement, or if any representation or warranty of La Jolla or Merger Sub shall have become inaccurate,
in either case such that the conditions set forth in Section 8.1 or Section 8.2 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become inaccurate, provided that if such inaccuracy in La Jolla’s or Merger Sub’s representations and warranties or breach by La Jolla or Merger Sub is curable by La Jolla or Merger Sub, then this Agreement shall not terminate pursuant to this Section 9.1(g) as a result of such particular breach or inaccuracy
until the earliest of (i) the Outside Date; (ii) the expiration of a thirty (30) day period commencing upon delivery of written notice from Adamis to La Jolla or Merger Sub of such breach or inaccuracy; and (iii) La Jolla or Merger Sub (as applicable) ceasing to exercise commercially reasonable efforts to cure such breach (it being understood that this Agreement shall not terminate pursuant to this Section 9.1(g) as a result of such particular breach or inaccuracy if such breach by La Jolla or Merger Sub is cured
before such termination becoming effective);

 

(j)           by La Jolla, upon a material breach of any representation, warranty, covenant or agreement on the part of Adamis set forth in this Agreement, or if any representation or warranty of Adamis shall have become inaccurate, in either case such that the conditions
set forth in Section 7.1 or Section 7.2 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become inaccurate, provided that if such inaccuracy in Adamis’s representations and warranties or breach by Adamis is curable by Adamis then this Agreement shall not terminate pursuant to this Section 9.1(h) as a result of such particular breach or inaccuracy until the earlier of (i) the Outside Date; (ii) the expiration of a thirty (30) day period commencing
upon delivery of written notice from La Jolla to Adamis of such breach or inaccuracy; and (iii) Adamis ceasing to exercise commercially reasonable efforts to cure such breach (it being understood that this Agreement shall not terminate pursuant to this Section 9.1(h) as a result of such particular breach or inaccuracy if such breach by Adamis is cured before such termination becoming effective);

 

(k)           by either La Jolla or Adamis if (i) the Adamis Stockholder Meeting (including any adjournments and postponements thereof) shall have been held and completed and Adamis’s stockholders shall have taken a final vote on the Merger and (ii) the Merger
shall not have been approved or adopted at the Adamis Stockholder Meeting (and shall not have been approved or adopted at any adjournment or postponement thereof) by the Required Adamis Stockholder Vote; provided, however, that the right to terminate this Agreement under this Section 9.1(k) shall not be available to Adamis where the failure to obtain the Required Adamis Stockholder Vote shall have been caused by the action or failure to act of Adamis and such action or failure to act constitutes a breach by Adamis
of this Agreement;

 

(l)           by La Jolla if the Adamis Discounted Share Price (as defined in the definition of “Post-Effective La Jolla Stockholder Shares”) is less than $0.20 per share and
an event of the type set forth on Schedule 9.1(l) has occurred; or

 

  

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(m)           by Adamis, if, as of the Closing Date, the La Jolla Net Cash, as reflected on the Net Cash Certification, is less than $2.3 million.

9.2           Effect of Termination.  In the event of the termination of this Agreement
as provided in Section 9.1, this Agreement shall be of no further force or effect; provided, however, that (i) Section 5.9, this Section 9.2, Section 9.3, and Section 10 and the Confidentiality Agreement shall survive the termination of this Agreement and shall remain in full force and effect, and (ii) the termination of this Agreement shall not relieve any Party from any liability for any breach of any representation, warranty, covenant, obligation or other provision contained in this Agreement.

 

9.3           Expenses; Termination Fees.

 

(a)           Except as set forth in this Section 9.3, all fees and expenses incurred in connection with this Agreement and the Contemplated Transactions shall be paid by the Party incurring such expenses, whether or not the Merger is consummated.

 

(b)           La Jolla shall pay Adamis a nonrefundable fee as liquidated damages in the following amounts and circumstances: (i) $150,000 if this Agreement is terminated by Adamis pursuant to Section 9.1(e) or by La Jolla pursuant to Sections 9.1(h) or 9.1(l); or
(ii) if this Agreement is terminated by La Jolla or Adamis pursuant to Section 9.1(d), all reasonable accounting and legal fees and costs incurred by Adamis in connection with the transactions contemplated by this agreement (up to a maximum of $100,000) (the fee payable in either of the above instances referred to as the “La Jolla Termination Fee”).  Any La Jolla Termination Fee due under this Section shall be paid
to Adamis by wire transfer of same-day funds within five Business Days of termination.

