Document:

regrightsfusion022008.htm

     

    
      

      

    

    
 

        Exhibit
10.36

     

    REGISTRATION
RIGHTS AGREEMENT

    

    REGISTRATION RIGHTS AGREEMENT
(this "Agreement"),
dated as of February 14, 2008, by and between DOR BioPharma, Inc., a
Delaware corporation, (the "Company"), and Fusion Capital Fund II, LLC
(together with it permitted assigns, the “Buyer”).  Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Common Stock Purchase Agreement by and between the
parties hereto, dated as of the date hereof (as amended, restated, supplemented
or otherwise modified from time to time, the "Purchase
Agreement").

    

    WHEREAS:

    

    A.           The
Company has agreed, upon the terms and subject to the conditions of the Purchase
Agreement, to issue to the Buyer up to Eight Million Five Hundred Thousand
($8,500,000) of the Company's common stock, $0.001 par value (the "Common Stock");
and

    

    B.           To
induce the Buyer to enter into the Purchase Agreement, the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "1933 Act"), and applicable
state securities laws.

    

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Buyer hereby agree as
follows:

    

    1.           DEFINITIONS.

    

    As used
in this Agreement, the following terms shall have the following
meanings:

    

    a.           "Investor" means the Buyer, any
transferee or assignee thereof to whom a Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 and any transferee or assignee thereof to whom a
transferee or assignee assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section
9.

    

    b.           "Person" means any person or
entity including any corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.

    

    c.           "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more registration
statements of the Company in compliance with the 1933 Act and pursuant to Rule
415 under the 1933 Act or any successor rule providing for offering securities
on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such
registration statement(s) by the United States Securities and Exchange
Commission (the "SEC").

    

    d.           "Registrable Securities" means
the 2,777,778 Initial Purchase Shares, the 1,275,000 Initial Commitment Shares
and the 1,275,000 Additional Commitment Shares, the Purchase Shares which after
Commencement may from time to time be issued or issuable upon purchases of the
Available Amount under the Purchase Agreement, and in each such case, any shares
of capital stock issued or issuable with respect to such shares or the Purchase
Agreement as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitation on
purchases under the Purchase Agreement.

    

    e.           "Registration Statement" means
the registration statement of the Company covering only the sale of the
Registrable Securities.

    

    2.           REGISTRATION.

    

    a.           Mandatory
Registration.  The Company shall within forty-five (45) days
from the date hereof file with the SEC the Registration
Statement.  The Registration Statement shall register the Registrable
Securities.  The Investor and its counsel shall have a reasonable
opportunity to review and comment upon such registration statement or amendment
to such registration statement and any related prospectus prior to its filing
with the SEC.  Investor shall furnish all information reasonably
requested by the Company for inclusion therein.  The Company shall use
its best efforts to have the Registration Statement or amendment declared
effective by the SEC at the earliest possible date.  The Company shall
use reasonable best efforts to keep the Registration Statement effective
pursuant to Rule 415 promulgated under the 1933 Act and available for sales of
all of the Registrable Securities at all times until the earlier of (i) the date
as of which the Investor may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) or (ii) the date on which (A) the Investor shall have sold all the
Registrable Securities and no Available Amount remains under the Purchase
Agreement (the "Registration
Period").  The Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

    

    b.           Rule 424
Prospectus.  The Company shall, as required by applicable
securities regulations, from time to time file with the SEC, pursuant to Rule
424 promulgated under the 1933 Act, the prospectus and prospectus supplements,
if any, to be used in connection with sales of the Registrable Securities under
the Registration Statement.  The Investor and its counsel shall have a
reasonable opportunity to review and comment upon such prospectus prior to its
filing with the SEC. The Investor shall use its reasonable best efforts to
comment upon such prospectus within one (1) Business Day from the date the
Investor receives the final version of such prospectus.

    

    c.           Sufficient Number of Shares
Registered.  In the event the number of shares available under
the Registration Statement is insufficient to cover all of the Registrable
Securities, the Company shall amend the Registration Statement or file a new
registration statement (a ”New
Registration Statement”), so as to cover all of such Registrable
Securities as soon as practicable, but in any event not later than ten (10)
Business Days after the necessity therefor arises.  The Company shall
use it reasonable best efforts to cause such amendment and/or New Registration
Statement to become effective as soon as practicable following the filing
thereof.

    

    3.           RELATED
OBLIGATIONS.

    

    With
respect to the Registration Statement and whenever any Registrable Securities
are to be registered pursuant to Section 2(b) including on any New Registration
Statement, the Company shall use its reasonable best efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:

    

    a.           The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to any registration statement and the
prospectus used in connection with such registration statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep the Registration Statement or any New Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by the Registration Statement
or any New Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in such
registration statement.

    

    b.           The
Company shall permit the Investor to review and comment upon the Registration
Statement or any New Registration Statement and all amendments and supplements
thereto at least two (2) Business Days prior to their filing with the SEC, and
not file any document in a form to which Investor reasonably
objects.  The Investor shall use its reasonable best efforts to
comment upon the Registration Statement or any New Registration Statement and
any amendments or supplements thereto within two (2) Business Days from the date
the Investor receives the final version  thereof.  The
Company shall furnish to the Investor, without charge any correspondence from
the SEC or the staff of the SEC to the Company or its representatives relating
to the Registration Statement or any New Registration Statement.

    

    c.           Upon
request of the Investor, the Company shall furnish to the Investor, (i) promptly
after the same is prepared and filed with the SEC, at least one copy of such
registration statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits, (ii) upon the effectiveness of any registration statement, a copy
of the prospectus included in such registration statement and all amendments and
supplements thereto (or such other number of copies as the Investor may
reasonably request) and (iii) such other documents, including copies of any
preliminary or final prospectus, as the Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by the Investor.

    

    d.           The
Company shall use reasonable best efforts to (i) register and qualify the
Registrable Securities covered by a registration statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as the
Investor reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall promptly notify the Investor who
holds Registrable Securities of the receipt by the Company of any notification
with respect to the suspension of the registration or qualification of any of
the Registrable Securities for sale under the securities or "blue sky" laws of
any jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

    

    e.           As
promptly as practicable after becoming aware of such event or facts, the Company
shall notify the Investor in writing of the happening of any event or existence
of such facts as a result of which the prospectus included in any registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and promptly prepare a supplement or amendment to such
registration statement to correct such untrue statement or omission, and deliver
a copy of such supplement or amendment to the Investor (or such other number of
copies as the Investor may reasonably request).  The Company shall
also promptly notify the Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
registration statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to the Investor by
facsimile on the same day of such effectiveness and by overnight mail), (ii) of
any request by the SEC for amendments or supplements to any registration
statement or related prospectus or related information, and (iii) of the
Company's reasonable determination that a post-effective amendment to a
registration statement would be appropriate.

    

    f.           The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of any registration statement,
or the suspension of the qualification of any Registrable Securities for sale in
any jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and to
notify the Investor of the issuance of such order and the resolution thereof or
its receipt of actual notice of the initiation or threat of any proceeding for
such purpose.

    

    g.           The
Company shall (i) cause all the Registrable Securities to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities on the Principal
Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section.

    

    h.           The
Company shall cooperate with the Investor to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legend) representing
the Registrable Securities to be offered pursuant to any registration statement
and enable such certificates to be in such denominations or amounts as the
Investor may reasonably request and registered in such names as the Investor may
request.

    

    i.           The
Company shall at all times provide a transfer agent and registrar with respect
to its Common Stock.

    

    j.           If
reasonably requested by the Investor, the Company shall (i) immediately
incorporate in a prospectus supplement or post-effective amendment such
information as the Investor believes should be included therein relating to the
sale and distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being sold, the
purchase price being paid therefor and any other terms of the offering of the
Registrable Securities; (ii) make all required filings of such prospectus
supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any registration statement.

