AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “ Agreement ”) is made and entered into as of July 9, 2008 (the “ Agreement Date ”), by and among (i)  ULURU INC. , a Nevada corporation (“ Parent ”), (ii) CARDINIA ACQUISITION CORP. , a Delaware corporation and a wholly owned Subsidiary of Parent (“ Merger Sub ”), (iii)  BIO MED SCIENCES, INC. , a New York corporation (the “ Company ”), and (iv) each of Mark E. Dillon, Thomas Asson, Joseph A. Dillon, Sr., and David P. Willis as the members of the Holders Representative Committee referred to herein for the limited purposes specifically set forth herein and only in their capacity as such.  Capitalized terms used herein without definition shall have the respective meanings set forth in Article 1 hereof.

Whereas , in accordance with the terms set forth herein, the Merger Sub shall merge with and into the Company (the “ Merger ”), following which the Company shall continue as the surviving corporation and a wholly owned subsidiary of the Parent, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the provisions of Delaware Law and New York Law;

Whereas , the board of directors of the Company (the “ Company Board ”) has approved and adopted this Agreement and the consummation of the transactions contemplated hereby, and will be submitting the execution and delivery of this Agreement and the performance of the transaction contemplated hereby to the holders of the shares of the capital stock of the Company (collectively, the “ Company Stockholders ”), for their approval in accordance with New York Law;

Whereas , the Company Board has carefully considered the terms of this Agreement and has determined that the terms and conditions of the transactions contemplated hereby, including the Merger, are fair and in the best interests of, and are advisable to, the Company and the Company Stockholders, and the Company Board recommends that the Company Stockholders vote for the approval of this Agreement and the transactions contemplated hereby; and

Whereas , as soon as practicable following the execution and delivery of this Agreement, Parent and certain stockholders of Company will execute and deliver a Voting and Support Agreement in the form of Exhibit A hereto (the “ Voting and Support Agreement ”) pursuant to which, among other things, such stockholders will covenant to: (i) at any time after the execution and delivery of this Agreement, vote in favor of the adoption of this Agreement and the transactions contemplated hereby, including, but not limited to, the Merger and (ii) otherwise to support this Agreement and the transactions contemplated hereby.

Now, Therefore , in consideration of the foregoing and the mutual covenants and agreements herein contained and intending to be legally bound hereby, the Parent, the Merger Sub and the Company hereby agree as follows:

“ Affiliate ” shall be with respect to any person or entity, any person or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person or entity.

“ Affiliated Group ” has the meaning ascribed to it in Section 1504 of the Code, and in addition includes any analogous combined, consolidated or unitary group, as defined under any applicable state, local, or foreign income Tax law.

“ business day ” (whether such term is capitalized or not) means any day other than Saturday, Sunday or a legal holiday that banks located in Dallas, Texas are open for business.

“ Branded Product ” means any Company woundcare, scar management or anti-wrinkle product sold under any trademark and specifically not including any Parent products, including the Parent’s Altrazeal product.

“ Buyer Group ” means Parent and its direct and indirect Subsidiaries, Affiliates, successors, and permitted assignees and includes, after the Effective Time, the Surviving Corporation and its Affiliates, successors, and permitted assignees (all of the foregoing being collectively referred to herein as the “ Members of the Buyer Group ” and individually as a “ Member of the Buyer Group ”).

“ Closing Payment ” means any payment required to be made by Parent to the Participating Rights Holders pursuant to Section 2.6 hereof.

“ Closing Payment Amount ” means any of the Initial Closing Payment Amount and Subsequent Closing Payment Amount.

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

“ Company Common Stock ” means the Company’s Common Stock, $0.002 par value per share.

“ Company Intellectual Property ” means (i) Company Patents and (ii) all Intellectual Property (other than Company Patents) owned by, or licensed to, the Company.

“ Company Patents ” means those United States, international and foreign patents and patent applications (including provisional applications), in each case that are listed in Schedule 4.10 of the Company Disclosure Schedule, and all reissues, divisions, renewals, extensions, provisions, continuations, foreign counterparts, and continuations-in-part thereof.

“ Company Registered Intellectual Property ” means those United States, international and foreign: (a) patents and patent applications (including provisional applications), in each case that are listed in Schedule 4.10 of the Company Disclosure Schedule; (b) registered trademarks, registered service marks, applications to register trademarks or service marks, intent-to-use applications, or other registrations or applications related to trademarks or service marks, in each case that are listed in Schedule 4.10 of the Company Disclosure Schedule; and (c) registered copyrights and applications for copyright registration, in each case that are listed on Schedule 4.10 of the Company Disclosure Schedule.

“ Contingent Payment ” means any payment required to be made by Parent to the Participating Rights Holders pursuant to Section 2.7 hereof.

“ Contingent Payment Amount ” means any of the Manufacturing Milestone Payment Amount or the Sales Milestone Payment Amount.

“ Damages ” means all damages, losses, claims, demands, actions, causes of action, suits, litigations, arbitrations, liabilities, costs, and expenses, including court costs and the reasonable fees and expenses of legal counsel.

“ Delaware Law ” means the General Corporation Law of the State of Delaware, as amended from time to time.

“ Disqualified Stockholder ” means (with respect to any Securities of the Company) Parent, Merger Sub or any Subsidiary of Parent or Merger Sub or any of their respective Affiliates or any transferees of any such securities of the Company at any time held by any of the foregoing.

“ Dissenting Shares ” means shares of Company Common Stock that are outstanding immediately prior to the Effective Time of the Merger and which are held by stockholders who shall have not voted in favor of the Merger or consented thereto in writing and who shall have exercised dissenters’ rights or rights of appraisal for such shares of Company Common Stock in accordance with New York Law and who, as of the Effective Time, have not effectively withdrawn or lost such dissenters’ rights.

“ FDA ” means the United States Food and Drug Administration.

“ Fully Diluted Company Common Stock Number ” means the fully-diluted number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time assuming the exercise or cancellation of all options and warrants pursuant to Sections 3.1(b) and 3.1(c) hereof.

“ Governmental Authority ” means any United States (federal, state or local) or foreign government, or governmental, regulatory or administrative authority, agency or commission.

“ Holders Representative Committee ” means the group of individuals appointed to serve as such under Section 3.5.

“ Indebtedness ,” as applied to any person, means (a) all indebtedness of such person for borrowed money, whether current or funded, or secured or unsecured, (b) all indebtedness of such person for the deferred purchase price of property or services represented by a note or other security, (c) all indebtedness of such person created or arising under any conditional sale or other title retention agreement (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of specific property), (d) all indebtedness of such person secured by a purchase money mortgage or other Lien to secure all or part of the purchase price of property subject to such mortgage or other Lien, (e) all notes payable of such person, (f) all indebtedness or liabilities of such person that would be required to be reflected on a balance sheet or referred to in the notes thereto in accordance with generally accepted accounting principles, (g) all indebtedness, liabilities or obligations of such person that are identified in Schedule 4.11 of the Company Disclosure Schedule as “Indebtedness,” (h) all other obligations of such person under leases that have been or must be, in accordance with generally accepted accounting principles, recorded as capital leases in respect of which such person is liable as lessee, (i) any liability of such person in respect of banker’s acceptances or letters of credit, and (j) all indebtedness referred to in clauses (a), (b), (c), (d), (e), (f), (g), (h) or (i) hereof that is directly or indirectly guaranteed by such person or which such person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which such person has otherwise assured a creditor against loss.

“ Initial Closing Payment Amount ” means an amount equal to seven million dollars ($7,000,000).

“ Intellectual Property ” means any or all of the following and all rights in, arising out of, or associated therewith: (a) all United States, international and foreign patents and applications thereof and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (b) all inventions (whether patentable or not), invention disclosures, improvements, drug candidates, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (c) all copyrights, copyright registrations and applications therefor, and all other rights corresponding thereto throughout the world; (d) all industrial designs and any registration and applications therefor throughout the world; (e) all trade names, logos, common law trademarks and service marks, trademark and service mark registration and applications therefor throughout the world; (f) all databases and data collections and all rights therein throughout the world; and (g) any similar or equivalent rights to any of the foregoing anywhere in the world.