 

(c)           Adamis shall pay La Jolla a nonrefundable fee as liquidated damages in the following amounts and circumstances: (i) $150,000 if this Agreement is terminated by La Jolla pursuant to Section 9.1(f) or by Adamis pursuant to Sections 9.1(g) or 9.1(m); or
(ii) if this Agreement is terminated by La Jolla or Adamis pursuant to Section 9.1(k), all reasonable accounting and legal fees and costs incurred by La Jolla in connection with the transactions contemplated by this agreement (up to a maximum of $100,000) (the fee payable in either of the above instances referred to as the “Adamis Termination Fee”).  Any Adamis Termination Fee due under this Section shall be paid
to La Jolla by wire transfer of same-day funds within five Business Days of termination.

 

(d)           If either Party fails to pay when due any amount payable by such Party under Section 9.3(b) or 9.3(c), as applicable then (i) such Party shall reimburse the other Party for reasonable costs and expenses (including reasonable fees and disbursements of
counsel) incurred in connection with the collection of such overdue amount and the enforcement by the other Party of its rights under this Section, and (ii) such Party shall pay to the other Party interest on such overdue amount (for the period commencing as of the date such overdue amount was originally required to be paid and ending on the date such overdue amount is actually paid to the other Party in full) at a rate per annum equal to the “prime rate” (as announced by Bank of America or any successor
thereto) in effect on the date such overdue amount was originally required to be paid.

 

  

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(e)           The fees payable pursuant to this Section 9.3 shall be paid as liquidated damages and shall be the sole remedy hereunder following a termination of the type set forth in this Section 9.3.  The parties acknowledge that the actual damages incurred
in connection with a termination as contemplated under this Section 9.3 would be impossible to ascertain and that the fees set forth in this Section 9.3 are an estimate of such damages and not a penalty for termination.

 

ARTICLE X

MISCELLANEOUS PROVISIONS

 

10.1           Non-Survival of Representations and Warranties.  The representations and
warranties of Adamis, Merger Sub and La Jolla contained in this Agreement or any certificate or instrument delivered pursuant to this Agreement shall terminate at the Effective Time, and only the covenants that by their terms survive the Effective Time and this Article 10 shall survive the Effective Time.

 

10.2           Amendment.  This Agreement may be amended with the approval of the respective
Boards of Directors of Adamis and La Jolla at any time (whether before or after the receipt of the Required Adamis Stockholder Vote or Required La Jolla Stockholder Vote); provided, however, that after any such adoption and approval of this Agreement by a Party’s stockholders, no amendment shall be made which by law requires further approval of the stockholders of such Party without the further approval of such stockholders. This Agreement may not be amended except by an instrument in writing signed on
behalf of each of Adamis and La Jolla.

 

10.3           Waiver.

 

(a)           No failure on the part of any Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of
such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

 

(b)           No Party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument
duly executed and delivered on behalf of such Party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

 

10.4           Entire Agreement; Counterparts; Exchanges by Facsimile.  This Agreement
and the other agreements referred to in this Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among or between any of the Parties with respect to the subject matter hereof and thereof; provided, however, that the Confidentiality Agreement shall not be superseded and shall remain in full force and effect in accordance with its terms. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same instrument. The exchange of a fully executed Agreement (in counterparts or otherwise) by all Parties by facsimile shall be sufficient to bind the Parties to the terms and conditions of this Agreement.

 

  

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10.5           Applicable Law; Jurisdiction.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California (except to the extent that the DGCL governs the procedures relating to the Merger), regardless of the laws that might otherwise govern under applicable principles of conflicts of laws.  In any action or suit between any of the parties arising out of or relating to this Agreement or any of the Contemplated Transactions: (a) each of the parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state
and federal courts located in the State of California; (b) if any such action or suit is commenced in a state court, then, subject to applicable Legal Requirements, no Party shall object to the removal of such action or suit to any federal court located in the county of San Diego, and (c) the parties agree that service of progress may be made in the manner provided for in this Agreement for delivery of notices.

 

10.6           Waiver of Jury Trial.  EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) IT
MAKES THIS WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.6.

 

10.7           Notices.  Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be given by means of hand delivery, registered mail, courier or express delivery service, or facsimile.  Notices shall be deemed delivered and received (i) upon delivery by hand, (ii) three (3) Business Days after deposit in the U.S. mails, certified or registered mail, (iii) one (1) Business Day after delivery to a reputable overnight courier service for next business-day delivery (with confirmation of delivery), or (iv) one
(1) Business Day after transmission by facsimile to the number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party shall have specified in written notice given to the other parties here), with confirmation of successful transmission:

 

if to La Jolla :

4365 Executive Drive, Suite 300

San Diego, California 92121

Attention: Chief Executive Officer

Telephone No.:  (858) 452-6600

Facsimile No.:  (858) 626-2851

  

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with a copy to:

Goodwin Procter LLP

4365 Executive Drive, Suite 300

San Diego, California 92121

Attention: Ryan Murr and Mitch Bloom

Telephone No.: (858) 202-2700

Facsimile No.: (858) 457-1255

if to Adamis:

Adamis Pharmaceuticals Corporation

2658 Del Mar Heights Road, #555

Del Mar, California 92014

Attention: President

Telephone No.: (858) 401-3984

with a copy to:

C. Kevin Kelso, Esq.

Weintraub Genshlea Chediak

400 Capitol Mall, 11th Floor

Sacramento, California 95814

Telephone: (916) 558-6000

Fax: (916) 446-1611

Email:  kkelso@weintraub.com

10.8           Cooperation.  Each Party agrees to cooperate fully with the other Party
and to execute and deliver such further documents, certificates, agreements and instruments and to take such other actions as may be reasonably requested by the other Party to evidence or reflect the Contemplated Transactions and to carry out the intent and purposes of this Agreement.

