EXECUTION
VERSION
AGREEMENT
AND PLAN OF MERGER
This
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of November 15, 2016, by and among
Marina Biotech, Inc., a Delaware corporation (“Parent”), Ithena Acquisition Corporation, a Delaware corporation
(“Merger Sub”), IthenaPharma, Inc., a Delaware corporation (“Company”), and Vuong Trieu,
the Company Representative. Certain capitalized terms that are used in this Agreement are defined in Section 8.1.
Schedule I provides an index to certain capitalized terms that are defined in other provisions of this Agreement.
RECITALS:
A. Upon
the terms and subject to the conditions set forth in this Agreement and in accordance with the Delaware General Corporation Law
(the “DGCL”), Parent, Merger Sub and Company intend to enter into a business combination transaction.
B. The
Board of Directors of Parent and of Merger Sub has: (i) determined that the Merger and the other transactions contemplated hereby
are in the best interests of each such Person and its stockholders; (ii) unanimously approved this Agreement, the Merger and the
other transactions contemplated hereby; and (iii) solely with respect to the Board of Directors of Parent, determined that Parent,
as the sole stockholder of Merger Sub, approve this Agreement, the Merger and the other transactions contemplated hereby.
C. The
Board of Directors of Company has: (i) determined that the Merger and the other transactions contemplated hereby are fair to and
in the best interests of Company and its shareholders; (ii) unanimously approved this Agreement, the Merger and the other transactions
contemplated hereby; and (iii) recommended that the shareholders of Company adopt and approve this Agreement, the Merger and the
other transactions contemplated in this Agreement.
D. The
stockholders of Company have unanimously approved this Agreement, the Merger and the other transactions contemplated by this Agreement.
NOW,
THEREFORE, in consideration of the foregoing premises, the mutual covenants, promises and representations set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties
hereto hereby agree as follows:
Article
I
THE MERGER AND EFFECT ON CAPITAL STOCK
1.1 The
Merger. At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions
of the DGCL, Merger Sub shall be merged with and into Company (the “Merger”), the separate corporate existence
of Merger Sub shall cease and Company shall continue as the surviving corporation in the Merger. Company, as the surviving corporation
in the Merger, is hereinafter sometimes referred to as the “Surviving Corporation.” As a result of the Merger,
the outstanding shares of capital stock of each of Company and Merger Sub shall be converted or cancelled in the manner provided
herein.
1.2 Effective
Time; Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall
take place at the offices of Pryor Cashman LLP, 7 Times Square, New York, New York 10036 at 11:59 p.m. Eastern Time on the date
hereof. The date on which the Closing takes place is referred to in this Agreement as the “Closing Date.” On
the Closing Date, a certificate of merger satisfying the applicable requirements of the DGCL in a form mutually acceptable to
the parties hereto (the “Certificate of Merger”) shall be duly executed by Company and filed with the Secretary
of State of the State of Delaware. The Merger shall become effective at the time specified in the Certificate of Merger, or if
no such time is specified, at the time of the filing of the Certificate of Merger with the Secretary of State of the State of
Delaware (the “Effective Time”). For all purposes, all of the document deliveries and other actions to occur
at the Closing will be conclusively presumed to have occurred at the same time, immediately before the Effective Time.
1.3 Effect
of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions
of the DGCL.
1.4 Certificate
of Incorporation; Bylaws. At the Effective Time, the Certificate of Incorporation of Merger Sub shall be the certificate of
incorporation of the Surviving Corporation, and the bylaws of Merger Sub shall be the bylaws of the Surviving Corporation.
1.5 Directors
and Officers.
(a) Directors.
At the Effective Time,
(i) the
Board of Directors of the Surviving Corporation shall consist of Joseph W. Ramelli and Vuong Trieu; and
(ii) Vuong
Trieu shall be appointed to the Board of Directors of Parent, to hold office, subject to the provisions of the Parent Certificate
of Incorporation and Bylaws, until his successor shall have been elected and qualified or until otherwise provided by Law, and
further, that Mr. Trieu shall be appointed to serve as the Chairman of the Board of Directors of Parent. Parent hereby agrees
that it shall appoint a person identified in writing by Mr. Trieu, which person is reasonably acceptable to Parent, to the Board
of Directors of Parent not more than thirty (30) days following the Closing Date.
(b) Officers
of the Surviving Corporation. At the Effective Time, the Officers of the Surviving Corporation shall consist of the
following:
(i) CEO
and Secretary: Joseph W. Ramelli
(ii) CFO
and Treasurer: Vuong Trieu
1.6 Closing
Deliverables.
(a) Closing
Deliverables by Company. Company agrees to deliver to (or cause to be delivered to) Parent at the Closing on the Closing Date
the following agreements and documents, all reasonably satisfactory in form and substance to Parent and its legal counsel:
(i) all
corporate minute and stock books, stock ledgers and corporate seals of Company;
(ii) written
resignations of all officers and members of the Board of Directors of Company who will not be officers or directors of
the Surviving Corporation pursuant to this Agreement;
(iii)
a certificate of an officer of Company in a form approved in advance by Parent, dated the Closing Date, certifying that attached
thereto is (A) a true, correct and complete certified copy of the Certificate of Incorporation of Company, (B) a true, correct
and complete copy of the bylaws of Company, (C) a true, correct and complete copy of any resolutions adopted by the Board of Directors
and stockholders of Company relating to this Agreement or the transactions contemplated hereby, and (D) a recent good standing
certificate of Company issued by the Secretary of State of Delaware;
(iv) A
true, complete and accurate listing of each holder of record of outstanding shares of Company Common Stock immediately prior to
the Effective Time whose shares are to be converted pursuant to this Agreement, including the number and class of shares of Company’s
capital stock held by such record holder, the number of shares of Parent Common Stock such holder is entitled to receive pursuant
to this Agreement, and any other information reasonably requested by Parent (the “Company Stock Record”);
(v) a
duly executed signature page of Vuong Trieu to that certain Line Letter by Vuong Trieu to Parent dated as of the date hereof substantially
in the form of Exhibit A hereto (the “Line Letter”), and that certain Demand Promissory Note to be issued
by Parent to Vuong Trieu on the date hereof substantially in the form of Exhibit B hereto (the “Demand Note”);
(vi) a
duly executed signature page of Autotelic, Inc. to that certain Master Services Agreement, dated as of the Closing Date, substantially
in the form of Exhibit C hereto (the “Master Services Agreement”);
(vii) a
duly executed signature page of Autotelic LLC to that certain License Agreement, dated as of the Closing Date, substantially in
the form of Exhibit D hereto (the “License Agreement”);
(viii) certificates
representing all issued and outstanding shares of Company Common Stock; and
(ix) such
other documents and instruments as may be reasonably required to effectuate the terms of this Agreement and to comply with the
terms hereof.
(b) Closing
Deliverables by Parent. Parent agrees to deliver to (or cause to be delivered to) Company at the Closing on the Closing Date
the following agreements and documents, all reasonably satisfactory in form and substance to Company and its legal counsel:
(i) a
certificate of an officer of Parent in a form approved in advance by Company, dated the Closing Date, certifying that attached
thereto is (A) a true, correct and complete certified copy of the Certificate of Incorporation of Parent, (B) a true, correct
and complete copy of the by-laws of Parent, and (C) a true, correct and complete copy of any resolutions adopted by the Board
of Directors of Parent relating to this Agreement or the transactions contemplated hereby;
(ii) a
certificate of an officer of Merger Sub in a form approved in advance by Company, dated the Closing Date, certifying that attached
thereto is (A) a true, correct and complete certified copy of the Certificate of Incorporation of Merger Sub, (B) a true, correct
and complete copy of the by-laws of Merger Sub, and (C) a true, correct and complete copy of any resolutions adopted by the Board
of Directors or the stockholders of Merger Sub relating to this Agreement or the transactions contemplated hereby;
(iii) a
duly executed signature page of Parent to the Line Letter and the Demand Note;
(iv) a
duly executed signature page of Parent to the Master Services Agreement;
(v) a
duly executed signature page of Parent to the License Agreement; and
(vi) such
other documents and instruments as may be reasonably required to effectuate the terms of this Agreement and to comply with the
terms hereof.
Article
II
EFFECT ON CAPITAL STOCK
2.1 Effect
on Capital Stock. Subject to the terms and conditions set forth in this Agreement, at the Effective Time, by virtue of the
Merger and without any action on the part of the parties hereto or the holders of any of the following securities, the following
shall occur:
(a) Conversion
of Company Common Stock. At the Effective Time, each share of common stock, par value $0.0001 per share, of Company (“Company
Common Stock”), issued and outstanding immediately prior to the Effective Time, other than shares to be cancelled pursuant
to Section 2.1(b), shall be converted solely into the right to receive a number of shares of common stock of
Parent (“Parent Common Stock”) equal to the Exchange Ratio.
(b) Cancellation
of Company Common Stock owned by Company. At the Effective Time, each share of Company Common Stock that is owned by Company
shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and no Parent Common
Stock or other consideration shall be delivered or deliverable in exchange therefor.
(c) Derivative
Securities. At the Effective Time, all Derivative Securities of Company shall be treated as set forth in Section 5.2.
(d) Fractional
Shares. No fraction of a share of Parent Common Stock shall be issued by virtue of the Merger, but in lieu thereof, each holder
of Company Common Stock who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all
fractional shares of Parent Common Stock that otherwise would be received by such holder) shall be automatically converted into
the right to receive one full additional share of Parent Common Stock.
(e) Conversion
of Merger Sub Common Stock. At the Effective Time, each share of common stock, par value $0.01 per share, of Merger Sub issued
and outstanding immediately prior to the Effective Time, shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, par value $0.0001 per share, of the Surviving Corporation. Each stock certificate of
Merger Sub evidencing ownership of any such shares shall, as of the Effective Time, evidence ownership of such shares of common
stock of the Surviving Corporation.
2.2 Exchange
Procedure.
(a) Exchange
of Certificates. Company shall deliver to Parent at the Closing certificates representing all of the issued and outstanding
shares of Company Common Stock. Promptly following the Effective Time, Parent shall deliver written instructions to the transfer
agent for the Parent Common Stock instructing such transfer agent to deliver to the holders of Company Common Stock certificates
representing the number of duly authorized whole shares of Parent Common Stock issuable pursuant to Section 2.1
to each holder of record of Company Common Stock immediately prior to the Effective Time as evidenced by the Company Stock
Record.
(b) No
Further Ownership Rights in Company Common Stock. At the Effective Time, (a) all shares of Company Common Stock outstanding
immediately prior to the Effective Time shall be treated in accordance with Section 2.1(a), and all holders
of certificates representing shares of Company Common Stock that were outstanding immediately prior to the Effective Time shall
cease to have any rights as shareholders of Company, and (b) the stock transfer books of Company shall be closed and there shall
be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, shares of Company Common Stock
are presented to Parent for any reason, they shall be cancelled and exchanged as provided in this Section 2.2.
(c) Withholding
Rights. The Surviving Corporation and Parent shall be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock, such amounts as the Surviving Corporation or Parent,
as applicable, is required to deduct and withhold pursuant to the applicable rules under the Code, or any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld as so contemplated, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.
2.3 Company
Representative. Company hereby designates Vuong Trieu to represent the interests of the Company Indemnitees for the purposes
of: (i) after the Closing, giving, receiving and forwarding notices and communications pursuant to this Agreement, (ii) taking
any actions relating to claims to indemnify, hold harmless or reimburse any indemnified party pursuant to this Agreement, (iii)
after the Closing, giving or agreeing to, on behalf of the Company shareholders, any and all consents, waivers, amendments, or
modifications deemed by the Company Representative, in his discretion, to be necessary or appropriate under this Agreement and
the execution or delivery of any documents that may be necessary or appropriate in connection therewith, (iv) taking all other
actions contemplated for the Company Representative in this Agreement, including any actions as may be required in connection
with the issuance of the Additional Parent Shares, (v) after the Closing, receiving payments under or pursuant to this Agreement,
and (vi) engaging or appointing any agents (including attorneys, accountants and consultants) to assist the Company Representative
in complying with the Company Representative’s duties and obligations pursuant to this Agreement (such designee and any
successor, the “Company Representative”). If such Person ceases to serve in such capacity, for any reason,
those members of the Board of Directors of Parent who were directors of the Company prior to the Closing shall appoint as a successor
a Person who was a former shareholder of Company or such other Person as such members shall designate. Parent shall be entitled
to deal exclusively with the Company Representative on all matters relating to Article VI and Article VII of this
Agreement and shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed
or purported to be executed on behalf of any shareholder of the Company or by the Company Representative, and on any other action
taken or purported to be taken on behalf of any shareholder of the Company or by the Company Representative, as being fully binding
upon such Person. Any decision or action by the Company Representative with respect to those matters as to which the Company Representative
has authority hereunder, shall constitute a decision or action of all stockholders of the Company with respect to such matter
and shall be final, binding and conclusive upon each such Person. No stockholder of the Company shall have the right to object
to, dissent from, protest or otherwise contest the same. The provisions of this Section 2.3(c), are independent and severable,
are irrevocable and coupled with an interest, and shall not be terminated by any act of any one or more stockholders of the Company,
or by operation of Law, whether by death or other event.
2.4 Tax
Consequences.
(a) It
is intended by the parties hereto that the Merger shall constitute a reorganization within the meaning of Section 368 of the Code.
The parties hereto adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Income Tax Regulations. The parties shall not take any position inconsistent with the foregoing
intention on any Tax Return or in any administrative or judicial proceeding, unless otherwise required by applicable Law.
(b)
Prior to the Effective Time, each of Company and Parent shall use their respective commercially reasonable efforts to cause the
Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, and shall not take any action reasonably
likely to cause the Merger not so to qualify. Parent shall not take, or cause or permit its Affiliates to take, any action after
the Effective Time that would cause the Merger not to qualify as a reorganization within the meaning of Section 368(a) of the
Code. Following the Merger, the Surviving Corporation shall continue Company’s historic business or will use a significant
portion of Company’s historic business assets in a business within the meaning of Section 1.368-1(d) of the United States
Income Tax Regulations.
Article
III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company
hereby represents and warrants to Parent and Merger Sub, subject to such exceptions as are specifically disclosed in the disclosure
letter supplied by Company to Parent, dated as of the date hereof (the “Company Disclosure Letter”),
as set forth below in this Article III.
3.1 Organization
and Qualification; Subsidiaries.
(a) Company
is a corporation duly organized, validly existing and in good standing under the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it
is now being conducted, and to perform its obligations under all Contracts by which it is bound. Company is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not, either individually or in the aggregate, have
or reasonably be expected to have an Company Material Adverse Effect.
(b) Company
has no Subsidiaries, and does not own a debt, equity or other similar interest in any other Person. Company has not agreed, nor
is it obligated to make, and nor is it bound by, any written, oral or other agreement, contract, sub-contract, lease, binding
understanding, instrument, note, option, warranty, purchase order, license, sub-license, insurance policy, benefit plan, commitment,
or undertaking of any nature, under which it may become obligated to make, any future investment in or capital contribution to
any other Person. Company does not own any equity or similar interest in or any interest convertible, exchangeable or exercisable
for any equity or similar interest in, any other Person.
3.2 Capital
Stock of Company. The authorized capital stock of Company consists of the following:
(a) Company
Common Stock authorized shares 10,000,000 and 5,555,556 issued and outstanding as of the date hereof;
(b) 300,000
of shares of Company Common Stock reserved for issuance for the exercise or conversion of all issued or granted Derivative Securities,
which consists exclusively of warrants to purchase up to 300,00 shares of Company Common Stock (the “Company Warrants”).