“ Knowledge ,” when used to qualify a representation or warranty in this Agreement, has the following meaning:  Where a representation or warranty is made to the Company’s knowledge, or with a similar qualification, the Company will be conclusively deemed to have knowledge of any matter with respect to which the Company’s Chief Executive Officer has actual knowledge after conducting a reasonable investigation.  Where a representation or warranty is made to the Parent’s knowledge, or with a similar qualification, Parent will be conclusively deemed to have knowledge of any matter with respect to which Parent’s Chief Executive Officer has actual knowledge after conducting a reasonable investigation.

“ Liens ” means any and all liens, claims, mortgages, security interests, pledges, options, rights of first offer or refusal, charges, encumbrances, limitations on voting rights, and restrictions on transfer of any kind, except (i) in the case of references to securities, those arising under applicable securities laws solely by reason of the fact that such securities were issued pursuant to exemptions from registration under such securities laws, (ii) mechanic’s, materialmen’s and similar liens, (iii) liens for Taxes not yet due and payable and (iv) liens arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation.

“ Manufacturing Milestone ” means (i) the first occurrence after the Effective Time of any Member of the Buyer Group entering into, prior to December 31, 2008, a contract manufacturing agreement with Unilever for moisture amplifying skin strips or (ii) the first occurrence after the Effective Time of any Member of the Buyer Group entering into any other contract manufacturing agreement with respect to a product utilizing the Intellectual Property of the Company with a market opportunity equal to or greater than the moisture amplifying skin strip.

“ Manufacturing Milestone Payment A mount” means an amount equal to five hundred thousand dollars ($500,000) minus the aggregate amount of any and all set off claims made against any Contingent Payment pursuant to Section 9.6 or Section 3.7 hereof, if any, that are outstanding as of the date on which the Manufacturing Milestone Payment is made pursuant to Section 2.7(a) hereof.

“ Material Adverse Effect ” means with respect to the Company or Parent, as the case may be, any change or effect that, when taken individually or together with all other adverse changes or effects, is or is reasonably likely to be materially adverse to the business, results of operations and financial condition of the Company or Parent, as the case may be, and their respective Subsidiaries, taken as a whole, except for any such changes or effects resulting from or arising as a result of (i) changes in general political or geopolitical conditions, (ii) changes in the healthcare, pharmaceutical or biotechnology industries generally, or (iii) changes generally applicable to the economy or securities market in the United States or the world economy or international securities markets, unless in any such instance such change described in (i), (ii) or (iii) above impacts the Company or Parent, as the case may be, in a materially disproportionate manner relative to the majority of other similar entities impacted by such change.  A decline or any fluctuation in the trading price or prices of Parent Common Stock shall in no event constitute a Material Adverse Effect with respect to Parent.  Any determination, decision or position taken by the FDA or other similar regulatory authority, any change in regulatory strategy by the Company or any change in the regulatory development status or affairs of the Company, that would otherwise materially adversely affect any of the Company’s product candidates or products, shall constitute a Material Adverse Effect with respect to the Company.

“ Merger Consideration ” means the cash and, at the election of Parent pursuant to Section 2.9 hereof, the shares of Parent Common Stock payable to the Participating Rights Holders pursuant to this Agreement.

“ Net Sales ” means, with respect to a Sales Milestone Payment Product, gross revenues recorded by Parent during the Sales Milestone Payment Period plus gross revenues recorded by the Company prior to the Effective Time of the Merger during the Sales Milestone Payment Period.  Net Sales shall be computed in accordance with generally accepted accounting principles as prescribed for application by publicly traded companies in the United States, but in any case shall be reduced by the following amounts to the extent applicable with respect to any sale to a particular customer that is not a Member of the Buyer Group: applicable fees; discounts; refunds; rebates; replacement or other credits allowed for return of product or as reimbursement for damaged product; freight and other shipping charges not borne by the customer; customs duties; sales and use taxes, value added taxes (VAT) and any other governmental tax or charge (except income taxes) imposed on or at the time of the importation, exportation, use, transportation, or sale of product to a particular customer, to the extent not borne by that customer.  Notwithstanding anything to the contrary herein, “ Net Sales ” shall not include any revenue received by any Member of the Buyer Group in connection with contracts pertaining to research and development of Sales Milestone Payment Products.

“ New York Law ” means New York Consolidated Laws, Chapter Four, applicable to business corporations, as amended from time to time.

“ Parent Common Stock ” means duly authorized, validly issued, fully paid and non-assessable shares of the common stock, $0.001 par value per share, of Parent.

“ Participating Rights Holders ” means those persons (other than the holders of Dissenting Shares, the Company, any Disqualified Stockholder or any Subsidiary of the Company) who, immediately prior to the Effective Time of the Merger, were holders of shares of Company Common Stock and whose interests therein, as the result of the Merger, are converted into rights to receive a portion of the Merger Consideration.

“ Per Share Common Closing Payment ” means, with respect to any Closing Payment, the amount equal to the quotient obtained by dividing (x) the applicable Closing Payment Amount for such Closing Payment by (y) the Fully Diluted Company Common Stock Number.

“ Per Share Common Contingent Payment ” means, with respect to any Contingent Payment, the amount equal to the quotient obtained by dividing (x) the applicable Contingent Payment Amount for such Contingent Payment, by (y) the Fully Diluted Company Common Stock Number.

“ Person ” (whether such term is capitalized or not) means an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government.

“ Reference Market Value ” means the average closing sale price, as published in the Eastern Edition of The Wall Street Journal, of a share of Parent Common Stock on the American Stock Exchange for the twenty (20) consecutive trading day period ending three (3) business days prior to the first business day following the six (6) month anniversary of the Closing Date; provided , that the Reference Market Value shall not be lower than $.50 less than the average closing price for the twenty (20) consecutive trading period immediately preceding the Agreement Date or higher than $.50 above the average closing price for the twenty (20) consecutive trading period immediately preceding the Agreement Date.

“ Sales Milestone ” means the recording of Net Sales of Sales Milestone Payment Products during the Sales Milestone Payment Period in an aggregate amount in excess of one million seven hundred twenty five thousand dollars ($1,725,000).

“ Sales Milestone Payment Amount ” means an amount determined as follows:

(i)   If the amount of Net Sales during the Sales Milestone Payment Period exceeds one million seven hundred twenty five thousand dollars ($1,725,000) and is less than or equal to one million seven hundred seventy thousand dollars ($1,770,000), then the “ Sales Milestone Payment Amount ” means an amount equal to two hundred fifty thousand dollars ($250,000) minus the aggregate amount of any and all set off claims made against any Contingent Payment pursuant to Sections 3.7 or 9.6 hereof, if any, that are outstanding as of the date on which the Sales Milestone Payment is made pursuant to Section 2.7(b) hereof.

(ii)   If the amount of Net Sales during the Sales Milestone Payment Period exceeds one million seven hundred seventy thousand dollars ($1,770,000) and is less than or equal to one million eight hundred fifteen thousand dollars ($1,815,000), then the “ Sales Milestone Payment Amount ” means an amount equal to five hundred thousand dollars ($500,000) minus the aggregate amount of any and all set off claims made against any Contingent Payment pursuant to Sections 3.7 or 9.6 hereof, if any, that are outstanding as of the date on which the Sales Milestone Payment is made pursuant to Section 2.7(b) hereof.

