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Exhibit 10.37

CONFIDENTIAL TREATMENT

AGREEMENT AND PLAN OF MERGER

        This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of December 24, 2007 (the "Agreement Date"), by and among (i) Cubist
Pharmaceuticals, Inc., a Delaware corporation ("Parent"), (ii) Edison Merger
Corp., a Delaware corporation and a wholly owned Subsidiary of Parent ("Merger
Sub"), (iii) Illumigen Biosciences, Inc. a Washington corporation (the
"Company"), and (iv) IB Securityholders, LLC as the Holders Representative
referred to herein for the limited purposes specifically set forth herein and
only in its 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 (the surviving corporation is referred to herein as the
"Surviving Corporation"), upon the terms and subject to the conditions set forth
in this Agreement and in accordance with the provisions of Washington Law and
Delaware Law;

        WHEREAS, the board of directors of the Company (the "Company Board") has
carefully considered the terms of this Agreement and has determined that this
Agreement and 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 Shareholders (as defined below);

        WHEREAS, concurrently with the execution and delivery of this Agreement,
Company and certain Company Shareholders are executing and delivering a Voting
and Support Agreement in the form of Exhibit A hereto pursuant to which, among
other things, such Company Shareholders are covenanting to: (i) immediately
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, (ii) retain ownership of the shares of Company
Stock held by them as of the date hereof until the earlier of the consummation
of the Merger or the termination of this Agreement pursuant to Article 10 hereof
and (iii) otherwise to support this Agreement and the transactions contemplated
hereby; and

        WHEREAS, the Company Board will be submitting this Agreement and the
performance of the transactions contemplated hereby to the holders of the shares
of the capital stock of the Company (collectively, the "Company Shareholders"),
for their adoption by written consent in accordance with Section 23B.07.040 of
Washington Law, and the Company Board is recommending that the Company
Shareholders vote for the adoption of 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:

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*Confidential Treatment Requested. Omitted portions filed with the Securities
and Exchange Commission (the "Commission").

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ARTICLE 1
DEFINITIONS

        "Abandonment Notice" means the delivery by Parent to the Holders
Representative, at any time after the Effective Time, of a written notice
disclosing the Parent's election to henceforth cease development of any and all
Contingent Payment Products.

        "Abandonment Grantback Notice" has the meaning ascribed to such term in
Section 6.10(a) hereof.

        "Accountants" has the meaning ascribed to such term in Section 2.7(k)
hereof.

        "Adverse Recommendation" has the meaning ascribed to such term in
Section 7.24(d) hereof.

        "Affiliate" shall mean, 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.

        "Agreed Contingent Payment Amount" has the meaning ascribed to such term
in Section 2.7(j) hereof.

        "Agreement" has the meaning ascribed to such term in the introductory
paragraph hereof.

        "Agreement Date" has the meaning ascribed to such term in the
introductory paragraph hereof.

        "Amended Articles" has the meaning ascribed to such term in Section 4.30
hereof.

        "Application For Marketing Approval" means a new drug application or a
biologics license application or any functional equivalent of such an
application seeking approval to market a pharmaceutical product in the United
States or elsewhere.

        "Appraiser" has the meaning ascribed to such term in Section 2.7(k)
hereof.

        "Articles of Merger" has the meaning ascribed to such term in
Section 2.2 hereof.

        "Available Closing Cash" means the amount of the Company's and its
Subsidiaries' cash that, as of the close of business on the business day
immediately preceding the Closing Date, is held on hand by the Company or any of
its Subsidiaries or on deposit in any bank account in full compliance with the
provisions of Section 6.14 hereof, subject to the following adjustments:
(i) minus the aggregate amount of the Company's and its Subsidiaries'
uncollected checks or other payment orders or instructions as of the close of
business on the business day immediately preceding the Closing Date; and
(ii) minus the aggregate amount of any checks or other payment orders or
instructions made, given or executed by the Company and its Subsidiaries on the
Closing Date; provided, that the amount of any items listed in clauses (ii) or
(iii) shall not be a reduction of Available Closing Cash to the extent that such
items have been made, given or executed for the purpose of paying one or more
Closing Liabilities that resulted in an adjustment of Closing Consideration.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "Blocking Third Party Patent" has the meaning ascribed to such term in
Section 2.7(f) hereof.

        "Blocking Third Party Patent Application" has the meaning ascribed to
such term in Section 2.7(f) hereof.

        "Board of Managers" has the meaning ascribed to such term in
Section 3.7(a) hereof.

        "Breach Dispute Notice" has the meaning ascribed to such term in
Section 6.10(c) hereof.

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

        "Buyer Group" means Parent and its direct and indirect Subsidiaries,
Affiliates, successors, permitted assignees and permitted licensees of any
Compound, any Contingent Payment Product, the Company Program, or any portion of
or interest in any of the foregoing, and includes, after the Effective Time, the
Surviving Corporation and its Affiliates, successors, permitted assignees and
permitted licensees of any Compound, any Contingent Payment Product, the Company
Program, or any portion of or interest in any of the foregoing (all of the
foregoing being collectively referred to as the "Members of the Buyer Group").

        "Capitalization Certificate" has the meaning ascribed to such term in
Section 8.3(d)(ii) hereof.

        "Certificate" or "Certificates" has the meaning ascribed to such term in
Section 3.2 hereof.

        "CERCLA" has the meaning ascribed to such term in Section 4.14(b)
hereof.

        "Closing" has the meaning ascribed to such term in Section 2.2 hereof.

        "Closing Consideration" means nine million dollars ($9,000,000.00),
subject to the following adjustments: (i) minus the aggregate amount of all
Closing Liabilities that have not been paid, satisfied or discharged as of the
close of business on the business day immediately preceding the Closing Date;
and (ii) plus the aggregate amount of all Available Closing Cash.

        "Closing Date" has the meaning ascribed to such term in Section 2.2
hereof.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "Closing Liabilities" has the meaning ascribed to such term in
Section 2.6(b) hereof.

        "Code" means the Internal Revenue Code of 1986, as amended.

        "Commercially Reasonable Efforts" means the level of efforts and
resources reasonably appropriate to develop and/or commercialize (as applicable)
a Section 6.9 Contingent Payment Product in a sustained manner consistent with
the efforts and resources that a similarly situated biopharmaceutical company
would typically devote to a product of similar market potential, profit
potential, and/or proprietary protection, and similar scientific, technical,
development, regulatory and competitive risks, based on market conditions then
prevailing; for this purpose, in order to be considered "similarly situated" to
Parent and Company, a comparable biopharmaceutical company shall be presumed not
to have []*.

        "Common Warrants" shall mean all outstanding warrants exercisable for
shares of Company Common Stock.

        "Company" has the meaning ascribed to such term in the introductory
paragraph hereof.

        "Company Board" has the meaning ascribed to such term in the recitals
hereof.

        "Company Common Stock" means the Company's common stock, $.0001 par
value per share.

        "Company Disclosure Schedule" has the meaning ascribed to such term in
Article 4 hereof.

        "Company Employee Benefit Plan" has the meaning ascribed to such term in
Section 4.13(a) hereof.

        "Company Grantback Assets" has the meaning ascribed to such term in
Section 6.10(a) hereof.

        "Company Indemnified Party" has the meaning ascribed to such term in
Section 9.3 hereof.

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

        "Company Options" means the issued and outstanding options to purchase
shares of Company Common Stock granted under the Company Plan.

        "Company Patents" means those United States, international and foreign
patents and patent applications (including provisional applications), in each
case that are listed in Schedule 4.9 of the Company Disclosure Schedule, and any
subsequent continuations, continuations-in-part, divisionals, reexaminations,
reissues, restorations (together with supplemental protection certificates in
Europe), provisions, foreign counterparts and extensions thereof.

        "Company Plan" means the Company's 2000 Stock Option Plan.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "Company Preferred Stock" means any or all of the Company's Series A
Preferred Stock, $.0001 par value per share and any or all of the Company's
Series B Preferred Stock, $.0001 par value per share.

        "Company Products" has the meaning ascribed to such term in
Section 4.25(a) hereof.

        "Company Program" means all of the Company's programs as currently being
conducted, and as currently contemplated to be conducted, by the Company related
to the application of the Compound for the treatment of infections caused by
HCV.

        "Company Program Assets" means all assets of the Company used in or
related to the Company Program, including, without limitation, (a) any Compound,
(b) all patent rights, inventions, know-how, trade secrets, trademarks and other
intellectual property rights owned or controlled by the Company that are
necessary or useful to carry out such program or to research, develop, make,
have made, use, import, export, market, distribute, have distributed, offer to
sell, sell and have sold any Compound, and (c) all non-disclosure, invention
assignment and non-competition agreements entered into by the Company with its
employees and consultants.

        "Company Program Contract" has the meaning ascribed to such term in
Section 4.17(a) hereof.

        "Company Program Expenditures" means identifiable expenditures
specifically related to the development of a Contingent Payment Product with an
indication for the treatment of infections caused by HCV (but excluding overhead
and other expense allocations not specifically identifiable thereto).

        "Company Registered Intellectual Property" means those United States,
international and foreign: (a) patents and patent applications (including
provisional applications); (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; (c) registered copyrights and applications for copyright
registration; and (d) registered domain names and applications for domain name
registrations, in each case that are owned by or licensed to the Company.

        "Company Stock" means, as the context may require, any or all of the
Company Common Stock and the Company Preferred Stock.

        "Company Shareholders" has the meaning ascribed to such term in the
recitals hereof.

        "Company's Most Recent Balance Sheet" has the meaning ascribed to such
term in Section 4.6 hereof.