(c) There
are no shares of Company Common Stock or any Company Derivative Security held in the treasury of Company.
(d) There
are no Derivative Securities issued by Company (or otherwise outstanding) other than as described in Section 3.2(b);
(e) Section
3.2(e) of the Company Disclosure Letter sets forth the material information with respect to each Derivative Security
issued by Company as of the date hereof.
(f) Company
has made available to Parent accurate and complete copies of each agreement, instrument or certificate evidencing a Derivative
Security. All shares of Company Common Stock subject to the issuance upon the exercise or conversion of any Derivative Security,
upon issuance on the terms and conditions specified in the instrument pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable. Except for the Company Warrants, Company does not have any stock option plan or
any other plan, program, agreement or arrangement providing for any equity or equity-based compensation for any Person.
(g) Except
as set forth in Section 3.3(g) of the Company Disclosure Letter, all outstanding shares of Company Common Stock and all
outstanding Company Warrants have been issued and granted in compliance in all material respects with: (i) all applicable Laws
and Orders or otherwise put into effect by or under the authority of any Governmental Entity; and (ii) all requirements set forth
in applicable Contracts.
(h) There
are no registration rights, and there is no voting trust, proxy, rights plan, antitakeover plan or other agreement or understanding
to which Company is a party or by which it is bound, with respect to any equity security of any class of Company.
(i) Except
for the Derivative Securities described in Section 3.3(b), there is no: (i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire any shares of the capital stock or other securities of Company; (ii)
outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the capital
stock or other securities of Company; or (iii) stockholder rights plan (or similar plan commonly referred to as a “poison
pill”) or Contract under which Company is or may become obligated to sell or otherwise issue any shares of its capital stock
or any other securities.
(j) All
of the outstanding shares of Company Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable.
None of the outstanding shares of Company Common Stock or preferred stock of Company is entitled or subject to any preemptive
right, right of participation or any similar right and none of the outstanding shares of Company Common Stock or preferred stock
of Company is subject to any right of first refusal in favor of Company.
(k) There
is no Contract relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise
disposing of (or granting any option or similar right with respect to), any shares of Company Common Stock or preferred stock
of Company. Company is not under any obligation, nor is it bound by any Contract pursuant to which it may become obligated, to
repurchase, redeem or otherwise acquire any outstanding shares of Company Common Stock or other securities.
3.3 Authority
Relative to this Agreement. Company has all necessary corporate power and authority to execute and deliver this Agreement
and all other Transaction Documents to which it is a party (the “Company Transaction Documents”) and to perform
its obligations hereunder and thereunder, to consummate the transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and the Company Transaction Documents by Company and the consummation by Company of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Company and no other
corporate proceedings on the part of Company are necessary to authorize this Agreement and the Company Transaction Documents or
to consummate the transactions so contemplated. This Agreement and the Company Transaction Documents have been duly and validly
executed and delivered by Company and, assuming the due authorization, execution and delivery by the other parties thereto, constitute
the legal and binding obligation of Company, enforceable against Company in accordance with their respective terms, subject to:
(i) the effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting
the enforcement of creditor’s rights generally; and (ii) general equitable principles (whether considered in a proceeding
in equity or at law).
3.4 No Conflict; Required Filings and Consents.
(a) Subject
only to the filing and recordation of the Certificate of Merger pursuant to the DGCL, the execution and delivery of this Agreement
and the Company Transaction Documents by Company does not, and the performance of this Agreement and the Transaction Documents
by Company will not: (i) conflict with or violate the organizational documents of Company; (ii) conflict with or violate any Law
applicable to Company; (iii) contravene, conflict with or result in a violation of, or give any Governmental Entity or any other
Person the right to challenge the Merger or any of the transactions contemplated by this Agreement or any of the Company Transaction
Documents or to exercise any remedy or obtain any relief under, any Law or any Order to which Company or any of the assets owned,
used or controlled by it is subject; (iv) contravene, conflict with or result in a violation of any of the terms or requirements
of, or give any Governmental Entity the right to revoke, withdraw, suspend, cancel, terminate or modify, any governmental authorization
that is held by Company or that otherwise relates to any of the assets owned, used or controlled by Company; (v) result in any
breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair
the Company’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties or assets of Company
pursuant to, any Company Material Contract; or (vi) cause the acceleration of any vesting of any awards for or rights to Company
Common Stock or the payment of or the acceleration of payment of any change in control, severance, bonus or other cash payments
or issuance of Company Common Stock. Section 3.4 of the Company Disclosure Letter sets forth
a list of all material Contracts that require a consent to be obtained or a notice to be given in connection with the execution
and delivery of this Agreement or the consummation of the Merger and the other transactions contemplated hereby.
(b) The
execution and delivery of this Agreement and the Company Transaction Documents by Company does not, and the performance of this
Agreement and the Company Transaction Documents by Company will not, require any consent, approval, authorization or permit of,
or registration, filing with or notification to, any court, administrative agency, commission, governmental or regulatory authority,
domestic or foreign (each, a “Governmental Entity” and, collectively, “Governmental Entities”)
or any Person, except for: (i) applicable requirements, if any, of the Securities Act of 1933, as amended (the “Securities
Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and U.S. state securities
laws (“Blue Sky Laws”); and (ii) the filing and recordation of the Certificate of Merger as required by the
DGCL.
3.5 Financial
Statements.
(a) Section
3.5(a) of the Company Disclosure Letter contains true and complete copies of (i) the audited
consolidated balance sheet of Company as of and for the year ended March 31, 2015 and the unaudited consolidated balance
sheet as of and for the year ended March 31, 2016, and for each case, the related consolidated statements of income, cash flows
and changes in stockholders’ equity of Company as of and for the years ended March 31, 2015 and March 31, 2016 (collectively,
the “Year-End Financial Statements”), and (ii) the unaudited interim consolidated balance sheets of Company
as of and for the quarter ended September 30, 2016, including, in each case, the notes, if any, thereto and the related consolidated
statements of income, cash flows and changes in stockholders’ equity of Company for the six (6) month period ended September
30, 2016 (collectively, the “Interim Financial Statements”, and along with the Year-End Financial Statements,
the “Company Financial Statements”). Except as set forth on Schedule 3.6(a) of the Company Disclosure
Letter, the Company Financial Statements: (i) were prepared in accordance with generally accepted accounting principles of the
United States (“GAAP”), applied on a consistent basis during the periods involved (except as may be indicated
therein in the notes thereto); (ii) fairly present (subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments (which are not expected to be, individually or in the aggregate, materially adverse to Company) and
the absence of complete footnotes) in all material respects the financial position of Company as at the respective dates thereof
and the results of its operations and cash flows for the respective periods then ended; and (iii) were compiled from, and are
consistent with, the books and records of Company, which books and records are accurate and complete in all material respects.
(b) Except
as disclosed in the footnotes to the Company Financial Statements Company is not a party to, nor has any commitment to become
a party to, any joint venture, off balance sheet partnership or any similar Contract, where the result, purpose or intended effect
of such Contract is to avoid disclosure of any material transaction involving, or material Liabilities of, Company in Company’s
financial statements.
(c) Company
does not have outstanding any “extensions of credit” (within the meaning of Section 402 of the Sarbanes-Oxley Act
of 2002 (including the rules and regulations promulgated thereunder, the “Sarbanes-Oxley Act”)) to any of its
directors or executive officers (as defined in Rule 3b-7 under the Exchange Act).
(d) Section
3.5(d) of the Company Disclosure Letter is a complete listing of all of the Indebtedness of Company, including:
(i) the Persons to whom such Indebtedness is owed, and (ii) the material terms of such Indebtedness. Company has not guaranteed
nor is it responsible or liable for any Indebtedness, liability or other obligation of any Person.
3.6 Compliance;
Permits.
(a) Company
is not in conflict with, or in default or violation of: (i) any Law or Order applicable to Company, or by which any of its properties
is bound or affected; or (ii) any Contract to which Company is a party or by which Company or any of its properties is bound or
affected, except for any conflicts, defaults or violations of such Laws, Orders or Contracts that (individually or in the aggregate)
would not have or reasonably be expected to have an Company Material Adverse Effect. To the Knowledge of Company, no investigation
or review by any Governmental Entity is pending or overtly threatened against Company, other than, in each such case, those the
outcome of which would not, individually or in the aggregate, have or reasonably be expected to have an Company Material Adverse
Effect.
(b) Company
holds all permits, licenses, variances, exemptions, orders and approvals from Governmental Entities which are material to operation
of the business of Company as currently conducted (collectively, the “Company Permits”). To the Knowledge of
Company, Company is in compliance in all material respects with the terms of each of the Company Permits.
(c) Company
is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and
orders (“Company Approvals”) necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where the failure to have such Company Approvals would
not, individually or in the aggregate, have or reasonably be expected to have an Company Material Adverse Effect.
3.7 No
Undisclosed LiabilitiesExcept for matters reflected or reserved against in the balance sheet as of September 30, 2016 included
in the Company Financial Statements or as are incurred in connection with the transactions contemplated by this Agreement, Company
did not have at such date, and has not incurred since that date, any Liabilities, except Liabilities or obligations which were
incurred in the ordinary course of business consistent with past practice, or Liabilities which, in the aggregate would not be
reasonably expected to have, a Company Material Adverse Effect.
3.8 Absence
of Litigation.
(a) Except
as set forth on Section 3.8 of the Company Disclosure Letter, there are no Legal Actions pending
or, to the Knowledge of Company, threatened against Company, or any properties or rights of Company: (i) that involves Company
or any of the assets owned, used or controlled by Company or any Person whose liability Company has or may have retained or assumed,
either contractually or by operation of law; or (ii) that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, the Merger or any of the other transactions contemplated by this Agreement or any of the
Transaction Documents.
(b) There
is no Order to which Company, or any of the assets owned or used by Company is subject. To the Knowledge of Company, there is
no proposed Order that, if issued or otherwise put into effect (i) could have a material adverse effect on the business or on
the ability of Company to comply with or perform any covenant or obligation under this Agreement or any of the Transaction Documents
or (ii) could have the effect of preventing, delaying, making illegal or otherwise interfering with the Merger or any of the other
transactions contemplated by this Agreement or the Transaction Documents.
3.9 Employee
Benefit Plans.
(a) Section
3.9(a) of the Company Disclosure Letter contains an accurate list of each current employee of Company as of a date no earlier
than five (5) days prior to the date hereof, along with: (i) the name, title or classification, employer, date of hire and exempt/non-exempt
status of each employee; and (ii) each employee’s annualized base compensation. Each such employee will be terminated effective
upon the closing of the Merger, such that the Surviving Company will not have any employees immediately following the Merger.
(b) Section
3.9(b) of the Company Disclosure Schedule contains an accurate and complete list of (a) all “employee benefit plans”
as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and
(b) all employment, severance, golden parachute, compensation, bonus, termination, retirement, retention, change in control, deferred
compensation, consulting, commission, equity or equity-based compensation, health, life insurance, disability, welfare, paid time
off, fringe benefit and other compensation agreement, contract, plan, program, understanding or arrangement (including established
working practices and employment policies), in any case, whether oral or written, and whether or not legally enforceable, maintained,
contributed to, or required to be contributed to, by the Company or any other person or entity that would be treated with the
Company as a single employer under Code Section 414 (each, an “ERISA Affiliate”) for the benefit of any current
or former employee, officer, director, independent contractor, consultant, member or manager of the Company, or under which the
Company has any actual or contingent Liability (collectively, the “Company Plans”).
(c) Except
as set forth in Section 3.9(c) of the Company Disclosure Schedule, each Company Plan is in compliance with, and has been
maintained in accordance with, its terms and the applicable provisions of ERISA, the Code and all other Laws and Orders.
(d) Except
as set forth in Section 3.9(d) of the Company Disclosure Schedule, there are no audits, investigations, actions, suits
or claims pending or, to the Company’s Knowledge threatened against any Company Plan or against the Company relating to
any Company Plan, or the assets of such plans, and no facts exist that could give rise to any such action, suit or claim. Neither
the Company nor any ERISA Affiliate thereof has engaged in any transaction involving any Company Plan which is a “prohibited
transaction” under Section 406 of ERISA or Section 4975 of the Code for which an exemption does not exist or has been granted.
(e) Neither
the Company nor any ERISA Affiliate thereof maintains, contributes to, or is required to contribute to, or has any actual or contingent
Liability with respect to, any (i) employee benefit plan subject to Title IV of ERISA or Section 412 of the Code, (ii) “multiple
employer welfare arrangement,” as defined in Section 3(40) of ERISA, (iii) “multiple employer plan” as defined
in Section 413(c) of the Code or (iv) “multiemployer plan” as defined in Section 3(37) of ERISA. All Company Plans
which are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet
the qualification requirements of Section 401(a) of the Code meet the qualification requirements of Section 401(a) of the Code,
and each related trust is exempt from taxation under Section 501(a) of the Code, and no circumstances exist that would adversely
affect such qualification or exemption from taxation. No Company Plan provides (and no promise has been made to provide) medical,
dental, vision, life insurance or other welfare benefits beyond termination of service or retirement (other than as required by
Law). The Company’s execution of, and performance of the transactions contemplated by, this Agreement will not (either alone
or when combined with any other event) result in the provision of any “parachute payment” (as defined in Code Section
280G).
(f) As
applicable, with respect to each of the Company Plans, the Company has delivered or made available to Parent true and complete
copies of (i) all plan documents (including all amendments thereto, and in the case of an unwritten Company Plan, a written description
thereof), (ii) all current trust documents, insurance contracts, custodial agreements and investment management agreements relating
thereto and, in all cases, all amendments thereto; (iii) the current summary plan description and each summary of material modifications
thereto; (iv) the three most recently filed annual reports (Form 5500 and all schedules thereto); (v) the most recent IRS determination
or opinion letter and each currently pending application to the IRS for a determination letter; (vi) the three most recent summary
annual reports, actuarial reports, financial statements and trustee reports; and (vii) all records, notices and filings concerning
IRS or Department of Labor audits or investigations and “prohibited transactions” within the meaning of Section 406
of ERISA or Section 4975 of the Code.
3.10 Labor
Matters.
(a) Company
is not a party to any collective bargaining agreement or other labor union contract applicable to Persons employed by Company;
and (ii) Company does not have any Knowledge of any strikes, slowdowns, work stoppages or lockouts, or threats thereof, by or
with respect to any employees of Company.
(b) During
the past three (3) years: (i) Company is and has been in material compliance with all applicable Laws with respect to labor and
employment, including Laws with respect to fair employment practices, discrimination, immigration and naturalization, retaliation,
work place safety and health, unemployment compensation, workers’ compensation, affirmative action, terms and conditions
of employment and wages and hours; (ii) to the Knowledge of Company, there have been no Legal Actions pending before any Governmental
Entity, or threats thereof with respect to labor and employment matters, including Legal Actions between Company (on the one hand)
and any of the current or former employees or current or former workers of Company (on the other hand); (iii) there have been
no written notices of charges of discrimination in employment or employment practices for any reason or noncompliance with any
other Law with respect to labor or employment that have been asserted, before the United States Equal Employment Opportunity Commission
or any other Governmental Entity; (iv) Company has not been a party to, or otherwise bound by, any consent decree or settlement
agreement with, or citation by, any Governmental Entity relating to the current or former employees or employment practices; and
(v) to the Knowledge of Company, Company has not been subject to any audit or investigation by the Occupational Safety and Health
Administration, the DOL, or other Governmental Entity with respect to labor or employment Laws or with respect to the employees
of Company, or subject to fines, penalties, or assessments associated with such audits or investigations.