    

    k.           The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by any registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.

    

    l.           Within
one (1) Business Day after any registration statement which includes the
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investor)
confirmation that such registration statement has been declared effective by the
SEC in the form attached hereto as Exhibit
A.  Thereafter, if requested by the Buyer at any time, the
Company shall require its counsel to deliver to the Buyer a written confirmation
whether or not the effectiveness of such registration statement has lapsed at
any time for any reason (including, without limitation, the issuance of a stop
order) and whether or not the registration statement is current and available to
the Buyer for sale of all of the Registrable Securities.

    

    m.           The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of Registrable Securities pursuant to any
registration statement.

    

    4.           OBLIGATIONS OF THE
INVESTOR.

    

    a.           The
Company shall notify the Investor in writing of the information the Company
reasonably requires from the Investor in connection with any registration
statement hereunder.  The Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.

    

    b.           The
Investor agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any registration
statement hereunder.

    

    c.           The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event or existence of facts of the kind described in Section
3(f) or the first sentence of 3(e), the Investor will immediately discontinue
disposition of Registrable Securities pursuant to any registration statement(s)
covering such Registrable Securities until the Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(f) or the
first sentence of 3(e). Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to promptly deliver shares of Common Stock
without any restrictive legend in accordance with the terms of the Purchase
Agreement in connection with any sale of Registrable Securities with respect to
which an Investor has entered into a contract for sale prior to the Investor's
receipt of a notice from the Company of the happening of any event of the kind
described in Section 3(f) or the first sentence of 3(e) and for which the
Investor has not yet settled.

    

    5.           EXPENSES OF
REGISTRATION.

    

    All
reasonable expenses, other than sales or brokerage commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company, shall be paid by the Company.

    

    6.           INDEMNIFICATION.

    

    a.           To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend the Investor, each Person, if any, who
controls the Investor, the members, the directors, officers, partners,
employees, agents, representatives of the Investor and each Person, if any, who
controls the Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act") (each, an "Indemnified Person"), against
any losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, attorneys' fees, amounts paid in settlement or expenses, joint or
several, (collectively, "Claims") incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("Indemnified Damages"), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in the Registration Statement, any New Registration Statement or
any post-effective amendment thereto or in any filing made in connection with
the qualification of the offering under the securities or other "blue sky" laws
of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to the Registration Statement or
any New Registration Statement  or (iv) any material violation by the
Company of this Agreement (the matters in the foregoing clauses (i) through (iv)
being, collectively, "Violations").  The
Company shall reimburse each Indemnified Person promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not apply to
a Claim by an Indemnified Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement, any New Registration Statement or
prospectus or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e); (ii) with respect to any superceded prospectus, shall not inure to
the benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the superceded prospectus was corrected
in the revised prospectus, as then amended or supplemented, if such revised
prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e), and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a violation and
such Indemnified Person, notwithstanding such advice, used it; (iii) shall not
be available to the extent such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(c) or Section 3(e); and (iv) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably
withheld.  Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9.

    

    b.           In
connection with the Registration Statement or any New Registration Statement,
the Investor agrees to severally and not jointly indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement or any New Registration Statement, each Person, if any,
who controls the Company within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an "Indemnified Party"), against
any Claim or Indemnified Damages to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information about the Investor set forth on Exhibit B attached
hereto and furnished to the Company by the Investor expressly for use in
connection with such registration statement; and, subject to Section 6(d), the
Investor shall promptly reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to the Investor as a result of the
sale of Registrable Securities pursuant to such registration
statement.  Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9.

    

    c.           Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or
claim.  The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto.  No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its
consent.  No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation.  Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

    

    d.           The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

    

    e.           The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.

    

    7.           CONTRIBUTION.

    

    To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

    

    8.           REPORTS AND DISCLOSURE UNDER
THE SECURITIES ACTS.

    

    With a
view to making available to the Investor the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that may
at any time permit the Investor to sell securities of the Company to the public
without registration ("Rule
144"), the Company agrees, at the Company’s sole expense,
to:

    

    a.           make
and keep public information available, as those terms are understood and defined
in Rule 144;

    

    b.           file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and

    

    c.           furnish
to the Investor so long as the Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied with
the reporting and or disclosure provisions of Rule 144, the 1933 Act and the
1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Investor to
sell such securities pursuant to Rule 144 without registration.

    

    d.           take
such additional action as is requested by the Investor to enable the Investor to
sell the Registrable Securities pursuant to Rule 144, including, without
limitation, delivering all such legal opinions, consents, certificates,
resolutions and instructions to the Company’s Transfer Agent as may
be  requested from time to time by the Investor and otherwise fully
cooperate with Investor and Investor’s broker to effect such sale of securities
pursuant to Rule 144.

    

    The Company agrees that damages may be
an inadequate remedy for any breach of the terms and provisions of this Section
8 and that Investor shall, whether or not it is pursuing any remedies at law, be
entitled to equitable relief in the form of a preliminary or permanent
injunctions, without having to post any bond or other security, upon any breach
or threatened breach of any such terms or provisions.

    

    
      	
              9.  

            	
              ASSIGNMENT OF
      REGISTRATION RIGHTS.

            

    

    

    The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investor, including by merger or
consolidation.  The Investor may not assign its rights under this
Agreement without the written consent of the Company, other than to an affiliate
of the Investor controlled by Steven G. Martin or Joshua B.
Scheinfeld.

    

    10.           AMENDMENT OF REGISTRATION
RIGHTS.

    

    Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the
Investor.

    

    11.           MISCELLANEOUS.

    

    a.           A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities.  If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

    

    b.           Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same.  The addresses and facsimile numbers for such
communications shall be:

    

    

    If to the
Company:

    DOR BioPharma, Inc.

    850 Bear Tavern Road, Suite
201

    Ewing, New Jersey 08628

    Telephone: 609-538-8200

    Facsimile:: 609-538-8205

    Attention:   Chief
Executive Officer

    

    With a
copy to:

    Edwards Angell Palmer & Dodge
LLP

    350 East Las Olas Boulevard, Suite
1150

    Fort Lauderdale, FL 33301

    Telephone:          954-727-2600

    Facsimile:                        
954-727-2601

    Attention:                       
Leslie J. Croland

    

    If to the
Holder:

         Fusion
Capital Fund II, LLC

                    
222
Merchandise Mart Plaza, Suite 9-112

                    
Chicago,
IL 60654

                    
Telephone:                   312-644-6644

                    
Facsimile:                      312-644-6244

                    
Attention:                     Steven
G. Martin

    

    or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party three (3) Business Days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

    

    c.           Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

    

    d.           The
corporate laws of the State of Delaware shall govern all issues concerning the
relative rights of the Company and its stockholders.  All other
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois.   Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting the City of
Chicago, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.  EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

    

    e.           This
Agreement, and the Purchase  Agreement constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and
thereof.  There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and
therein.  This Agreement and the Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.

    

    f.           Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of
and be binding upon the permitted successors and assigns of each of the parties
hereto.

    

    g.           The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

    

    h.           This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

    

    i.           Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.

    

    j.           The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.

    

    k.           This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

    

    

    

    * * * * * *

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    IN WITNESS WHEREOF, the
parties have caused this Registration Rights Agreement to be duly executed as of
day and year first above written.

    

    

    

    THE
COMPANY:

    

    DOR
BioPharma, Inc.

    
 

    
                                      By:  /s/ Christopher J.
Schaber_

                                      Name:  
Christopher J. Schaber

                                      Title:   President
and C.E.O.