 

10.9           Severability.  Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the Parties hereto agree that the court making such determination

 

10.10           Other Remedies; Specific Performance.  Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or
any state having jurisdiction, this being the addition to any other remedy to which they are entitled at law or in equity.  Notwithstanding the foregoing, in the event that this Agreement is terminated by Adamis pursuant to Section 9.1(d), 9.1(e), 9.1(g) or 9.1(i) or by La Jolla pursuant to Section 9.1(d) or 9.1(f) or 9.1(k) above, Adamis’s or La Jolla’s sole and exclusive remedy hereunder shall be that provided
in Section 9.3(b) or (c), respectively.

 

  

53

  

10.11           Construction.

 

(a)           For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter
genders; and the neuter gender shall include masculine and feminine genders.

 

(b)           The Parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be applied in the construction or interpretation of this Agreement.

 

(c)           As used in this Agreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

 

(d)           Except as otherwise indicated, all references in this Agreement to “Sections,” “Exhibits” and “Schedules” are intended to refer to Sections of this Agreement and Exhibits and Schedules to this Agreement.

 

(e)           The bold-faced headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

  

54

  

IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of Reorganization to be executed as of the date first above written.

	  	  	
LA JOLLA PHARMACEUTICAL COMPANY

	  	  	  
	  	  	
By:
	

/s/ Deirdre Y. Gillespie

	  	  	
Name:
	
Deirdre Y. Gillespie

	  	  	
Title:
	
President and Chief Executive Officer

	  	  	
MERGER SUB

	  	  	  
	  	  	
By:
	

/s/ Deirdre Y. Gillespie

	  	  	
Name:
	
Deirdre Y. Gillespie

	  	  	
Title:
	
President and Chief Executive Officer

	  	  	
MERGER SUB CORPORATION

	  	  	  
	  	  	
By:
	

/s/ Dennis J. Carlo

	  	  	
Name:
	
Dennis J. Carlo

	  	  	
Title:
	
President and Chief Executive Officer

  

55

  

EXHIBIT A

 

CERTAIN DEFINITIONS

 

For purposes of this Agreement:

 

“Acquisition Inquiry” shall mean, with respect to a Party, an inquiry, indication of interest or request for information (other than an inquiry, indication of interest or request for information made or submitted by Adamis, on the
one hand or La Jolla, on the other hand, to the other Party) that would reasonably be expected to lead to an Acquisition Proposal from such Party.

“Acquisition Proposal” shall mean any offer or proposal (other than an offer or proposal made or submitted by Adamis, on the one hand or La Jolla, on the other hand to the other Party) contemplating or otherwise relating to any Acquisition
Transaction with such Party.

“Acquisition Transaction” shall mean any transaction or series of transactions (except for the Contemplated Transactions) involving:

(a) any merger, consolidation, amalgamation, share exchange, business combination, issuance of securities, acquisition of securities, reorganization, recapitalization, tender offer, exchange offer or other similar transaction in which (i) a Person or “group” (as defined in the Exchange Act and the rules
promulgated thereunder) of Persons directly or indirectly acquires beneficial or record ownership of securities representing more than 50% of the outstanding securities of any class of voting securities of a Party or any of its Subsidiaries; or (ii) a Party or any of its Subsidiaries issues securities representing more than 50% of the outstanding securities of any class of voting securities of such Party or any of its Subsidiaries (other than, solely with respect to Adamis, through any capital raising transaction);

(b) any sale, lease, exchange, transfer, license, acquisition or disposition of any business or businesses or assets that constitute or account for: (i) 50% or more of the consolidated book value of the assets of a Party and its Subsidiaries, taken as a whole; or (ii) 50% or more of the fair market value of the assets
of a Party and its Subsidiaries, taken as a whole; or

(c) any liquidation or dissolution of a Party.

“Adamis” shall have the meaning set forth in the Preamble.

“Adamis Bylaws” shall mean the bylaws of Adamis as currently in effect.

 

“Adamis Capital Stock” shall mean shares of Adamis Common Stock and, if any, Adamis Preferred Stock.