(iii)   If the amount of Net Sales during the Sales Milestone Payment Period exceeds one million eight hundred fifteen thousand dollars ($1,815,000) and is less than or equal to one million eight hundred sixty thousand dollars ($1,860,000), then the “ Sales Milestone Payment Amount ” means an amount equal to seven hundred fifty thousand dollars ($750,000) minus the aggregate amount of any and all set off claims made against any Contingent Payment pursuant to Sections 3.7 or 9.6 hereof, if any, that are outstanding as of the date on which the Sales Milestone Payment is made pursuant to Section 2.7(b) hereof.

(iv)   If the amount of Net Sales during the Sales Milestone Payment Period exceeds one million eight hundred sixty thousand dollars ($1,860,000) and is less than or equal to one million nine hundred five thousand dollars ($1,905,000), then the “ Sales Milestone Payment Amount ” means an amount equal to one million dollars ($1,000,000) minus the aggregate amount of any and all set off claims made against any Contingent Payment pursuant to Sections 3.7 or 9.6 hereof, if any, that are outstanding as of the date on which the Sales Milestone Payment is made pursuant to Section 2.7(b) hereof.

(v)   If the amount of Net Sales during the Sales Milestone Payment Period exceeds one million nine hundred five thousand dollars ($1,905,000) and is less than or equal to one million nine hundred fifty thousand dollars ($1,950,000), then the “ Sales Milestone Payment Amount ” means an amount equal to one million two hundred fifty thousand dollars ($1,250,000) minus the aggregate amount of any and all set off claims made against any Contingent Payment pursuant to Sections 3.7 or 9.6 hereof, if any, that are outstanding as of the date on which the Sales Milestone Payment is made pursuant to Section 2.7(b) hereof.

(vi)   If the amount of Net Sales during the Sales Milestone Payment Period exceeds one million nine hundred fifty thousand dollars ($1,950,000), then the “ Sales Milestone Payment Amount ” means an amount equal to one million five hundred thousand dollars ($1,500,000) minus the aggregate amount of any and all set off claims made against any Contingent Payment pursuant to Sections 3.7 or 9.6 hereof, if any, that are outstanding as of the date on which the Sales Milestone Payment is made pursuant to Section 2.7(b) hereof.

“ Sales Milestone Payment Period ” means the period of time commencing on January 1, 2008 and ending on December 31, 2008.

“ Sales Milestone Payment Product ” means any product sold by Parent, Merger Sub or Company during the Sales Milestone Payment Period as a Branded Product that could not have been commercialized without the Intellectual Property of the Company.

“ SEC ” means the United States Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Subsequent Closing Payment Amount ” means an amount (payable in the form or forms of consideration set forth in Section 2.9 hereof) equal to three million dollars ($3,000,000), subject to adjustment pursuant to the terms of this Agreement.

“ Subsidiary or Subsidiaries ” (whether or not capitalized) of any person means (i) any corporation, partnership, joint venture or other legal entity of which such person (either above or through or together with any other subsidiary), owns, directly or indirectly, more than 50% of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity or (ii) any partnership, limited liability company, association, trust, or other entity in which such person (directly or indirectly through another Subsidiary or Subsidiaries) holds an equity interest.

“ Tax ” or “ Taxes ” (and with correlative meaning, “ Taxable ” and “ Taxing ”) means any federal, state, local, or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, import value added, excise, export, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, net worth, intangibles, social security, pension insurance contributions, unemployment, disability, payroll, license, employee, withholding tax, including, but not limited to, on salaries and wages, or other tax or levy or contribution, of any kind whatsoever, regardless, whether directly or indirectly owed, including any interest, penalties, special charges or additions to tax in respect of the foregoing.

“ Valid and Enforceable Claim ” means (i) a claim of any issued patent which has not expired, lapsed, or been held invalid, unpatentable or unenforceable by court or other authority of competent jurisdiction in the issuing country in a decision which is not subject to pending appeal or was not or is no longer appealable, or (ii) a claim in any pending patent application which has not been the subject of a final rejection notice from which an appeal cannot be taken or with respect to which the applicable period of appeal has expired.

2.1   The Merger .  Subject to the other terms and conditions of this Agreement, including those set forth in Article 8 hereof, and in accordance with Delaware Law and New York Law, at the Effective Time, Merger Sub shall be merged with and into the Company.  As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the surviving corporation is referred to herein as the “ Surviving Corporation ”).

2.2   Consummation of the Merger; Effective Time .  Subject to the fulfillment or waiver of all of the conditions contained in Article 8, as soon as is reasonably practicable on or after the date hereof, a closing (the “ Closing ”) will be held at the offices of Parent or such other place as the parties may agree.  The date on which the Closing is actually held is referred to herein as the “ Closing Date .”  On the Closing Date, Parent, Merger Sub and the Company shall cause the Merger to be consummated by filing (i) with the Secretary of State of the State of Delaware a certificate of merger, substantially in the form of Exhibit B-1 hereto, executed in accordance with the relevant provisions of Delaware Law (the “ Delaware Merger Certificate ”) and (ii) with the Secretary of State of the State of New York a certificate of merger, substantially in the form of Exhibit B-2 hereto, executed in accordance with the relevant provisions of New York Law (the “ New York Merger Certificate ” and together with the Delaware Merger Certificate, the “ Merger Documents ”).  The term “ Effective Time ” means the later of the date and time of the filing of the Merger Documents with (i) the Secretary of State of the State of Delaware and (ii) the Secretary of State of the State of New York, as applicable (or such later time as may be agreed by each of the parties hereto and specified in the Merger Documents in accordance with Delaware Law and New York Law, as applicable).

2.3   Effect of the Merger .  At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Merger Documents and as provided by the applicable provisions of Delaware Law and New York Law.  Without limiting the generality of the foregoing, and subject thereto, upon the consummation of the Merger, all the property (including, but not limited to, Intellectual Property and licenses to Intellectual Property, subject to Section 2.3(a) below), rights, privileges, powers and franchises of the Company and the Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of those corporations shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

2.4   Charter; Bylaws .

(a)   As soon as practicable after the Effective Time, Parent shall cause that the certificate of incorporation of the Surviving Corporation be amended and restated in its entirety to conform substantively, to the extent reasonably practicable (except that the name of the Surviving Corporation shall continue to be “Bio Med Sciences, Inc.”), to the terms of the certificate of incorporation of the Merger Sub, as in effect immediately prior to the Effective Time, and such amended and restated certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation (the “ Surviving Corporation Charter ”) until thereafter amended as provided by New York Law and such Surviving Corporation Charter.

(b)   As soon as practicable after the Effective Time, Parent shall cause that the bylaws of the Surviving Corporation be amended and restated in their entirety to conform substantively, to the extent reasonably practicable, to the terms of the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, which shall thereafter be the bylaws of the Surviving Corporation until thereafter amended as provided by New York Law, the Surviving Corporation Charter and such bylaws.

2.5   Directors and Officers .  The directors of the Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Surviving Corporation Charter and the bylaws of the Surviving Corporation, and until their respective successors are duly elected and qualified or until their earlier death, disability, resignation or removal.  The officers of the Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified or until their earlier death, disability, resignation or removal.

2.7   Contingent Consideration .

(a)   Manufacturing Milestone Payment .  Subject to the limitations set forth herein, including without limitation those set forth in Sections 2.7(c) through (h) below, within ninety (90) days after December 31, 2008, if any Member of the Buyer Group has achieved the Manufacturing Milestone, Parent shall pay to the Participating Rights Holders an amount equal to the Manufacturing Milestone Payment Amount (the “ Manufacturing Milestone Payment ”).  The obligation of Parent under this Section 2.7(a) shall be subject to the provisions of Article 3 below.  The Manufacturing Milestone Payment Amount shall be payable to the Participating Rights Holders in the respective amounts set forth on the Merger Consideration Certificate as being payable to each Participating Rights Holder in respect of the Manufacturing Milestone Payment Amount.