    

    BUYER:

    
 

    
      Fusion
Capital Fund II, LLC

      By:
Fusion Capital Partners, LLC

      By:
Rockledge Capital Corporation

       

    

    
      By: 
/s/ Josh
Scheinfeld

      Name:  
Josh Scheinfeld

      Title:    
President

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

    TO REGISTRATION RIGHTS
AGREEMENT

    

                                                 
FORM OF NOTICE OF EFFECTIVENESS

    OF
REGISTRATION STATEMENT

    

    

    

    

    

    

    _________,
2008

    

    

    [TRANSFER
AGENT]

    ________________

    ________________

    Attention:
___________

    

    RE:
DOR BioPharma, Inc.

    

    

    Ladies
and Gentlemen:

    

    We are
counsel to DOR BioPharma,
Inc., a Delaware corporation (the “Company”), and have
represented the Company in connection with that certain Common Stock Purchase
Agreement, dated as of ____________, (the “Purchase Agreement”), entered
into by and between the Company and Fusion Capital Fund II, LLC (the “Buyer”) pursuant to which the
Company has agreed to issue to the Buyer shares of the Company's Common Stock,
$0.001 par value (the “Common
Stock”), in an amount up to Eight Million Five Hundred Thousand
($8,500,000), in accordance with the terms of the Purchase Agreement. In
connection with the transactions contemplated by the Purchase Agreement, the
Company has registered with the U.S. Securities & Exchange Commission the
following shares of Common Stock:

    

    (1)      _______________
shares of Common Stock to be issued upon purchase from the Company by the Buyer
from time to time (the “Purchase
Shares.”).

    

    (2) 4,052,778
shares of Common Stock previously issued to the Buyer (the “Initial  Shares.”).

    

    (3)           1,275,000
additional Commitment Shares to be issued in connection with each purchase of
Purchase Shares (the “Additional Commitment
Shares”).

    

    [(4)           1,388,889
shares of Common Stock underlying warrants issued to the Buyer to purchase
shares of Common Stock (the “Warrant Shares”).]  [If
applicable]

    

    Pursuant to the Purchase Agreement,
the Company also has entered into a Registration Rights Agreement, dated as of
___________, with the Buyer (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the Purchase Shares, the Initial Shares, the Additional Commitment
Shares [and the Warrant
Shares] under the Securities Act of 1933, as amended (the “1933 Act”).  In
connection with the Company's obligations under the Purchase Agreement and the
Registration Rights Agreement, on _______, the Company filed a Registration
Statement (File No. 333-_________) (the “Registration Statement”) with
the Securities and Exchange Commission (the “SEC”) relating to the sale of
the Purchase Shares, the Initial Shares and the Additional
Commitment Shares [and the
Warrant Shares].

    

    In
connection with the foregoing, we advise you that: (1) a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at _____ P.M. on
__________, 2007, (2) we have no knowledge, after telephonic inquiry of a member
of the SEC's staff, that any stop order suspending its effectiveness has been
issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC, (3) the Initial Shares [and the Warrant Shares] are
available for sale under the 1933 Act pursuant to the Registration Statement and
the restrictive legend on the Initial Shares [and the Warrant Shares] shall
be removed and (4) the Purchase Shares and the Additional Commitment Shares
[and the Warrant Shares]
are available for sale under the 1933 Act pursuant to the Registration Statement
and shall be issued without any restrictive legend.

    

    

    

    Very
truly yours,

    

    [Company Counsel]

    

    

    By:____________________

    

    

    

    

    

    CC:             Fusion
Capital Fund II, LLC

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    EXHIBIT
B

    

    TO REGISTRATION RIGHTS
AGREEMENT

    

    Information
About The Investor Furnished To The Company By The Investor

    Expressly
For Use In Connection With The Registration Statement

    

    

    As of the
date of the Purchase Agreement, Fusion Capital beneficially owned no shares of
common stock of the Company.  Steven G. Martin and Joshua B.
Scheinfeld, the principals of Fusion Capital, are deemed to be beneficial owners
of all of the shares of common stock owned by Fusion Capital.  Messrs.
Martin and Scheinfeld have shared voting and investment power over the shares
being offered under the prospectus filed with the SEC in connection with the
transactions contemplated under the Purchase Agreement.  Fusion
Capital is not a licensed broker dealer or an affiliate of a licensed broker
dealer.DATED: January 22, 2008 

MTS MEDICATION
TECHNOLOGIES INTERNATIONAL, LIMITED (1) 

— and — 

PETER WILLIAMS (2) 

SERVICE AGREEMENT 

Brabners Chaffe Street
LLP 
Solicitors 
1 Dale Street 
Liverpool L2 2ET 

INDEX 

	CLAUSES  	 	PAGE 
	  	 	 
	1.	Definitions and Interpretation	3
	2.	Appointment	5
	3.	Duration	5
	4.	Duties	5
	5.	Remuneration and Expenses	7
	6.	Insurance Benefits	7
	7.	Mobile Phone	8
	8.	Pension	8
	9.	Holidays	8
	10.	Illness	9
	11.	Medical Examination	9
	12.	Place of Work	10
	13.	Grievance and Disciplinary Matters	10
	14.	Suspension	11
	15.	Restrictions during Employment	11
	16.	Confidential Information	11
	17.	Restrictions	12
	18.	Termination	14
	19.	Effect of Termination	15
	20.	Amalgamation, Reconstruction, Transfer and Change of Director	16
	21.	Intellectual Property	16
	22.	Notices	17
	23.	Data Protection	17
	24.	General	19

Schedule 
Special Restricted Stock Award 

 2

THIS AGREEMENT
is made on January 22, 2008 

BETWEEN:- 

	(1)  	MTS
MEDICATION TECHNOLOGIES INTERNATIONAL, LIMITED (registered in England and Wales
under number 04562981 whose registered office is Unit 6A-6B Dalton Court, Blackburn
Interchange, Lower Darwen, Blackburn, Lancashire BB3 0AT (the “Company”) and  

	(2) 	PETER
WILLIAMS of 3 Pall Mall, Billinge End Road, Pleasington, Blackburn,
Lancashire BB2 6QD (the “Managing Director”)  

IT IS AGREED as follows:- 

	1.  	DEFINITIONS
AND INTERPRETATION  

		1.1  	In
this Agreement the following definitions apply:-  

		 	“MTS Medication
Technologies, Inc.” means the parent company of the Company, based in St. Petersburg,
Florida, USA  

	 	   	“MTS
Board of Directors” means the Board of Directors of MTS Medication Technologies,
Inc.  “Board”means the board of directors of the Company, any duly
authorised director or any committee of directors for the time being  

	 	  	“Business”means
any business carried on by the Company or any Group Company at the Cessation Date in
which the Managing Director shall have been involved to any extent (other than de
minimis) at any time during the 12 months up to and including the Cessation Date  

	 	  	“Business
day” means a day (apart from a Saturday) on which clearing banks are open for
business in the City of London  

	 	  	“CEO”means
the Chairman of the Board of Directors of MTS Medication Technologies Inc  

	 	  	“Cessation
Date”means the date the Managing Director ceases to be a director or an employee of
the Company  

	 	  	“Commencement
Date” means the date of this Agreement  

	 	 	“Confidential
Information” means information (whether or not in documentary form or recorded on
computer disk or tape or stored on any magnetic or optical disk or memory) relating to:-  

	 	(i)  	the
business, business methods, products, affairs, management systems, research
and development projects, marketing and sales data (including past present
and future sales targets, market share statistics, pricing statistics and
lists and discount structures) advertising and promotional material,
customer, client or supplier details and finances of the Company or of any
other Group Company (for the time being confidential to it or to them or
treated by it or by them as such); and  