        "Compensation Liabilities" has the meaning ascribed to such term in
Section 6.16(b) hereof.

        "Complementary Technology" has the meaning ascribed to such term in
Section 2.7(f) hereof.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "Compound" means IB657 and any oligoadenylate synthetase protein, []*.

        "Confidentiality Agreement" has the meaning ascribed to such term in
Section 6.11 hereof.

        "Contingent Consideration" means the aggregate amount that Parent is
required to pay, if any, pursuant to, and in accordance with, the provisions of
Section 2.7 hereof, to the Holders Representative for the benefit of the
Participating Holders.

        "Contingent Earn-Out Payment" has the meaning ascribed to such term in
Section 2.7(b) hereof.

        "Contingent Earn-Out Payment Amount" means, with respect to all
Contingent Payment Products, a payment amount equal to (i) []* of the portion of
Net Sales from sales of all Contingent Payment Products, if any, by Buyer Group
everywhere in the world during any calendar year after the Effective Time that
is less than or equal to []*, plus, (ii) []* of the portion of Net Sales from
sales of all Contingent Payment Products, if any, by Buyer Group everywhere in
the world during any calendar year after the Effective Time that exceeds []*.

        "Contingent Earn-Out Payment Year" means each calendar year in which Net
Sales of any Contingent Payment Product occur.

        "Contingent Payment" means any payment resulting from the Contingent
Consideration.

        "Contingent Payment Amount" has the meaning ascribed to such term in
Section 2.7(g) hereof.

        "Contingent Payment Audit" has the meaning ascribed to such term in
Section 2.7(h) hereof.

        "Contingent Payment Audit Period" has the meaning ascribed to such term
in Section 2.7(h) hereof.

        "Contingent Payment Certificate" has the meaning ascribed to such term
in Section 2.7(g) hereof.

        "Contingent Payment Dispute Period" has the meaning ascribed to such
term in Section 2.7(h) hereof.

        "Contingent Payment Product" means any pharmaceutical composition or
product that includes a Compound as an active pharmaceutical ingredient,
provided that the composition, use, or production of such Compound is the
subject of a Valid and Enforceable Claim of a Company Patent, which Company
Patent (i) was owned or controlled by the Company immediately prior to the
Effective Time, which ownership or control shall be deemed to have included any
subsequent continuations, continuations in part, divisionals, reexaminations,
reissues, restorations (together with supplemental protection certificates in
Europe), provisions, foreign counterparts, and extensions, and (ii) is owned or
controlled by Parent or the Surviving Corporation or any of their Affiliates,
successors, permitted assignees and permitted licensees at all times following
the Effective Time.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "Corresponding HCV Milestone Payment" means, (i) with respect to HCV
Milestone One, the HCV Milestone One Payment, (ii) with respect to HCV Milestone
Two, the HCV Milestone Two Payment, (iii) with respect to HCV Milestone Three,
the HCV Milestone Three Payment, (iv) with respect to HCV Milestone Four, the
HCV Milestone Four Payment, (v) with respect to HCV Milestone Five, the HCV
Milestone Five Payment, (vi) with respect to HCV Milestone Six, the HCV
Milestone Six Payment, (vii) with respect to HCV Milestone Seven, the HCV
Milestone Seven Payment, (viii) with respect to HCV Milestone Eight, the HCV
Milestone Eight Payment and (ix) with respect to HCV Milestone Nine, the HCV
Milestone Nine Payment.

        "Corresponding HCV []* Milestone Payment" means, (i) with respect to HCV
[]* Milestone Four, the HCV []* Milestone Four Payment, (ii) with respect to HCV
[]* Milestone Five, the HCV []* Milestone Five Payment, (iii) with respect to
HCV []* Milestone Six, the HCV []* Milestone Six Payment and (iv) with respect
to HCV []* Milestone Seven, the HCV []* Milestone Seven Payment.

        "Corresponding Non-HCV Milestone Payment" means, (i) with respect to
Non-HCV Milestone One, the Non-HCV Milestone One Payment, (ii) with respect to
Non-HCV Milestone Two, the Non-HCV Milestone Two Payment, (iii) with respect to
Non-HCV Milestone Three, the Non-HCV Milestone Three Payment, (iv) with respect
to Non-HCV Milestone Four, the Non-HCV Milestone Four Payment, (v) with respect
to Non-HCV Milestone Five, the Non-HCV Milestone Five Payment, (vi) with respect
to Non-HCV Milestone Six, the Non-HCV Milestone Six Payment and (vii) with
respect to Non-HCV Milestone Seven, the Non-HCV Milestone Seven Payment.

        "Corresponding Sales-Based Milestone Payment" means, (i) with respect to
Sales-Based Milestone One, the Sales-Based Milestone One Payment and (ii) with
respect to Sales-Based Milestone Two, the Sales-Based Milestone Two Payment.

        "CPR" has the meaning ascribed to such term in Section 6.10(c) hereof.

        "Cure Notice" has the meaning ascribed to such term in Section 6.10(c)
hereof.

        "D&O Policy" has the meaning ascribed to such term in Section 6.8
hereof.

        "Damages" means all damages, losses, claims, demands, actions, causes of
action, diminutions of value, suits, litigations, arbitrations, liabilities,
costs, and expenses, including court costs and the reasonable fees and expenses
of legal counsel, in each case, regardless of whether relating to a third-party
claim.

        "Delaware Law" means the Delaware General Corporation Law, as amended
from time to time.

        "Dispute Notice" has the meaning ascribed to such term in Section 2.7(i)
hereof.

        "Disputed Contingent Payment Amount" has the meaning ascribed to such
term in Section 2.7(j) hereof.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "Disqualified Shareholder" 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 Stock that are outstanding
immediately prior to the Effective Time of the Merger and which are held by
shareholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have exercised rights of appraisal for such
shares of Company Stock in accordance with Washington Law and who, as of the
Effective Time, have not effectively withdrawn or lost such dissenters' rights.

        "dollars" (whether such word is capitalized or not) means United States
dollars, the lawful currency of the United States of America.

        "Effective Time" has the meaning ascribed to such term in Section 2.2
hereof.

        "Eligible Company Option" has the meaning ascribed to such term in
Section 3.1(c) hereof.

        "EMEA" means the European Medicines Agency of the European Union with
headquarters in London, United Kingdom.

        "Environmental Laws" has the meaning ascribed to such term in
Section 4.14(b) hereof.

        "Environmental Permits" has the meaning ascribed to such term in
Section 4.14(f) hereof.

        "EPA" has the meaning ascribed to such term in Section 4.14(c) hereof.

        "EPO" means the European Patent Office.

        "ERISA" has the meaning ascribed to such term in Section 4.13(c) hereof.

        "Escrow Agent" has the meaning ascribed to such term in
Section 2.6(a)(ii) hereof.

        "Escrow Agreement" has the meaning ascribed to such term in
Section 2.6(a)(ii) hereof.

        "Escrow Deposit Amount" has the meaning ascribed to such term in
Section 2.6(a)(ii) hereof.

        "Escrow Funds" shall mean the aggregate amounts being held by the Escrow
Agent in escrow pursuant to the Escrow Agreement.

        "Facility Leases" means (i) that certain Sublease, dated as of
December 1, 2005, by and between the Company and Cell Therapeutics, Inc and
(ii) any lease or sublease that the Company may enter into in connection with
relocating its operations to a different location from the location specified in
the Sublease set forth in clause (i) of this definition.

        "FDA" means the United States Food and Drug Administration.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "FDCA" has the meaning ascribed to such term in Section 4.25(a) hereof.

        "Financial Statements" has the meaning ascribed to such term in
Section 4.6 hereof.

        "First Commercial Sale" means the []* by a Member of the Buyer Group of
a Contingent Payment Product []* to a purchaser []* for such sale in whichever
country such sale occurs.

        "First European Commercial Sale" means the []* by a Member of the Buyer
Group of a Contingent Payment Product []* to a purchaser []* for such sale []*.

        "First U.S. Commercial Sale" means the []* by a Member of the Buyer
Group of a Contingent Payment Product []* to a purchaser []* for such sale []*.

        "Fraud Claim" has the meaning ascribed to such term in Section 9.6(a)
hereof.

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

        "Governmental Entity" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign, as well as any corporations owned or chartered by any such
governmental agency, bureau, board, commission, court, department, official,
political subdivision, tribunal or other instrumentality.

        "Government Contract" means any Government Prime Contract or Government
Subcontract, together with any modifications, amendments or waivers thereto, as
to which either (a) any performance is outstanding; (b) the Government has not
made final payment; (c) any routine cost audits have not been completed; or
(d) there is any outstanding audit, investigation, or dispute. A task order or
delivery order is not itself a Government Contract but is a part of the
Government Contract under which it was issued.

        "Government Prime Contract" means any prime contract, basic ordering
agreement, letter contract, or purchase order between the Company and any state
or the Federal government.

        "Government Subcontract" means any subcontract, basic ordering
agreement, letter subcontract, or purchase order between the Company and any
higher-tier contractor with respect to a Government Prime Contract.

        "Grantback Assets" has the meaning ascribed to such term in
Section 6.10(a) hereof.

        "Grantback Date" means the date upon which Parent grants any and all
licenses to the Holders Representative pursuant to Section 6.10(a) or
Section 6.10(d), as applicable.

        "Grantback Licensed Patents" has the meaning ascribed to such term in
Section 6.10(f) hereof.

        "Hazardous Substances" has the meaning ascribed to such term in
Section 4.14(c) hereof.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "HCV" means the hepatitis C virus and all genotypes, strains,
quasispecies, and clinical isolates thereof.