(c) To
the Knowledge of Company, all of the employees of Company are: (i) United States citizens or lawful permanent residents of the
United States; (ii) aliens whose right to work in the United States is unrestricted; or (iii) aliens who have valid, unexpired
work authorizations issued by the United States government.
(d) To
the Knowledge of Company, Company has properly treated all individuals performing rendered services to Company as employees, leased
employees, independent contractors or agents, as applicable, for all federal, state, local and foreign Tax purposes. There has
been no determination by any Governmental Entity that any independent contractor is an employee of Company.
3.11 Title
to Assets; Property. Company owns, and has good and valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all tangible properties or assets and equipment used or held for use in its business or operations or
purported to be owned or leased by it, including: (i) all assets reflected on the Interim Financial Statements; and (ii) all other
assets reflected in the books and records of Company as being owned by Company, except as would not reasonably be expected to
result in a Company Material Adverse Effect. All of said assets are owned by Company free and clear of any Liens, except for Permitted
Liens. Company does not own or lease any real property.
3.12 Taxes
Definition of Taxes.
(a) For
all purposes of and under this Agreement, “Tax” or “Taxes” refers to any and all federal,
state, local and foreign taxes, assessments and other governmental charges, duties, impositions and other Liabilities relating
to taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added,
ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest,
penalties, backup withholding and additions imposed with respect to such amounts and any obligations under any agreements or arrangements
with any other Person with respect to such amounts and including any Liability for the foregoing arising from the operation of
law or from a predecessor or transferor entity.
(b) The
Company has timely filed all federal, state, local and foreign returns, estimates, information statements and reports (“Tax
Returns”) required to be filed by it, and all such Tax Returns are accurate, complete and correct. The Company has paid
all Taxes required to be paid by it (whether or not shown on any Tax Return described in the preceding sentence). There is no
Tax audit or examination now pending or threatened with respect to the Company. No claim has ever been made in writing by any
Governmental Entity in a jurisdiction where the Company does not pay Taxes or file Tax Returns that the Company is or may be subject
to Tax by that jurisdiction. The Company has not requested or entered into an agreement providing for any extension of time within
which to file any Tax Return, make any Tax election, pay any Taxes or pursuant to which any Governmental Entity may assess Taxes.
All Taxes which the Company was or is required by applicable Law to withhold or collect have been and are being withheld or collected
by it and have been paid over to the proper Governmental Entity or, if not yet due, are being held by the Company for payment.
The Company has collected and remitted sales, use, value added and similar Taxes applicable in connection with the assets of the
Company and the operation of the Company’s business. The Company has never entered into a “closing agreement”
as defined in Section 7121 of the Code. There is no lien for Taxes upon any of the assets of the Company other than liens for
Taxes that are not yet due and payable. The Company has used the accrual method of accounting at all times since its date of incorporation
for U.S. federal income Tax purposes. For purposes of this Section 3.13, each reference to the Company includes any person that
was liquidated into, merged with or otherwise a predecessor to, the Company.
3.13 Environmental
Matters. To the Knowledge of Company, Company is in compliance, in all material respects, with all applicable Environmental
Laws and Environmental Permits. Company is not required to hold any Environmental Permits for the operation of its businesses.
To the Knowledge of Company, there is no Environmental Claim pending or overtly threatened against Company nor is there any reasonable
basis for any such claim or any Liability, in each case, under any applicable Environmental Law.
3.14 Intellectual
Property.
(a) Section
3.14(a) of the Company Disclosure Letter contains an accurate and complete list of all Company
Registered Intellectual Property Rights, specifying as to each such Registered Intellectual Property Right, as applicable: (i)
the jurisdictions by or in which such Registered Intellectual Property Right has been issued or registered or in which an application
for such issuance or registration has been filed; and (ii) the registration or application numbers thereof. Section 3.14(a)
of the Company Disclosure Letter contains an accurate and complete list of all Company Owned Intellectual Property Rights
and Company Licensed Intellectual Property Rights that are material to the business of Company.
(b) Section
3.14(b) of the Company Disclosure Letter lists any License Agreements or Contracts under which Company has granted
any third party rights that are exclusive, or exclusive of all other third parties, to use, sublicense, resell or distribute any
Company Owned Intellectual Property Right.
(c) Company
is not a party to any License Agreements, forbearances to sue, consents, judgments, orders or similar obligations, in each case,
that restrict the rights of Company to use or enforce any Company Owned Intellectual Property Rights.
(d) Company
owns all right, title, and interest, free and clear of all security interests and similar encumbrances (other than Permitted Liens),
in and to all Intellectual Property Rights used or held for use in the business of Company (other than Company Licensed Intellectual
Property Rights or Intellectual Property Rights that are not material to the business of Company). Except as listed in Section
3.14(d) of the Company Disclosure Letter, Company is listed in the records of the appropriate United States, state
or foreign agency as the sole owner for each Company Registered Intellectual Property Right.
(e) To
Company’s Knowledge, the conduct of the business of Company as such business is currently conducted: (i) does not infringe,
misappropriate or otherwise violate the Intellectual Property Rights of any third party; and (ii) does not constitute unfair competition
or unfair trade practices under the Laws in the United States.
(f) Company
has not received any written, or, to the Knowledge of Company, oral communications from any third party that overtly claim that
the operation of the business of Company infringes, misappropriates or otherwise violates the Intellectual Property Rights of
any third party or constitutes unfair competition or unfair trade practices under the Laws of any jurisdiction. Except as set
forth in Section 3.14(f) of the Company Disclosure Letter, Company has not received any written communication from a third
party pursuant to which the third party offered Company a license to use any technology or Intellectual Property Rights in order
to avoid a claim of infringement or misappropriation.
(g) Company
has not received written notice of, and to the Knowledge of Company, there is no pending or threatened Legal Action by a third
party before any Governmental Entity in any jurisdiction challenging the ownership, use, validity, enforceability or registrability
of any Company Owned Intellectual Property Rights.
(h) To
the Knowledge of Company, no Person has infringed, misappropriated, or otherwise violated, or is infringing, misappropriating,
or otherwise violating, any Company Owned Intellectual Property Rights. Company has not brought any Legal Action against any third
party alleging infringement, misappropriation or violation of Company Owned Intellectual Property Rights that remain unresolved.
(i) To
the Knowledge of Company, Company Owned Intellectual Property Rights are subsisting, in full force and effect, have not been cancelled
or abandoned, have not expired, and, with respect to Company Registered Intellectual Property Rights only, are valid and enforceable.
(j) Company
has made commercially reasonable efforts to protect its trade secrets and preserve their status as intellectual property under
applicable Law. Company has in place a policy requiring all employees, contractors and other parties having access to such trade
secrets to execute a commercially reasonable form of proprietary information/confidentiality agreement with Company.
(k) Following
the Effective Time, the Surviving Corporation will be permitted to exercise all of the rights of Company under such License Agreements
or Contracts to the same extent Company would have been able to had the transactions contemplated hereby not occurred and without
the payment of additional amounts or consideration other than ongoing fees, royalties or payments which Company would otherwise
be required to pay. The consummation of the Merger and the transactions contemplated hereby will not: (i) result in the loss or
impairment of Company’s ownership of or right to use Company Owned Intellectual Property Rights or Company Licensed Intellectual
Property Rights; or (ii) cause the Surviving Corporation or any of its Affiliates (x) to be bound by any non-compete or other
restriction on the operation of any business or (y) to grant any rights or licenses to any Intellectual Property Rights of the
Surviving Corporation or any of its Affiliates to a third party (including a covenant not to sue).
3.15 Material
Agreements. Section 3.15 of the Company Disclosure Letter sets forth a list of all Company Material Agreements.
All of the Company Material Agreements are in full force and effect and constitute the valid, legal and binding obligation of
Company and, to the Knowledge of Company, constitute the valid, legal and binding obligation of the other parties thereof, enforceable
against each such Person in accordance with its terms, subject to: (i) the effect of bankruptcy, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of creditor’s rights generally; and (ii) general
equitable principles (whether considered in a proceeding in equity or at law). Company has not violated or breached, or committed
any default under, any Company Material Agreement, and, to the Knowledge of Company, no other Person has violated or breached,
or committed any default under, any Company Material Agreement. Company has not received or given any notice or claim of breach
or violation of, or default under, any Company Material Agreement. Company has not received or given any notice of an intention
to terminate, not renew or challenge the validity or enforceability of any Company Material Agreement. No event has occurred,
and no circumstance or condition exists that, with or without notice or lapse of time or both, would, or would reasonably be expected
to, (i) result in a material violation or breach of any of the provisions of any Company Material Agreement; (ii) give any Person
the right to declare a default or exercise any remedy under any Company Material Agreement; (iii) give any Person the right to
accelerate the maturity or performance of any Company Material Agreement; or (iv) give any Person the right to cancel, terminate
or materially modify any Company Material Agreement. Each Company Material Agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on substantially identical terms immediately following the consummation of the transactions
contemplated hereby, and the consummation of the transactions contemplated hereby shall not (either alone or upon the occurrence
of additional acts or events) result in any payment or payments becoming due from Company to any Person or give any Person the
right to terminate or alter the provisions of such Company Material Agreement.
3.16 Agreements
with Regulatory Agencies. Company (a) is not subject to any cease-and-desist or other Order issued by, (b) is not a party
to any Contract, consent agreement or memorandum of understanding with, (c) is not a party to any commitment letter or similar
undertaking to, (d) is not subject to any order or directive by, (e) is not a recipient of any extraordinary supervisory letter
from, and (f) has not adopted any board resolutions at the request of (each of clauses (a)-(e) of this Section 3.16,
a “Regulatory Agreement”), any Governmental Entity that restricts the conduct of its business or that in any
manner relates to its management or its business, or would reasonably be expected, following the Merger and the consummation of
the transactions contemplated hereby, to impair in any material respect the Surviving Corporation’s ability to conduct the
business of Company after the Effective Time, as presently conducted.
3.17 Related
Party Transactions. Other than in respect of Contracts or interests related to employment in the ordinary course of business
or incentive arrangements under the Company Warrants, to the knowledge of the Company no Related Party (i) is a party to any Contract
with or binding upon Company or any of its assets, rights or properties or has any interest in any property owned by any member
of Company or has engaged in any transaction with any of the foregoing since September 3, 2014, (ii) has any direct or indirect
ownership interest in any material asset used in the business of Company, (iii) is indebted to Company, or (iv) since September
3, 2014, has entered into, or has had any direct or indirect financial interest in, any Contract, transaction or business dealing
involving Company.
3.18 Insurance.
All casualty, general liability, business interruption, product liability, director & officer liability, worker’s compensation,
environmental, automobile and sprinkler and water damage and other insurance policies and bond and surety arrangements maintained
Company are listed in Section 3.18 of the Company Disclosure Letter (the “Company Insurance Policies”),
including historical property and casualty claims information with respect to the five (5)-year period prior to the date hereof
indicating pending and paid claims as of the date hereof. Company has not received any notice from the applicable carrier regarding
any refusal of coverage under, or any rejection of any claim under, any such policies. There are no claims related to the business
of Company pending under any Company Insurance Policy as to which coverage has been questioned, denied or disputed or in respect
of which there is an outstanding reservation of rights.
3.19 Brokers.
Company has not incurred, or will not incur, directly or indirectly, any Liability for brokerage or finder’s fees or agent’s
commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.
3.20 Inapplicability
of Anti-takeover Statutes. The Board of Directors of Company has taken and will take all actions necessary to ensure that
the restrictions applicable to business combinations contained in the DGCL are, and will be, inapplicable to the execution, delivery
and performance by the Company of this Agreement and to the consummation of the Merger and the other transactions contemplated
hereunder.
3.21 Full
Disclosure. Neither this Agreement (including the Company Disclosure Letter) nor any Transaction Document: (i) contains any
representation or warranty by Company or information regarding Company that is false or misleading with respect to any material
fact; or (ii) omits to state any material fact necessary in order to make the representations and warranties regarding Company
contained herein and therein, in light of the circumstances under which such representations and warranties were or will be made
or provided, not false or misleading.
Article
IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent
hereby represents and warrants to Company, subject to such exceptions as are specifically disclosed in writing (with reference
to a specific section of this Agreement to which each such exception applies) in the disclosure letter supplied by Parent to Company,
dated as of the date hereof (the “Parent Disclosure Letter”) as set forth below in this Article IV.
As used in this Article IV, unless the context indicates otherwise, the term “Parent Group” means each entity comprising
the Parent Group. “Parent Group” consists of Parent and each of its wholly-owned subsidiaries (such entities,
the “Parent Subsidiaries”.
4.1 Organization
and Qualification; Subsidiaries.
(a) Except
as set forth in Section 4.1(a) of the Parent Disclosure Letter, Parent and Merger Sub each is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted, and to
perform its obligations under all Contracts by which it is bound. As of the date of this Agreement, except for incidental Liabilities
incurred in connection with its organization and except for the transactions contemplated by this Agreement, Merger Sub has not
engaged in any other business activities or incurred any other Liabilities, or entered into any agreements or arrangements with
any Person.
(b) The
Parent 2016 SEC Documents list each Parent Subsidiary and its place of organization. Each of the Parent Subsidiaries is wholly-owned
by Parent. All of the outstanding shares of capital stock of, or other equity or voting interests in, each Parent Subsidiary have
been validly issued, were issued free of pre-emptive rights and are fully paid and non-assessable, and are free and clear of all
Liens, including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity or voting
interests, except for any Liens imposed by applicable securities Laws or the Laws of the jurisdiction of formation of any Parent
Subsidiary organized under foreign Laws. Except for the capital stock of the Parent Subsidiaries, Parent does not own, directly
or indirectly, any capital stock of, or other equity or voting interests in, any Person.
4.2 Capital
Stock of ParentThe authorized capital stock of Parent consists of the following:
(a) Preferred
stock, par value $0.01 per share: authorized shares of 100,000 and 1,080 shares issued or outstanding as of the date hereof;
(b) Parent
Common Stock, $0.006 par value: authorized shares 180,000,000 and 29,759,503 issued and outstanding as of the date hereof, plus
(x) an additional 119,048 shares of Parent Common Stock that Parent is currently obligated to issue as additional consideration
to Novosom Verwaltungs GmbH (“Novosom”) pursuant to that certain Asset Purchase Agreement dated July 27, 2010
between Parent and Novosom and (y) an additional 1,500,000 shares of Parent Common Stock that Parent is obligated to issue to
Novosom upon the closing of the Merger pursuant to that certain letter agreement between Parent and Novosom dated November 15,
2016;
(c) 33,564,889
of shares of Parent Common Stock reserved for issuance for the exercise or conversion of all issued or granted Derivative Securities,
including:
(i) Warrants
to purchase 24,466,783 shares of Parent Common Stock;
(ii) Options
to purchase 1,548,106 shares of Parent Common Stock (the “Parent Options”) granted under Parent’s equity
incentive plans (the “Parent Option Plans”); and
(iii) 7,550,000
shares of Parent Common Stock issuable upon conversion of outstanding shares of Parent preferred stock.
(d) There
are no Derivative Securities issued by Parent (or otherwise outstanding) other than as described in Section 4.2(c)
or in the Parent 2016 SEC Documents;
(e) All
shares of Parent Common Stock subject to the issuance upon the exercise or conversion of any Derivative Security, upon issuance
on the terms and conditions specified in the instrument pursuant to which they are issuable, would be duly authorized, validly
issued, fully paid and nonassessable. Except for the Parent Option Plans, Parent does not have any stock option plan or any other
plan, program, agreement or arrangement providing for any equity or equity-based compensation for any Person.