 3

	 	(ii)  	the
trade secrets (including without limitation technical data, secret formulae,
processes, inventions, designs, discoveries, technical specifications,
recipes and know-how) relating to the business of the Company or of any
other Group Company or of any of its or their suppliers, clients or
customers  

	 	whether or
not in the case of documents or other written materials they are or were marked as
confidential and whether or not in the case of other information, such information is
identified or treated by the Company or any Group Company as being confidential  

	 	“Employment”means
the Managing Director’s employment under this Agreement  

	  	“ERA”means
the Employment Rights Act 1996  

	  	“Group”means
the Company and any other Group Companies  

	 	“Group
Company” means any company which is for the time being a subsidiary or holding
company of the Company or a subsidiary of any such holding company  

	 	“subsidiary
company” shall have the meanings ascribed to it by sections 736 and 736A Companies
Act 1985  

	 	“holding
company” shall have the meanings ascribed to it by sections 736 and 736A Companies
Act 1985  

	 	“Regulations”means
the Working Time Regulations 1998

	 	“Restricted
Area” means the United Kingdom and/or the Republic of Ireland together with any
other country in which the Company or any other Group Company:  

	 	(i)  	carried
on any Business or provided any goods or services in connection with any
Business at the Cessation Date; or  

	 	(ii)  	carried
on any Business or provided any goods or services in connection with any
Business at any time during the period of six months immediately prior to
the Cessation Date; or  

	 	(iii)  	is
to the knowledge of the Managing Director to carry out any Business at any
               time during the six months immediately following the Cessation Date;  

	 	and
regarding which country the Managing Director;  

	 	(a) 	was
materially concerned or worked in;  

	 	(b)  	had
management responsibility for; and/or  

	 	(c)  	obtained
Confidential Information  

	 	during
the course of the Employment at any time during the period of 12 months immediately prior
to the Cessation Date  

 4

		1.2  	References
to a clause or schedule are to a clause of or a schedule to this Agreement respectively  

		1.3  	The
headings in this Agreement are for convenience only and shall not affect its construction
or interpretation 

		1.4 	References
to any statute or statutory provision shall include any subordinate legislation made
under it, any provision which it has superseded or re-enacted (whether with or without
modification) and any provision superseding it or re-enacting it (whether with or without
modification)  

		1.5  	A
reference to one gender includes a reference to the other gender 

	2.  	APPOINTMENT  

		2.1 	The
Company appoints the Managing Director and the Managing Director agrees to act asManaging
Directoror in such other capacity as the Company may from time to time reasonably
direct on the terms of this Agreement  

	3.  	DURATION  

		3.1 	The
Employment shall commence on the Commencement Date and shall subject to the other
provisions of this Agreement continue unless and until terminated by either party giving
to the other at least 6 months’ notice  

		3.2  	The
Managing Director's period of continuous employment for statutory purposes began on 1st
September 2003 

		3.3 	If
not previously terminated and without prejudice to the Managing Director’s statutory
rights the Employment shall terminate automatically upon the Managing Director reaching
his 65th birthday. The Employer will consider any request by the employee to
work beyond his 65th birthday  

		3.4 	The
Managing Director warrants that he is entitled to work in the United Kingdom without any
additional approvals and will notify the Company immediately if he ceases to be so
entitled during the Employment  

	4.  	DUTIES  

		4.1  	During
the Employment the Managing Director shall:- 

	 	4.1.1 	subject
to clause 15.1 unless prevented by ill health, devote the whole of his time, attention
and skill to the business and affairs of the Company both during normal business hours
and during such additional hours as are necessary for the proper performance of his
duties or as the CEO may reasonably require from time to time; 

	 	4.1.2 	faithfully
and diligently perform such duties and exercise such powers as may from time to time be
lawfully assigned to him by the CEO whether relating to the Company or any Group Company; 

 5

	 	4.1.3 	use
his best endeavours to promote the interests of the Company and any other Group Company
for which he works pursuant to clause 4.2; 

	 	4.1.4  	observe
and comply with all lawful and reasonable requests, instructions, resolutions and
regulations of the Company and keep the Company promptly and fully informed of his
conduct of the business and affairs of the Company and provide such explanations as the
CEO may require;  

	 	4.1.5  	not
engage in any activity which may be or may become harmful to or contrary to the interests
of the Company; 

	 	4.1.6  	report
to the CEO in writing any matter relating to the Company or any Group company or any of
its or their offices or employees which he becomes aware of and which could be the
subject of a qualifying disclosure as defined by section 43B of the ERA; and  

	 	4.1.7  	accept
(if offered) appointment as a director of the Company or any Group company and
resign any such appointment if requested by the Board  

		4.2 	The
Managing Director may be required to perform services not only for the Company but also
for any other Group Company and to accept such offices in any such Company as the CEO may
from time to time reasonably require without further remuneration  

		4.3 	The
Company shall be entitled at any time to appoint another person to act jointly with the
Managing Director in any capacity in which the Managing Director may be employed  

		4.4 	The
Managing Director’s normal hours of work are 35 hours per week from 9.00 a.m. to
5.00 p.m. Monday to Friday each week (with a 1 hour lunch break on each working day)
together with such additional hours as may be required for the proper performance of his
duties. The Managing Director acknowledges that he shall not receive further remuneration
in respect of such additional hours  

	 	4.5	4.5.1 	The Company may
in its absolute discretion at any time after notice of termination shall
have been given by either party lawfully terminate this Agreement with immediate effect
by paying to the Managing Director an amount equal to his basic salary entitlement for
the then unexpired period of notice together with such further amount as is equal to the
fair value of any other benefits to which the Managing Director is contractually entitled
under the terms of this Agreement during such unexpired period of notice (subject in
either case to deduction at source of Income Tax and National Insurance contributions)  

	 	4.5.2 	The
sum referred to in clause 4.5.1 above may be paid in instalments on the last working day
of each month following termination of the employment for such portion of the notice
period stipulated in clause 3.1 as the Managing Director does not perform work for
services on his own account or for any other party of a recognisable remunerative nature 

	 	4.5.3 	For
the avoidance of doubt the right of the Company to make a payment in lieu of notice does
not give rise to the right of the Managing Director to receive such a payment 

6 

		4.6 	During
any period of notice to terminate this Agreement, given either by the Company or by the
Managing Director, the Company shall be under no obligation to provide the Managing
Director with any work and may at any time during such period suspend the Managing
Director on full pay and benefits from his employment or exclude him from the premises of
the Company and other Group Companies  

		4.7 	Where
the Company requires the Managing Director to remain away from work pursuant to clause
4.6 above during any period of notice to terminate this Agreement, the Managing Director
shall comply with any conditions laid down by the Company and whilst on full pay and
benefits the Managing Director shall not be entitled to work for any other person, firm,
client, company, organisation or on the Managing Director’s own behalf without the
Company’s prior written permission and the Company may require the Managing Director
not to contact customers or employees of the Company or any Group Company  

		4.8 	The
Managing Director acknowledges that for the purposes of the Regulations, his working time
is unmeasured and that he falls within regulation 20 of the Regulations and that
therefore the provisions in the Regulations regarding maximum hours of working time,
daily rest, weekly rest or rest breaks do not apply to the Managing Director  

	5.  	REMUNERATION
AND EXPENSES  

		5.1 	The
Company shall pay to the Managing Director during the Employment a salary at an annual
rate of£90,725 gross (or such other sum as may from time to time be agreed)  

		5.2 	The
rate of salary shall be reviewed once in each year, usually in or around 1st April
by the Company’s compensation committee. The review does not imply an increase.
There will be no review of salary after notice has been given by either party to
terminate the Employment  

		5.3 	The
salary of the Managing Director shall accrue evenly on a day to day basis and shall be
paid by 12 equal calendar monthly instalments in arrears on or around the last day of
each calendar month by credit transfer to his bank account  

		5.4 	The
remuneration payable to the Managing Director under this Agreement shall be inclusive of
any sums received or receivable as remuneration or director’s fees from any Group
Company and accordingly the Managing Director will account to the Company for any such
remuneration, fees or interest  

	 	5.5	5.5.1 	The
Managing Director shall be entitled to participate at a level appropriate to his
status, in any Short Term Incentive Compensation Plan which MTS Medication Technologies
Inc may introduce for companies within its Group, at any time during the period that this
Appointment remains in force on such terms as may be determined by MTS Medication
Technologies Inc.  