 

“Adamis Charter” shall mean the certificate of incorporation of Adamis, as in effect on the date of this Agreement.

 

“Adamis Common Stock” shall have the meaning set forth in the Recitals.

  

A-1

  

“Adamis Current Balance Sheet”  shall have the meaning set forth in Section 2.8(b).

“Adamis Disclosure Letter” shall have the meaning set forth in the first paragraph of Article II.

“Adamis Employee Agreement” shall mean each management, employment, severance, consulting, relocation, repatriation or expatriation agreement or other contract between Adamis or any of its Subsidiaries and any current employee thereof,
other than any such management, employment, severance, consulting, relocation, repatriation or expatriation agreement or other contract with such employee which is terminable “at will” without any obligation on the part of Adamis or any of its Subsidiaries to make any payments or provide any benefits in connection with such termination.

“Adamis Employee Plan” shall have the meaning set forth in Section 2.13(a).

“Adamis Financial Statements” shall have the meaning set forth in Section 2.8(b).

 

“Adamis’s Knowledge” shall mean (a) the actual knowledge, after reasonable diligence, of the officers and directors of Adamis and (b) such facts
and circumstances each of the officers and directors of Adamis should have known given their involvement in Adamis and the information available to them.

 

“Adamis Options” shall mean all options, warrants or other rights, if any, that may be outstanding to purchase, acquire or otherwise receive shares of Adamis Capital Stock (whether or not vested) held by current or former employees
or directors of or consultants to Adamis.

 

“Adamis Patent and Proprietary Rights” shall have the meaning set forth in Section 2.11.

 

“Adamis Preferred Stock” shall mean shares of preferred stock of Adamis.

 

“Adamis Restricted Stock” shall have the meaning set forth in Section 1.6(c).

“Adamis SEC Reports” shall have the meaning set forth in Section 2.8(a).

“Adamis Stock Certificate” shall have the meaning set forth in Section 1.6(f).

 

“Adamis Stockholder” shall
mean each holder of any Adamis Capital Stock immediately before the Effective Time.

 

“Adamis Termination Fee” shall have the meaning set forth in Section 9.3(c).

“Adamis Triggering Event” shall be deemed to have occurred if: (i) there shall have occurred a Change in the Adamis
Board Recommendation; (ii) Adamis shall have failed to convene or hold the Adamis Stockholder Meeting within sixty (60) days after the definitive Proxy Statement is filed with the SEC (other than to the extent that Adamis determines, in good faith, that the Required Adamis Stockholder Vote will not be obtained at a meeting held within such time, in such case the sixty (60) day period shall be

  

A-2

  

 tolled until such time as Adamis determines, in good faith, that the Required Adamis Stockholder Vote can be obtained at a meeting, in each case in accordance with Section 5.2(d)), (iii) Adamis or any of its Subsidiaries or Representatives shall have failed to comply with the provisions set forth in Section 4.5
of the Agreement in any material respect, (iv) Adamis or any of its Representatives shall change the Adamis Board Recommendation, or (v) Adamis shall have delivered a Notice of Superior Proposal under Section 4.5(b).

“Agreement” shall mean the Agreement and Plan of Reorganization to which this Exhibit A is attached, as it may be amended from time to time.

 

“Ancillary Agreements” shall have the meaning as set forth in Section 2.3.

 

“Business” shall mean the business and operations of a party.

“Business Day” shall mean any day other than a day on which banks in the State of California are authorized or obligated to be closed.

“Certificate of Merger” shall have the meaning as set forth in Section 1.3.

 

“Change in the Adamis Board Recommendation” shall have the meaning set forth in Section 5.2.

“Change in the La Jolla Board Recommendation” shall have the meaning set forth in Section 5.3.

“Closing” shall have the meaning set forth in Section 1.3.

 

“Closing Date” shall have the meaning set forth in Section 1.3.

 

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

“Combined Company” shall mean La Jolla and Adamis and their respective Subsidiaries (and, after the Closing, the Surviving Corporation), taken together as a whole.

“Confidentiality Agreement” shall have the meaning as set forth in Section 5.14 of this Agreement.

 

“Consent” shall mean any approval, consent, ratification, permission, waiver or authorization (including any necessary Governmental Authorization).

 

“Contemplated Transactions” shall mean the Merger and the other transactions and actions expressly contemplated by the Agreement.

“Contract” shall, with respect to any Person, mean any written, oral or other agreement, contract, subcontract, lease (whether real or personal property), mortgage, understanding, arrangement, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan or legally binding commitment or undertaking of any nature to which such Person is a party or by which such Person or any of its assets are bound or affected under applicable law.

  

A-3

  

“Convertible Securities” shall mean and include options, warrants and other rights for the purchase of common stock or any stock or security convertible into or exchangeable for common stock.

“Current Balance Sheet” shall have the meaning as set forth in Section 2.8.