(f) All
outstanding shares of Parent Common Stock Options under the Parent Option Plans, have been issued and granted in compliance in
all material respects with: (i) all Laws and Orders or otherwise put into effect by or under the authority of any Governmental
Entity; and (ii) all requirements set forth in applicable Contracts and the Parent Option Plans.
(g) Except
as set forth in Section 4.2(g) of the Parent Disclosure Letter, or in the Parent
2016 SEC Documents, there are no registration rights, and there is no voting trust, proxy, rights plan, antitakeover plan or other
agreement or understanding to which Parent is a party or by which it is bound, with respect to any equity security of any class
of Parent.
(h) Except
as disclosed in the Parent 2016 SEC Documents, there is no: (i) outstanding subscription, option, call, warrant or right (whether
or not currently exercisable) to acquire any shares of the capital stock or other securities of Parent or any Parent Subsidiary;
(ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the
capital stock or other securities of Parent or any Parent Subsidiary; or (iii) stockholder rights plan (or similar plan commonly
referred to as a “poison pill”) or Contract under which Parent or any Parent Subsidiary is or may become obligated
to sell or otherwise issue any shares of its capital stock or any other securities.
(i) All
of the outstanding shares of Parent Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable.
Except as set forth in the Parent 2016 SEC Documents, none of the outstanding shares of Parent Common Stock or preferred stock
of Parent is entitled or subject to any preemptive right, right of participation or any similar right and none of the outstanding
shares of Parent Common Stock or preferred stock of Parent is subject to any right of first refusal in favor of Parent or any
Parent Subsidiary.
(j) There
is no Contract relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise
disposing of (or granting any option or similar right with respect to), any shares of Parent Common Stock or preferred stock of
Parent. Neither Parent nor any Parent Subsidiary is under any obligation, nor is it bound by any Contract pursuant to which it
may become obligated, to repurchase, redeem or otherwise acquire any outstanding shares of Parent Common Stock or other securities.
4.3 Authority
Relative to this Agreement. Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver
this Agreement and all other Transaction Documents to which it is a party (the “Parent Transaction Documents”),
to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Parent Transaction Documents by Parent and Merger Sub, and the consummation by Parent and
Merger Sub of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary corporate
action on the part of Parent and Merger Sub, and no other corporate proceedings on the part of Parent or Merger Sub are necessary
to authorize this Agreement and the Parent Transaction Documents or to consummate the transactions so contemplated. This Agreement
and the Parent Transaction Documents have been duly and validly executed and delivered by Parent and Merger Sub and, assuming
the due authorization, execution and delivery by the other parties thereto, constitute the legal and binding obligation of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with their respective terms, subject to: (i) the effect
of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement
of creditor’s rights generally; and (ii) general equitable principles (whether considered in a proceeding in equity or at
law).
4.4 No
Conflict; Required Filings and Consents.
(a) Subject
only to the filing and recordation of the Certificate of Merger pursuant to the DGCL and except as set forth on Section 4.4
of the Parent Disclosure Letter, the execution and delivery of this Agreement and the Parent Transaction Documents by Parent does
not, and the performance of this Agreement and the Transaction Documents by Parent will not: (i) conflict with or violate the
organizational documents of Parent; (ii) conflict with or violate any Law applicable to Parent or by which its properties is bound
or affected; (iii) contravene, conflict with or result in a violation of, or give any Governmental Entity or any other Person
the right to challenge the Merger or any of the transactions contemplated by this Agreement or any of the Parent Transaction Documents
or to exercise any remedy or obtain any relief under, any Law or any Order to which Parent or any of the assets owned, used or
controlled by Parent is subject; (iv) contravene, conflict with or result in a violation of any of the terms or requirements of,
or give any Governmental Entity the right to revoke, withdraw, suspend, cancel, terminate or modify, any governmental authorization
that is held by Parent or that otherwise relates to any of the assets owned, used or controlled by Parent; (v) result in any breach
of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair Parent’s
rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of a Lien on any of the properties or assets of Parent pursuant to, any Parent Material
Contract; or (vi) cause the acceleration of any vesting of any awards for or rights to Parent Common Stock or the payment of or
the acceleration of payment of any change in control, severance, bonus or other cash payments or issuance of Parent Common Stock.
(b) The
execution and delivery of this Agreement and the Parent Transaction Documents by Parent and Merger Sub does not, and the performance
of this Agreement and the Parent Transaction Documents by Parent and Merger Sub will not, require any consent, approval, authorization
or permit of, or registration, filing with or notification to, any Governmental Entity or any Person, except for: (i) applicable
requirements, if any, of the Securities Act, the Exchange Act, Blue Sky Laws and the OTCQB; and (ii) the filing and recordation
of the Certificate of Merger as required by the DGCL.
4.5 Reports
and Financial Statements; Internal Controls.
(a) Parent
has filed all forms, reports and documents required to be filed by it with the SEC (all such required forms, reports and documents
are referred to herein as the “Parent SEC Documents”). As of their respective dates, the Parent SEC Documents:
(i) were prepared in accordance in all material respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to such Parent SEC Documents; and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a material fact require to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The certifications
and statements required by (x) Rule 13a-14 under the Exchange Act and (y) 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley
Act) relating to the Parent SEC Documents are accurate and complete and comply as to form and content with all applicable legal
requirements.
(b) The
audited consolidated financial statements of Parent as of and for the years ended December 31, 2014 and December 31, 2015, and
the unaudited interim consolidated financial statements of Parent as of and for the quarter ended June 30, 2016, including, in
each case, the notes, if any, thereto (the “Parent Interim Financial Statements”, and collectively, the “Parent
Financial Statements”): (i) complied as to form in all material respects with the published rules and regulations of
Regulation S-X promulgated by the SEC; (ii) were prepared in accordance with GAAP, applied on a consistent basis during the periods
involved (except as may be indicated therein in the notes thereto); (iii) fairly present (subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments (which are not expected to be, individually or in the aggregate,
materially adverse to Parent) and the absence of complete footnotes) in all material respects the financial position of Parent
as at the respective dates thereof and the results of its operations and cash flows for the respective periods then ended; and
(iv) were compiled from, and are consistent with, the books and records of Parent, which books and records are accurate and complete
in all material respects.
(c) Except
as disclosed in the footnotes to the Parent Financial Statements, Section 4.5(c) of the Parent Disclosure Letter
or in Parent 2016 SEC Documents, the Parent Group is not a party to, nor has any commitment to become a party to, any joint venture,
off balance sheet partnership or any similar Contract where the result, purpose or intended effect of such Contract is to avoid
disclosure of any material transaction involving, or material Liabilities of, the Parent Group in Parent’s financial statements.
(d) Section
4.5(d) of the Parent Disclosure Letter and/or the Parent 2016 SEC Reports, as applicable, sets forth all of the
Indebtedness of the Parent Group, including: (i) the Persons (or a general description of the Persons) to whom such Indebtedness
is owed, and (ii) the material terms of such Indebtedness. No member of the Parent Group has guaranteed nor is any member of the
Parent Group responsible or liable for any Indebtedness, liability or other obligation of any Person, except as set forth in Section
4.5(d) of the Parent Disclosure Letter and/or the Parent 2016 SEC Reports.
(e) To
the Knowledge of Parent, since January 1, 2010, no employee of Parent or its Subsidiaries has provided or is providing information
to any law enforcement agency regarding the violation of any applicable Law of the type described in Section 806 of the Sarbanes-Oxley
Act. Neither Parent nor its Subsidiaries nor, to the Knowledge of Parent, any director, officer, employee or agent of Parent or
its Subsidiaries, has discharged, demoted or suspended an employee of Parent or its Subsidiaries in the terms and conditions of
employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act.
4.6 Compliance;
Permits.
(a) No
member of the Parent Group is in conflict with, or in default or violation of: (i) any Law or Order applicable to the Parent Group
or any member thereof, or by which any of its properties is bound or affected; or (ii) any Contract to which the Parent Group
or any member thereof is a party or by which the Parent Group or any of each entity’s respective properties are bound or
affected, except for any conflicts, defaults or violations of such Laws, Orders or Contracts that (individually or in the aggregate)
would not have or reasonably be expected to have a Parent Material Adverse Effect. To the Knowledge of Parent, no investigation
or review by any Governmental Entity is pending or overtly threatened against the Parent Group, other than, in each such case,
those the outcome of which would not, individually or in the aggregate, have or reasonably be expected to have a Parent Material
Adverse Effect.
(b) The
Parent Group holds all permits, licenses, variances, exemptions, orders and approvals from Governmental Entities which are material
to operation of the business of the Parent Group as currently conducted (collectively, the “Parent Permits”).
To the Knowledge of Parent, the Parent Group is in compliance in all material respects with the terms of each of the Parent Permits.
(c) The
Parent Group is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates,
approvals and orders (“Parent Approvals”) necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted, except where the failure to have such Parent
Approvals would not, individually or in the aggregate, have or reasonably be expected to have a Parent Material Adverse Effect.
4.7 No
Undisclosed Liabilities. Except for matters reflected or reserved against in the balance sheet (including the notes thereto)
as of December 31, 2015 included in the Parent Financial Statements or as disclosed in Section 4.7 of the Parent Disclosure
Letter or in the Parent 2016 SEC Documents or incurred in connection with the transactions contemplated by this Agreement, no
member of the Parent Group had at such date, or has incurred since that date, any Liabilities, except Liabilities incurred in
the ordinary course of business consistent with past practice, or Liabilities which, in the aggregate would not be reasonably
expected to have, a Parent Material Adverse Effect.
4.8 Absence
of Litigation.
(a) Except
as set forth on Section 4.8 of the Parent Disclosure Letter, there are no Legal Actions pending
or, to the Knowledge of Parent, threatened against any member of the Parent Group, or any properties or rights of any member of
the Parent Group: (i) that involves the Parent Group or any of the assets owned, used or controlled by the Parent Group or any
Person whose liability the Parent Group has or may have retained or assumed, either contractually or by operation of law; or (ii)
that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the Merger
or any of the other transactions contemplated by this Agreement or any of the Transaction Documents.
(b) There
is no Order to which any member of the Parent Group, or any of the assets owned or used by the Parent Group, is subject. To the
Knowledge of Parent, there is no proposed Order that, if issued or otherwise put into effect (i) could have a material adverse
effect on the business or on the ability of the Parent Group to comply with or perform any covenant or obligation under this Agreement
or any of the Transaction Documents or (ii) could have the effect of preventing, delaying, making illegal or otherwise interfering
with the Merger or any of the other transactions contemplated by this Agreement or the Transaction Documents.
4.9 Employee
Benefit Plans.
(a) Section
4.9(a) of the Parent Disclosure Schedule contains an accurate and complete list of (a) all “employee benefit plans”
as defined in Section 3(3) of ERISA and (b) all employment, severance, golden parachute, compensation, bonus, termination, retirement,
retention, change in control, deferred compensation, consulting, commission, equity or equity-based compensation, health, life
insurance, disability, welfare, paid time off, fringe benefit and other compensation agreement, contract, plan, program, understanding
or arrangement (including established working practices and employment policies), in any case, whether oral or written, and whether
or not legally enforceable, maintained, contributed to, or required to be contributed to, by any ERISA Affiliate of Parent for
the benefit of any current or former employee, officer, director, independent contractor, consultant, member or manager of any
member of Parent Group, or under which Parent has any actual or contingent Liability (collectively, the “Parent Plans”).
(b) Each
Parent Plan is in compliance with, and has been maintained in accordance with, its terms and the applicable provisions of ERISA,
the Code and all other Laws and Orders.
(c) There
are no audits, investigations, actions, suits or claims pending or, to Parent’s Knowledge threatened against any Parent
Plan or against any member of the Parent Group relating to any Parent Plan, or the assets of such plans, and no facts exist that
could give rise to any such action, suit or claim. Neither Parent, any member of the Parent Group nor any ERISA Affiliate thereof
has engaged in any transaction involving any Parent Plan which is a “prohibited transaction” under Section 406 of
ERISA or Section 4975 of the Code for which an exemption does not exist or has been granted.
(d) Neither
Parent, any member of the Parent Group nor any ERISA Affiliate thereof maintains, contributes to, or is required to contribute
to, or has any actual or contingent Liability with respect to, any (i) employee benefit plan subject to Title IV of ERISA or Section
412 of the Code, (ii) “multiple employer welfare arrangement,” as defined in Section 3(40) of ERISA, (iii) “multiple
employer plan” as defined in Section 413(c) of the Code or (iv) “multiemployer plan” as defined in Section 3(37)
of ERISA. All Parent Plans which are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA
and which are intended to meet the qualification requirements of Section 401(a) of the Code meet the qualification requirements
of Section 401(a) of the Code, and each related trust is exempt from taxation under Section 501(a) of the Code, and no circumstances
exist that would adversely affect such qualification or exemption from taxation. No Parent Plan provides (and no promise has been
made to provide) medical, dental, vision, life insurance or other welfare benefits beyond termination of service or retirement
(other than as required by Law). Parent’s execution of, and performance of the transactions contemplated by, this Agreement
will not (either alone or when combined with any other event) result in the provision of any “parachute payment” (as
defined in Code Section 280G).
4.10 Title
to Assets; Property. Each of Parent and the Parent Subsidiaries owns, and has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all tangible properties or assets and equipment used or held for use
in its business or operations or purported to be owned or leased by it, including: (i) all assets reflected on the Parent Interim
Financial Statements; and (ii) all other assets reflected in the books and records of Parent and the Parent Subsidiaries as being
owned by Parent and the Parent Subsidiaries, except as would not reasonably be expected to result in a Parent Material Adverse
Effect. Except as set forth in Section 4.10 of the Parent Disclosure Letter, all of said assets are owned by Parent and
the Parent Subsidiaries free and clear of any Liens, except for Permitted Liens. No member of the Parent Group owns or leases
any real property.
4.11 Taxes.
Parent and each other member of the Parent Group has timely filed all Tax Returns required to be filed by it, and all such Tax
Returns are accurate, complete and correct. Each member of the Parent Group has paid all Taxes required to be paid by it (whether
or not shown on any Tax Return described in the preceding sentence). There is no Tax audit or examination now pending or threatened
with respect to any member of the Parent Group. Since January 1, 2014, no claim has been made in writing by any Governmental Entity
in a jurisdiction where the any member of the Parent Group does not pay Taxes or file Tax Returns that any member of the Parent
Group is or may be subject to Tax by that jurisdiction. No member of the Parent Group has requested or entered into an agreement
providing for any extension of time within which to file any Tax Return that has not yet been filed, make any Tax election with
respect to any such Tax Return, or pay any Taxes that have not been paid, or pursuant to which any Governmental Entity may assess
Taxes (which period has not yet expired). All Taxes which any member of the Parent Group was or is required by applicable Law
to withhold or collect have been and are being withheld or collected by it and have been paid over to the proper Governmental
Entity or, if not yet due, are being held by the applicable member of the Parent Group for payment. Each member of the Parent
Group has collected and remitted sales, use, value added and similar Taxes applicable in connection with the assets of such entity
and the operation of such entity’s business. No member of the Parent Group has entered into a “closing agreement”
as defined in Section 7121 of the Code. There is no lien for Taxes upon any of the assets of any member of the Parent Group other
than liens for Taxes that are not yet due and payable. For purposes of this Section 4.13, each reference to Parent includes any
person that was liquidated into, merged with or otherwise a predecessor to, Parent.
4.12 Environmental
Matters. To the Knowledge of Parent, each member of the Parent Group is in compliance, in all material respects, with all
applicable Environmental Laws and Environmental Permits. No member of the Parent Group is required to hold any Environmental Permits
for the operation of its businesses. To the Knowledge of Parent, there is no Environmental Claim pending or overtly threatened
against any member of the Parent Group nor is there any reasonable basis for any such claim or any Liability, in each case, under
any applicable Environmental Law.