	 	5.5.2  	Notwithstanding
the provisions of clause 5.5.1 above, the Managing Director shall also be entitled to
receive a Special Restricted Stock Award subject to the terms and conditions of the
Schedule to this Agreement (the “Special Restricted Stock Award”)  

		5.6 	The
Managing Director shall receive an annual car allowance of 12,000 (or such other sum as
may from time to time be agreed). The car allowance shall be paid by 12 equal calendar
instalments on or around the last day of each calendar month.  

7

		5.7 	The
Company shall refund to the Managing Director all reasonable and authorised travelling,
hotel, entertaining, telephone bills and other expenses properly incurred by him in the
performance of his duties upon the production of proper invoices or other evidence of
expenditure (if required). Any credit or charge card supplied to the Managing Director by
the Company shall be used solely for expenses incurred in the course of the Managing
Director’s duties and must be returned to the Company if the Managing Director’s
employment is terminated for whatever reason  

		5.8 	The
Managing Director expressly agrees that the Company may make such deductions from salary
or other payments due on the termination of or during the Employment as may be necessary
to reimburse the Company against any liability of or incurred by the Managing Director to
the Company including but not limited to loans, advances, relocation expenses and excess
holiday payments  

	6.  	INSURANCE
BENEFITS  

		6.1 	Subject
to clause 6.2, the Company shall provide the Managing Director with life insurance cover
at the rate of 2 times the Managing Director’s basic annual salary, in accordance
with arrangements made between the Company and such reputable insurer as the Company may
decide from time to time and subject to the terms and conditions applicable to any such
insurance. The continued operation and any membership of any such scheme is at the sole
discretion of the Company and may either be amended or withdrawn by the Company at any
time  

		6.2 	The
benefit referred to at clause 6.1 is conditional on the relevant insurer(s) accepting
cover for the Managing Director at normal rates and accepting liability for any
particular claim. In the event that the relevant insurer(s) do not accept cover or
liability in respect of the Managing Director at normal rates or any claim by the
Managing Director in respect of any of the benefits referred to at clause 6.1 the Company
shall have no obligation to provide any alternative benefit or cover in this regard. The
provision of the benefit at Clause 6.1 shall not restrict the Company’s ability to
terminate the Managing Director’s employment in accordance with clauses 3.1 or 18
for any reason including, without limitation, incapacity. All and any benefits provided
under clause 6.1 shall cease with effect from the Cessation Date  

	7.  	MOBILE
PHONE  

		7.1 	The
Company shall provide the Managing Director with a mobile phone as a tool for performing
his duties. On termination of the Employment the Managing Director shall promptly return
or account for the mobile phone to the Company in satisfactory condition together with
any chargers or documents relating to it. Failure to do so shall entitle the Company to
withhold any outstanding monies due from the Company to the Managing Director up to the
value of the mobile phone  

	8.  	PENSION  

		8.1 	The
Company operates a contributory Pension Scheme in which the Managing Director is eligible
to participate subject to the rules of the scheme from time to time in force. The Company
will match an amount the Managing Director contributes to the Pension Scheme, from a
minimum of three percent (3%), up to a maximum of five percent (5%) of the Managing
Director’s basic salary. The Company reserves the right to vary the scheme or to
change pension provider  

8 

		8.2  	A
contracting out certificate is not in force in respect of the Employment 

	9.  	HOLIDAYS  

		9.1 	In
addition to the 8 statutory bank holidays the Managing Director shall be entitled to 20
business days paid holiday in each 12 month period running 1st January to 31st December
in each year (“a holiday year”), to be taken at times approved by the CEO. The
Managing Director shall not be entitled to carry any unutilised holiday entitlement
forward from one holiday year to another without the consent of the CEO, or to receive
any monetary compensation for any unutilised holiday entitlement  

		9.2 	Upon
the termination of this Agreement for whatever reason the Managing Director shall as
appropriate either be entitled to pay in lieu of unutilised holiday entitlement or shall
be required to repay to the Company any salary received for holiday taken in excess of
his actual entitlement and any sums repayable by the Managing Director may be deducted
from any outstanding salary or other payments due to the Managing Director. Where such
termination is pursuant to clause 18.1 (or grounds for such dismissal exist at the time
of termination) or where the termination follows the Managing Director’s resignation
in breach of clause 3.1, such accrued but untaken holiday shall be based on the Managing
Director’s minimum holiday entitlement under the Regulations only and not on his
entitlement under clause 9.1. For these purposes any paid holiday that has been taken by
the Managing Director (including any paid holiday on public holidays) shall be deemed
first to be statutory paid holiday. The Managing Director’s entitlement to holiday
shall be deemed to accrue pro rata per completed month throughout each holiday year of
the Employment  

		9.3 	If
either party has served notice to terminate the Employment the Company may require the
Managing Director to take any accrued but unused holiday entitlement during the notice
period  

	10.  	ILLNESS  

		10.1 	If
the Managing Director shall at any time be incapacitated by illness or accident from
performing his duties then he shall as soon as possible on the first day of absence
inform the CEO of such illness or accident and of the expected date of his return to work  

		10.2 	For
periods of absence exceeding 7 days a medical certificate must be forwarded to the
Company as soon as possible following the seventh day of absence and on each occasion
thereafter to cover the entire period of absence  

		10.3 	Whilst
the Managing Director does not have any contractual entitlement to pay during periods of
incapacity, subject to clause 18.2 the Company shall at its absolute discretion and for
such period or periods as the Company shall determine pay to the Managing Director his
salary as provided in clause 5.1 and any other contractual benefits save that the Company
will set off against any such payments any Statutory Sick Pay to which the Managing
Director is entitled and any Social Security Sickness Benefit or other benefits
recoverable by the Managing Director  

		10.4 	For
the purposes of calculation of Statutory Sick Pay the days on which the Managing Director
could qualify for payments are Monday, Tuesday, Wednesday, Thursday and Friday  

 9

		10.5 	If
the Managing Director is prevented by incapacity from properly performing his duties
under this agreement for a consecutive period of 5 working days the Company may (without
prejudice to the provisions of clause 4.3) appoint another person or persons to perform
those duties until such time as the Managing Director is able to resume fully the
performance of his duties  

		10.6 	If
any sickness absence appears to be occasioned by action, negligence or omission for which
a third party may be liable, the Managing Director shall notify the CEO immediately,
providing such particulars as the CEO may reasonably require. If required by the CEO he
shall refund to the Company any amounts received by him from any such third party
provided that such refund shall not exceed the amount of damages or settlement monies if
any recovered by the Managing Director from that third party in respect of loss of
remuneration less the costs he reasonably incurred in recovering such sums  

	11.  	MEDICAL
EXAMINATION  

		11.1 	The
Managing Director may be required at any time to attend a doctor or clinic nominated by
the Company to be medically examined whether or not he is suffering or has suffered any
period of sickness or incapacity. The Managing Director shall ensure the prompt delivery
of the medical report to the Company. The Company will comply with the provisions of the
Access to Medical Reports Act 1988 in making any such request. Notwithstanding the
provisions of the Act, the Managing Director will allow the Company access to any medical
report or any medical records relating to his physical or mental health by a medical
practitioner and shall authorise such medical practitioner to disclose to and discuss
with the Company the results of any such medical examination  