(b)   Sales Milestone Payment .  Subject to the achievement by the Company and/or the Buyer Group of the Sales Milestone and to the limitations set forth herein, including without limitation those set forth in Sections 2.7(c) through (h) below, within ninety (90) days after the end of the Sales Milestone Payment Period, Parent shall pay to the Participating Rights Holders an amount equal to the Sales Milestone Payment Amount (the “ Sales Milestone Payment ”).  The obligation of Parent under this Section 2.7(b) shall be subject to the provisions of Article 3 below.  The Sales Milestone Payment Amount shall be payable to the Participating Rights Holders in the respective amounts set forth on the Merger Consideration Certificate as being payable to each Participating Rights Holder in respect of the Sales Milestone Payment Amount.  For purposes of clarification, Parent shall make payment equal to the Sales Milestone Payment Amount only once regardless of the number of times that the Sales Milestone is achieved.

(c)   Delivery of Sales Milestone Payment Certificate .  On or prior to the ninetieth (90 ^th ) day following end of the Sales Milestone Payment Period, Parent shall deliver to the Holders Representative a certificate (the “ Sales Milestone Payment Certificate ”), setting forth (a) the amount of Net Sales for the Sales Milestone Payment Period, and (b) Parent’s determination of the amount of the Sales Milestone Payment, if any, due pursuant to Section 2.7(b) above.

(d)   Holders Representative Committee Audit Rights .  Parent hereby grants, and shall cause the other members of the Buyer Group to grant, the Holders Representative Committee and its representatives and advisers, at the Holders Representative Committee’s sole expense, the right, exercisable no more than once during the forty-five (45) day period (the “ Sales Milestone Payment Dispute Period ”) following the receipt by the Holders Representative Committee of the Sales Milestone Payment Certificate, subject to the execution of, and compliance with, a customary confidentiality agreement in form and substance reasonably satisfactory to Parent, to demand an opportunity to examine and have full access to the Buyer Group’s books of account and records of Net Sales for the Sales Milestone Payment Period, at the location of such records on prior written notice of at least ten (10) days, for the purpose of verifying the amount of Net Sales for the Sales Milestone Payment Period (such review shall be referred to herein as the “ Sales Milestone Payment Audit ”).  For the purpose of conducting the Sales Milestone Payment Audit, the Holders Representative Committee may hire, at its expense, one or more auditors or attorneys of the Holders Representative Committee’s choosing to assist in such examination, provided , that such auditors or attorneys have entered into customary confidentiality agreements with Parent in form and substance reasonably acceptable to Parent.  The Holders Representative Committee and such representatives shall have access to all of the books and records reasonably required to perform the Sales Milestone Payment Audit at all times during the period of one hundred twenty (120) days following the date on which the Holders Representative Committee delivers a Dispute Notice (as defined below) to Parent (the “ Sales Milestone Payment Audit Period ”).  Each Member of the Buyer Group hereby agrees to keep the books of account and records of Net Sales for the Sales Milestone Payment Period until the expiration of the Sales Milestone Payment Dispute Period.

(e)   Dispute Notice .  In the event that the Holders Representative Committee does not agree with or desires to investigate the calculation of the Sales Milestone Payment Amount set forth on the Sales Milestone Payment Certificate, the Holders Representative Committee shall be entitled, during the Sales Milestone Payment Audit Period, to give Parent written notice (a “ Dispute Notice ”), of such disagreement or desire.  In the event that the Holders Representative delivers a Dispute Notice, the date by which Parent shall be obligated to deliver the Sales Milestone Payment reflected in the Sales Milestone Payment Certificate shall not be extended, but the date by which Parent shall be obligated to deliver any additional increment of Sales Milestone Payment determined as a result of the Sales Milestone Payment Audit, shall be extended until the date that is thirty (30) days following the final determination of the disputed Sales Milestone Payment Amount pursuant to the provisions of Sections 2.7(f) and 2.7(g) below.  In the event that the Holders Representative Committee does not deliver a Dispute Notice during the Sales Milestone Payment Audit Period, the Sales Milestone Payment Amount set forth on the Sales Milestone Payment Certificate shall irrevocably be deemed to be the final Sales Milestone Payment Amount for all purposes of this Agreement, absent fraud or intentional misconduct, or the discovery after the expiration of the Sales Milestone Payment Dispute Period of a material fact in existence at such time and not disclosed by Parent to the Holders Representative Committee in the Sales Milestone Payment Certificate.  

(f)   Agreed Sales Milestone Payment .  In the event that the Holders Representative Committee delivers a Dispute Notice within the Sales Milestone Payment Dispute Period, the Holders Representative Committee and Parent shall, for a period of not less than thirty (30) days after the later of delivery of the Dispute Notice or conclusion of the Sales Milestone Payment Audit demanded by the Holders Representative Committee, attempt in good faith to resolve the disputed Sales Milestone Payment Amount (the “ Disputed Sales Milestone Payment Amount ”), and mutually determine any adjustments to the Sales Milestone Payment Amount (the “ Agreed Sales Milestone Payment Amount ”).  Parent and the Holders Representative Committee shall, subject to the execution of a confidentiality agreement in form and substance reasonably satisfactory to the delivering party, provide each other with such information, records and material kept in the ordinary course of business in such party’s possession and which such party may disclose without violating confidentiality obligations to third parties, as is reasonably necessary and appropriate in attempting to resolve any such Disputed Sales Milestone Payment Amount, including the delivery of a copy to the Holders Representative Committee of any such information, records and material, to the extent then available, that was used to calculate the amount of Net Sales and the Sales Milestone Payment Amount set forth on the Sales Milestone Payment Certificate.

(g)   Arbitration of Disputes Over Net Sales .  In the event that no agreement can be reached by the Holders Representative Committee and Parent as to the calculation of the Disputed Sales Milestone Payment Amount within ninety (90) days after the later of the delivery of a Dispute Notice or the conclusion of the Sales Milestone Payment Audit, and such disagreement relates only to the amount of Net Sales of Sales Milestone Payment Products, then, pursuant to this Section 2.7(g), either party shall have the right to submit the Disputed Sales Milestone Payment Amount to arbitration by the New York, New York office of a reputable accounting firm (the “ Accountant ”) as the Holders Representative Committee and Parent may mutually agree; provided , however , that the engagement and charge of the Accountant shall be limited to determining the Net Sales of any identified product or products for the Sales Milestone Payment Period, and the Accountant shall not be entitled to determine whether any products sold by Parent or its Affiliates are Sales Milestone Payment Products for purposes of this Agreement or any other matter.  The Holders Representative Committee and Parent shall jointly select the Accountant to perform the calculation within thirty (30) days after either Holders Representative Committee or Parent delivers a written demand to the other to submit the dispute to arbitration; provided , that in the event that the Holders Representative Committee and Parent are unable to agree upon the Accountant to perform such calculation within such thirty (30) day period, then each of the Holders Representative Committee and Parent shall select one Accountant and such Accountants shall jointly select an alternative Accountant to perform such calculation.  The Accountant selected in accordance with the foregoing sentence shall be responsible for the determination of the Disputed Sales Milestone Payment Amount (the “ Appraiser ”).  The Appraiser shall determine the Disputed Sales Milestone Payment Amount within the limitations set forth above within ninety (90) days after the date of such Appraiser’s engagement and the Appraiser shall be provided with such information and records, which may include on-site access, relating to such dispute as it may reasonably request.  The Disputed Sales Milestone Payment Amount determined by an Appraiser in accordance with this paragraph (g) shall be deemed to be the final Sales Milestone Payment Amount for all purposes of this Agreement.  The fees and expenses of the Appraiser shall be paid by the Holders Representative Committee, provided , that if the final Sales Milestone Payment Amount determined by the Appraiser in any examination conducted pursuant to this Section 2.7(g) is greater than the corresponding Sales Milestone Payment Amount set forth on the relevant Sales Milestone Payment Certificate by an amount equal to or more than two and one half percent (2.5%) of the Sales Milestone Payment Amount set forth on the Sales Milestone Payment Certificate, then Parent shall pay all of the fees and expenses of the Appraiser.  The determination of the Sales Milestone Payment Amount pursuant to this Section 2.7(g) shall be conclusive, in the absence of fraud or intentional misconduct, or the discovery (following the completion of any determination by an Appraiser) of a material fact in existence at the time of such determination and not made available by Parent to the Holder Representative Committee, its representatives or the Appraiser in the course of the dispute proceeding, which material fact, if taken into account in the calculation of the Sales Milestone Payment Amount, would have resulted in an increase in the Sales Milestone Payment Amount.