        "HCV First Commercial Sale" has the meaning ascribed to such term in
Section 6.9(a) hereof.

        "HCV Milestone" means any of HCV Milestone One, HCV Milestone Two, HCV
Milestone Three, HCV Milestone Four, HCV Milestone Five, HCV Milestone Six, HCV
Milestone Seven, HCV Milestone Eight and HCV Milestone Nine.

        "HCV Milestone One" means the []* by a Member of the Buyer Group of a
[]*.

        "HCV Milestone Two" means the []* by a Member of the Buyer Group of a
[]*.

        "HCV Milestone Three" means the []* by a Member of the Buyer Group for
any Contingent Payment Product that includes treatments of infections caused by
HCV []*.

        "HCV Milestone Four" means []* of any Contingent Payment Product []*
with an indication for the treatment of infections caused by HCV.

        "HCV Milestone Five" means []* of any Contingent Payment Product []*
with an indication for the treatment of infections caused by HCV.

        "HCV Milestone Six" means the []* by a Member of the Buyer Group of an
[]* any Contingent Payment Product []* with an indication for the treatment of
infections caused by HCV.

        "HCV Milestone Seven" means the []*, by a Member of the Buyer Group of
[]* any Contingent Payment Product []* with an indication for the treatment of
infections caused by HCV.

        "HCV Milestone Eight" means the []* of a Contingent Payment Product with
an indication for treatment of infections caused by HCV.

        "HCV Milestone Nine" means the []* of a Contingent Payment Product with
an indication for treatment of infections caused by HCV.

        "HCV Milestone Payment" means any of HCV Milestone One Payment, HCV
Milestone Two Payment, HCV Milestone Three Payment, HCV Milestone Four Payment,
HCV Milestone Five Payment, HCV Milestone Six Payment, HCV Milestone Seven
Payment, HCV Milestone Eight Payment and HCV Milestone Nine Payment.

        "HCV Milestone One Payment" means one million two hundred fifty thousand
dollars ($1,250,000.00).

        "HCV Milestone Two Payment" means one million two hundred fifty thousand
dollars ($1,250,000.00).

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "HCV Milestone Three Payment" means three million dollars
($3,000,000.00), provided that if the Non-HCV Milestone One Payment has been
made by the Parent prior to the occurrence of HCV Milestone Three, then the "HCV
Milestone Three Payment" shall mean zero dollars ($0.00).

        "HCV Milestone Four Payment" means thirty million dollars
($30,000,000.00), provided that if the HCV []* Milestone Four Payment has been
made by the Parent prior to the occurrence of HCV Milestone Four, then the "HCV
Milestone Four Payment" shall mean fifteen million dollars ($15,000,000.00).

        "HCV Milestone Five Payment" means twenty five million dollars
($25,000,000.00), provided that if the HCV []* Milestone Five Payment has been
made by the Parent prior to the occurrence of HCV Milestone Five*, then the "HCV
Milestone Five Payment" shall mean twelve million five hundred thousand dollars
($12,500,000.00)*.

        "HCV Milestone Six Payment" means ten million dollars ($10,000,000.00),
provided that if the HCV []* Milestone Six Payment has been made by the Parent
prior to the occurrence of HCV Milestone Six, then the "HCV Milestone Six
Payment" shall mean five million dollars ($5,000,000.00).

        "HCV Milestone Seven Payment" means five million dollars
($5,000,000.00), provided that if the HCV []* Milestone Seven Payment has been
made by the Parent prior to the occurrence of HCV Milestone Seven, then the "HCV
Milestone Seven Payment" shall mean two million five hundred thousand dollars
($2,500,000.00).

        "HCV Milestone Eight Payment" means thirty million dollars
($30,000,000.00).

        "HCV Milestone Nine Payment" means ten million dollars ($10,000,000.00).

        "HCV []* Milestone" means any of HCV []* Milestone Four, HCV []*
Milestone Five, HCV []* Milestone Six and HCV []* Milestone Seven.

        "HCV []* Milestone Four" means []* of any Contingent Payment Product []*
with an indication for the treatment of infections caused by HCV.

        "HCV []* Milestone Five" means []* of any Contingent Payment Product []*
with an indication for the treatment of infections caused by HCV.

        "HCV []* Milestone Six" means the []* by a Member of the Buyer Group of
an []* any Contingent Payment Product []* with an indication for the treatment
of infections caused by HCV.

        "HCV []* Milestone Seven" means the []*, by a Member of the Buyer Group
of an []* any Contingent Payment Product []* with an indication for the
treatment of infections caused by HCV.

        "HCV []* Milestone Payment" means any of HCV []* Milestone Four Payment,
HCV []* Milestone Five Payment, HCV []* Milestone Six Payment and HCV []*
Milestone Seven Payment.

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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        "HCV []* Milestone Four Payment" means fifteen million dollars
($15,000,000.00), provided that if the HCV Milestone Four Payment has been made
by the Parent prior to the occurrence of HCV []* Milestone Four, then the "HCV
[]* Milestone Four Payment" shall mean zero dollars ($0.00).

        "HCV []* Milestone Five Payment" means twelve million five hundred
thousand dollars ($12,500,000.00), provided that if the HCV Milestone Five
Payment has been made by the Parent prior to the occurrence of HCV []* Milestone
Five, then the "HCV []* Milestone Five Payment" shall mean zero dollars ($0.00).

        "HCV []* Milestone Six Payment" means five million dollars
($5,000,000.00), provided that if the HCV Milestone Six Payment has been made by
the Parent prior to the occurrence of HCV []* Milestone Six, then the "HCV []*
Milestone Six Payment" shall mean zero dollars ($0.00).

        "HCV []* Milestone Seven Payment" means two million five hundred
thousand dollars ($2,500,000.00), provided that if the HCV Milestone Seven
Payment has been made by the Parent prior to the occurrence of HCV []* Milestone
Seven, then the "HCV []* Milestone Seven Payment" shall mean zero dollars
($0.00).

        "Holders Representative" means IB Securityholders, LLC, pursuant to its
appointment to serve as such under Section 3.7 hereof.

        "Holders Representative Reimbursement Amount" has the meaning ascribed
to such term in Section 2.6(a)(i) hereof.

        "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

        "IB657" means the compound known as IB657 that is owned or exclusively
licensed by the Company immediately prior to the Effective Time and is being
developed by the Company immediately prior to the Effective Time for the
treatment of infections caused by HCV.

        "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
accounts payable, notes payable and accrued expenses 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 4.10 of the
Company Disclosure Schedule as "Indebtedness," if any, (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.

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        "Indemnified Party" has the meaning ascribed to such term in Section 9.4
hereof.

        "Indemnifying Party" has the meaning ascribed to such term in
Section 9.4 hereof.

        "Initial Press Release" has the meaning ascribed to such term in
Section 11.15 hereof.

        "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 everywhere in the world.

        "IRB" has the meaning ascribed to such term in Section 4.25(d) hereof.

        "IRS" has the meaning ascribed to such term in Section 4.13(b) hereof.

        "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 any of
Charles Magness, Shawn Iadonato or Donald Elmer has actual knowledge or which a
reasonable investigation of facts or information in the possession of any of the
Company's employees, attorneys or agents, including but not limited to, any
information contained in the patent searches described on Schedule 4.9(k) of the
Company Disclosure Schedule, prior to the Effective Time would have disclosed to
any of them. 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, Chief Financial Officer, General Counsel, Senior Vice President of
Research and Development and Corporate Development or Senior Vice President of
Commercial Operations has actual knowledge or which a reasonable investigation
of facts or information in the possession of any employee, attorney or agent of
Parent (or any of its Subsidiaries or controlled Affiliates) prior to the
Effective Time would have disclosed to any of them.

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        "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.

        "LLC Agreement" shall mean the Limited Liability Company Agreement of IB
Securityholders, LLC dated December 21, 2007 in the form attached hereto as
Exhibit B.

        "Lost Certificate or Document Affidavit" has the meaning ascribed to
such term in Section 3.4 hereof.

        "Material Adverse Effect" means (a) with respect to the Company any
change or effect that, when taken individually or together with all other
similar or related 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 and its Subsidiaries, taken as a whole, or to adversely
affect the ability of the Company to consummate the transactions contemplated
hereby, and (b) with respect to Parent any change or effect that, when taken
individually or together with all other similar or related adverse changes or
effects, is or is reasonably likely to be materially adverse to the business,
results of operations and financial condition of Parent and its Subsidiaries,
taken as a whole, or to adversely affect the ability of the Parent or the Merger
Sub to consummate the transactions contemplated hereby, except, in each case of
(a) and (b) above, 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.

        "Material Contract" has the meaning ascribed to such term in
Section 4.17(a) hereof.

        "Maximum Amount" has the meaning ascribed to such term in Section 6.8
hereof.

        "Member of the Buyer Group" has the meaning ascribed to such term in the
definition of "Buyer Group" hereof.

        "Merger" has the meaning ascribed to such term in the recitals hereof.

        "Merger Certificate" has the meaning ascribed to such term in
Section 2.2 hereof.

        "Merger Consideration" means, collectively, the Closing Consideration,
the Contingent Consideration and any amounts distributed pursuant to
Section 2.6(c).

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        "Merger Consideration Certificate" has the meaning ascribed to such term
in Section 2.6(b) hereof.

        "Merger Documents" has the meaning ascribed to such term in Section 2.2
hereof.

        "Merger Sub" has the meaning ascribed to such term in the introductory
paragraph hereof.