 

“D&O Indemnified Parties” shall have the meaning set forth in Section 5.2.

“Dissenting Shares” shall have the meaning as set forth in Section 1.8.

 

“Dissenting Stockholder” shall have the meaning set forth in Section 1.8.

 

“Effective Time” shall have the meaning as set forth in Section 1.3.

 

“Encumbrances” shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, infringement, interference, option, right of first refusal, preemptive right, community property interest or restriction
of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).

 

“Entity” shall have the meaning set forth in Section 2.2.

 

“Environment” shall mean soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), ground waters, drinking water supply, stream sediments, ambient
air (including indoor air), plant and animal life, and any other environmental medium or natural resource.

 

“Environmental, Health, and Safety Liabilities” shall mean any cost, damages, expense, liability, obligation, or other responsibility arising out of any Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:

 

(i)           any fines, penalties, judgments, awards, settlements, legal or administrative Legal Proceedings, damages, losses, claims, demands and response, investigative, remedial, compliance, corrective or inspection costs and expenses arising under Environmental
Law or Occupational Safety and Health Law (including on-site or off-site contamination, occupational safety and health, and regulation of chemical substances or products); or

 

(iii)           financial responsibility under Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response actions (“Cleanup”)
required by applicable Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any Governmental Entity or any other Person) and for any natural resource damages.

 

  

A-4

  

The terms “removal,” “remedial,” and “response action,” include the types of activities covered by the United States Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended (“CERCLA”).

 

“Environmental Law” shall mean all federal, state and local laws, statutes, regulations, ordinances, codes, rules and other governmental restrictions and requirements relating to the discharge of air pollutants, water pollutants or
processed waste water or otherwise relating in any manner to the environment, pollutants or hazardous substances or materials, including but not limited to the Federal Solid Waste Disposal Act; the Federal Clean Air Act including, without limitation, the Clean Air Act Amendments of 1990; the Federal Water Pollution Control Act; the Hazardous Materials Transportation Act; the Federal Toxic Substances Control Act; the Federal Resource Conservation and Recovery Act of 1976; CERCLA, all amendments to any of the foregoing
statutes, and all regulations promulgated by any federal or state agencies, including the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency previously, now or at any time hereafter in effect.

 

“ERISA” shall have the meaning as set forth in Section 2.13(a).

 

“ERISA Affiliate” shall have the meaning as set forth in Section 2.13(a).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Exchange Agent” shall have the meaning set forth in Section 1.10.

 

“Exchange Ratio” shall have the meaning set forth in Section 1.7.

 

“Exchange Shares” shall have the meaning set forth in Section 1.10(b).

 

“Facilities” shall mean any real property, leaseholds, or other interests currently or formerly owned or operated by a Party and any buildings, plants, structures, or equipment
(including motor vehicles, tank cars, and rolling stock) currently or formerly owned or operated by any Party.

 

“GAAP” shall mean United States generally accepted accounting principles.

 

“Governmental Authorization” shall mean any: (a) permit, license, certificate, franchise, grant, funding arrangement,
permission, variance, clearance, registration, qualification, approval or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Entity or pursuant to any applicable Legal Requirement; or (b) right under any Contract with any Governmental Entity.

 

“Governmental Entity” shall mean any: (a) nation, state, commonwealth, province, territory, county, municipality, district
or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and for the avoidance of doubt, any Taxing authority).

  

A-5

  

“Hazardous Materials” shall mean any pollutant,
chemical, substance and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical, or chemical compound, or hazardous substance, material or waste, whether solid, liquid or gas, that is subject to regulation, control or remediation under any Environmental Law Requirement, including without limitation, crude oil or any fraction thereof, and petroleum products or by-products.

“Intellectual Property” shall mean all domestic and foreign intellectual property and proprietary rights, including
but not limited to all (i) inventions (whether or not patentable and whether or not reduced to practice), all improvements thereto, and all patents and patent applications, (ii) trademarks, service marks, trade names, domain names, trade dress, logos, corporate names and brand names, together will all goodwill associated therewith, and all applications and registrations in connection therewith, (iii) all works of authorship (whether or not published), copyrights and designs, and all applications and registrations
in connection therewith, (iv) source code and object code versions of computer software (including data and related documentation) and website content, and (v) trade secrets and confidential business information (including ideas, know-how, formulas, compositions, processes and techniques, research and development information, technical data, designs, drawings, specifications, research records, records of inventions, test information, financial, marketing and business data, pricing and cost information, business
and marketing plans and proposals and customer and supplier lists and information, including all membership lists and databases and related information and profiles).

“IRS” shall mean the United States Internal Revenue Service.

“La Jolla” shall have the meaning set forth in the Preamble.

“La Jolla Board Recommendation” shall have the meaning set forth in Section 5.3.