2.8   Merger Consideration Certificate .  At Closing, the Company shall deliver to Parent and the Holders Representative Committee a certificate (the “ Merger Consideration Certificate ”) that shall include a calculation of the respective portions of each Closing Payment and each Contingent Payment payable to each Participating Rights Holder pursuant to the terms of Section 3.1 hereof.  The information and calculations set forth in the Merger Consideration Certificate shall be deemed to constitute a representation and warranty of the Company and any inaccuracy or calculation of any information set forth in the Merger Consideration Certificate that results in Damages to Parent shall entitle Parent to make a claim for indemnification for breach of representation or warranty under Section 9.3 of this Agreement .

2.9   Form of Consideration Payable by Parent .

(a)   Parent Common Stock .  Subject to the provisions of Section 2.9(b) below, at the sole discretion of Parent, any portion or all of the Subsequent Closing Payment Amount may be satisfied by (i) the issuance to the Participating Rights Holders of that number of shares of Parent Common Stock equal to the quotient obtained by dividing (x) the amount of the Subsequent Closing Payment Amount that Parent has elected to satisfy through the issuance of whole shares of Parent Common Stock, by (y) the Reference Market Value on the date of payment, with any fraction of a share of Parent Common Stock being treated as provided in Section 2.9(c) below, (ii) payment of such amount in cash, or (iii) a combination of the forms of consideration referred to in the foregoing clauses (i) and (ii).

(b)   Listing of Shares .  The right of Parent to pay all or any portion of the Subsequent Closing Payment Amount through the issuance of shares of Parent Common Stock shall, upon the date such shares are issued to the Participating Rights Holders, be subject to Parent having caused such shares to be listed on each securities exchange on which similar securities, including as to class and series, issued by Parent are then listed.

(c)   No Fractional Shares .  In the event that all or any portion of the Subsequent Closing Payment Amount is paid in the form of shares of Parent Common Stock, no certificates or scrip representing fractional shares of Parent Common Stock shall be issued.  Fractional portions of shares shall be rounded down to the next whole integer and an amount in cash equal to the aggregate Reference Market Value of all so affected fractional portions of shares shall be deposited with the Holders Representative Committee by Parent.

(d)   Legend .  Any certificate issued to any Participating Rights Holders representing shares of Parent Common Stock that have not been registered under the Securities Act shall be imprinted with the following legend (or the substantial equivalent thereof):

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF, IN WHOLE OR IN PART, OTHER THAN PURSUANT TO REGISTRATION UNDER SAID ACT OR IN CONFORMITY WITH THE LIMITATIONS OF RULE 144 AND RULE 145 OR OTHER SIMILAR RULE OR EXEMPTION AS THEN IN EFFECT, WITHOUT FIRST OBTAINING (I) IF REASONABLY REQUIRED BY THE COMPANY, A WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, WHICH MAY BE COUNSEL TO THE COMPANY, TO THE EFFECT THAT THE CONTEMPLATED SALE OR OTHER DISPOSITION WILL NOT BE IN VIOLATION OF SAID ACT, OR (II) A ‘NO-ACTION’ OR INTERPRETIVE LETTER FROM THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT SUCH STAFF WILL TAKE NO ACTION IN RESPECT OF THE CONTEMPLATED SALE OR OTHER DISPOSITION.”

In the event that any certificate issued to any Participating Rights Holders representing shares of Parent Common Stock is imprinted with the foregoing legend (or a similar legend), Parent shall cause such legends to be removed in connection with any resale of such shares of Parent Common Stock that is made in compliance with, or pursuant to a valid exemption from, the registration provisions of the Securities Act.

(e)   Accredited Investors Plus 35 .  In the event that Parent elects to pay all or any portion of the Subsequent Closing Payment Amount through the issuance of shares of Parent Common Stock, then Parent, in its sole discretion, shall be entitled to restrict any such issuance of Parent Common Stock to only those Participating Rights Holders that are “accredited investors” as defined in Rule 501 under the Securities Act, and the next 35 Participating Rights Holders based on size of holding as per Schedule 4.4 of the Company Disclosure Schedule.  Notwithstanding the foregoing or anything to the contrary contained elsewhere in this Agreement, Parent shall be entitled to determine, in its sole discretion (which shall be exercised based solely on accredited investor status), (i) which Participating Rights Holders shall receive shares of Parent Common Stock and which Participating Rights Holders shall receive cash in satisfaction of any such payment, and (ii) the ratio, if any, of cash versus shares of Parent Common Stock to be received by any Participating Rights Holder in satisfaction of any such payment.

2.10   Cash Payments . Parent shall make payment to each Participating Rights Holder of any cash amount that Parent is required or elects, in accordance with the terms of Section 2.9 hereof, to pay to such Participating Rights Holder pursuant to the terms of this Agreement, either (i) for any such payment greater than $500,000, by wire transfer to an account in the name of such Participating Rights Holder as provided to Parent by written notice from the Holders Representative Committee at least two (2) business days prior to the date when Parent shall be required to make such payment or (ii) delivery of a check, made payable to such Participating Rights Holder, to the Holders Representative Committee for further distribution to such Participating Rights Holder pursuant to Section 3.2 hereof.

3.1   Conversion of Securities .

(a)   Common Stock .  Each share of the Company Common Stock issued and outstanding immediately prior to the Effective Time and held by Participating Rights Holders will be converted at the Effective Time into the right to receive from Parent, in the form of consideration determined by Parent (except for the Initial Closing Payment Amount and Contingent Payment Amount which shall be paid in cash) in accordance with Section 2.9, (i) an amount equal to the Per Share Common Closing Payment, plus (ii) an amount equal to the Per Share Common Contingent Payment associated with each Contingent Payment when such payments, if any, are made pursuant to Section 2.7 hereof. All such shares of Company Common Stock, when so converted, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Per Share Common Closing Payment associated with each Closing Payment when such payments are made pursuant to Sections 2.6 hereof and the Per Share Common Contingent Payment associated with each Contingent Payment, if any, when such payments are made pursuant to Sections 2.7 hereof, upon the surrender of such certificate in accordance with Section 3.2 and this Section 3.1.

(b)   Exercise and Termination of Options .

(i)   All options to purchase Company Common Stock issued under any stock option or equity incentive plan of the Company (each, a “ Company Option Plan ”) or otherwise listed on Schedule 4.4 of the Company Disclosure Schedule (which Company Disclosure Schedule shall list all options to purchase Company Common Stock or any other equity of the Company), whether or not exercisable, whether or not vested, and whether or not performance-based, (each a “ Company Option ”), shall have been exercised or terminated pursuant to any applicable Company Option Plan immediately prior to the Effective Time and shall not be assumed by the Surviving Corporation or Parent.

(ii)   As soon as reasonably practicable following the Agreement Date, the Company Board (or, if appropriate, any committee thereof administering any Company Option Plan) shall take all necessary action, including obtaining the consent of any holder of a Company Option, to: (A) terminate, as of the Effective Time, each Company Option Plan; (B) terminate, as of the Effective Time, each Company Option that is then outstanding and unexercised, whether unvested or vested (including Company Options that become vested as a result of any acceleration of the vesting schedule of such Company Options pursuant to the terms of such Company Options as a result of or in connection with the Merger, or as a result of any such acceleration effected by the Company Board or any committee thereof prior to the Closing); and (C) terminate all unvested Company Options without consideration.  All Company Options, when terminated as contemplated under this Section 3.1(b), shall no longer be outstanding and shall automatically cease to exist, and each holder of a Company Option shall cease to have any rights with respect thereto.