        "Net Sales" means, with respect to a Contingent Payment Product, gross
revenues recorded by Parent and gross revenues recorded by all other Members of
the Buyer Group in the aggregate during any calendar year (or portion of a
calendar year as to which Contingent Earn-Out Payments may be due under
Section 2.7(b)) arising from sales of such Contingent Payment Product in all
countries of the world, except to the extent otherwise provided below in this
definition and subject to certain deductions specified further below. 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 such gross revenues 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. "Net Sales" shall
not, however, include (A) gross revenues with respect to sales of any Contingent
Payment Product that (i) are recorded by any Member of the Buyer Group in a
country where such sales by a person who is not a Member of the Buyer Group
would not infringe a Valid and Enforceable Claim of an issued patent in such
country that is within the definition of Company Patents, and (ii) either
(x) []* or (y) arise after the time at which there is a generic or unlicensed
version or equivalent of such Contingent Payment Product that has been lawfully
marketed or received governmental marketing approval in such country, (B) gross
revenues with respect to sales of any Contingent Payment Product for
non-commercial use in any country of the world, including sales for
compassionate use or for research, pre-clinical development or clinical
development, or (C) gross revenues with respect to sales of any Contingent
Payment Product by any member of the Buyer Group to any other member of the
Buyer Group in any country of the world if such sales are for re-sale or
re-transfer purposes or for purposes of manufacturing or packaging a product for
re-sale or re-transfer. If a Contingent Payment Product is sold in combination
with other products or other components proprietary to the Buyer Group, then
"Net Sales" shall be based on the []*.

        "Non-Compliance Grantback Notice" has the meaning ascribed to such term
in Section 6.10(d) hereof.

        "Non-Compliance Grantback" has the meaning ascribed to such term in
Section 6.10(d) hereof.

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        "Non-Compliance Notice" has the meaning ascribed to such term in
Section 6.10(b) hereof.

        "Non-HCV Indication" means any indication for treatment other than an
indication for treatment of infections caused by HCV.

        "Non-HCV Milestone" means any of Non-HCV Milestone One, Non-HCV
Milestone Two, Non-HCV Milestone Three, Non-HCV Milestone Four, Non-HCV
Milestone Five, Non-HCV Milestone Six and Non-HCV Milestone Seven.

        "Non-HCV Milestone One" means the []* by a Member of the Buyer Group of
an []* for any Contingent Payment Product that includes treatment of a Non-HCV
Indication []*.

        "Non-HCV Milestone Two" means []* of any Contingent Payment Product for
the treatment of a Non-HCV Indication.

        "Non-HCV Milestone Three" means []* of any Contingent Payment Product
for the treatment of a Non-HCV Indication.

        "Non-HCV Milestone Four" means the []* by a Member of the Buyer Group of
an []* any Contingent Payment Product with a Non-HCV Indication.

        "Non-HCV Milestone Five" means []* by a Member of the Buyer Group with
the []*, of an []* any Contingent Payment Product with a Non-HCV Indication.

        "Non-HCV Milestone Six" means []* by a Member of the Buyer Group of []*
or its functional equivalent with respect to any Contingent Payment Product for
the treatment of a Non-HCV Indication.

        "Non-HCV Milestone Seven" means []* by a Member of the Buyer Group of
[]*, with respect to any Contingent Payment Product for the treatment of a
Non-HCV Indication.

        "Non-HCV Milestone Payment" means any of Non-HCV Milestone One Payment,
Non-HCV Milestone Two Payment, Non-HCV Milestone Three Payment, Non-HCV
Milestone Four Payment, Non-HCV Milestone Five Payment, Non-HCV Milestone Six
Payment and Non-HCV Milestone Seven Payment.

        "Non-HCV Milestone One Payment" means three million dollars
($3,000,000.00), provided that if the HCV Milestone Three Payment has been made
by the Parent prior to the occurrence of Non-HCV Milestone One, then the
"Non-HCV Milestone One Payment" shall mean zero dollars ($0.00).

        "Non-HCV Milestone Two Payment" means (i) thirteen million dollars
($13,000,000.00) upon the first occurrence, if any, of Non-HCV Milestone Two and
(ii) six million five hundred thousand dollars ($6,500,000.00) upon the second
occurrence, if any, of Non-HCV Milestone Two.

        "Non-HCV Milestone Three Payment" means (i) twenty million dollars
($20,000,000.00) upon the first occurrence, if any, of Non-HCV Milestone Three
and (ii) ten million dollars ($10,000,000.00) upon the second occurrence, if
any, of Non-HCV Milestone Three.

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        "Non-HCV Milestone Four Payment" means (i) ten million dollars
($10,000,000.00) upon the first occurrence, if any, of Non-HCV Milestone Four
and (ii) five million dollars ($5,000,000.00) upon the second occurrence, if
any, of Non-HCV Milestone Four.

        "Non-HCV Milestone Five Payment" means (i) five million dollars
($5,000,000.00) upon the first occurrence, if any, of Non-HCV Milestone Five and
(ii) two million five hundred thousand dollars ($2,500,000.00) upon the second
occurrence, if any, of Non-HCV Milestone Five.

        "Non-HCV Milestone Six Payment" means (i) twenty million dollars
($20,000,000.00) upon the first occurrence, if any, of Non-HCV Milestone Six and
(ii) ten million dollars ($10,000,000.00) upon the second occurrence, if any, of
Non-HCV Milestone Six.

        "Non-HCV Milestone Seven Payment" means (i) ten million dollars
($10,000,000.00) upon the first occurrence, if any, of Non-HCV Milestone Seven
and (ii) five million dollars ($5,000,000.00) upon the second occurrence, if
any, of Non-HCV Milestone Seven.

        "Option Agreement" means that certain letter agreement between Parent
and the Company dated as of October 15, 2007.

        "Outside Date" has the meaning ascribed to such term in Section 10.1(g)
hereof.

        "Parent" has the meaning ascribed to such term in the introductory
paragraph hereof.

        "Parent Disclosure Schedule" has the meaning ascribed to such term in
Article 5 hereof.

        "Parent Grantback Assets" has the meaning ascribed to such term in
Section 6.10(a) hereof.

        "Parent Grantback Work Product" has the meaning ascribed to such term in
Section 6.10(a) hereof.

        "Parent Indemnified Parties" has the meaning ascribed to such term in
Section 9.2 hereof.

        "Participating Holders" means those persons (other than the holders of
Dissenting Shares, the Company, any Disqualified Shareholder or any Subsidiary
of the Company) who, immediately prior to the Effective Time of the Merger, were
holders of shares of Company Common Stock or Company Preferred Stock or holders
of Common Warrants or Eligible Company Options, and whose interests therein, as
the result of the Merger, are converted into the right to receive a portion of
the Merger Consideration.

        "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.

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        "Personnel" has the meaning ascribed to such term in Section 6.16(a)
hereof.

        "Phase I" means a clinical trial, either singular or one of several such
clinical trials, intended to provide an initial evaluation of the safety,
pharmacokinetic and/or pharmacological effects of a Contingent Payment Product
in human subjects, either healthy or diseased, and to gather sufficient
information about the drug's pharmacokinetics and pharmacological effects to
permit the design of a well-controlled, scientifically valid, Phase II study;
provided that for certain indications, administration to diseased patients may
be required, necessary or useful in order for such trial to provide an
indication of activity or effectiveness and in such instance(s) such a trial
shall nonetheless be deemed "Phase I".

        "Phase II" means a clinical trial, either singular or one of several
such clinical trials, usually but not always conducted after the completion of a
Phase I trial, intended to evaluate the effectiveness and/or side effects and
risks of a Contingent Payment Product in human subjects, and to gather
sufficient information about the drug's effectiveness and/or side effects and
risks to permit the design of a well-controlled, scientifically valid, Phase III
study.

        "Phase III" means a clinical trial, usually but not always conducted
after the completion of a Phase II trial, that is intended to gather additional
information as to the effectiveness and safety of a Contingent Payment Product
in human subjects, in order to evaluate the overall benefits and risks of such
Contingent Payment Product and to provide an adequate basis for physician
labeling.

        "Post-Approval Notice" has the meaning ascribed to such term in
Section 6.5 hereof.

        "Preferred Stock Closing Amount" has the meaning ascribed to such term
in Section 2.6(a)(iii) hereof.

        "Presumed Breach Events" has the meaning ascribed to such term in
Section 6.9(b) hereof.

        "PTO" means the United States Patent and Trademark Office.

        "RCRA" has the meaning ascribed to such term in Section 4.14(b) hereof.

        "Reimbursable Expenses" has the meaning ascribed to such term in
Section 2.6(a)(i) hereof.

        "Required Shareholder Approval" has the meaning ascribed to such term in
Section 4.30 hereof.

        "Rights Documents" has the meaning ascribed to such term in
Section 3.2(a) hereof.

        "Sales-Based Milestone" means any of Sales-Based Milestone One and
Sales-Based Milestone Two.

        "Sales-Based Milestone One" means the first occurrence of Net Sales of
Contingent Payment Products in excess of []* after the Effective Time.

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        "Sales-Based Milestone Two" means the first occurrence of Net Sales of
Contingent Payment Products in excess of []* after the Effective Time other than
the year in which the Sales-Based Milestone One occurs.

        "Sales-Based Milestone One Payment" means thirty million dollars
($30,000,000.00).

        "Sales-Based Milestone Two Payment" means seventy million dollars
($70,000,000.00).

        "Sales-Based Milestone Payment" means any of Sales-Based Milestone One
Payment and Sales-Based Milestone Two Payment.

        "SARA" has the meaning ascribed to such term in Section 4.14(b) hereof.

        "SEC" has the meaning ascribed to such term in Section 5.4 hereof.