4.13 Intellectual
Property.
(a) Section
4.13(a) of the Parent Disclosure Letter contains an accurate and complete list of all Parent Registered
Intellectual Property Rights, specifying as to each such Registered Intellectual Property Right, as applicable: (i) the jurisdictions
by or in which such Registered Intellectual Property Right has been issued or registered or in which an application for such issuance
or registration has been filed; and (ii) the registration or application numbers thereof. Section 4.13(a)
of the Parent Disclosure Letter contains an accurate and complete list of all Parent Owned Intellectual Property Rights and
Parent Licensed Intellectual Property Rights that are material to the business of any member of the Parent Group.
(b) Section
4.13(b) of the Parent Disclosure Letter lists any material License Agreements or Contracts under which any member
of the Parent Group has granted any third party rights that are exclusive, or exclusive of all other third parties, to use, sublicense,
resell or distribute any Parent Owned Intellectual Property Right.
(c) Except
as set forth in the Parent 2016 SEC Documents, no member of the Parent Group is a party to any License Agreements, forbearances
to sue, consents, judgments, orders or similar obligations, in each case, that restrict the rights of any member of the Parent
Group to use or enforce any Parent Owned Intellectual Property Rights.
(d) Each
member of the Parent Group owns all right, title, and interest, free and clear of all security interests and similar encumbrances
(other than Permitted Liens), in and to all Intellectual Property Rights used or held for use in the business of the Parent Group
(other than Parent Licensed Intellectual Property Rights or Intellectual Property Rights that are not material to the business
of any member of the Parent Group). Except as listed in Section 4.13(d) of the Parent Disclosure Letter or
in the Parent 2016 SEC Documents, Parent is listed in the records of the appropriate United States, state or foreign agency as
the sole owner for each Parent Registered Intellectual Property Right.
(e) To
Parent’s Knowledge, the conduct of the business of the Parent Group as such business is currently conducted: (i) does not
infringe, misappropriate or otherwise violate the Intellectual Property Rights of any third party; and (ii) does not constitute
unfair competition or unfair trade practices under the Laws in the United States.
(f) No
member of the Parent Group has received any written or, to the Knowledge of Parent, oral communications from any third party that
overtly claim that the operation of the business of any member of the Parent Group infringes, misappropriates or otherwise violates
the Intellectual Property Rights of any third party or constitutes unfair competition or unfair trade practices under the Laws
of any jurisdiction. No member of the Parent Group has received any written communication from a third party pursuant to which
the third party offered any member of the Parent Group a license to use any technology or Intellectual Property Rights in order
to avoid a claim of infringement or misappropriation.
(g) No
member of the Parent Group has received written notice of, and to the Knowledge of Parent, there is no pending or threatened Legal
Action by a third party before any Governmental Entity in any jurisdiction challenging the ownership, use, validity, enforceability
or registrability of any Parent Owned Intellectual Property Rights.
(h) To
the Knowledge of Parent, no Person has infringed, misappropriated or otherwise violated, or is infringing, misappropriating or
otherwise violating, any Parent Owned Intellectual Property Rights. No member of the Parent Group has brought any Legal Action
against any third party alleging infringement, misappropriation or violation of Parent Owned Intellectual Property Rights that
remain unresolved.
(i) Except
as set forth in Section 4.13(a) of the Parent Disclosure Letter, to the Knowledge of Parent, Parent Owned Intellectual
Property Rights are subsisting, in full force and effect, have not been cancelled or abandoned, have not expired, and, with respect
to Parent Registered Intellectual Property Rights only, are valid and enforceable.
(j) Each
member of the Parent Group has made commercially reasonable efforts to protect its trade secrets and preserve their status as
intellectual property under applicable Law. Each member of the Parent Group has in place a policy requiring all employees, contractors
and other parties having access to such trade secrets to execute a commercially reasonable form of proprietary information/confidentiality
agreement with the applicable member of the Parent Group.
(k) Following
the Effective Time, the members of the Parent Group will be permitted to exercise all of the rights of the Parent Group under
such License Agreements or Contracts to the same extent the Parent Group would have been able to had the transactions contemplated
hereby not occurred and without the payment of additional amounts or consideration other than ongoing fees, royalties or payments
which the Parent Group would otherwise be required to pay. The consummation of the Merger and the transactions contemplated hereby
will not: (i) result in the loss or impairment of any member of the Parent Group’s ownership of or right to use Parent Owned
Intellectual Property Rights or Parent Licensed Intellectual Property Rights; or (ii) cause Parent or Merger Sub or any of their
respective Affiliates (x) to be bound by any non-compete or other restriction on the operation of any business or (y) to grant
any rights or licenses to any Intellectual Property Rights of Parent or Merger Sub, or any of their respective Affiliates, to
a third party (including a covenant not to sue).
4.14 Material
Agreements. Section 4.14 of the Parent Disclosure Letter sets forth a list of all Parent Material Agreements.
All of the Parent Material Agreements are in full force and effect and constitute the valid, legal and binding obligation of the
applicable member(s) of the Parent Group and, to the Knowledge of Parent, constitute the valid, legal and binding obligation of
the other parties thereof, enforceable against each such Person in accordance with its terms, subject to: (i) the effect of bankruptcy,
fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditor’s
rights generally; and (ii) general equitable principles (whether considered in a proceeding in equity or at law). No member of
the Parent Group has violated or breached, or committed any default under, any Parent Material Agreement, and, to the Knowledge
of Parent, no other Person has violated or breached, or committed any default under, any Parent Material Agreement. No member
of the Parent Group has received or given any notice or claim of any breach or violation of, or default under, any Parent Material
Agreement. No member of the Parent Group has received or given any notice of an intention to terminate, not renew or challenge
the validity or enforceability of any Parent Material Agreement. No event has occurred, and no circumstance or condition exists
that, with or without notice or lapse of time or both, would, or would reasonably be expected to, (i) result in a material violation
or breach of any of the provisions of any Parent Material Agreement; (ii) give any Person the right to declare a default or exercise
any remedy under any Parent Material Agreement; (iii) give any Person the right to accelerate the maturity or performance of any
Parent Material Agreement; or (iv) give any Person the right to cancel, terminate or materially modify any Parent Material Agreement.
Each Parent Material Agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on substantially
identical terms immediately following the consummation of the transactions contemplated hereby or by any Transaction Document.
4.15 Agreements
with Regulatory Agencies. No member of the Parent Group (a) is subject to any cease-and-desist or other Order issued by, (b)
is a party to any Contract, consent agreement or memorandum of understanding with, (c) is a party to any commitment letter or
similar undertaking to, (d) is subject to any order or directive by, (e) is a recipient of any extraordinary supervisory letter
from, and (f) has adopted any board resolutions at the request of (each of clauses (a)-(e) of this Section 4.15,
a “Regulatory Agreement”), any Governmental Entity that restricts the conduct of its business or that in any
manner relates to its management or its business, or would reasonably be expected, following the Merger and the consummation of
the transactions contemplated hereby, to impair in any material respect the ability of the Parent Group to conduct the business
of the Parent Group after the Effective Time, or the ability of Merger Sub to conduct the business of Company after the Effective
Time, in each case, as presently conducted.
4.16 Related
Party Transactions. Other than in respect of Contracts or interests related to employment in the ordinary course of business
or incentive arrangements under the Parent Option Plans and as disclosed in the Parent 2016 SEC Documents, to the Knowledge of
Parent no Related Party (i) is a party to any Contract with or binding upon any member of the Parent Group or any of its assets,
rights or properties or has any interest in any property owned by any member of the Parent Group or has engaged in any transaction
with any of the foregoing since January 1, 2015, (ii) has any direct or indirect ownership interest in any material asset used
in the business of the Parent Group, (iii) is indebted to any member of the Parent Group, or (iv) since January 1, 2015, has entered
into, or has had any direct or indirect financial interest in, any Contract, transaction or business dealing involving any member
of the Parent Group.
4.17 Insurance.
All casualty, general liability, business interruption, product liability, director & officer liability, worker’s compensation,
environmental, automobile and sprinkler and water damage and other insurance policies and bond and surety arrangements maintained
by the Parent Group are listed in Section 4.17 of the Parent Disclosure Letter (the “Parent Insurance Policies”)
including historical property and casualty claims information with respect to such policies for the five (5)-year period prior
to the date hereof indicating pending and paid claims as of the date hereof. No member of the Parent Group has received any notice
from the applicable carrier regarding any refusal of coverage under, or any rejection of any claim under, any such policies. There
are no claims related to the business of any member of the Parent Group pending under any Parent Insurance Policy as to which
coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights.
4.18 Brokers.
No member of the Parent Group has incurred, or will incur, directly or indirectly, any Liability for brokerage or finder’s
fees or agent’s commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.
4.19 Inapplicability
of Anti-takeover Statutes. The Board of Directors of Parent has taken and will take all actions necessary to ensure that the
restrictions applicable to business combinations contained in the DGCL are, and will be, inapplicable to the execution, delivery
and performance of this Agreement and to the consummation of the Merger and the other transactions contemplated hereunder.
4.20 Full
Disclosure. Neither this Agreement (including the Parent Disclosure Letter) nor any Parent Transaction Document: (i) contains
any representation or warranty by Parent or information regarding the Parent Group that is false or misleading with respect to
any material fact; or (ii) omits to state any material fact necessary in order to make the representations and warranties regarding
the Parent Group contained herein and therein, in light of the circumstances under which such representations and warranties were
or will be made or provided, not false or misleading.
Article
V
COVENANTS
5.1 Further
Assurances. Each party hereto will, following the date hereof, execute such further documents, instruments, deeds, bills of
sale, assignments and assurances and take such further actions as may reasonably be requested by the other to vest the Surviving
Corporation with full title to all assets, properties, privileges, rights, approvals, immunities and franchises of Company or
to effect the other purposes of this Agreement. \
5.2 Warrants.
At the Effective Time, Parent shall issue to the holder of each Company Warrant outstanding immediately prior to the Effective
Time (other than any Company Warrants the holders of which shall have agreed to exercise such Company Warrant for Company Common
Stock immediately prior to the Effective Time) a warrant (each, an “Adjusted Parent Warrant”) to acquire, on
the same terms and conditions as were applicable under such Company Warrant immediately prior to the Effective Time, the number
of shares of Parent Common Stock equal to the product of: (i) the number of shares of Company Common Stock subject to
such Company Warrant immediately prior to the Effective Time multiplied by (ii) the Exchange Ratio, with any fractional shares
rounded down to the next lower whole number of shares. The exercise price per share of Parent Common Stock subject to any such
Adjusted Parent Warrant will be an amount equal to the quotient obtained by dividing (A) the exercise price per share
of Company Common Stock subject to such Company Warrant immediately prior to the Effective Time divided by (B) the Exchange Ratio,
with any fractional cents rounded up to the next higher number of whole cents. Notwithstanding the foregoing, if the conversion
of a Company Warrant in accordance with the preceding provisions of this Section 5.2(a) would cause the related
Adjusted Parent Warrant to be treated as the grant of a new stock right for purposes of Section 409A of the Code, such company
Warrant shall not be converted in accordance with the preceding provisions but shall instead be converted in a manner reasonably
acceptable to Parent and Company that would not cause the related Adjusted Parent Warrant to be treated as the grant of new stock
right for purposes of Section 409A of the Code. For avoidance of doubt, each Adjusted Parent Warrant shall be vested to the same
extent to which the Company Warrant for which it was substituted was vested before or as of the Effective Time.
5.3 Expenses.
Except as otherwise specifically set forth elsewhere in this Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party incurring such cost or expense.
5.4 Public
Announcements. The initial press release with respect to this Agreement and the transactions contemplated hereby shall be
a release mutually agreed to by Company and Parent. Thereafter, Company and Parent agree that no public release or other public
announcement concerning the transactions contemplated hereby shall be issued by any party prior to the Closing without the prior
written consent of the other party (which consent shall not be unreasonably withheld, conditioned or delayed), except as such
release or announcement may be required by applicable Law or the rules or regulations of the SEC or a Governmental Entity to which
the relevant party is subject, wherever situated, in which case the party required to make the release or announcement shall consult
with the other party about, and allow the other party reasonable time to comment on, such release or announcement in advance of
such issuance.
5.5 Registration
Rights. Parent herby agrees that it shall, within thirty (30) days following the later of (x) the Closing Date and (y) the
date on which Parent files with the SEC the audited financial statements (including pro forma financial statements) that are required
to be filed by Parent pursuant to Regulation S-X under the Securities Act as a result of the consummation of the Merger (such
financial statements, the “Required Financial Statements”), file with the SEC a registration statement to register
the resale of the shares of Parent Common Stock issued to the holders of record of Company Common Stock pursuant to Section
2.1(a) of this Agreement on such form as Parent is eligible to use for such registration, and shall use commercially reasonable
efforts to cause such registration statement to be declared effective by the SEC within sixty (60) days of the filing thereof.
Parent shall use commercially reasonable efforts to keep such registration statement effective at all times and available for
use until the earlier of the time at which: (i) none of the holders of record of Company Common Stock immediately prior to the
Merger own any shares of Parent Common Stock that were issued to such persons pursuant to Section 2.1(a) and registered
for resale on such registration statement; or (ii) all of the shares of Parent Common Stock issued to the holders of record of
Company Common Stock immediately prior to the Merger pursuant to Section 2.1(a) that are registered for resale on such
registration statement are eligible for resale under Rule 144. Parent shall use commercially reasonable efforts to cause the filing
of the Required Financial Statements as soon as reasonably practicable following the date hereof, but in no event later than seventy-five
(75) days following the date hereof.
Article
VI
INDEMNIFICATION OF PARENT
6.1 Indemnification
of Parent. Subject to the terms and conditions of this Article VI (including without limitation the limitations
set forth in Section 6.5), the Company Indemnitees shall jointly and severally indemnify, defend and hold harmless
Parent, the Surviving Corporation and their respective Representatives, successors and permitted assigns (the “Parent
Indemnitees”), from and against all Losses asserted against, resulting to, imposed upon, or incurred by any Parent Indemnitee
by reason of, arising out of or resulting from:
(a) the
inaccuracy or breach of any representation or warranty of the Company contained in or made pursuant to this Agreement, any Schedule
or any certificate delivered by Company to Parent pursuant to this Agreement with respect hereto or thereto in connection with
the Closing; and
(b) the
non-fulfillment or breach of any covenant or agreement of Company contained in this Agreement.
6.2 Indemnification
Procedures.
(a) If
Parent determines that it or any Parent Indemnitees are entitled to indemnification pursuant to Section 6.1
(subject to the limitations of Section 6.5) or has had notice of a claim or demand made by a third party against
any of the Parent Indemnitees, then Parent shall deliver to the Company Representative a written notice (a “Parent Indemnification
Notice”) that complies with this Agreement of a claim for payment of a stated sum. Such Parent Indemnification Notice
shall set forth in reasonable detail the factual and legal basis for such claim.