“La Jolla Bylaws” shall mean the bylaws of La Jolla as currently in effect.

 

“La Jolla Charter” shall mean the certificate of incorporation of La Jolla, as in effect on the date of this Agreement.

 

“La Jolla Charter Amendment” shall have the meaning set forth in Section 8.9.

“La Jolla Common Stock” shall have the meaning set forth in the Recitals.

“La Jolla Disclosure Letter” shall have the meaning set forth in the first paragraph of Article III.

“La Jolla Employee Agreement” shall mean each management, employment, severance, consulting, relocation, repatriation or expatriation agreement or other contract between La Jolla or any of its Subsidiaries and any current employee thereof,
other than any such management, employment, severance, consulting, relocation, repatriation or expatriation agreement or other contract with such employee which is terminable “at will” without any obligation on the part of La Jolla or any of its Subsidiaries to make any payments or provide any benefits in connection with such termination.

 

  

A-6

  

 

“La Jolla Employee Plan” shall have the meaning set forth in Section 3.13.

“La Jolla Employee Stock Purchase Plan” means the La Jolla Pharmaceutical Company 1995 Employee Stock Purchase Plan.

“La Jolla Equity Incentive Plans” means (a) the La Jolla Pharmaceutical Company 1994 Stock Incentive Plan and (b) the La Jolla Pharmaceutical Company 2004 Equity Incentive Plan.

“La Jolla Financial Statements” shall have the meaning set forth in Section 3.8(b).

 

“La Jolla’s Knowledge” shall mean (a) the actual knowledge, after reasonable diligence, of La Jolla’s officers and directors and (b) such facts and circumstances each of the officers and directors of La Jolla should have
known given their involvement in La Jolla and the information available to them.

 

“La Jolla Name Change Amendment” shall have the meaning set forth in Section 5.10.

“La Jolla Net Cash” shall mean the amount of (A) La Jolla’s cash and cash equivalents and current amounts receivable of La Jolla, as reflected in La Jolla’s financial records as of the Closing Date, minus (B) all cash
Liabilities of La Jolla as reflected in La Jolla’s financial records as of the Closing Date, but excluding the Reverse Split Expenses.

“La Jolla Options” shall mean options or other rights to purchase or acquire shares of La Jolla Common Stock issued by La Jolla.

“La Jolla Patent and Proprietary Rights” shall have the meaning as set forth in Section 3.11 of this Agreement.

 

“La Jolla Preferred Stock” shall mean shares of preferred stock, par value $0.01 per share, of La Jolla.

“La Jolla Restated Certificate” shall have the meaning set forth in Section 1.5(a).

 

“La Jolla SEC Reports” shall have the meaning set forth in Section 3.8.

 

“La Jolla Stock Plan” shall have the meaning set forth in Section 5.10.

“La Jolla Stockholder Meeting” shall have the meaning set forth in Section 5.3.

“La Jolla Termination Fee” shall have the meaning set forth in Section 9.3.

“La Jolla Triggering Event” shall be deemed to have occurred if: (i) there shall have occurred a Change in the La Jolla Board Recommendation; (ii) La Jolla shall have failed to convene or hold the La Jolla Stockholder Meeting within
sixty (60) days after 

 

  

A-7

  

the definitive Proxy Statement is filed with the SEC (other than to the extent that La Jolla determines, in good faith, that the Required La Jolla Stockholder Vote will not be obtained at a meeting held within such time, in such case the sixty (60) day period shall be tolled until such time as La Jolla determines, in
good faith, that the Required La Jolla Stockholder Vote can be obtained at a meeting, in each case in accordance with Section 5.3(d)), (iii) La Jolla or any of its Subsidiaries or Representatives shall have failed to comply with the provisions set forth in Section 4.5 of the Agreement in any material respect, (iv) La Jolla or any of its Representatives shall change the La Jolla Board Recommendation, or (v) La Jolla shall have delivered a Notice of Superior Proposal under Section 4.5(c).

“Legal Proceeding” shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other Governmental Entity or any arbitrator or arbitration panel.

“Legal Requirement” shall mean any federal, state, foreign, material local or municipal or other law, statute, constitution,
ordinance, code, rule, or regulation issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity.

“Liabilities” (or when used with reference to a single item described below, “Liability”) means debts, liabilities and obligations (whether pecuniary
or not, including without limitation obligations to perform or forbear from performing acts or services), fines, or penalties, whether accrued or fixed, absolute or contingent, matured or unmatured, determined or undeterminable, known or unknown, and whether or not required to be included in financial statements under GAAP, including without limitation those arising under any law, action or governmental order, liabilities for Taxes and those arising under any contract, agreement, arrangement, commitment, employee
benefit plan (including without limitation the cost of any severance, salary continuation or similar payment and the costs of any obligation to maintain health insurance or other benefits) or undertaking of any kind whatsoever (whether written, express or implied).