        "Section 6.9 Contingent Payment Product" means any Contingent Payment
Product that includes Section 6.9 IB657 as an active pharmaceutical ingredient
and that is being developed for the treatment of infections caused by HCV as an
indication.

        "Section 6.9 IB657" means []*.

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

        "Services Agreement" means the services agreement between Parent and
ServicesCo substantially in the form of Exhibit C attached hereto.

        "ServicesCo" shall mean Lecura, Inc., a Washington corporation.

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

        "Superior Proposal" has the meaning ascribed to such term in
Section 7.24(a) hereof.

        "Surviving Corporation" has the meaning ascribed to such term in the
recitals hereof.

        "Surviving Corporation Articles" has the meaning ascribed to such term
in Section 2.4(a) hereof.

        "Takeover Proposal" has the meaning ascribed to such term in
Section 7.24(a) hereof.

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        "Tax" or "Taxes" (and with correlative meaning, "Taxable" and "Taxing")
means any federal, state, local, or non-United States 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, including any interest, penalties, special
charges or additions to tax in respect of the foregoing.

        "Tax Return" means any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
estimates, elections, schedules, statements or information) filed or required to
be filed in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.

        "Taxation Authority" means any Governmental Authority having any
responsibility for (a) the determination, assessment or collection or payment of
any Tax, or (b) the administration, implementation or enforcement of or
compliance with any law relating to any Tax.

        "Third Party Consideration Claim" has the meaning ascribed to such term
in Section 9.2 hereof.

        "Third Party Payment" has the meaning ascribed to such term in
Section 2.7(d) hereof.

        "Third Party Payment Offset" has the meaning ascribed to such term in
Section 2.7(d) hereof.

        "Threshold Amount" has the meaning ascribed to such term in
Section 9.6(a) hereof.

        "Transaction Expenses" means all expenses of each of the Company, its
Subsidiaries and the Participating Holders incurred by the Company or any of its
Subsidiaries in connection with the preparation, execution and consummation of
this Agreement, the transactions contemplated hereby and the Closing, including
all fees and disbursements of attorneys, accountants and other advisors
(including, but not limited to, P2 Partners, LLC) and service providers of the
Participating Holders or the Company or any of its Subsidiaries.

        "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.

        "Washington Law" means the Business Corporation Act of the State of
Washington (Title 23B of the Revised Code of Washington), as amended from time
to time.

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ARTICLE 2
THE MERGER

        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
Washington Law and Delaware Law, at the Effective Time (as defined below),
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.

        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 after, but in no event later than, the fifth
business day following the fulfillment or waiver of such conditions, a closing
(the "Closing") will be held at the offices of Bingham McCutchen LLP in Boston,
Massachusetts (or such other place as the parties may agree). The date on which
the Effective Time (as defined below) occurs 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 D-1 hereto, executed in accordance with the relevant provisions of
Delaware Law (the "Merger Certificate") and (ii) with the Secretary of State of
the State of Washington articles of merger, substantially in the form of Exhibit
D-2 hereto, executed in accordance with the relevant provisions of Washington
Law (the "Articles of Merger" and together with the 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
Washington, 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 Washington 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 Washington 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, the
Company Program Assets and all related Intellectual Property and licenses to
Intellectual Property), rights, privileges, powers and franchises of the Company
and the Merger Sub shall remain vested in the Surviving Corporation, and,
subject to this Agreement, all debts, liabilities, obligations, restrictions,
disabilities and duties of each of those corporations shall continue to be the
debts, liabilities, obligations, restrictions, disabilities and duties of the
Surviving Corporation.

        2.4    Charter; Bylaws.    

        (a)   At the Effective Time, the articles of incorporation of the
Company shall be amended in their entirety, upon the filing of the Articles of
Merger, to the form attached as Exhibit E hereto, which shall thereafter be the
articles of incorporation of Surviving Corporation (the "Surviving Corporation
Articles") until thereafter amended as provided by Washington Law, and as
permitted under the terms of such Surviving Corporation Articles.

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        (b)   At the Effective Time, the bylaws of the Company shall be amended
in their entirety to the form attached as Exhibit F hereto, which shall
thereafter be the bylaws of Surviving Corporation until thereafter amended as
provided by Washington Law, and as permitted under the terms of 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 Articles 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.

        2.6    Closing Date Consideration.    

        (a)    Closing Consideration.    At the Effective Time or in the event
the Effective Time is prior to January 2, 2008, on January 2, 2008 (the "Closing
Consideration Payment Date") and subject to the provisions of Article 3 hereof,
Parent shall pay the Closing Consideration, of which:

          (i)  Two Hundred Thousand Dollars ($200,000.00) (the "Holders
Representative Reimbursement Amount") shall be deposited with the Holders
Representative, to be held by the Holders Representative for the payment of
expenses incurred by the Holders Representative in performing its duties
pursuant to this Agreement, the Escrow Agreement and the LLC Agreement
("Reimbursable Expenses");

         (ii)  An amount equal to one million five hundred thousand dollars
($1,500,000.00) (the "Escrow Deposit Amount") shall be deposited with The Bank
of New York (the "Escrow Agent") to be held for a period of one year from the
Closing Date pursuant to an Escrow Agreement, substantially in the form of
Exhibit G attached hereto (the "Escrow Agreement"), and distributed in
accordance therewith; and

        (iii)  The remainder of the Closing Consideration shall, subject to
Section 2.6(d) and Section 9.5(b), be payable in cash to those Participating
Holders that are holders of shares of Company Preferred Stock immediately prior
to the Effective Time (such aggregate amount being hereinafter referred to in
the aggregate as the "Preferred Stock Closing Amount"), in the respective
amounts reflected on the Merger Consideration Certificate, either: by (x) wire
transfer to an account in the name of such Participating Holder as provided to
Parent by written notice from the Holders Representative at least two
(2) business days prior to the Closing Consideration Payment Date; or
(y) delivery of a check, payable to such Participating Holder, to the Holders
Representative on the Closing Consideration Payment Date.

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        (b)    Merger Consideration Certificate.    At Closing, the Company
shall deliver to Parent and the Holders Representative a certificate (the
"Merger Consideration Certificate") that shall include (1) a complete and
accurate list of all of the liabilities of the Company and its Subsidiaries as
of the close of business on the business day immediately preceding the Closing
Date (the "Closing Liabilities", which shall not include liabilities under
written executory Company Program Contracts to the extent that such liabilities
accrue and arise from and after the Closing but shall include (i) amounts owing
to Parent under the proviso to subparagraph 3(b) of the Option Agreement,
(ii) any and all payment amounts due and payable by the Company under equipment
leases, real estate leases and any other agreements to which the Company is a
party regardless of whether any such payment amounts are accrued or due and
payable prior to or after the Closing (other than payment amounts that accrue or
arise from and after the Closing under Company Program Contracts) and (iii) the
Transaction Expenses referred to below in clause (5) of this paragraph, and
shall be calculated net of any cash deposits held by the creditor to whom the
liability is owed), (2) for each of the Company's and its Subsidiaries' bank
accounts, the uncollected checks or other payment orders or instructions made by
the Company as of the close of business on the business day immediately
preceding the Closing Date and the respective amount of each such uncollected
checks or other payment orders or instructions, (3) a complete and accurate
list, including the amount, of all cash and cash equivalents, as well as all
cash deposits held by the Company, as of the close of business on the business
day immediately preceding the Closing Date, (4) the Available Closing Cash,
(5) the Transaction Expenses, if any, that have not been paid or adequately
provided for as of the close of business on the business day immediately
preceding the Closing Date, and (6) the number of shares of Company Preferred
Stock outstanding immediately prior to the Effective Time. The Merger
Consideration Certificate shall further set forth a calculation of (i) the
Closing Consideration, (ii) the Preferred Stock Closing Amount in accordance
with Section 2.6(a), and (iii) the respective portions of the Preferred Stock
Closing Amount payable to each holder of Company Preferred Stock based on their
respective holdings thereof immediately prior to the Effective Time and
application of the provisions of Section 3.1 of the LLC Agreement. 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 9.2 of this Agreement.

        (c)    Distribution of Holders Representative Reimbursement
Amount.    Any of the Holders Representative Reimbursement Amount that has not
been spent on Reimbursable Expenses by the Holders Representative on or prior to
the end of the period in which the Holders Representative has continuing duties
to perform pursuant to this Agreement, the Escrow Agreement or the LLC
Agreement, shall be distributed by the Holders Representative to the
Participating Holders as additional Merger Consideration pursuant to the terms
of Section 3.1 of the LLC Agreement.

        (d)    Holdback.    In the event that any Participating Holder that is a
holder of Company Preferred Stock shall not have returned to Parent duly
executed transmittal materials in proper form pursuant to, and in accordance
with, Section 3.2(a) hereof at any time prior to the Effective Time, Parent
shall be entitled to hold back the portion of the Preferred Stock Closing Amount
which such Participating Holder would have been entitled to receive pursuant to,
and in accordance with, Section 2.6(a) hereof. Upon Parent's receipt of such
Participating Holder's properly executed transmittal materials, Parent shall
promptly transmit any such holdback amounts to the Holders Representative for
distribution to the Participating Holder pursuant to, and in accordance with,
Section 2.6(a)(iii) hereof.

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        2.7    Contingent Consideration.    

        (a)    Milestone Payments.    

        (i)    HCV Milestone Payments and HCV []* Milestone Payments.    