(c)   Warrants and Other Rights .  All warrants to purchase shares of the Company’s capital stock, if any, and all other rights or options (other than Company Options) to purchase or acquire any securities of the Company, if any (all of the foregoing, collectively, the “ Company Warrants ”), whether or not exercisable or vested, shall have been exercised or terminated prior to the Closing Date.  Parent shall not assume any Company Warrants.

(d)   Treasury Stock .  Notwithstanding anything to the contrary expressed or implied herein, each share of Company Common Stock held in the treasury of the Company or held by any Subsidiary of the Company immediately prior to the Effective Time shall be cancelled and extinguished at the Effective Time without any conversion thereof and no payment shall be made with respect thereto.

(e)   Stock Held by Disqualified Stockholders .  Notwithstanding anything to the contrary expressed or implied herein, each share of Company Common Stock held by any Disqualified Stockholder shall be cancelled and extinguished at the Effective Time without any conversion thereof and no payment shall be made with respect thereto.

(f)   Stock of Merger Sub .  Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one (1) validly issued fully paid and nonassessable share of common stock of the Surviving Corporation and Parent shall be the owner and holder of all such shares.

3.2   Exchange of Certificates and Instruments .

(a)   Exchange Procedures .

(i)   Within a reasonable period of time prior to the Closing, Parent shall deliver to the Company forms of the transmittal materials which Parent or its transfer agent will require from those Participating Rights Holders entitled to receive at the Closing Merger Consideration in respect of their shares of Company Common Stock, which materials may include any certifications Parent may request with respect to compliance with any withholding obligations of Parent or the Surviving Corporation under the Code or other applicable Tax law.  The Company shall distribute such materials to eligible Participating Rights Holders.  As promptly as practicable following the Effective Time, Parent shall deliver to each Participating Rights Holder who has completed such transmittal materials and returned them to Parent at or prior to the Closing, together with the certificate or certificates representing outstanding shares of Company Common Stock (the “ Certificates ”), a check (or, in the case of any payment in excess of $500,000, a wire transfer) representing that portion of the Initial Closing Payment Amount to which such Participating Rights Holder is entitled; provided , that such payment made by Parent by check may be made by delivering such checks on the Closing Date to the Holders Representative Committee, which, in turn, shall distribute such checks to the appropriate Participating Rights Holders.  The delivery of such checks (or wire transfers, as applicable) by Parent to the Holders Representative Committee shall be deemed, for all purposes, to have satisfied in full Parent’s Initial Closing Payment Amount obligation to such Participating Rights Holders and Parent shall have no further obligation for such payments.  Parent shall not be required to pay any amount of the Closing Payment or any Contingent Payment to any Participating Rights Holder until receipt from such Participating Rights Holder of properly completed and executed transmittal materials in the form prepared by Parent.

(ii)   As promptly as practicable after the Effective Time, Parent or its transfer agent will send to each Participating Rights Holder who does not submit completed transmittal materials to Parent at or before the Closing, as permitted by Section 3.2(a)(i) above, transmittal materials for use in exchanging his, her or its Certificates for the applicable portion of the Merger Consideration into which such shares of Company Common Stock (other than any Dissenting Shares) have been converted.  Until surrendered as contemplated by this Section 3.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable amounts of Merger Consideration payable pursuant to Section 3.1.  Upon receipt of the completed transmittal materials and the applicable Certificates, Parent will issue to the Participating Rights Holder a check (or, in the case of any payment in excess of $500,000, a wire transfer) representing that portion of the Initial Closing Payment Amount to which such Participating Rights Holder is entitled.  Parent shall not be required to deliver any of the Merger Consideration to any Participating Rights Holder until receipt from such Participating Rights Holder of properly completed and executed transmittal materials in the form prepared by Parent and the applicable Certificate.

(iii)   Parent shall be entitled to rely entirely on the information contained in the Capitalization Certificate, Merger Consideration Certificate or any other certificates delivered pursuant to this Agreement and in any transmittal materials delivered hereunder for purposes of satisfying the obligation of Parent to deliver the Merger Consideration hereunder.

(b)   No Further Rights in Certificates or Company Options .  After the Effective Time, holders of Company Common Stock or Company Options outstanding immediately prior to the Effective Time will cease to be, and will have no rights as, stockholders or right holders of the Company or the Surviving Corporation, other than (i) in the case of Company Common Stock (other than Dissenting Shares and other than any Disqualified Stockholder), the right to receive the applicable portions of the Merger Consideration; (ii) in the case of Dissenting Shares, the rights afforded to the holders thereof under New York Law, and (iii) rights under this Agreement.

(c)   No Liability .  Neither Parent, the Surviving Corporation nor the Company shall be liable to any holder of Company Common Stock for any portion of the Merger Consideration delivered to an appropriate public official pursuant to any abandoned property, escheat or similar law.

(d)   Withholding Rights .  Each of 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 Company Common Stock such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax law.  To the extent that amounts are so withheld by the Surviving Corporation or Parent, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such holder in respect of which such deduction and withholding was made by the Surviving Corporation or Parent, as the case may be.

3.3   Stock Transfer Books .  At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of Company Common Stock thereafter on the records of the Company.  From and after the Effective Time, the holders of certificates representing such shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares except as otherwise provided herein or by any applicable laws.

3.4   Dissenting Shares .

(a)   Notwithstanding any provision of this Agreement to the contrary, Dissenting Shares shall not be converted into or represent the right to receive any portion of the amounts to be paid pursuant to Section 3.1, but the holders thereof shall only be entitled to such rights as are granted by New York Law.  All Dissenting Shares held by stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their dissenters’ rights shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the later of the Effective Time or the occurrence of such event, the right to receive an appropriate portion of the amounts to be paid pursuant to Section 3.1, without any interest thereon, upon surrender, in the manner provided in Section 3.2, of the Certificates that formerly evidenced such shares.

(b)   The Company shall give Parent (i) prompt notice of any demands for fair value of shares of Company Common Stock received by the Company, any withdrawals of such demands, and any other instruments served pursuant to New York Law, if any, and received by the Company, and (ii) the opportunity to direct, at its expense, all negotiations and proceedings with respect to demands for fair value under New York Law, if any.  The Company shall cooperate with Parent concerning, and shall not, except with the prior written consent of Parent, make any payment with respect to, any demands for the fair value of shares of Company Common Stock or settle or offer to settle any such demands other than by operation of law or pursuant to a final order of a court of competent jurisdiction. In the event that any Company Stockholder exercises his, her or its appraisal rights pursuant to New York Law, then Parent shall be entitled to seek indemnification from the Participating Rights Holders pursuant to, and in accordance with, the provisions of Article 9 hereof in connection with any Damages suffered or incurred by Parent in connection with such exercise of appraisal rights.

3.5   Holders Representative Committee .

(a)   Appointment of Holders Representative Committee .  Each of Mark E. Dillon, Thomas Asson, Joseph A. Dillon, Sr., and David P. Willis (i) are hereby appointed, effective from and after the Effective Time of the Merger, to act as the Holders Representative Committee under this Agreement in accordance with the terms of this Section 3.5, and (ii) hereby represents to Parent that they are an “accredited investor” (as such term is defined in Rule 501 under the Securities Act).  The members of the Holders Representative Committee (in such capacity, the “ Holders Representatives ”) shall be required to designate (and notify Parent of such designation) a single member of the Holders Representative Committee upon whose instruction Parent, the Merger Sub and the Surviving Corporation shall be entitled to rely, without any investigation or inquiry, as having been taken or not taken upon the authority of the Holders Representative Committee. In the event that any member of the Holders Representative Committee ceases to be a member thereof as a result of death, resignation, incapacity or removal, then the remaining member of the Holders Representative Committee shall appoint a successor member as soon as practicable. In the event that there are no members of the Holders Representative Committee at any time from and after the Effective Time as a result of death, resignation, incapacity or removal, then Thomas J. Dugdale and Wilbur J. Smiles (each of whom, to the knowledge of the Company, is an accredited investor) shall be automatically deemed to be appointed as successor members of the Holders Representative Committee and Parent shall be entitled to rely, without any investigation or inquiry, on the instruction of such individuals.