	12. 	PLACE
OF WORK  

		12.1. 	The
Managing Director’s place of work will be at the Company’s offices at
Unit 6A / 6B Dalton Court, Blackburn Interchange, Lower Darwen, Blackburn,
Lancashire, England, but he shall, if so requested by the Company travel to and
work at such places (whether within or outside the United Kingdom) in such
manner, on such occasions and for such periods as the Company may from time to
time reasonably require  

	13. 	GRIEVANCE
AND DISCIPLINARY MATTERS  

		13.1 	If
the Managing Director has any grievance he may apply in writing to the CEO for his
grievance to be considered by the CEO and the CEO shall meet with the Managing Director
to consider the matter usually within 2 weeks of that application and respond to the
Managing Director usually within 7 days of that meeting  

		13.2  	There
are no special disciplinary rules, which apply to the Managing Director, and any
disciplinary matters affecting him shall be dealt with by the CEO  

		13.3 	If
the Managing Director is dissatisfied with any decision of the CEO regarding any
grievance or disciplinary matter he may apply in writing to any non-Executive director of
the Company for his case to be re-considered who shall meet with the Managing Director to
consider the matter usually within 2 weeks of that application and respond to the
Managing Director usually within 7 days of that meeting  

10 

		13.4 	The
Company is aware of its obligations under the Statutory Dismissal and Disciplinary
Procedures and Statutory Grievance Procedures. Although the Company does not have a
separate dismissal procedure applicable to the Managing Director, before any decision is
taken to dismiss the Managing Director in any situation which is covered by the Statutory
Disciplinary and Dismissal Procedures, as a minimum, the Managing Director will be:  

	 	13.4.1  	told
in writing the reason why his employment is at risk; 

	 	13.4.2  	invited
to a meeting at a reasonable time and place (at which he may be accompanied) to discuss
the matter and to which the Managing Director must take all reasonable steps to attend;  

	 	13.4.3  	informed
of the Company's decision in writing; and 

	 	         13.4.4  	told
of his right of appeal if the decision taken is to dismiss. 

	 	However,
the Managing Director has no contractual entitlement under this clause, under the
statutory procedures or otherwise  

	14.  	SUSPENSION  

		14.1 	The
Company shall not be under any obligation to vest in or assign to the Managing Director
any powers or duties or to provide any work for the Managing Director and the Company may
at any time or from time to time suspend the Managing Director from the performance of
his duties and exclude him from any premises of the Company (whether or not the Company
or the Managing Director has served notice to terminate this Agreement). During any such
period of suspension the Company shall continue to pay the Managing Director his basic
salary  

	15.  	RESTRICTIONS
DURING EMPLOYMENT  

		15.1 	During
the first 12 months of the Employment (or such longer period (if any) as the CEO may in
his absolute discretion specify in writing), the Managing Director shall be permitted to
devote a reasonable amount of time on the basis previously notified to the Company to his
existing business interest in Whithnell Pharmacy in which he has 100% ownershipand
thereafter the Managing Director shall devote the whole of his time, attention and skill
to the business and affairs of the Company as provided for in clause 4.1.1  

		15.2  	During
the Employment the Managing Director shall not:- 

	 	         15.2.1  	subject
to clause 15.1 above be directly or indirectly interested, engaged or concerned in the
conduct of any other business, or  

	 	15.2.2  	engage
in any activity which the Board reasonably considers may be, or become, harmful to the
interests of the Company or of any other Group Company or which might reasonably be
considered to interfere with the performance of the Managing Director’s duties under
this Agreement; or  

11 

	 	15.2.3  	pledge
the credit of the Company or any Group Company other than in the day to day running of
the business or enter into any contracts or obligations involving the Company or any
Group Company in major or substantial commitments; or  

	 	         15.2.4  	become
engaged in public office; or  

	 	15.2.5  	make
any public statement (whether written or oral) to the media or otherwise relating to the
affairs of the Company or any Group Company without the prior consent of the Board  

		15.3  	Clause
15.2 shall not apply:- 

	 	15.3.1 	to
any act undertaken by the Managing Director as a representative of the Company or any
other Group Company or with the prior written consent of the Board, or 

	 	15.3.2 	to
any interest in investments which are for the time being dealt in on any recognised
investment exchange as defined in section 207 Financial Services Act 1986 where the
Managing Director (together with his spouse, children, parents and parents’ other
issue) neither holds nor is beneficially interested in more than a total of 3 per cent of
those investments in issue 

	16.  	CONFIDENTIAL
INFORMATION  

		16.1  	At
all times the Managing Director shall keep confidential any Confidential Information 

		16.2 	The
Managing Director shall not use or disclose to any person any Confidential Information
and shall during the Employment use his best endeavours to prevent or avoid its use or
disclosure  

		16.3 	The
obligations in this clause shall continue to apply after the expiry of the Employment for
whatever reason and whether or not in breach of contract without any time limit  

		16.4 	This
clause shall apply, modified as appropriate, in relation to each of the Group Companies
and the Managing Director shall, upon the request of any Group Company, enter into a
separate agreement or undertaking with it to that effect  

		16.5  	The
Managing Director shall not be restrained from disclosing any Confidential Information
which: 

	 	16.5.1  	he
is authorised in writing to disclose by the CEO; 

	 	16.5.2  	had
entered the public domain unless it enters the public domain as a result of an
unauthorised disclosure by the Managing Director or an authorised disclosure for an
unauthorised purpose by the Managing Director or anyone else employed or engaged by the
Company or any Group Company;  

	 	16.5.3  	he
is required to disclose by law; or 

	 	16.5.4 	he
is entitled to disclose under the Public Interest Disclosure Act 1998 provided that the
disclosure is made in an appropriate way to an appropriate person having regard to the
provisions of that Act and clause 4.1.6 

12 

	17.  	RESTRICTIONS  

		17.1 	The
Managing Director hereby agrees and confirms that during the course of the Employment he
will obtain knowledge of trade secrets and other confidential information concerning the
business, dealings and financial affairs of the Company and other Group Companies with
which the Managing Director may be associated or involved and their customers and
suppliers details of which are not in the public domain. The Managing Director hereby
acknowledges and agrees with the Company’s right to protect it’s legitimate
business interests and those of other Group Companies, and that the covenants set out
below are reasonably necessary for the protection of the Company’s legitimate
business interests  

		17.2 	The
Managing Director agrees and confirms that during the course of his employment he will
have dealings with fellow employees (including directors) of the Company and may have
dealings with employees (including directors) of other Group Companies and the Managing
Director recognises the Company’s and other Group Companies’ legitimate
business interests in developing and maintaining a stable and trained workforce. The
Managing Director acknowledges and recognises that the Company’s right to protect it’s
workforce is a legitimate business interest  

		17.3 	The
Managing Director covenants with the Company that, except with the prior written consent
of the Company, he will not whether as principal or agent, and whether alone or jointly
with, or as director, manager, partner, shareholder, employee or consultant of, any other
person, directly or indirectly:-  

	 	17.3.1 	for
so long as he is a director or employee of the Company or any other Group Company and for
a period of 12 months from the Cessation Date establish, carry on, or be engaged,
concerned or interested in any business within the Restricted Area which competes with
the Business 

	 	17.3.2 	for
so long as he is a director or employee of the Company or any other Group Company and for
a period of 12 months from the Cessation Date, in connection with any business of the
Company/Group as carried on at the Cessation Date employ or solicit or contact with a
view to employment or engagement by any person, any person who is an employee of the
Company/Group and was employed at any time during the 6 months prior to the Cessation
Date whether or not such person would commit a breach of contract by leaving his
employment with the Company/that Group Company (provided that this clause shall not
relate to any person employed or engaged in a purely clerical, administrative or
secretarial capacity) 