        (A)  Subject to the limitations set forth herein, including without
limitation those set forth in Sections 2.7(d) through (f) below, if any HCV
Milestone is achieved by any Member of the Buyer Group, then, within sixty
(60) days after the date on which such HCV Milestone has been achieved, Parent
shall deliver to the Holders Representative, for the benefit of the
Participating Holders and for application and distribution in accordance with
Section 3.1 of the LLC Agreement, an amount of cash equal to the remainder
obtained by subtracting from the Corresponding HCV Milestone Payment the
aggregate amount of any and all outstanding set off claims, if any, made against
any Contingent Payment pursuant to Sections 2.7(n), 3.7(e) or 9.5 hereof. The
obligation of Parent under this Section 2.7(a)(i)(A) shall be subject to the
provisions of Section 2.7(m) below. For purposes of clarification, Parent shall
make each HCV Milestone Payment contemplated under this Section 2.7(a)(i)(A)
[]*.

        (B)  Subject to the limitations set forth herein, including without
limitation those set forth in Sections 2.7(d) through (f) below, if any HCV []*
Milestone is achieved by any Member of the Buyer Group, then, within (60) days
after the date on which such HCV []* Milestone has been achieved, Parent shall
deliver to the Holders Representative, for the benefit of the Participating
Holders and for application and distribution in accordance with Section 3.1 of
the LLC Agreement, an amount of cash equal to the remainder obtained by
subtracting from the Corresponding HCV []* Milestone Payment the aggregate
amount of any and all outstanding set off claims, if any, made against any
Contingent Payment pursuant to Sections 2.7(n), 3.7(e) or 9.5 hereof. The
obligation of Parent under this Section 2.7(a)(i)(B) shall be subject to the
provisions of Section 2.7(m) below. For purposes of clarification, Parent shall
make each HCV []* Milestone Payment contemplated under this Section 2.7(a)(i)(B)
[]*.

        (ii)    Non-HCV Milestone Payments.    Subject to the limitations set
forth herein, including without limitation those set forth in Sections 2.7(d)
through (f) below, if any Non-HCV Milestone is achieved by any Member of the
Buyer Group, then, within sixty (60) days after the date on which such Non-HCV
Milestone has been achieved, Parent shall deliver to the Holders Representative,
for the benefit of the Participating Holders and for application and
distribution in accordance with Section 3.1 of the LLC Agreement, an amount of
cash equal to the remainder obtained by subtracting from the Corresponding
Non-HCV Milestone Payment the aggregate amount of any and all outstanding set
off claims, if any, made against any Contingent Payment pursuant to
Sections 2.7(n), 3.7(e) or 9.5 hereof. The obligation of Parent under this
Section 2.7(a)(ii) shall be subject to the provisions of Section 2.7(m) below.
For purposes of clarification: (i) Parent shall make the Non-HCV Milestone One
Payment contemplated under this Section 2.7(a)(ii) []*.

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        (iii)    Sales-Based Milestone Payments.    Subject to the limitations
set forth herein, including without limitation those set forth in
Sections 2.7(d) through (f) below, if any Sales-Based Milestone is achieved,
then within ninety (90) days after the end of the calendar year in which such
Sales-Based Milestone has been achieved by any Member of the Buyer Group, Parent
shall deliver to the Holders Representative, for the benefit of the
Participating Holders and for application and distribution in accordance
Section 3.1 of the LLC Agreement, an amount of cash equal to the remainder
obtained by subtracting from the Corresponding Sales-Based Milestone Payment the
aggregate amount of any and all outstanding set off claims, if any, made against
any Contingent Payment pursuant to Sections 2.7(h), 2.7(j), 2.7(k), 2.7(n),
3.7(e) or 9.5 hereof, provided however, that commencing five (5) years from the
Effective Date, such ninety (90) day time period shall be modified to require
payment of such Sales-Based Milestone Payment on or before March 15th of the
calendar year following achievement of such Sales-Based Milestone. The
obligation of Parent under this Section 2.7(a)(iii) shall be subject to the
provisions of Section 2.7(m) below. For purposes of clarification, Parent shall
make each Sales-Based Milestone Payment contemplated under this
Section 2.7(a)(iii) []*.

        (b)    Contingent Earn-Out Payments.    Subject to the limitations set
forth herein, including without limitation those set forth in Sections 2.7(d)
through (f) below, and in addition to the HCV Milestone Payments, the Non-HCV
Milestone Payments and the Sales-Based Milestone Payments, if Parent or any
Member of the Buyer Group at any time determines, in its sole discretion
(subject to the obligations of Parent set forth in Section 6.9 below), to market
and sell a Contingent Payment Product, then within ninety (90) days after the
end of each calendar year in which Net Sales of such Contingent Payment Product
occur, Parent shall deliver to the Holders Representative, for the benefit of
the Participating Holders and for application and distribution in accordance
Section 3.1 of the LLC Agreement, an amount of cash equal to the remainder
obtained by subtracting from the Contingent Earn-Out Payment Amount the
aggregate amount of any and all outstanding set off claims, if any, made against
any Contingent Payment pursuant to Sections 2.7(h), 2.7(j), 2.7(k), 2.7(n),
3.7(e) or 9.5 hereof (each such payment, a "Contingent Earn-Out Payment"),
provided however, commencing five (5) years from the Effective Date, such ninety
(90) day time period shall be modified to require payment of such Contingent
Earn-Out Payment on or before March 15th of the calendar year following the year
in which Net Sales of such Contingent Payment Product occur. The obligation of
Parent under this Section 2.7(b) shall be subject to the provisions of
Section 2.7(m) below. For purposes of clarification, Parent shall make each
Contingent Earn-Out Payment contemplated under this Section 2.7(b) []* during
any calendar year after the Effective Time.

        (c)    Decision to Develop, Market or Sell.    Without limiting the
obligations of the Parent set forth in Section 6.9 below, nothing contained in
this Section 2.7 or elsewhere in this Agreement shall obligate Buyer Group to
develop, commence or continue marketing or selling, any Contingent Payment
Product.

        (d)    Reduction of Contingent Payments for Licensing Fees and Royalty
Payments to Third Parties.    In the event that, in connection with the sale of
any Contingent Payment Product by Buyer Group in any country of the world during
any calendar year, there is any license fee, royalty payment or any similar
payment (each a "Third Party Payment") due or owing from any Member of the Buyer
Group to any third party pursuant to (x) any license or other agreement listed
on the Company Disclosure Schedule or (y) any license or other agreement entered
into by the Company with such third party prior to the Effective Time, then the
Contingent Payments required to be made by the Parent pursuant to this Agreement
shall be reduced by an amount equal to []* of all such Third Party Payments (the
"Third Party Payment Offset"). The right of any Member of the Buyer Group to
indemnification for Damages under any other provision of this Agreement based on
a breach of any representation or warranty pertaining to any license or other
agreement described in clauses (x) and (y) above shall be reduced to the extent
of any Third Party Payment Offsets actually taken by Parent with respect to
payments on such license.

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        (e)    Reduction of Contingent Payments for Patent Expiration and Patent
Invalidity.    Notwithstanding anything express or implied to the contrary in
this Section 2.7, in the event that the sale or manufacture of any Contingent
Payment Product in any country of the world by any person would not, absent a
license or sublicense granted by Buyer Group, infringe any Valid and Enforceable
Claim of any issued Company Patents in such country, then the amount of any
Sales-Based Milestone Payment or Contingent Earn-Out Payment that would
otherwise be made with respect to sales of such Contingent Payment Product in
such country may be reduced in accordance with the third sentence of the
definition of Net Sales.

        (f)    Reduction of Contingent Payments for Payments in Respect of Third
Party Patents and Technology.    If (a) Parent reasonably determines that (i) a
patent []* (each, a "Blocking Third Party Patent"), (ii) a patent application
[]* (each, a "Blocking Third Party Patent Application") or (iii) a patented or
proprietary complementary technology []* of such Contingent Payment Product (a
"Complementary Technology"), and (b) a Member of the Buyer Group in-licenses
such Blocking Third Party Patent, Blocking Third Party Patent Application or
Complementary Technology pursuant to terms requiring any Member of the Buyer
Group to make payments to such third party, then, with respect to such
Contingent Payment Product, []* of the amount of any cash payments that Parent
pays in connection with, and []* of the amount by which the consideration paid
to Parent by any Member of the Buyer Group is reduced because of, any such
in-licensed Blocking Third Party Patent, Blocking Third Party Patent Application
or Complementary Technology, shall be offset by Parent against any and all
amounts that Parent would otherwise be required to pay pursuant to Sections 2.7
hereof (after giving effect to any other adjustments thereto pursuant to this
Section 2.7) with respect to such Contingent Payment Product, provided that in
no event shall any and all amounts that Parent would otherwise be required to
pay pursuant to Sections 2.7 hereof (after giving effect to any other
adjustments thereto pursuant to this Section 2.7) during any calendar year be
reduced by more than []* pursuant to this Section 2.7(f). Nothing in this
Section 2.7(f) shall limit any remedy or indemnification right that any member
of the Buyer Group may have under any other provision of this Agreement based on
a breach of any representation or warranty contained in this Agreement. The
right of any Member of the Buyer Group to indemnification for Damages under any
other provision of this Agreement based on a breach of any representation or
warranty as a result of or pertaining to any Blocking Third Party Patent or
Complementary Technology shall be reduced to the extent of any Contingent
Payment reduction actually taken by Parent with respect to payments on such
license.

        (g)    Delivery of Contingent Payment Certificate.    On or prior to the
ninetieth (90th) day following the last day of each Contingent Earn-Out Payment
Year, Parent shall deliver to the Holders Representative a certificate (a
"Contingent Payment Certificate"), setting forth (a) the amount of Net Sales for
such Contingent Earn-Out Payment Year (including the amount and location of any
sales excluded from Net Sales under the third sentence of the definition of Net
Sales), and (b) Parent's determination of the amount of any Contingent Earn-Out
Payments and Sales-Based Milestone Payments, if any, due for such Contingent
Earn-Out Payment Year (each such amount due being referred to herein as a
"Contingent Payment Amount"), including the calculation of any offsets or
reductions of such amounts pursuant to Sections 2.7(d), 2.7(f) or 2.7(n).