(b)   Authority After the Effective Time .  From and after the Effective Time, the Holders Representative Committee shall be authorized to:

(i)   take all actions required or permitted by, and exercise all rights granted to, the Holders Representative Committee in this Agreement;

(ii)   receive all notices or other documents given or to be given to the Holders Representative Committee by Parent pursuant to this Agreement;

(iii)   negotiate, undertake, compromise, defend, resolve and settle any suit, proceeding or dispute under this Agreement on behalf of the Participating Rights Holders;

(iv)   execute and deliver all agreements, certificates and documents required or deemed appropriate by the Holders Representative Committee in connection with any of the transactions contemplated by this Agreement;

(v)   engage special counsel, accountants and other advisors and incur such other expenses in connection with any of the transactions contemplated by this Agreement on behalf of the Participating Rights Holders;

(vi)   approve of and execute amendments to this Agreement in accordance with Section 11.14 hereof; and

(vii)   take such other action as the Holders Representative Committee may deem appropriate on behalf of the Participating Rights Holders, including:

(A)   agreeing to any modification or amendment of this Agreement and executing and delivering an agreement of such modification or amendment; and

(B)   all such other matters as the Holders Representative Committee may deem necessary or appropriate to carry out the intents and purposes of this Agreement.

3.6   Release from Liability; Indemnification; Authority of Holders Representative Committee .  Each Participating Rights Holder hereby releases the Holders Representative Committee, and each of its members, from, and each Participating Rights Holder agrees to indemnify the Holders Representative Committee, and each of its members, against, liability for any action taken or not taken by him, her or it in his, her or its capacity as such agent, except for the liability of the Holders Representative Committee, or any member thereof, to a Participating Rights Holder for loss which such holder may suffer from the willful misconduct or gross negligence of the Holders Representative Committee or such member in carrying out his, her or its duties hereunder.  By virtue of the adoption of this Agreement and the approval of the Merger by the stockholders of the Company, each Participating Rights Holder (regardless of whether or not such Participating Rights Holder votes in favor of the adoption of the Agreement and the approval of the Merger, whether at a meeting or by written consent in lieu thereof) appoints, as of the Agreement Date, the Holders Representative Committee as his, her or its true and lawful agent and attorney-in-fact to enter into any agreement in connection with the transactions contemplated by this Agreement, to exercise all or any of the powers, authority and discretion conferred on him under any such agreement, to give and receive notices on their behalf and to be his, her or its exclusive representative with respect to any matter, suit, claim, action or proceeding arising with respect to any transaction contemplated by any such agreement, including, without limitation, the defense, settlement or compromise of any claim, action or proceeding for which Parent, the Merger Sub or the Surviving Corporation may be entitled to indemnification and, by virtue of its approval of the Agreement, the Holders Representative Committee agrees to act as, and to undertake the duties and responsibilities of, such agent and attorney-in-fact.  This power of attorney is coupled with an interest and is irrevocable.  All actions, decisions and instructions of the Holders Representative Committee shall be conclusive and binding upon all of the Participating Rights Holders.  By virtue of the adoption of this Agreement and the approval of the Merger by the stockholders of the Company, each Participating Rights Holder (regardless of whether or not such Participating Rights Holder votes in favor of the adoption of the Agreement and the approval of the Merger, whether at a meeting or by written consent in lieu thereof) hereby agrees to the provisions of this Agreement, including, without limitation, the provisions of Sections 3.5 and 3.6 and Article 9 hereof.

3.7   Reimbursement of Expenses .  The Holders Representatives shall receive no compensation for services performed as the Holders Representatives, but shall receive reimbursement from, and be indemnified by, the Participating Rights Holders, pro rata, for any and all expenses, charges and liabilities incurred in connection with such performance, including, but not limited to, reasonable attorneys’ fees, incurred by the Holders Representatives in the performance or discharge of their duties pursuant to this Section 3.7, which expenses, charges and liabilities shall be paid out of any Contingent Payment payable to the Participating Rights Holders pursuant to this Agreement and paid directly to the Holders Representative Committee upon their reasonable request at the time of any required Contingent Payment.  Unless the Participating Rights Holders pay all such expenses, charges and liabilities upon demand by the Holders Representative Committee, the Holders Representatives shall have no obligation to incur such expenses, charges or liabilities, or to continue to perform any duties hereunder.

The Company hereby represents and warrants to Parent, the Merger Sub and the Surviving Corporation as follows as of each of (a) the Agreement Date and (b) the Closing Date, subject in each case to such exceptions as are set forth in the Company Disclosure Schedule attached to this Agreement (the “ Company Disclosure   Schedule ”):

4.1   Incorporation; Authority .  The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of New York and has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as presently conducted and as presently proposed to be conducted. The Company has delivered to Parent complete and correct copies of its certificate of incorporation and by-laws, in each case with all amendments thereto, which certificate of incorporation and by-laws are in full force and effect.

4.2   Authorization and Enforceability.   The Company has all requisite corporate power to enter into this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company, subject only to the approval of the Merger and this Agreement by the Company’s stockholders (which shall be obtained immediately after the execution and delivery of this Agreement by written consent in accordance with Section 615 of New York Law).  The Company Board has (i) approved this Agreement and the transactions contemplated hereby and (ii) determined that the Merger is in the best interests of the stockholders of the Company and is on terms that are fair to such stockholders.  This Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms, except as such enforcement may be limited by (i) the effect of bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights, or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in law or equity.

4.3   Governmental and Other Third-Party Consents, Non-Contravention, Etc.   No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, except for (i) the filing of the New York Merger Certificate with the New York Secretary of State; (ii) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state and federal securities laws and the securities laws of any foreign country in connection with the issuance of shares of Parent Common Stock in the Merger; and (iii) such other consents, authorizations, filings, approvals and registrations which, if not obtained or made, would not have a Material Adverse Effect on Parent and would not be reasonably likely to prevent, or materially alter or delay any of the transactions contemplated by this Agreement.  The execution, delivery, and performance of this Agreement and the consummation of such transactions will not violate (a) any provision of the Company’s certificate of incorporation or by-laws, as amended and in effect, (b) any order, judgment, injunction, award or decree of any court or state or federal governmental or regulatory body applicable to the Company, (c) any judgment, decree, order, statute, rule, regulation, agreement, instrument, or other obligation to which the Company is a party or by or to which it or any of its assets is bound or subject, or (d) any contract, agreement or written arrangement to which the Company is a party, which violation will not have a Material Adverse Effect on the Company.

4.4   Capitalization .  The authorized and outstanding capital stock and other securities of the Company are as set forth in Schedule 4.4 of the Company Disclosure Schedule.  All of such outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, and all of such outstanding shares and other securities are owned of record as set forth in Schedule 4.4 of the Company Disclosure Schedule, and were issued in compliance with all applicable laws, including securities laws, and all applicable preemptive or similar rights of any person.  The only authorized, issued and outstanding class of capital stock of the Company is the Company Common Stock (i.e., there are no shares of any class or series of preferred stock authorized, issued or outstanding).  The Company is not aware of any person who has a valid right to rescind any purchase of any shares of the Company’s capital stock or other securities. Other than as set forth on Schedule 4.4 of the Company Disclosure Schedule, there are no agreements or other obligations to which the Company is a party or known to it and by which it is bound to purchase or sell any shares of its capital stock or other securities, and no outstanding convertible or exchangeable securities, options, warrants or other rights to acquire from the Company any shares of its capital stock or other securities.   Schedule 4.4 of the Company Disclosure Schedule sets forth the name of each person who holds any option, warrant or other right to acquire shares of the Company’s capital stock or other securities, the number and type of shares or securities subject to such option or right, the per-share exercise price payable therefor and, in the case of warrants, the priority and amount of consideration to be payable upon exercise thereof.  The per-share exercise price payable for each of the options set forth on Schedule 4.4 of the Company Disclosure Schedule is equal to or greater than the fair market value of the Company Common Stock as of the date of grant of each such option.