(b) If
Parent delivers a Parent Indemnification Notice to the Company Representative and if no Company Response Notice (as defined below)
is delivered to Parent by the Company Representative prior to 11:59 p.m. Eastern Time on the 30th day after delivery of such Parent
Indemnification Notice to Parent, then the Company Indemnitees shall promptly pay to the Parent Indemnitees the amount set forth
in the Parent Indemnification Notice. If Parent delivers a Parent Indemnification Notice to the Company Representative and the
Company Representative delivers a Company Response Notice (as defined below) and states in such Company Response Notice that it
does not dispute the payment of certain claims set forth in the applicable Parent Indemnification Notice, then the Company Indemnitees
shall promptly pay to the Parent Indemnitees the amount set forth in the Parent Indemnification Notice. Notwithstanding the foregoing
or anything else in this Agreement to the contrary, the Company Indemnitees may satisfy their indemnification obligation to the
Parent Indemnitees with respect to the claims set forth in any Parent Indemnification Notice by delivering to Parent for cancellation
such number of shares of Parent Common Stock as is equal to the quotient obtained by dividing (x) the aggregate amount payable
to the Parent Indemnitees as a result of the applicable indemnity claim (as determined pursuant to this Article VI) by (y) the
closing price of the Parent Common Stock on the OTCQB on the date of this Agreement, and the Company Representative hereby agrees
to use his best efforts to cause such shares of Parent Common Stock to be returned to Parent.
(c) If
the Company Representative objects to the Parent Indemnification Notice or any part thereof, then prior to 11:59 p.m. Eastern
Time on the 30th day after the delivery to the Company Representative of such Parent Indemnification Notice, the Company Representative
shall deliver to Parent a written notice (a “Company Response Notice”) which shall (i) state that it disputes
all or some matters under the Parent Indemnification Notice (the “Company Disputed Matters”) and/or (ii) indicate
that the Company Representative is assuming the defense of the matters relating to the Parent Indemnification Notice.
(d) The
Company Representative and Parent shall act in good faith to resolve any Company Disputed Matters in accordance with the following
procedure:
(i) Within
30 days after the delivery of a Company Response Notice to Parent pursuant to the preceding paragraph identifying Company Disputed
Matters, the Company Representative and Parent shall attempt to resolve the Company Disputed Matters through good faith negotiations.
(ii) If
the Company Disputed Matters are not fully resolved within the 30-day period described in paragraph (i) above, all such Company
Disputed Matters shall be submitted to non-binding mediation, which may be done by either Parent or the Company Representative
by written notice. The mediation shall be held before one neutral mediator in a location to be agreed by the Company Representative
and Parent and administered by a mutually agreeable organization, or if none is agreed upon, the American Arbitration Association
(“AAA”), in either case, the mediation shall be governed by the Commercial Mediation Rules of the AAA. The
parties shall agree on a locations and a neutral mediator within five days after notice of submission to mediation. If the parties
are unable to agree on the location or mediator within that time period, the location and mediator shall be selected by the AAA.
Each party shall bear its own costs and expenses incurred in connection with any such mediation, including one-half of the fees
of the mediator.
(iii) If
the parties are unable to fully resolve the Company Disputed Matters within 30 days after the Company Disputed Matters are submitted
to mediation in accordance with paragraph (ii) above, either Parent or the Company Representative may seek relief from any United
States District Court or a state court located in the State of New York in accordance with Section 9.9.
(e) Within
five (5) Business Day after the resolution of a Company Response Notice, the Company Indemnitees shall make payment in accordance
with the resolution of the applicable Company Response Notice.
6.3 Indemnification
of Parent Third Party Claims. The indemnification obligations and liabilities under this Article VI with respect
to actions, proceedings, lawsuits, investigations, demands or other claims brought against Parent by a Person other than Company
(a “Parent Third Party Claim”) shall be subject to the following terms and conditions:
(a) Defense.
The Company Representative shall have the right, at its option (subject to the limitations set forth in Section 6.3(b)
below) and at its own expense, by written notice to Parent, to assume the entire control of, subject to the right of Parent
to participate (at its expense and with counsel of its choice) in, the defense, compromise or settlement of the Parent Third Party
Claim as to which Parent has provided a written notice to the Company Representative (a “Parent Claim Notice”),
and shall be entitled to appoint a recognized and reputable counsel reasonably acceptable to Parent to be the lead counsel in
connection with such defense. If the Company Representative is permitted and elects to assume the defense of a Parent Third Party
Claim:
(i) the
Company Representative shall diligently and in good faith defend such Parent Third Party Claim and shall keep Parent reasonably
informed of the status of such defense; provided, however, that in the case of any settlement providing for remedies
which are not merely incidental to a primary damage claim or claims for monetary damages, Parent shall have the right to approve
any settlement, which approval will not be unreasonably withheld, delayed or conditioned; and
(ii) Parent
shall cooperate fully in all respects with the Company Representative in any such defense, compromise or settlement thereof, including,
without limitation, the selection of counsel, and Parent shall make available to the Company Representative all pertinent information
and documents under its control.
(b) Limitations
of Right to Assume Defense. The Company Representative shall not be entitled to assume control of such defense and shall pay
the fees and expenses of counsel retained by Parent if (i) the Parent Third Party Claim relates to or arises in connection with
any criminal proceeding, action, indictment, allegation or investigation; (ii) the Parent Third Party Claim seeks an injunction
or equitable relief against Parent which is not merely incidental to a primary damage claim or claims for monetary damages; or
(iii) there is a reasonable probability that a Parent Third Party Claim may materially and adversely affect Parent other than
as a result of money damages or other money payments.
(c) Other
Limitations. Failure to give prompt Parent Claim Notice or to provide copies of relevant available documents or to furnish
relevant available data shall not constitute a defense (in whole or in part) to any Parent Third Party Claim by Parent pursuant
to this Article VI and shall not affect the Company Representative’s duty or obligations under
this Article VI, except to the extent (and only to the extent that) such failure shall have actually
materially prejudiced the ability of the Company Representative to defend against or reduce its liability or caused or increased
such liability or otherwise caused the damages for which the Parent is seeking indemnification to be greater than such damages
would have been had Parent given the Company Representative prompt notice hereunder. So long as the Company Representative is
defending any such action actively and in good faith, Parent shall not settle such action. Parent shall make available to the
Company Representative all relevant records and other relevant materials required by him and in the possession or under the control
of Parent, for the use of the Company Representative and its representatives in defending any such action, and shall in other
respects give reasonable cooperation in such defense.
(d) Failure
to Defend. If the Company Representative, promptly after receiving a Parent Claim Notice, fails to defend such Parent Third
Party Claim actively or in good faith, Parent, at the reasonable cost and expense of the Company Indemnitees, will (upon further
written notice) have the right to undertake the defense, compromise or settlement of such Parent Third Party Claim as it may determine
in its reasonable discretion, provided that the Company Representative shall have the right to approve any settlement, which approval
will not be unreasonably withheld, delayed or conditioned.
(e) Parent’s
Rights. Anything in this Section 6.3 to the contrary notwithstanding, the Company Representative shall
not, without the written consent of Parent, settle or compromise any action or consent to the entry of any judgment which does
not include as an unconditional term thereof the giving by the claimant or the plaintiff to Parent of a full and unconditional
release from all liability and obligation in respect of such action without any payment by Parent.
(f) Company
Representative Consent. Unless the Company Representative has consented to a settlement of a Parent Third Party Claim, the
amount of the settlement shall not be a binding determination of the amount of the Loss and such amount shall be determined in
accordance with the provisions of this Agreement.
6.4 Insurance
Effect. To the extent that any Losses that are subject to indemnification pursuant to this Article VI are covered
by insurance paid for by Company or Parent prior to or after the Closing, Parent shall use commercially reasonable efforts to
obtain the maximum recovery under such insurance; provided, that Parent shall nevertheless be entitled to bring a claim for indemnification
under this Article VI in respect of such Losses and the time limitations set forth in Section 6.5 for
bringing a claim of indemnification under this Agreement shall be tolled during the pendency of such insurance claim. The existence
of a claim by Parent for monies from an insurer or against a third party in respect of any Loss shall not, however, delay any
payment pursuant to the indemnification provisions contained herein and otherwise determined to be due and owing hereunder. If
Parent has received the payment required by this Agreement in respect of any Loss and later receives proceeds from insurance in
respect of such Loss, then it shall hold such proceeds or other amounts in trust for the benefit of the Company Indemnitees and
shall pay to the Company Indemnitees, as promptly as practicable after receipt, a sum equal to the amount of such proceeds or
other amount received, up to the aggregate amount of any payments received from the Company Indemnitees pursuant to this Agreement
in respect of such Loss. Notwithstanding any other provisions of this Agreement, it is the intention of the parties that no insurer
or any other third party shall be (a) entitled to a benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, or (b) relieved of the responsibility to pay any claims for which it is obligated.
6.5 Limitations
on IndemnificationSurvival; Time Limitation.
(a) The
representations, warranties, covenants and agreements in this Agreement or in any writing delivered by Company to Parent in connection
with this Agreement shall survive for a period of one (1) year following the Closing Date (the “Survival Period”).
(b) Any
indemnification claim made by Parent prior to the termination of the Survival Period shall be preserved despite the subsequent
termination of the Survival Period and any claim set forth in a Parent Indemnification Notice sent prior to the expiration of
the Survival Period shall survive until final resolution thereof. Except as set forth in the immediately preceding sentence, no
claim for indemnification under this Article VI shall be brought after the end of the Survival Period.
(c) Minimum
Amount Limitation. The Parent Indemnitees shall be entitled to indemnification for any Losses with respect to the matters
contained in Section 6.1(a), only to the extent that the aggregate Losses with respect thereto exceed an amount
equal to $30,000 (the “Basket Amount”), at which point the Parent Indemnitees shall be permitted to
recover only such Losses in excess of the Basket Amount.
(d) Aggregate
Amount Limitation. The aggregate liability for Losses pursuant to Section 6.1(a) shall not in any event
exceed $1,000,000.
6.6 Exclusive
Remedy. Parent, on behalf of itself and the other Parent Indemnitees, hereby acknowledges and agrees that, from and after
the Closing, the sole remedy of the Parent Indemnitees with respect to any and all claims for money damages arising out of or
relating to this Agreement shall be pursuant and subject to the requirements of the indemnification provisions set forth in this
Article VI. Notwithstanding any of the foregoing, nothing contained in this Article VI shall in any way
impair, modify or otherwise limit a Parent Indemnitee’s right to bring any claim, demand or suit against the other party
based upon such other party’s actual fraud or intentional or willful misrepresentation or omission, it being understood
that a mere breach of a representation and warranty, without intentional or willful misrepresentation or omission, does not constitute
fraud.
6.7 Adjustment
to Merger Consideration. Amounts paid for indemnification under Article VI shall be deemed to be an adjustment
to the value of the shares of Parent Common Stock issued by Parent as a result of the Merger, except as otherwise required by
Law.
6.8 Company
Representative Capacities. The parties acknowledge that the Company Representative’s obligations under this Article
VI are solely as a representative of Company’s shareholders with respect to the obligations to indemnify the Parent
Indemnitees under this Article VI and that the Company Representative shall have no personal liability or responsibility
for any expenses incurred by him in such capacity and that all payments to Parent as a result of such indemnification obligations
shall be made solely from, the Company Indemnitees.
Article
VII
INDEMNIFICATION OF COMPANY INDEMNITEES
7.1 Indemnification
of Company Indemnitees. Subject to the terms and conditions of this Article VII (including without limitation
the limitations set forth in Section 7.5, Parent shall indemnify, defend and hold harmless Persons who receive shares of
Parent Common Stock from Parent upon consummation of the Merger (the “Company Indemnitees”), from and against
all Losses asserted against, resulting to, imposed upon, or incurred by any Company Indemnitee by reason of, arising out of or
resulting from:
(a) the
inaccuracy or breach of any representation or warranty of Parent or Merger Sub contained in or made pursuant to this Agreement,
any Schedule or any certificate delivered by Parent or Merger Sub to Company pursuant to this Agreement with respect hereto or
thereto in connection with the Closing; and
(b) the
non-fulfillment or breach of any covenant or agreement of Parent or Merger Sub contained in this Agreement.
7.2 Indemnification
Procedures.
(a) If
the Company Representative determines that the Company Indemnitees are entitled to indemnification pursuant to Section 7.1
(subject to the limitations of Section 7.5 or has had notice of a claim or demand made by a third party against any
of the Company Indemnitees, then the Company Representative shall deliver to Parent a written notice (a “Company Indemnification
Notice”) that complies with this Agreement of a claim for payment of a stated sum. Such Company Indemnification Notice
shall be signed by the Company Representative and set forth in reasonable detail the factual and legal basis for such claim.
(b) If
the Company Representative delivers a Company Indemnification Notice to Parent and if no Parent Response Notice (as defined below)
is delivered to the Company Representative prior to 11:59 p.m. Eastern Time on the 30th day after delivery of such Company Indemnification
Notice to Parent, then Parent shall promptly pay to the company Indemnitees the amount set forth in the Company Indemnification
Notice. If the Company Representative delivers a Company Indemnification Notice to Parent and Parent delivers a Parent Response
Notice (as defined below) and states in such Parent Response Notice that it does not dispute the payment of certain claims and
amounts set forth in the applicable Company Indemnification Notice, then Parent shall promptly pay to the Company Indemnitees
the amount set forth in the Company Indemnification Notice.
(c) If
Parent objects to the Company Indemnification Notice or any part thereof, then prior to 11:59 p.m. Eastern Time on the 30th day
after the delivery to Parent of such Company Indemnification Notice, deliver to the Company Representative a written notice (a
“Parent Response Notice”) which shall (i) state that it disputes all or some matters under the Company Indemnification
Notice (the “Parent Disputed Matters”) and/or (ii) indicate whether Parent is assuming the defense of the matters
relating to the Company Indemnification Notice.
(d) The
Company Representative and Parent shall act in good faith to resolve any Parent Disputed Matters in accordance with the following
procedure:
(i) Within
30 days after the delivery of a Parent Response Notice to the Company Representative pursuant to the preceding paragraph identifying
Parent Disputed Matters, the Company Representative and Parent shall attempt to resolve the Parent Disputed Matters through good
faith negotiations.
(ii) If
the Parent Disputed Matters are not fully resolved within the 30-day period described in paragraph (i) above, all such Parent
Disputed Matters shall be submitted to non-binding mediation, which may be done by either Parent or the Company Representative
by written notice. The mediation shall be held before one neutral mediator in a location to be agreed by the Company Representative
and Parent and administered by a mutually agreeable organization, or if none is agreed upon, the AAA, in either case, the mediation
shall be governed by the Commercial Mediation Rules of the AAA. The parties shall agree on a locations and a neutral mediator
within five days after notice of submission to mediation. If the parties are unable to agree on the location or mediator within
that time period, the location and mediator shall be selected by the AAA. Each party shall bear its own costs and expenses incurred
in connection with any such mediation, including one-half of the fees of the mediator.
(iii) If
the parties are unable to fully resolve the Parent Disputed Matters within 30 days after the Parent Disputed Matters are submitted
to mediation in accordance with paragraph (ii) above, either Parent or the Company Representative may seek relief from any United
States District Court or a state court located in the State of New York in accordance with Section 9.9.
(e) Within
five (5) Business Days after the resolution of a Parent Response Notice, Parent shall make any such payment pro rata to the Company
Indemnitees in accordance with the resolution of the applicable Parent Response Notice.
7.3 Indemnification
of Company Third Party Claims. The indemnification obligations and liabilities under this Article VII with respect to
actions, proceedings, lawsuits, investigations, demands or other claims brought against any of the Company Indemnitees by a Person
other than Parent (a “Company Third Party Claim”) shall be subject to the following terms and conditions:
(a) Defense.