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        (h)    Holders Representative Audit Rights.    Parent hereby grants, and
shall cause the other members of the Buyer Group to grant, the Holders
Representative and its representatives and advisers, at the Holders
Representative's sole expense, the right, exercisable no more than once during
each forty-five (45) day period (the "Contingent Payment Dispute Period")
following the receipt by the Holders Representative of a Contingent 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, Third Party Payment Offsets,
offsets related to Blocking Third Party Patents and offsets related to
Complementary Technologies for the applicable Contingent Earn-Out Payment Year
with respect to which the most recent Contingent Payment Certificate has been
delivered, 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, Third Party
Payment Offsets, offsets related to Blocking Third Party Patents and offsets
related to Complementary Technologies for such Contingent Earn-Out Payment Year
(each such review shall be referred to herein as a "Contingent Payment Audit").
Notwithstanding the foregoing, absent fraud, intentional misconduct, or the
discovery (whether or not following the completion of any Contingent Payment
Audit) of a material fact that was required to be taken into account by Parent
in the Contingent Payment Certificate and that was not disclosed by Parent to
the Holders Representative or its representatives either in the Contingent
Payment Certificate or otherwise in the course of conducting such Contingent
Payment Audit, which material fact, if taken into account in the calculation of
the applicable Contingent Payment Amount, would have resulted in an increase in
such Contingent Payment Amount, the Holders Representative or its
representatives shall not be permitted to review any records of Net Sales, Third
Party Payment Offsets, offsets related to Blocking Third Party Patents and
offsets related to Complementary Technologies for any Contingent Earn-Out
Payment Year for which a Contingent Payment Audit has previously been performed,
or, if no such Contingent Payment Audit was demanded or performed on a timely
basis, after the expiration of the Contingent Payment Dispute Period. For the
purpose of conducting a Contingent Payment Audit, the Holders Representative may
hire, at its expense, one or more auditors or attorneys of the Holders
Representative'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 and such representatives shall have access to all of the books
and records reasonably required to perform any Contingent Payment Audit at all
times during the period of one hundred twenty (120) days following the date on
which the Holders Representative delivers a Dispute Notice to Parent (the
"Contingent Payment Audit Period"). Nothing in this Section 2.7 shall be deemed
to require any Member of the Buyer Group to keep any books of account or records
other than those which it maintains in the ordinary course of business in its
usual and customary practice, to retain any such books of account or records for
any period in excess of the period for which it retains such records in the
ordinary course of business in its usual and customary practice, or to provide
access to any books and records other than that specified above, and no
presumption shall be made against any Member of the Buyer Group as a result of
the absence of any such books and records as a result of the disposition of any
such books and records in the ordinary course of business; provided, however,
that in no case shall any Member of the Buyer Group dispose of such books of
account or records with respect to a Contingent Earn-Out Payment Year earlier
than the date that is four (4) years following the last day of the subsequent
Contingent Earn-Out Payment Year; and, provided further, that once the Holders
Representative delivers to Parent a Dispute Notice indicating its intention to
commence a Contingent Payment Audit with respect to a Contingent Earn-Out
Payment Year, the Buyer Group shall use commercially reasonable efforts to keep
and retain all books of account relating to Net Sales, Third Party Payment
Offsets, offsets related to Blocking Third Party Patents and offsets related to
Complementary Technologies for the Contingent Earn-Out Payment Year for which
such Contingent Payment Audit is being conducted, including but not limited to
those identified in a request or requests from the Holders Representative with
respect to any Contingent Payment Amount for such Contingent Earn-Out Payment
Year. If any final Contingent Payment Amount determined pursuant to this
Section 2.7(h) is greater than the corresponding Contingent Payment Amount set
forth on the relevant Contingent Payment Certificate by an amount equal to more
than the greater of (i) []* or (ii) five percent (5%) of the applicable
Contingent Payment Amount set forth in the relevant Contingent Payment
Certificate, Parent shall pay all of the reasonable out-of-pocket costs and
expenses actually incurred by the Holders Representative in connection with such
Contingent Payment Audit. If any final Contingent Payment Amount determined
pursuant to this Section 2.7(h) is less than the corresponding Contingent
Payment Amount set forth on the relevant Contingent Payment Certificate, then
(x) the Holders Representative shall pay all of the reasonable out-of-pocket
costs and expenses actually incurred by the Holders Representative in connection
with such Contingent Payment Audit and (y) Parent shall be entitled to offset
the difference between the Contingent Payment Amount set forth on the relevant
Contingent Payment Certificate and such lesser amount against any and all
amounts that Parent would otherwise be required to pay pursuant to this
Section 2.7 (after giving effect to any other adjustments thereto pursuant to
this Section 2.7).

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        (i)    Dispute Notice.    In the event that the Holders Representative
does not agree with or desires to investigate the calculation of any Contingent
Payment Amount set forth on any Contingent Payment Certificate, the Holders
Representative shall be entitled, during the Contingent 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 any Contingent Earn-Out Payment or
Sales-Based Milestone Payment reflected in the Contingent Payment Certificate
shall not be extended, but the date by which Parent shall be obligated to
deliver any additional increment of Contingent Earn-Out Payment or Sales-Based
Milestone Payment determined as a result of the Contingent Payment Audit, shall
be extended until the date that is thirty (30) days following the final
determination of any and all disputed Contingent Payment Amounts pursuant to the
provisions of Sections 2.7(j) and 2.7(k) below. In the event that the Holders
Representative does not deliver a Dispute Notice during the Contingent Payment
Audit Period, all Contingent Payment Amounts set forth on such Contingent
Payment Certificate shall irrevocably be deemed to be the final Contingent
Payment Amounts for such Contingent Earn-Out Payment Year and all purposes of
this Agreement, absent fraud or intentional misconduct, or the discovery after
the expiration of the Contingent Payment Dispute Period of a material fact in
existence at such time that was required to be, but was not, disclosed by Parent
to the Holders Representative in the Contingent Payment Certificate.

        (j)    Agreed Contingent Payment.    In the event that the Holders
Representative delivers a Dispute Notice within the Contingent Payment Dispute
Period, the Holders Representative 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 any Contingent Payment Audit demanded by the Holders
Representative, attempt in good faith to resolve all Contingent Payment
Amount(s) that is/are in dispute (each, a "Disputed Contingent Payment Amount"),
and mutually determine any adjustments to such Contingent Payment Amount(s)
(each, an "Agreed Contingent Payment Amount"). Parent and the Holders
Representative 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 Contingent
Payment Amount, including the delivery of a copy to the Holders Representative
of any such information, records and material, to the extent then available,
that was used to calculate the amount of Net Sales and the Contingent Payment
Amount(s) set forth on each relevant Contingent Payment Certificate. If any
final Agreed Contingent Payment Amount determined pursuant to this
Section 2.7(j) is greater than the corresponding Contingent Payment Amount set
forth on the relevant Contingent Payment Certificate by an amount equal to more
than the greater of (i) []* or (ii) five percent (5%) of the applicable
Contingent Payment Amount set forth in the relevant Contingent Payment
Certificate, Parent shall pay all of the reasonable out-of-pocket costs and
expenses actually incurred by the Holders Representative in connection with such
Contingent Payment Audit. If any final Agreed Contingent Payment Amount
determined pursuant to this Section 2.7(j) is less than the corresponding
Contingent Payment Amount set forth on the relevant Contingent Payment
Certificate, then (x) Holders Representative shall pay all of the reasonable
out-of-pocket costs and expenses actually incurred by Parent in connection with
such Contingent Payment Audit and (y) Parent shall be entitled to offset the
difference between the Contingent Payment Amount set forth on the relevant
Contingent Payment Certificate and such lesser amount against any and all
amounts that Parent would otherwise be required to pay pursuant to this
Section 2.7 (after giving effect to any other adjustments thereto pursuant to
this Section 2.7).