“Material Adverse Effect” shall mean any fact, change, event, factor, condition, circumstance, development or effect that, individually or in the aggregate, has, or would reasonably be expected to have, a material adverse effect on
the business, assets, liabilities, condition (financial or otherwise), prospects or results of operations of a Party and its Subsidiaries (including, following the Merger, the Surviving Corporation and its Subsidiaries), taken as a whole, other than to the extent such effects are due to: (a) the announcement of the transactions contemplated by this Agreement; (b) economic factors affecting the national, regional or world economy; (c) any act or threat of terrorism or war anywhere in the world, any armed hostilities
or terrorist activities anywhere in the world, any threat or escalation or armed hostilities or terrorist activities anywhere in the world or any governmental or other response or reaction to any of the foregoing; (d) changes in GAAP or the interpretation thereof, in each case to the extent required by GAAP; (e) the Reverse Stock Split; or (f) any change in the stock price or trading volume of La Jolla Common Stock or Adamis Common Stock (it being understood that the facts and circumstances giving rise to such
change may be deemed to constitute, and may be taken into account in determining whether there has been, a Material Adverse Effect if such facts and circumstances are not otherwise excluded by clauses (a) – (e) of this definition).

  

A-8

  

For the avoidance of doubt, “Material Adverse Effect” shall include, without limitation, any regulatory actions taken by the FDA that would be expected to cause an interruption in the ability of Adamis to commercialize the Epinephrine PFS product.

“Merger” shall have the meaning set forth in the Recitals.

“Merger Sub” shall have the meaning set forth in the Preamble.

“Material Contract” shall mean any agreement, instrument or document now in effect (including any amendment to any of
the foregoing):

 

(i)           with any director, officer or affiliate of Adamis or La Jolla, as the case may be;

 

(ii)          evidencing, governing or relating to indebtedness for borrowed money or which provides for the imposition of any lien on any of its assets;

 

(iii)         that involves expenditures or receipts in excess of $50,000;

 

(iv)         that in any material way purports to restrict the business activity of a party or any of its affiliates or to limit the freedom of a party or any of its affiliates to engage in any line of business or to compete with any Person or in any geographic area or to
hire or retain any Person;

 

(v)          relating to the employment of, or the performance of services by, any employee or consultant; or pursuant to which a party is or may become obligated to make any severance, termination or similar payment to any employee or director; or pursuant to which a
party is or may become obligated to make any bonus or similar payment (other than payments constituting base salary) to any employee or director;

 

(vii)        (A) relating to the acquisition, issuance, voting, registration, sale or transfer of any securities of a party, (B) providing any Person with any preemptive right, right of participation, right of maintenance or any similar right with respect to any securities of a
Party, or (C) providing a Person with any right of first refusal with respect to, or right to repurchase or redeem, any securities, except for Contracts pursuant to La Jolla Stock Option Plan, the Adamis Stock Option Plan and Contracts between Adamis and any Person that provide a right of first refusal, right of repurchase or cancellation or similar right in favor of Adamis;

 

(viii)       incorporating or relating to any guaranty or any indemnity or similar obligation;

 

(ix)          relating to any currency hedging;

 

(x)           (A) imposing any confidentiality obligation on a party (other than under agreements entered into in the Ordinary Course of Business that are not material to the Party), or (B) containing "standstill" provisions;

 

  

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(xi)          (A) to which any Governmental Entity is a party or under which any Governmental Entity has any rights or obligations, or (B) directly or indirectly benefiting any Governmental Entity (including any subcontract or other Contract between Adamis and any contractor
or subcontractor to any Governmental Entity), or (C) relating to any funding, grant or similar agreement, proposal or commitment relating to product of the party; and

 

(xii)         that if terminated or breached would reasonably be expected to have a Material Adverse Effect on the Party or on any of the transactions contemplated by this Agreement or any of the Ancillary Agreements.

 

“Notice of Superior Proposal” shall have the meaning set forth in Section 4.5.

“Ordinary Course of Business” shall mean, in the case of each of Adamis and La Jolla, such actions taken in the ordinary
course of its normal operations and consistent with its past practices.

“Outside Date” shall have the meaning set forth in Section 9.1(b).

“Party” or “Parties” shall mean
Adamis, Merger Sub and La Jolla.

“Person” shall mean any individual, Entity or Governmental Entity.