Parent shall have the right, at its option (subject to the limitations set forth in Section 7.3(b) below) and
at its own expense, by written notice to the Company Representative, to assume the entire control of, subject to the right of
the Company Representative to participate (at its expense and with counsel of its choice) in, the defense, compromise or settlement
of the Company Third Party Claim as to which the Company Representative has provided a written notice to Parent (a “Company
Claim Notice”), and shall be entitled to appoint a recognized and reputable counsel reasonably acceptable to the Company
Representative to be the lead counsel in connection with such defense. If Parent is permitted and elects to assume the defense
of a Company Third Party Claim:
(i) Parent
shall diligently and in good faith defend such Company Third Party Claim and shall keep the Company Representative reasonably
informed of the status of such defense; provided, however, that in the case of any settlement providing for remedies
which are not merely incidental to a primary damage claim or claims for monetary damages, the Company Representative shall have
the right to approve any settlement, which approval will not be unreasonably withheld, delayed or conditioned; and
(ii) the
Company Representative shall cooperate fully in all respects with Parent in any such defense, compromise or settlement thereof,
including, without limitation, the selection of counsel, and the Company Representative shall make available to Parent all pertinent
information and documents under its control.
(b) Limitations
of Right to Assume Defense. Parent shall not be entitled to assume control of such defense and shall pay the fees and expenses
of counsel retained by the Company Representative if (i) the Company Third Party Claim relates to or arises in connection with
any criminal proceeding, action, indictment, allegation or investigation; (ii) the Company Third Party Claim seeks an injunction
or equitable relief against a Company Indemnitee which is not merely incidental to a primary damage claim or claims for monetary
damages; or (iii) there is a reasonable probability that a Company Third Party Claim may materially and adversely affect a Company
Indemnitee other than as a result of money damages or other money payments.
(c) Other
Limitations. Failure to give a prompt Company Claim Notice or to provide copies of relevant available documents or to furnish
relevant available data shall not constitute a defense (in whole or in part) to any Company Third Party Claim by the Company Representative
pursuant to this Article VII, and shall not affect Parent’s duty or obligations under this Article
VII, except to the extent (and only to the extent that) such failure shall have actually materially prejudiced the ability
of Parent to defend against or reduce its liability or caused or increased such liability or otherwise caused the damages for
which Parent is obligated to be greater than such damages would have been had the Company Representative given Parent prompt notice
hereunder. So long as Parent is defending any such action actively and in good faith, the Company Representative and Parent each
shall not, and shall make reasonable efforts to prevent a Company Indemnitee from settling such action. The Company Representative
shall make available to Parent all relevant records and other relevant materials required by it and in the possession or under
the control of the Company Representative, for the use of Parent and its representatives in defending any such action, and shall
in other respects give reasonable cooperation in such defense.
(d) Failure
to Defend. If Parent, promptly after receiving a Company Claim Notice, fails to defend such Company Third Party Claim actively
or in good faith, the Company Representative, at the reasonable cost and expense of Parent, will (upon further written notice)
have the right to undertake the defense, compromise or settlement of such Company Third Party Claim as he may determine in his
reasonable discretion, provided that Parent shall have the right to approve any settlement, which approval will not be unreasonably
withheld, delayed or conditioned.
(e) Company
Indemnitees’ Rights. Anything in this Section 7.3 to the contrary notwithstanding, Parent shall not,
without the written consent of the Company Representative, settle or compromise any action or consent to the entry of any judgment
which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Company Indemnitees
of a full and unconditional release from all liability and obligation in respect of such action without any payment by Company
Indemnitees.
(f) Parent.
Unless Parent has consented to a settlement of a Company Third Party Claim, the amount of the settlement shall not be a binding
determination of the amount of the Loss and such amount shall be determined in accordance with the provisions of this Agreement.
7.4 Insurance
Effect. To the extent that any Losses that are subject to indemnification pursuant to this Article VII are
covered by insurance paid for by Company or Parent prior to or after the Closing, the Company Representative shall use commercially
reasonable efforts to obtain the maximum recovery under such insurance; provided, that the Company Representative shall nevertheless
be entitled to bring a claim for indemnification under this Article VII in respect of such Losses and the time
limitations set forth in Section 6.5 for bringing a claim of indemnification under this Agreement shall be tolled
during the pendency of such insurance claim. The existence of a claim by the Company Representative and/or Company Indemnitee
for monies from an insurer or against a third party in respect of any Loss shall not, however, delay any payment pursuant to the
indemnification provisions contained herein and otherwise determined to be due and owing by Parent. If the Company Representative
has received the payment required by this Agreement from Parent in respect of any Loss and later receives proceeds from insurance
in respect of such Loss, then it shall hold such proceeds or other amounts in trust for the benefit of Parent and shall pay to
Parent, as promptly as practicable after receipt, a sum equal to the amount of such proceeds or other amount received, up to the
aggregate amount of any payments received from Parent pursuant to this Agreement in respect of such Loss. Notwithstanding any
other provisions of this Agreement, it is the intention of the parties that no insurer or any other third party shall be (i) entitled
to a benefit it would not be entitled to receive in the absence of the foregoing indemnification provisions, or (ii) relieved
of the responsibility to pay any claims for which it is obligated.
7.5 Limitations
on Indemnification.
(a) Survival;
Time Limitation. The representations, warranties, covenants and agreements in this Agreement or in any writing delivered by
Parent to Company in connection with this Agreement shall survive the Closing for the Survival Period.
(b) Any
indemnification claim made by the Company Representative prior to the termination of the Survival Period shall be preserved despite
the subsequent termination of the Survival Period and any claim set forth in a Company Claim Notice sent prior to the expiration
of the Survival Period shall survive until final resolution thereof. Except as set forth in the immediately preceding sentence,
no claim for indemnification under this Article VII shall be brought after the end of the Survival Period.
(c) Minimum
Amount Limitation. The Company Indemnitees shall be entitled to indemnification for any Losses with respect to the matters
contained in Section 7.1(a), only to the extent that the aggregate Losses with respect thereto exceed the Basket
Amount, at which point the Company Indemnitees shall be permitted to recover only such Losses in excess of the Basket Amount.
(d) Aggregate
Amount Limitation. The aggregate liability for Losses pursuant to Section 7.1(a) shall not in any event
exceed $1,000,000.
7.6 Exclusive
Remedy. Company, on behalf of itself and the other Company Indemnitees, hereby acknowledges and agrees that, from and after
the Closing, the sole remedy of the Company Indemnitees with respect to any and all claims for money damages arising out of or
relating to this Agreement shall be pursuant and subject to the requirements of the indemnification provisions set forth in this
Article VII. Notwithstanding any of the foregoing, nothing contained in this Article VII shall in any
way impair, modify or otherwise limit a Company Indemnitee’s right to bring any claim, demand or suit against the other
party based upon such other party’s actual fraud or intentional or willful misrepresentation or omission, it being understood
that a mere breach of a representation and warranty, without intentional or willful misrepresentation or omission, does not constitute
fraud.
7.7 Adjustment
to Merger Consideration. Amounts paid for indemnification under Article VII shall be deemed to be an adjustment
to the value of the shares of Parent Common Stock issued by Parent as a result of the Merger, except as otherwise required by
Law.
7.8 Company
Representative. The parties acknowledge that all actions to be taken by the Company Indemnitees pursuant to this Article
VII shall be taken on their behalf by the Company Representative in accordance with the provisions of this Agreement.
Article
VIII
DEFINED TERMS
8.1 Definitions.
For purposes of this Agreement, the following terms will have the following meanings when used herein with initial capital letters:
“Action”
means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Entity.
“Affiliate”
as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with,
that Person; for purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,”
“controlled by” and “under common control with”), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the
ownership of voting securities, by Contract or otherwise.
“Business
Day” means a day other than a Saturday, Sunday or any day on which banks located in the State of New York are authorized
or obligated to close.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company
Licensed Intellectual Property Rights” means any Licensed Intellectual Property Rights of Company.
“Company
Material Adverse Effect” means a Material Adverse Effect on Company.
“Company
Material Agreements” means each Contract to which Company is a party or subject to or by which its assets are bound
which: (a) provides for obligations, payments, Liabilities, consideration, performance of services or the delivery of goods to
or by such party of any amount or value reasonably expected to be in excess of $50,000 in any annual period; (b) contains
covenants limiting the freedom of such party to engage in any line of business in any geographic area or to compete with any Person;
(c) is an employment, retention or severance contract or indemnification contract, or a consulting or non-compete agreement, applicable
to any employee of or consultant to such party whose annual total compensation exceeds $120,000 or any director of such party;
(d) relates to, or is evidence of, or is a guarantee of, or provides security for, indebtedness (whether incurred, assumed, guaranteed
or secured by any asset of such party); (e) is a letter of credit, bond or similar arrangement running to the account of, or for
the benefit of, such party in an amount in excess of $50,000; (f) is a joint venture or partnership contract or a limited
liability company operating agreement; (g) is entered into with, or otherwise relates to, any Affiliate, officer or director or
their family members of such party; (h) provides for the payment of cash or other compensation or benefits upon the Merger and
the consummation of the transactions contemplated hereby; (i) relates to any loan to any directors, officers or Affiliates of
such party; or (j) is otherwise material to the operations and business prospects of such party.
“Company
Owned Intellectual Property Rights” means any Intellectual Property Rights owned by or registered to Company.
“Company
Registered Intellectual Property Rights” means any Registered Intellectual Property Rights included in Company Owned
Intellectual Property Rights.
“Computer
Software” means all computer programs, databases, compilations, data collections (in each case, whether in human-readable,
machine readable, source code or object code form) and documentation related to the foregoing.
“Contract”
means any contract, agreement, license, lease, guaranty, indenture, sales or purchase order or other legally binding commitment
in the nature of a contract (whether or not written) to which a Person is a party.
“Derivative
Security” means any option, warrant, equity security, equity-linked security, appreciation rights, phantom equity, or
similar ownership interests, calls, rights (including preemptive rights), Contracts, commitments or agreements of any character
to which the specified Person is a party or by which either is bound obligating such Person to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition
of, or deliver cash or other consideration with respect to, any shares of capital stock or similar ownership interests or equity-linked
securities of such Person or obligating such Person to grant, extend, accelerate the vesting of or enter into any such subscription,
option, warrant, equity security, equity-linked security, appreciation rights, call, right, commitment or agreement.
“DOL”
means the United States Department of Labor.
“Environmental
Claim” means any and all administrative, regulatory or judicial Legal Actions alleging Liability arising out of or resulting
from: (1) the presence or Release into the environment of any Hazardous Substance at the Company Leased Real Estate or Parent
Leased Real Estate, as applicable; or (2) any violation of Environmental Law.
“Environmental
Laws” means all federal, state or local statutes, laws, regulations, judgments and orders in effect on the Effective
Time and relating to protection of human health or the environment, including laws and regulations relating to Releases or threatened
Releases of Hazardous Substances, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances.
“Environmental
Permits” means all governmental licenses, permits, registrations and government approvals issued pursuant to Environmental
Law.
“Exchange
Ratio” means 10.510708.
“Hazardous
Substances” means any chemicals, materials or substances which are defined as or included in the definition of
“hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous
wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or similar
terms under any Environmental Law.
“Indebtedness”
means, without duplication to current liabilities, all: (i) obligations for borrowed money (including any unpaid principal, premium,
accrued and unpaid interest, prepayment penalties, commitment and other fees, reimbursements, indemnities and all other amounts
payable in connection therewith); (ii) liabilities evidenced by bonds, debentures, notes, or other similar instruments or debt
securities; (iii) obligations, contingent or otherwise, in respect of any letters of credit or bankers’ acceptances (to
the extent drawn), sureties, performance bonds, guaranties, endorsements and other similar obligations, whether secured or not,
in respect of the obligations of other Persons; (iv) obligations (including accrued interest) without duplication under a lease
agreement that would be capitalized pursuant to GAAP and (v) the deferred purchase price of property or services (excluding earn-out
obligations which shall not be deemed Indebtedness under this Agreement). For purposes of calculating Indebtedness, all interest,
prepayment penalties, premiums, fees and expenses (if any) and other amounts which would be payable if Indebtedness were paid
in full at the Closing shall be treated as Indebtedness.
“Intellectual
Property Rights” means all worldwide (a) inventions, whether or not patentable, (b) patents and patent applications,
and any reissue, continuation, continuation-in-part, division, extension or reexamination thereof, and any application that claims
priority to any of the foregoing in this subpart (b), (c) trademarks, trademark applications, service marks, service mark applications,
trade dress, logos, Internet domain names and trade names, whether or not registered, and all goodwill associated therewith, (d)
rights of publicity and other rights to use the names and likeness of individuals, (e) copyrights and related rights, whether
or not registered, (f) Computer Software, data, databases, files, and documentation and other materials related thereto, (g) trade
secrets and all confidential, proprietary, technical, technological, industrial, business processes and business information,
(h) know how, (i) all rights in any of the foregoing provided by bilateral or international treaties or conventions, and (j) all
rights to sue or recover and retain damages and costs and attorneys’ fees for past, present and future infringement or misappropriation
of any of the foregoing.
“International
Employee Plan” means an employee plan that has been adopted or maintained by a Person, whether informally or formally,
for the benefit of current or former employees of such Person outside the United States.
“IRS”
means the United States Internal Revenue Service.
“Knowledge”
means, with respect to Company, the actual Knowledge after reasonable inquiry of Vuong Trieu, and with respect to Parent, the
actual Knowledge after reasonable inquiry of Joseph W. Ramelli.
“Law”
means any federal, state, local (statutory, common or otherwise), municipal, foreign or international, multinational or other
law, statute, constitution, treaty, principle of common law, resolution, ordinance, code, edict, guideline, policy, decree, rule,
regulation, ruling or requirement issued, enacted, adopted, promulgated, applied, implemented or otherwise put into effect by
or under the authority of any Governmental Entity.
“Legal
Action” means any claim, action, suit, arbitration, proceeding or governmental investigation or proceeding.
“Liabilities”
means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including those arising under any Law, Legal Action or Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.
“License
Agreements” means all agreements (whether written or oral, including license agreements, research agreements, development
agreements, distribution agreements, consent to use agreements and covenants not to sue, or settlement agreements containing like
provisions) to which a Person is a party or otherwise bound, pursuant to which a Person has granted or been granted any right
to use, exploit or practice any Intellectual Property Rights, or that restrict the right of a Person to use or enforce any Intellectual
Property Rights.
“Licensed
Intellectual Property Rights” means any Intellectual Property Rights owned by a third party that a Person has a right
to use, exploit or practice by virtue of a license grant, immunity from Legal Action, License Agreement or otherwise.
“Liens”
means all liens, pledges, hypothecations, charges, mortgages, security interests, encumbrances, claims, infringements, interferences,
options, right of first refusals, preemptive rights, community property interests or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on
the possession, exercise or transfer of any other attribute of ownership of any asset), other than Permitted Liens.
“Losses”
shall mean any loss, damage, injury, liability, claim, demand, settlement, judgment, award, assessment, fine, penalty, Tax, fee
(including reasonable attorneys’ fees), charge, cost (including costs of investigation) or expense of any nature, including
any lost profits and any diminution in value of the business. Notwithstanding anything to the contrary, for purposes of calculating
the amount of any Losses under Article VI or Article X, all references to “material,” “materiality,”
“Material Adverse Effect” and the like shall be disregarded.
“Material
Adverse Effect” means a change, event, effect, violation, inaccuracy, circumstance or other matter which, individually
or in the aggregate with other changes, events, effects, violations, inaccuracies, circumstances or other matters, when considered
on either a long-term basis or a short-term basis, has had or could reasonably be expected to have or give rise to a material
adverse effect on: (i) the business, results of operations, condition (financial or otherwise), prospects, capitalization, liabilities,
operations or financial performance or assets of the specified party; or (ii) the ability of the specified party to consummate
the transactions contemplated hereby on a timely basis.
“Order”
means any writ, decree, injunction, order, judgment, stipulation, determination, award or similar action.