	 	17.3.3 	for
so long as he is a director or employee of the Company or any other Group Company and for
a period of 12 months from the Cessation Date in competition with the Company/Group
approach, canvass solicit or otherwise endeavour to entice away from the Company or any
other Group Company (or assist another person in competition with the Company/Group to
approach canvass solicit or otherwise endeavour to entice away from the Company or any
other Group Company) the custom of any person who at any time during the 12 months prior
to the Cessation Date shall have been a customer or supplier of the Company/Group and
with whom the Managing Director shall have personally had dealings; or 

13 

	 	17.3.4 	for
so long as he is a director or employee of the Company or any other Group Company and for
a period of 12 months from the Cessation Date use his knowledge of or influence over any
person who at any time during the 12 months prior to the Cessation Date shall have been a
customer or supplier of the Company/Group (and with whom the Managing Director shall have
personally had dealings) to or for his own benefit or the benefit of any other person
carrying on business in competition with the Business or otherwise use his knowledge of
or influence over any such customer or supplier to the detriment of the Company or any
other Group Company; 

	 	17.3.5 	for
a period of 12 months from the Cessation Date solicit, interfere with, tender for or
endeavour to entice away from the Company or any Group Company any contract, project or
piece of work, or the renewal of any of them, carried on by the Company or any Group
Company which is current and in progress at the Cessation Date or which is in the process
of negotiation at that date and in respect of which the Managing Director had a material
involvement 

		17.4 	None
of the restrictions contained in clause 17 shall prohibit any activities by the Managing
Director which are not in direct or indirect competition with any business being carried
on by the Company or any other Group Company at the Cessation Date  

		17.5  	Nothing
in clause 17 shall preclude the Managing Director from having an interest in investments
which are for the time being dealt in on any recognised investment exchange as defined in
Section 207 of the Financial Services Act 1986 where the Managing Director (together with
his spouse, children, parents and parents’ other issue) neither holds nor is
beneficially interested in more than a total of 3 per cent of those investments in issue  

		17.6 	At
no time after the Cessation Date shall the Managing Director directly or indirectly
represent himself as being interested in or employed by or in any way connected with the
Company or any other Group Company, other than as a former employee of the Company  

		17.7 	If
the Company gives notice to the Managing Director to terminate his employment under
clause 3.1 and the Company requires the Managing Director to serve his notice period but
not to perform his duties pursuant to clauses 4.6 and 4.7 (“Garden Leave”) then
any time spent on Garden Leave shall be deducted from the periods specified in clause
17.3  

		17.8 	The
Managing Director agrees that, having regard to all the circumstances, the restrictions
contained in this clause are reasonable and necessary for the protection of the
legitimate business interests of the Company/Group and that they do not bear harshly upon
him and the parties agree that:-  

	 	17.8.1 	each
restriction shall be read and construed independently of the other restrictions in this
clause so that if one or more are found to be void or unenforceable as an unreasonable
restraint of trade or for any other reason the remaining restrictions shall not be
affected, and 

	 	17.8.2 	if
any restriction is found to be void but would be valid and enforceable if some part of it
were deleted or its duration, area of application or range of prohibited activities were
reduced, that restriction shall apply with such deletion or modification as may be
necessary to make it valid and enforceable 

 14

		17.9 	In
the event that the Managing Director receives an offer of employment or request to
provide services either during the Employment or during the currency of the restrictive
periods set out in clause 17.3 the Managing Director shall provide immediately to such
person, company or other entity making such an offer or request a full and accurate copy
of this Agreement signed by both parties together with any subsequent letter or document
varying the terms of this Agreement  

	18.  	TERMINATION  

		18.1 	Notwithstanding
any other provisions of this Agreement, in any of the following circumstances the Company
may terminate the Employment immediately by serving notice on the Managing Director to
that effect. In such event the Managing Director shall not be entitled to any further
payment from the Company except such sums as shall have accrued due at that time and
subject to the terms and conditions set out in the schedule of this Agreement (Special
Restricted Stock Award). Should the Managing Director be terminated for any of the
circumstances contained in clause 18.1 before the first three (3) share award dates as
referenced in the schedule (Special Restricted Stock Award), no further share awards will
be granted or owed to the Managing Director under the Special Restricted Stock Award
schedule. The circumstances are if the Managing Director:-  

	 	18.1.1 	commits
any serious breach of this Agreement or any act of gross misconduct or any serious
neglect in the discharge of his duties or otherwise fails to faithfully and diligently
perform and exercise such powers as may from time to time be lawfully assigned to him by
the CEO; 

	 	         18.1.2  	repeats
or continues (after warning) any breach of this Agreement; 

	 	18.1.3  	commits
any act of fraud, dishonesty or conduct tending to bring himself or the Company or any
Group Company into disrepute; 

	 	18.1.4  	commits
any act of  bankruptcy  or takes  advantage of any statute for the time being in force
 offering  relief for insolvent                   debtors; 

	 	18.1.5  	is
or becomes of unsound mind or is or becomes a patient for any purpose of any enactment
relating to mental health; 

	 	18.1.6  	is
convicted of any criminal offence (other than minor offences under the Road Traffic Acts
or the Road Safety Acts for which a fine or non-custodial penalty is imposed), which
might reasonably be thought to bring himself or the Company or any Group Company into
disrepute;  

	 	18.1.7  	is
disqualified from holding office in the Company or any Group Company or another company
because of wrongful trading under the Insolvency Act 1986 or the Company Directors
Disqualification Act 1986;  

	 	18.1.8  	ceases
to be eligible to work in the United Kingdom in accordance with section 8 of the Asylum
and Immigration Act 1996;  

 15

	 	18.1.9  	refuses
(without  reasonable cause) to accept  employment on the terms and in the  circumstances
 specified in clauses 20.1 or       20.2;
or 

	 	18.1.10  	resigns
as or otherwise ceases to be a director of the Company, otherwise than at the Company's
request 

		18.2 	If
at any time the Managing Director is prevented by illness, accident or other incapacity
from performing his duties properly for a period or periods totalling at least 180
business days in any period of 12 consecutive calendar months then the Company may
terminate his employment by giving him no less than one months’ notice to that
effect  

	19.  	EFFECT
OF TERMINATION  

		19.1  	Upon
the termination of this Agreement, for whatever reason, the Managing Director shall:- 

	 	19.1.1 	resign
without claim for compensation from all positions held by him in the Company or in any
other Group Company but without prejudice to any claim he may have against the Company
for breach of contract or under the ERA; 

	 	19.1.2 	execute
the appropriate form of transfer of any shares held by him as nominee for the Company or
for any other Group Company in favour of such other person as that company shall require; 

	 	19.1.3 	execute
any bank mandate, letter or other document required to sever his connection with the
Company or with any other Group Company; and 

	 	19.1.4 	deliver
to the Company or to its authorised representative all documents and any other property
of whatever nature and wherever situated belonging to the Company or any other Group
Company and in his possession or under his control. Such property includes, without
limitation company car, keys, books, correspondence, lists of customers, notes,
memoranda, plans, calculations, forecasts, drawings, computer programmes, passwords,
information stored on computer and other documents made or compiled by, or delivered to,
the Managing Director during the Employment, including all copies, and which relate in
any way to the business, finances or affairs of the Company or of any other Group
Company. The Managing Director acknowledges that all property and rights in the documents
and property belong to and remain with the Company or any other Group Company as the case
may be 

		19.2 	In
order to secure the performance of his obligations under clauses 19.1.1 to 19.1.3, the
Managing Director irrevocably authorises the Company to appoint some person on his behalf
to sign and deliver any document and do any thing considered requisite by the Company  