4.5   Qualification .  The Company is duly qualified and in good standing as a foreign corporation in all jurisdictions in which to Company’s knowledge the character of its owned or leased properties or the nature of its activities makes such qualification necessary, except for such failures to be so qualified or in good standing as would not, either individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the Company.

4.6   Subsidiaries .  The Company does not have any Subsidiaries or own any legal and/or beneficial interests in or to any other business enterprise or other person.

4.7   Financial Statements .   Attached to Schedule 4.7 of the Company Disclosure Schedule are copies of (i) the audited balance sheets of the Company as of December 31, 2007, and the related audited statements of income and retained earnings and cash flows, respectively, of the Company, for the fiscal year ended on such date, certified by Buckno Lisicky & Company, independent public accountants (such balance sheet as of December 31, 2007, the “ Company’s Most Recent Balance Sheet ”), and (ii) the unaudited balance sheet of the Company as of March 31, 2007 and as of March 31, 2008, and the related unaudited statements of income and retained earnings and cash flows, respectively, of the Company, for each of the three-month periods, respectively, ended on such dates.  Each of such financial statements have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods; each of such balance sheets presents fairly and accurately in all material respects the financial condition of the Company as of its respective date; and each of such statements of income and retained earnings and cash flows, respectively, presents fairly and accurately in all material respects the results of operations and retained earnings, or cash flows, as the case may be, of the Company for the period covered thereby; in each case, subject, with respect to the unaudited financial statements referred to in clause (ii) of this section, to the absence of footnote disclosure and to normal, recurring end-of-period adjustments, the effect of which, both individually and in the aggregate, is not and will not be material.

4.8   Absence of Certain Changes .  Since the date of the Company’s Most Recent Balance Sheet, except as disclosed on Schedule 4.8 of the Company Disclosure Schedule, there has not been any:  (i) change in the assets, liabilities, sales, income, or business of the Company or in its relationships with suppliers, customers, or lessors, other than changes that were both in the ordinary course of business and have not caused, either in any case or in the aggregate, a Material Adverse Effect on the Company; (ii) acquisition or disposition by the Company of any material asset or property; (iii) damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting, either in any case or in the aggregate, the business or any material property of the Company; (iv) declaration, setting aside or payment of any dividend or any other distributions in respect of any shares of capital stock of the Company; (v) issuance of any shares of the capital stock of the Company or any direct or indirect redemption, purchase, or other acquisition by the Company of any such capital stock; (vi) loss of the services of any officer or key employee or consultant, or any increase in the compensation, pension, or other benefits payable or to become payable by the Company to any of its officers or key employees or consultants, or any bonus payments or arrangements made to or with any of them, except as provided in Section 7.4 and Schedule 7.4 hereof; (vii) forgiveness or cancellation of any debts or claims by the Company or any waivers of any rights; (viii) entry by the Company into any transaction with any of its Affiliates; (ix) incurrence by the Company of any obligations or liabilities, whether absolute, accrued, contingent or otherwise (including without limitation liabilities as guarantor or otherwise with respect to obligations of others), other than obligations and liabilities incurred in the ordinary course of business with persons other than Affiliates of the Company; (x) incurrence or imposition of any Lien on any of the assets, tangible or intangible, of the Company; or (xi) discharge or satisfaction by the Company of any Lien or payment by the Company of any obligation or liability (fixed or contingent) other than (A) current liabilities included in the Company’s Most Recent Balance Sheet, (B) current liabilities to persons other than Affiliates of the Company incurred since the date of the Company’s Most Recent Balance Sheet in the ordinary course of business, and (C) current liabilities incurred in connection with the transactions contemplated hereby and as disclosed in Schedule 4.8 of the Company Disclosure Schedule.

4.9   Properties and Assets .

(a)   The Company has good and marketable title or leasehold title, as the case may be, to all of its assets and properties that it purports to own or lease, including without limitation all those reflected in the Company’s Most Recent Balance Sheet (except for properties or assets sold, consumed, or otherwise disposed of in the ordinary course of business since the date of the Company’s Most Recent Balance Sheet), all free and clear of Liens on the Company’s interest therein.  All such properties and assets are in good condition and repair, reasonable wear-and-tear excepted, and are, and as of the Closing Date will be, adequate and sufficient to carry on the business of the Company as presently conducted.   Schedule 4.9 of the Company Disclosure Schedule sets forth a complete and correct list of all capital assets of the Company.

(b)   The Company does not own any real property.  The Company has not received any notice that either the whole or any portion of any real property leased by it is to be condemned, requisitioned, or otherwise taken by any public authority or is to be the subject of any public improvements that may result in special assessments against or otherwise affect such real property.   Schedule 4.9 of the Company Disclosure Schedule sets forth a complete and correct description of all leases of real property to which the Company is a party.  Complete and correct copies of all such leases have been delivered to Parent.  Each such lease is valid and subsisting and no event or condition exists that constitutes, or after notice or lapse of time or both would be reasonably likely to constitute, a default thereunder by the Company, or to its knowledge, any other person.  The leasehold interests of the Company are subject to no Lien, and the Company is in quiet possession of the properties covered by such leases.

(e)   Except as set forth on Schedule 4.10(e) of the Company Disclosure Schedule, the Company has not transferred ownership of, or granted any license with respect to, any Company Intellectual Property to any third party.   Schedule 4.10(e) of the Company Disclosure Schedule lists all contracts, licenses and agreements to which the Company is a party that are currently in effect (i) with respect to Company Intellectual Property licensed or offered to any third party; or (ii) pursuant to which a third party has licensed or transferred any Company Intellectual Property to the Company.

(f)   Each of the Company’s contracts, licenses and agreements which relate in any way to Company Intellectual Property are in full force and effect.  The consummation of the transactions contemplated by this Agreement will neither violate nor result in the breach, modification, cancellation, termination, or suspension of, nor require the consent of any party to, such contracts, licenses and agreements.  The Company is in material compliance with, and has not materially breached any term any of such contracts, licenses and agreements and, to the knowledge of the Company, all other parties to such contracts, licenses and agreements are in compliance with, and have not breached any term of, such contracts, licenses and agreements.  Following the Closing Date, the Surviving Corporation will be permitted to exercise all of the Company’s rights under such contracts, licenses and agreements to the same extent the Company would have been able to had the transaction contemplated by this Agreement not occurred and without the payment of any additional funds other than ongoing fees, royalties or payments which the Company would otherwise be required to pay.   Schedule 4.10(f) of the Company Disclosure Schedule sets forth each of the Company’s contracts, licenses and agreements which relate in any way to Company Intellectual Property.

(g)   Schedule 4.10(g) of the Company Disclosure Schedule lists all contracts, licenses and agreements between the Company and any third party wherein or whereby the Company has agreed to, or assumed, any obligation or duty to warrant, indemnify, hold harmless or otherwise assume or incur any obligation or liability with respect to the infringement or misappropriation by the Company of any third party’s Intellectual Property.

(h)   The Company (including its executive officers, directors and, to the Company’s knowledge, employees) has not received notice from any third party, nor is the Company aware of any basis for any third-party claim that could assert, that the operation of its business or any act, product, drug candidate or service of the Company infringes or misappropriates the Intellectual Property of any third party or constitutes unfair competition or trade practices under the laws of any jurisdiction.

(i)   Except as set forth in Sched