“OTCQB”
means the OTCQB tier of the OTC Markets.
“Parent
2016 SEC Documents” means all forms, reports and documents filed by Parent with the SEC for the period commencing on
January 1, 2016 and ending on the date hereof, including, without limitation, Parent’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2015.
“Parent
Licensed Intellectual Property Rights” means any Licensed Intellectual Property Rights of any of the Parent Group.
“Parent
Material Adverse Effect” means a Material Adverse Effect on Parent and/or Merger Sub.
“Parent
Material Agreements” means each Contract to which the Parent is a party or subject to or by which its assets are bound
which: (a) provides for obligations, payments, Liabilities, consideration, performance of services or the delivery of goods to
or by such party of any amount or value reasonably expected to be in excess of $50,000 in any annual period; (b) contains
covenants limiting the freedom of such party to engage in any line of business in any geographic area or to compete with any Person;
(c) is an employment, retention or severance contract, or a consulting or non-compete agreement, applicable to any employee of
or consultant to such party whose annual total compensation exceeds $120,000 or any director of such party; (d) relates to, or
is evidence of, or is a guarantee of, or provides security for, indebtedness (whether incurred, assumed, guaranteed or secured
by any asset of such party); (e) is a letter of credit, bond or similar arrangement running to the account of, or for the benefit
of, such party in an amount in excess of $50,000; (f) is a joint venture or partnership contract or a limited liability
company operating agreement; (g) is entered into with, or otherwise relates to, any Affiliate, officer or director or their family
members of such party; (h) provides for the payment of cash or other compensation or benefits upon the Merger and the consummation
of the transactions contemplated hereby; (i) relates to any loan to any directors, officers or Affiliates of such party; or (j)
is otherwise material to the operations and business prospects of such party.
“Parent
Owned Intellectual Property Rights” means any Intellectual Property Rights owned by or registered to any of the Parent
Group.
“Parent
Registered Intellectual Property Rights” means any Registered Intellectual Property Rights included in Parent Owned
Intellectual Property Rights.
“Permitted
Liens” means (a) statutory Liens for current Taxes or other governmental charges not yet due and payable or the amount
or validity of which is being contested in good faith, (b) mechanics’, carriers’, workers’, repairers’
and similar statutory Liens arising or incurred in the ordinary course of business for amounts which are not delinquent or which
are being contested by appropriate proceedings, (c) zoning, entitlement, building and other land use regulations imposed by Governmental
Entities having jurisdiction over such Person’s owned or leased real property, which are not violated by the current use
and operation of such real property, (d) covenants, conditions, restrictions, easements and other similar non-monetary matters
of record affecting title to such Person’s owned or leased real property, which do not materially impair the occupancy or
use of such real property for the purposes for which it is currently used in connection with such Person’s businesses, (e)
any right of way or easement related to public roads and highways, which do not materially impair the occupancy or use of such
real property for the purposes for which it is currently used in connection with such Person’s businesses, (f) Liens arising
under workers’ compensation, unemployment insurance, social security, retirement and similar legislation, and (g) any other
Liens that, in the aggregate, do not materially impair the value or the continued use and operation of the assets or properties
to which they relate, including the rights to use a license under the applicable Contract.
“Person”
means any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other
enterprise, association, organization, entity or Governmental Entity.
“Registered
Intellectual Property Rights” means all patents and patent applications, registered copyrights and copyright applications,
registered trademarks and trademark applications, and any other Intellectual Property Right that is the subject of an application,
certificate, filing, registration or other document issued by, filed with, or recorded by, any Governmental Entity.
“Related
Party” of any specified Person means: (i) an executive officer or director (or any Person that exercises substantially
similar right and authority) of such specified Person; (ii) any Person owning 5% or more of the voting shares of such specified
Person (assuming the exercise or conversion of any Derivative Securities of such specified Person that represents, directly or
indirectly, the right to acquire voting shares of such specified Person); (iii) any Person that can significantly influence the
management or operating policies of such specified Person, including the ability that would prevent such specified Person from
fully pursuing its own separate interests, through the ownership of securities, contract or both; or (iv) the immediate family
members or Affiliates or associates of any Person described in the foregoing clauses of this paragraph.
“Release”
means any release, spill, emission, emptying, leaking, injection, deposit, disposal, discharge, dispersal, leaching, pumping,
pouring, or migration into the atmosphere, soil, surface water, groundwater or property.
“Representatives”
of any entity means such entity’s directors, officers, employees, legal, investment banking and financial advisors, accountants
and any other agents and representatives.
“SEC”
means the U.S. Securities and Exchange Commission.
“Subsidiary”
means, with respect to any Person, any corporation or other organization, whether incorporated or unincorporated, of which more
than fifty percent (50%) of either the equity interests in, or the voting control of, such corporation or other organization is,
directly or indirectly through subsidiaries or otherwise, beneficially owned by such Person.
“Transaction
Documents” means each of the documents, agreements and instruments related to this Agreement and the Merger or the other
transactions contemplated hereby, to which the specified Person is a party.
Article
IX
GENERAL PROVISIONS
9.1 Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be
deemed to have been given and duly delivered: (i) when delivered (or delivery was properly tendered) by hand; (ii) when delivered
(or delivery was properly tendered) by the addressee if sent by a nationally recognized overnight courier; or (iii) on the date
sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and
on the next Business Day if sent after normal business hours of the recipient, if the original of such notice was duly transmitted
in accordance with (i) or (ii) of this Section 9.1 or transmitted by certified mail, return receipt requested,
postage prepaid. Such communications must be sent to the respective parties at the addresses for such parties on the signature
page hereto (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9.1):
if
to Parent, to:
Marina
Biotech, Inc.
P.O.
Box 1559
Bothell,
WA 98041
Attention:
CEO
Email:
jramelli@marinabio.com
with
a copy to (which will not constitute notice to Parent):
Pryor
Cashman LLP
7
Times Square
New
York, NY 10036
Attention:
Lawrence Remmel
Email:
lremmel@pryorcashman.com
if
to Company, to:
IthenaPharma,
Inc.
17700
Castleton Street, Suite 558
City
of Industry, CA 91748
Attention:
Vuong Trieu
Email:
vtrieu@autotelicinc.com
with
a copy to (which will not constitute notice to Company):
Reed
Smith LLP
1901
Avenue of the Stars, Suite 700
Los
Angeles, CA 90067-5299
Attention:
John Chao
Email:
jchao@reedsmith.com
or
to such other Persons, addresses or email addresses as may be designated in writing by the Person entitled to receive such communication
as provided above.
9.2 Interpretation.
When a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement. Unless
otherwise indicated the words “include,” “includes” and “including” when used herein shall
be deemed in each case to be followed by the words “without limitation.” The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. When reference
is made herein to “the business of” an entity, such reference shall be deemed to include the business of all direct
and indirect subsidiaries of such entity. A reference in this Agreement to $ or dollars is to U.S. dollars. The words “hereof,”
“herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement. References to the “date hereof” shall mean the date
first written above. References to “this Agreement” shall include the Company Disclosure Letter and the Parent Disclosure
Letter. Any reference to a party to this Agreement shall include a reference to each and every subsidiary of such party to the
extent applicable, unless otherwise expressly provided.
9.3 Counterparts.
This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall
become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
9.4 Entire
Agreement. This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated
by or referred to herein, including the Confidentiality Agreement, the Company Disclosure Letter and the Parent Disclosure Letter
constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the subject matter hereof.
9.5 Amendment.
This Agreement may be amended, supplemented or modified by action taken by or on behalf of the respective Boards of Directors
of the parties hereto at any time prior to the Effective Time, but only to the extent permitted by applicable Law or in accordance
with the rules of any self-regulatory organization. No such amendment, supplement or modification shall be effective unless set
forth in a written instrument duly executed by or on behalf of each party hereto. After the Effective Time, any such amendment,
supplement or modification of this Agreement shall require the written consent of the Board of Directors of Parent and of the
Company Representative.
9.6 Waiver.
At any time prior to the Effective Time any party hereto, by action taken by or on behalf of its Board of Directors, may to the
extent permitted by applicable Law (i) extend the time for the performance of any of the obligations or other acts of the other
party hereto, (ii) unless prohibited by applicable Law, waive any inaccuracies in the representations and warranties or compliance
with the covenants and agreements of the other party hereto contained herein or in any document delivered pursuant hereto or (iii)
unless prohibited by applicable Law, waive compliance with any of the conditions of such party contained herein. No such extension
or waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party extending the
time of performance or waiving any such inaccuracy or non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion.
9.7 Severability.
In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application
of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to negotiate in good faith to modify this Agreement so as to replace such void or unenforceable provision
of this Agreement with a valid and enforceable provision that is mutually agreeable to the parties and that will achieve, to the
extent possible, the economic, business and other purposes of such void or unenforceable provision.
9.8 Specific
Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to specific performance of the terms of this Agreement in addition to any other remedy at law or equity.
The parties accordingly agree that the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they
are entitled at law or in equity or under this Agreement.
9.9 Governing
Law; Dispute Resolutio. This Agreement, and all claims or causes of action (whether at law, in contract or in tort) that may
be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed
by and construed in accordance with the Laws of the State of New York, without giving effect to any choice or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the Laws of
any jurisdiction other than the State of New York. Each of the parties hereto irrevocably (i) consents to submit itself to the
personal jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District
Court for the Southern District of New York in the event any dispute arises out of this Agreement or any of the transactions contemplated
hereby, and, in connection with any such matter, to service of process by notice as otherwise provided herein, (ii) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and
(iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated hereby in any
court other than the foregoing New York State court or, to the fullest extent permitted by applicable Law, the foregoing Federal
court. Any party may make service on another party by sending or delivering a copy of the process to the party to be served at
the address and in the manner provided for the giving of notices in Section 9.1.
9.10 Rules
of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution
of this Agreement and, therefore, waive the application of any Law, regulation, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
9.11 Assignment;
Parties in Interest. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the other party. Subject to the preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and permitted assigns, and, except as provided in the
following sentence, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person (other
than the Parent Indemnitees to the extent provided in Article VI and the Company Indemnitees to the extent provided
in Article VII) any rights, interests, benefits or remedies of any nature whatsoever under or by reason of this Agreement.
No current or former employee, director, officer, stockholder, creditor, agent, representative or advisor of Parent or Company,
or any of their respective Affiliates, shall have any liability for any obligations or liabilities of Parent or Merger Sub hereunder
or under the Transaction Documents, other than to the extent provided in Article VI and Article VII.
9.12 WAIVER
OF JURY TRIAL. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF
THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Remainder
of Page Intentionally Left Blank; Signature Page Follows]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers duly authorized thereunto,
as of the date first written above.
| |
MARINA
BIOTECH, INC. |
| |
|
| |
By: |
/s/
Joseph W. Ramelli |
| |
Name:Joseph
W. Ramelli |
| |
Title:
Interim CEO |
| |
|
|
| |
ITHENA
ACQUISITION CORPORATION |
| |
|
|
| |
By: |
/s/
Joseph W. Ramelli |
| |
Name:
Joseph W. Ramelli |
| |
Title:
President |
| |
|
|
| |
ITHENAPHARMA
INC. |
| |
|
|
| |
By: |
/s/
Vuong Trieu |
| |
Name: Vuong Trieu |
| |
Title: CEO
|
| |
|
| |
COMPANY REPRESENTATIVE |
| |
|
| |
By: |
/s/
Vuong Trieu |
| |
Name: Vuong Trieu |
[Signature
Page to Agreement and Plan of Merger]
Schedule
I - Index to Certain Defined Terms
| Term |
Section |
|
Term |
Section |
| |
|
|
|
|
| AAA |
6.2(d) |
|
Merger Sub |
Preamble |
| |
|
|
|
|
| Adjusted Parent Option |
5.2 |
|
Merger |
1.1 |
| |
|
|
|
|
| Agreement |
Preamble |
|
Novosom |
4.2(b) |
| |
|
|
|
|
| Basket Amount |
6.5(c) |
|
Parent |
Preamble |
| |
|
|
|
|
| Blue Sky Laws |
3.4(b) |
|
Parent Approvals |
4.7(c) |
| |
|
|
|
|
| Certificate of Merger |
1.2 |
|
Parent Claim Notice |
6.3(a) |
| |
|
|
|
|
| Closing Date |
1.2 |
|
Parent Common Stock |
2.1(a) |
| |
|
|
|
|
| Closing |
1.2 |
|
Parent Disclosure Letter |
Article IV |
| |
|
|
|
|
| Company |
Preamble |
|
Parent Disputed Matters |
7.2(c) |
| |
|
|
|
|
| Company Approvals |
3.6(c) |
|
Parent Financial Statements |
4.5(b) |
| |
|
|
|
|
| Company Claim Notice |
6.3(a) |
|
Parent Group |
Article IV |
| |
|
|
|
|
| Company Common Stock |
2.1(a) |
|
Parent Indemnification Notice |
6.2(a) |
| |
|
|
|
|
| Company Disputed Matters |
6.2(c) |
|
Parent Indemnitees |
6.1 |
| |
|
|
|
|
| Company Disclosure Letter |
Article III |
|
Parent Interim Financial Statements |
4.5(b) |
| |
|
|
|
|
| Company Financial Statements |
3.5(a) |
|
Parent Insurance Policies |
4.17 |
| |
|
|
|
|
| Company Indemnification Notice |
7.2(a) |
|
Parent Options |
4.2(c) |
| |
|
|
|
|
| Company Indemnitees |
7.1 |
|
Parent Option Plans |
4.2(c) |
| |
|
|
|
|
| Company Insurance Policies |
3.18 |
|
Parent Permits |
4.6(b) |
| |
|
|
|
|
| Company Leased Real Estate |
3.11(b) |
|
Parent Plans |
4.9(a) |
| |
|
|
|
|
| Company Leases |
3.11(b) |
|
Parent Response Notice |
7.2(c) |
| |
|
|
|
|
| Company Permits |
3.6(b) |
|
Parent SEC Documents |
4.5(a) |
| |
|
|
|
|
| Company Plans |
3.9(b) |
|
Parent Subsidiary |
Article IV |
| |
|
|
|
|
| Company Representative |
2.3 |
|
Parent Third Party Claim |
6.3 |
| |
|
|
|
|
| Company Response Notice |
6.2(c) |
|
Parent Transaction Documents |
4.3 |
| |
|
|
|
|
| Company Stock Record |
2.2(b) |
|
Regulatory Agreement |
3.16 |
| |
|
|
|
|
| Company Third Party Claim |
7.3(a) |
|
Required Financial Statements |
5.5 |
| |
|
|
|
|
| Company Transaction Documents |
3.3 |
|
Sarbanes-Oxley Act |
3.5(c) |
| |
|
|
|
|
| Company Warrants |
3.2(b) |
|
Securities Act |
3.4(b) |
| |
|
|
|
|
| DGCL |
Recitals |
|
Survival Period |
6.5(a) |
| |
|
|
|
|
| Effective Time |
1.2 |
|
Surviving Corporation |
1.1 |
| |
|
|
|
|
| ERISA Affiliate |
3.9(b) |
|
Tax Returns |
3.12(a) |
| |
|
|
|
|
| ERISA |
3.9(b) |
|
Tax |
3.12(a) |
| |
|
|
|
|
| Exchange Act |
3.4(b) |
|
Year-End Financial Statements |
3.5(a) |
| |
|
|
|
|
| GAAP |
3.5(a) |
|
|
|
| |
|
|
|
|
| Governmental Entity |
3.4(b) |
|
|
|
| |
|
|
|
|
| Interim Financial Statements |
3.5(a) |
|
|
|