 

“Post-Effective La Jolla Stockholder Shares” shall be a number equal to (i) the La Jolla Net Cash as of the Closing Date plus $750,000, divided by (ii) the Adamis Discounted Share Price.  The “Adamis
Discounted Share Price” shall mean the volume weighted average closing price of the Adamis Common Stock (as reported on the OTC Bulletin Board or other market or quotation system on which the Adamis Common Stock is quoted or traded) commencing on the first Business Day after the date of this Agreement and ending two trading days before the Closing Date, discounted by an amount set forth in the following table:

	
Adamis Average Share Price*
	
% Discount

	
Less than $0.25
	
10% (not to go below $0.20 per share)

	
$0.25 to $2.00
	
25% (not to go below $0.20 per share)

	
Greater than $2.00
	
$1.50 (fixed price)

*  Subject to adjustment, as appropriate, in the event of Recapitalization of Adamis.

By way of example only: (A) if the La Jolla Net Cash as of the Closing Date is $2,000,000 and the Adamis Average Share Price is $0.24, then the Adamis Discounted Share Price would equal $0.216 and the Post-Effective La Jolla Stockholder Shares would equal 12,731,481; (B) if the La Jolla Net Cash as of the Closing Date
is $2,000,000 and the Adamis Average Share Price is $0.50, then the Adamis Discounted Share Price would equal $0.375 and the Post-Effective La Jolla Stockholder Shares would equal 7,333,333; and (C) if the La Jolla Net Cash as of the Closing Date is $2,000,000 and the Adamis Average Share Price is $2.01, then the Adamis Discounted Share Price would equal $1.50 and the Post-Effective La Jolla Stockholder Shares would equal 1,833,333.

  

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“Pre-Closing Period” shall have the meaning as set forth in Section 4.1.

 

“Pre-Effective La Jolla Shares” shall be the sum of all shares of La Jolla Common Stock prior to the Effective Date that are: (a) issued and outstanding and (b) issuable upon conversion of any preferred stock of La Jolla.

“Proposals” shall have the meaning set forth in Section 5.3(b).

“Proxy Statement” shall mean the joint Proxy Statement to be filed with the SEC by La Jolla and Adamis in connection
with the Merger, as said statements may be amended, and mailed to the La Jolla stockholders in connection with the La Jolla Stockholder Meeting and to the Adamis stockholders in connection with the Adamis Stockholder Meeting.

“Registration Statement” shall mean the registration statement on Form S-4 (the “S-4”)
to be filed with the SEC by La Jolla, together with all amendment and supplements thereto and including the exhibits thereto.

 

“Representatives” shall mean officers, directors, employees, agents, attorneys, accountants, investment bankers, advisors
and representatives.

 

“Required La Jolla Stockholder Vote” shall mean the vote of the La Jolla stockholders that is required under the DGCL
or other applicable law to approve the Proposals.

 

“Required Adamis Stockholder Vote” shall mean the vote of the Adamis Stockholders that is required under applicable
law to approve the Merger and the transactions contemplated by this Agreement.

“Reverse Stock Split” shall have the meaning set forth in Section 1.5(a)(i).

“Reverse Stock Split Ratio” shall be expressed as a fraction, the numerator of which shall equal one (1) and the denominator of which shall equal the Pre-Effective La Jolla Shares divided by the Post-Effective La Jolla Stockholder Shares.

“Sarbanes-Oxley” shall mean the Sarbanes-Oxley Act of 2002, as it may be amended from time to time.

“SEC” shall mean the United States Securities and Exchange Commission.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Subsidiary” An Entity shall be deemed to be a “Subsidiary” of another Person if such Person directly or
indirectly owns, beneficially or of record, (a) an amount of voting securities of other interests in such Entity that is sufficient to enable such Person to elect at least a majority of the members of such Entity’s board of directors or other governing body, or (b) at least 50% of the outstanding equity, voting, beneficial or financial interests in such Entity.

“Superior Proposal” means an Acquisition Proposal that the board of directors of a Party determines, in its reasonable judgment, to be more favorable to such Party’s stockholders than the terms of the transactions contemplated
by this Agreement.

  

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“Surviving Corporation” shall have the meaning set forth in Section 1.1.

“Tax” shall have the meaning set forth in Section 2.12.

 

“Tax Return” shall mean any return (including any information return), report, statement, declaration, estimate, schedule,
notice, notification, form, election, certificate or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Entity in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax.

 

“Treasury Regulations” shall mean the official interpretations of the Code promulgated by the United States Department
of the Treasury.

“Voting Agreement” shall have the meaning set forth in the Recitals.

  

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Schedule 9.1(l)

List of events:

	
  
	
·
	
Material manufacturing or supply problems with “Epinephrine PFS” product (including API and syringe), or any regulatory actions taken by the FDA, that result in or would be expected to result in a commercial interruption in sales of such product.

	
  
	
·
	
Any litigation filed against Adamis, its directors or officers asserting claims that could reasonably be expected to result in the occurrence of a Material Adverse Effect.

	
  
	
·
	
The loss of the services of Dennis J. Carlo as an officer, director or full-time employee of the Company for any reason whatsoever.

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