	20.  	AMALGAMATION,
RECONSTRUCTION, TRANSFER AND CHANGE OF DIRECTOR  

		20.1 	If
the Company is wound up for the purposes of reconstruction or amalgamation the Managing
Director shall not as a result or by reason of any termination of the Employment or the
redefinition of his duties within the Company or the Group arising or resulting or from
any reorganisation of the Group have any claim against the Company for damages for
termination of the Employment or otherwise so long as he shall be offered employment with
any concern or undertaking resulting from such reconstruction or amalgamation on terms
and conditions no less favourable to the Executive than the terms contained in this
Agreement  

16 

		20.2 	If
the Managing Director shall at any time have been offered but shall have unreasonably
refused or failed to agree to the transfer of this Agreement by way of novation to a
company which has acquired or agreed to acquire the whole or substantially the whole of
the undertaking and assets or not less than fifty per cent of the equity share capital of
the Company the Managing Director shall have no claim against the Company by reason of
the termination of the Employment by the Company on one month’s notice to the
Managing Director given within one month of such offer  

		20.3 	The
appointment of the Managing Director as a director of the Company or any Group Company
does not amount to a term of employment and the Company reserves the right to remove any
such directorship at any time for any reason. Where the Company exercises this right,
this shall not amount to a breach of this agreement and shall not give rise to a claim
for damages or compensation  

	21.  	INTELLECTUAL
PROPERTY  

		21.1 	Any
invention (relevant to or capable of use in the business of the Company) made by the
Managing Director in the course of his employment by the Company or any Group Company
whether or not in the course of his duties, is, unless it is otherwise stated, the
exclusive property of the Company and hereby assigned by the Managing Director to the
Company or at the Company’s discretion any Group Company, and the Managing Director
undertakes at the expense of the Company to execute any formal and additional assignment
required by the Company to vest or to confirm the vesting in it or any Group Company of
such invention  

		21.2 	The
Company has no liability to account to the Managing Director for any revenue or profit
derived or resulting from any invention belonging to the Company or any Group Company but
this does not prejudice any of the Managing Director’s rights under section 40 of
the Patents Act 1977  

	22.  	NOTICES  

		22.1  	Any
notice under this Agreement shall be in writing signed by or on behalf of the party
giving it 

		22.2 	Any
such notice may be served by personal delivery, or by sending it by telex or facsimile
transmission or by prepaid first class letter through the post, to:-  

	 	         22.2.1  	in
the case of the Company, its registered office for the time being; and 

	 	22.2.2 	in
the case of the Managing Director, his address specified in this Agreement or such other
address as he may notify to the Company in accordance with this Agreement 

		22.3 	Any
such notice shall (unless the contrary is proved) be deemed to have been served if by
delivery, when delivered, if by telex or facsimile transmission, when despatched and if
by first class post, on the day on which in the ordinary course of post it would be
delivered. In proving such service it shall be sufficient to prove, where appropriate,
that the notice was properly addressed and posted, or that the telex or facsimile
transmission was despatched  

 17

	23.  	DATA
PROTECTION  

		23.1 	The
Managing Director’s personal data will be held by the Company in its manual and
automated filing systems. The Managing Director consents to the processing and disclosure
of such data both inside and, where necessary, outside the European Economic Area in
order for the appointment to be performed and this Agreement to be fulfilled, for
decisions to be made regarding the Managing Director’s employment or continued
employment, for obtaining or carrying out work from or for customers or potential
customers, or for the purpose of any potential sale of over 50% of the shares of the
Company or any Holding Company of the Company or other change of control or any potential
transfer of the Managing Director’s employment under the Transfer of Undertaking
(Protection of Employment) Regulations 2006. Disclosure may include, in the case of sale,
change of control or transfer, disclosure to the potential purchaser or investor and
their advisors and, in the case of obtaining or carrying out work, disclosure to
customers or potential customers  

		23.2 	The
Managing Director consents to the Company processing sensitive data including medical
information for the purpose of the performance of the Managing Director’s employment
and fulfilment of this agreement and determining the Managing Director’s fitness to
carry out duties on behalf of the Group. The Managing Director further consents to the
Company processing data regarding sex, status, race, ethnic origin, religion, sexual
orientation or disability for the purpose of monitoring to ensure equality of opportunity
within the Company. The Managing Director consents to the Company holding and processing
his personal data for administrative and management purposes and “sensitive personal
data” (as defined in the Data Protection Act 1998)  

		23.3 	The
Company may make any such data available to advisers, those who provide products and/or
services to the Company (such as payroll administrators), regulatory authorities,
potential or future employers, governmental or quasi-governmental organisations and
potential purchasers of the Company or the business in which the Managing Director works  

	 	23.4
    The Managing Director shall use all reasonable endeavours to keep the Company
informed of any changes to his personal data 

		23.5 	The
Managing Director acknowledges that in the course of the Employment he shall have access
to personal and sensitive data relating to other employees and he agrees to comply with
the Company’s Data Protection Policy at all times  

	24.  	GENERAL  

		24.1 	This
Agreement is in substitution for all previous contracts of service (whether written or
oral) between the Managing Director and the Company or any other Group Company, which
shall be deemed to have been terminated by mutual consent as from the Commencement Date
and the Managing Director shall have no further right against the Company or any other
Group Company in respect of any such contract  

		24.2 	The
Managing Director acknowledges that the provisions of clauses 15, 16, 17 and 21 shall
constitute separate undertakings given for the benefit of each Group Company and may be
enforced by any of them  

 18

		24.3 	The
expiration or termination of this Agreement for whatever reason and whether or not in
breach of contract shall not prejudice any claim which either party may have against the
other in respect of any pre-existing breach of or contravention of or non-compliance with
any provision of this Agreement nor shall it prejudice the coming into force or the
continuance in force of any provision of this Agreement which is expressly or by
implication intended to or has the effect of coming into or continuing in force on or
after such expiration or termination  

		24.4  	There
are no collective agreements, which directly affect the terms and conditions of the
Managing Director's employment 

		24.5  	This
Agreement  constitutes the written  statement of the terms of employment of the Managing
 Director provided in compliance          with part I of the ERA 

		25.6 	This
Agreement shall be governed by and construed in accordance with the laws of England and
Wales for the time being in force and the parties agree to submit to the exclusive
jurisdiction of the English Courts  

		25.7 	The
Contracts (Rights of Third Parties) Act 1999 shall not apply to this agreement and no
person shall have any rights under it.  

        IN
WITNESS whereof the parties have executed this Agreement as a deed the day and year first
Before written 

19 

The Schedule 

Special Restricted
Stock Award 

The Company will procure that MTS
Medication Technologies Inc. grant to the Managing Director, a MTS Medication
Technologies, Inc. Restricted Stock Award of Fourteen Thousand (14,000) shares each year,
with the first award on April 1, 2009 and thereafter for four (4) additional years on
April 1st of each year, for a total of Seventy Thousand (70,000) shares. The
Managing Director must be an active full-time employee of the Company on the first three
(3) grant dates in order to receive the share award. Should the Managing Director receive
the first three (3) share awards, as a result of being an active full-time employee, the
active full-time employment requirement will not apply in respect of the final two (2)
share awards and such awards will be granted regardless of the Managing Director’s
then employment status with the Company. If at any time during the first three (3) years,
the Managing Director is not eligible to receive any share award as a result of not then
being an active full-time employee, no further share awards will be granted or owed to the
Managing Director. 

All Restricted Stock awards will vest
immediately upon grant. 

 20

EXCUTED AS A DEED

by the Company
acting by:-  

	 	
Director 

	 	Director/Secretary 

EXECUTED AS A DEED

by the Managing Director in the
 presence of:-  

Signature of Witness: 

Name:
Address:

Occupation:

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