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        (k)    Appraisal of Disputed Contingent Payment Amount.    In the event
that no agreement can be reached by the Holders Representative and Parent as to
the calculation of any Disputed Contingent Payment Amount within ninety
(90) days after the later of the delivery of a Dispute Notice or the conclusion
of a Contingent Payment Audit, and such disagreement relates only to the amount
of Net Sales, Third Party Payment Offsets, offsets related to Blocking Third
Party Patents and offsets related to Complementary Technologies of Contingent
Payment Products, then either party shall have the right to seek a determination
of such Disputed Contingent Payment Amount by appraisal by an accounting firm
(the "Appraiser") selected under this paragraph; provided, however, that the
provisions of this Section 2.7(k) will only be applicable if there is a dispute
or disagreement concerning the calculation or determination of the specific
amount of any of such items and there is no dispute or disagreement concerning
the interpretation or application of any of the defined terms Net Sales, Third
Party Payment Offsets, Blocking Third Party Patents, Complementary Technologies
and Contingent Payment Products or the nature or extent of the parties rights
and obligations under this Agreement with respect to any of such defined terms
or any of the items covered by such defined terms. The accounting firms
qualified to serve as Appraiser under this paragraph (each an "Accountant") are
the Boston, Massachusetts offices of Deloitte & Touche LLP, KPMG, Ernst &
Young LLP, PricewaterhouseCoopers, BDO Seidman, LLP, Grant Thornton LLP, or
their respective successors, or such other accounting firms as the Company and
Parent may mutually agree; provided that such firm is not the principal
regularly-engaged outside accountant to Parent, the Company, any member of the
Buyer Group involved in such dispute, or any auditor that may have assisted the
Holders Representative in any Contingent Payment Audit. The Holders
Representative and Parent shall jointly select one (1) of the Accountants to
serve as the Appraiser within thirty (30) days after either Holders
Representative or Parent delivers a written demand to the other to submit the
dispute to appraisal. In the event that the Holders Representative and Parent
are unable to agree upon an Appraiser within such thirty (30) day period, then
each of the Holders Representative and Parent shall select one of the
Accountants and the two Accountants so selected shall jointly select a third
Accountant to be the Appraiser. The engagement and charge of the Appraiser shall
be limited to determining the specific amount of Net Sales, Third Party Payment
Offsets, offsets related to Blocking Third Party Patents and offsets related to
Complementary Technologies of any identified product or products for the
applicable Contingent Earn-Out Payment Year. The Appraiser shall determine such
Disputed Contingent 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. Any Disputed
Contingent Payment Amount determined by an Appraiser in accordance with this
paragraph (l) shall be deemed to be the final determination of all matters
within the scope of the Appraiser's authority pursuant to this Section 2.7(k)
with respect to the Contingent Payment Amount for the applicable Contingent
Earn-Out Payment Year for all purposes of this Agreement. The determination of
any matters within the scope of the Appraiser's authority pursuant to this
Section 2.7(k) shall be conclusive unless (i) the Appraiser's determination was
procured by fraud or intentional misconduct or (ii) a material fact that was
(w) in existence at the time of such determination, (x) known to Parent,
(y) required to be made available by Parent and (z) not made available by Parent
to the Holders Representative, its representatives or the

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Appraiser in the course of the dispute proceeding, is discovered by the Holders
Representative after the completion of any determination by an Appraiser, and
such material fact, if taken into account in the calculation of the applicable
Contingent Payment Amount, would have resulted in an increase in such Contingent
Payment Amount. The fees and expenses of the Appraiser shall be paid by the
party who demands submission of the dispute to appraisal; provided, that if any
Contingent Payment Amount calculated on the basis of matters determined by the
Appraiser in any examination conducted pursuant to this Section 2.7(k) is
greater than the corresponding Contingent Payment Amount set forth on the
relevant Contingent Payment Certificate by an amount equal to more than the
greater of (i) []* or (ii) five percent (5%) of the Contingent Payment Amount
set forth in the relevant Contingent Payment Certificate, then Parent shall pay
all of the fees and expenses of the Appraiser; all reasonable out-of-pocket
costs and expenses actually incurred by the Holders Representative in connection
with such Contingent Payment Audit; and if any final Contingent Payment Amount
calculated on the basis of matters determined by the Appraiser in any
examination conducted pursuant to this Section 2.7(k) is less than the
corresponding Contingent Payment Amount set forth on the relevant Contingent
Payment Certificate, then (x) Holders Representative shall pay all of the
reasonable out-of-pocket costs and expenses actually incurred by Parent in
connection with such Contingent Payment Audit and (y) Parent shall be entitled
to offset the difference between the Contingent Payment Amount set forth on the
relevant Contingent Payment Certificate and such lesser amount against any and
all amounts that Parent would otherwise be required to pay pursuant to this
Section 2.7 (after giving effect to any other adjustments thereto pursuant to
this Section 2.7). For purposes of clarification, any dispute over any matter
relevant to any Contingent Payment Amount that the Appraiser is not authorized
to determine pursuant to the foregoing provisions of this Section 2.7(k) shall
fall within the purview of the dispute resolution mechanics contemplated by
Section 11.13 hereof.

        (l)    Interest.    Any Contingent Earn-Out Payments or Sales-Based
Milestone Payments, or portion thereof, including any incremental amounts
determined by agreement or pursuant to a determination by Appraiser, not paid
when due under this Agreement shall bear interest at an annual rate equal to the
prime rate established by the Wall Street Journal from the date such incremental
amount would originally have been due until the date such incremental amount is
paid in full.

        (m)    Holdback.    In the event that any Participating Holder shall not
have (i) become a member of IB Securityholders, LLC by executing the LLC
Agreement and delivering to Parent a copy of such signed counterpart signature
page thereto, or (ii) returned to Parent duly executed transmittal materials in
proper form pursuant to, and in accordance with, Section 3.2 hereof, in each
case at any time prior to the time that Parent is required to make any payment
pursuant to Section 2.7(a) or 2.7(b) hereof, then Parent shall be entitled to
hold back the portion of any such payment pursuant to Section 2.7(a) or 2.7(b)
hereof to which such Participating Holder would have been entitled to receive
pursuant to, and in accordance with, Section 3.1 hereof and Section 3.1 of
the LLC Agreement. Upon Parent's receipt of a copy of such Participating
Holder's executed counterpart signature page to the LLC Agreement and such
Participating Holder's properly executed transmittal materials, Parent shall
promptly transmit any such holdback amounts to the Holders Representative for
distribution to the Participating Holder pursuant to, and in accordance with,
Section 2.7(n) below.

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        (n)    Payment.    Parent shall make payment to the Holders
Representative of any cash amount that Parent is required to pay to the Holders
Representative pursuant to the foregoing provisions of this Section 2.7
(including any increase in a Contingent Payment Amount determined in accordance
with Section 2.7(j) or 2.7(k) hereof) by wire transfer to an account in the name
of the Holders Representative as the Holders Representative shall have provided
to Parent by giving written notice thereof in accordance with the provisions of
Section 11.4 hereof at least two business days prior to the date when Parent
shall be required to make such payment (which shall be within five (5) business
days after any increased amount is determined under Section 2.7(j) or 2.7(k)
hereof). As soon as practicable after receipt of such cash amount from the
Parent, the Holders Representative shall pay to each Participating Holder that
portion of such cash amount to which such Participating Holder is entitled in
accordance with the terms of Section 3.1 of the LLC Agreement. Notwithstanding
anything to the contrary in this Agreement, Parent shall be entitled to offset
against any Contingent Payment the amount(s) of any and all payroll, social
security, or other employment taxes imposed on Parent, the Surviving Corporation
or any Affiliate of Parent or the Surviving Corporation in connection with any
payment required to be made under Section 3.1 hereof.

        (o)    No Liability.    Subject to the right of the Holders
Representative to dispute, audit and seek a determination by an Appraiser as to
the amount of any Contingent Payment under the foregoing provisions, payment by
Parent of any portion of any Contingent Payment to the Holders Representative
pursuant to this Section 2.7 shall constitute full discharge as to that portion
of such payment of any obligation Parent may have under this Agreement or
otherwise to make payment of that portion of such Contingent Payment in
connection with the Merger. Parent shall have no liability or obligation of any
kind to any Participating Holder (or any successor or assign of such
Participating Holder) (i) to make payment directly to any such Participating
Holder of any portion of any payment made or required to be made by Parent to
the Holders Representative pursuant to this Section 2.7 and (ii) for the
failure, inability or delay of the Holders Representative to make payment to
such Participating Holder of the portion of any amount paid by Parent to the
Holders Representative pursuant to this Section 2.7 to which such Participating
Holder may be entitled pursuant to this Agreement.

ARTICLE 3
CONVERSION OF SECURITIES;
EXCHANGE OF CERTIFICATES; PAYMENTS

        3.1    Conversion of Securities.    

        (a)    Common Stock.    At the Effective Time and in accordance with the
procedures set forth in Section 3.2, each share of the Company Common Stock
(other than Dissenting Shares) issued and outstanding immediately prior to the
Effective Time will be converted into the right to receive a portion of any
Contingent Consideration that may be paid or become payable by the Parent to the
Holders Representative, such portion to be determined in accordance with the
provisions of Section 3.1 of the LLC Agreement. All shares of Company Common
Stock (other than Dissenting Shares), when so converted, shall no longer be
outstanding and shall automatically be canceled and cease to exist, and each
holder of a certificate representing any

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shares of Company Common Stock so converted shall cease to have any rights with
respect thereto, except the right to receive the consideration set forth in this
Section 3.1(a) following the surrender of such certificate in accordance with
the provisions of Sections 3.1 and 3.2 hereof and Section 3.1 of the LLC
Agreement.

        (b)    Preferred Stock.    At the Effective Time and in accordance with
the procedures set forth in Section 3.2, each share of Company Preferred Stock
(other than Dissenting Shares) issued and outstanding immediately prior to the
Effective Time will be converted into

        (A)  the right to receive from Parent a cash payment of a portion of the
Preferred Stock Closing Amount, such portion payable to the holder of each such
share of Company Preferred Stock to be determined in accordance with the
provisions of Section 3.1 of the LLC Agreement;

        (B)  the right to receive a portion of any Contingent Consideration that
may be paid or payable by the Parent to the Holders Representative, such portion
to be determined in accordance with the provisions of Section 3.1 of the LLC
Agreement;

        (C)  the right to receive a portion of any Escrow Funds that may be
distributed to the Holders Representative pursuant to, and in accordance with,
the Escrow Agreement, such portion to be determined in accordance with
Section 3.1 of the LLC Agreement; and

        (D)  the right to receive a portion of any of the Holders Representative
Reimbursement Amount that may be distributed to the Participating Holders, such
portion to be determined in accordance with Section 3.1 of the LLC Agreement.

        All shares of Company Preferred Stock (other than Dissenting Shares),
when so converted pursuant to this Section 3.1(b), shall no longer be
outstanding and shall automatically be cancelled and cease to exist, and each
holder of a certificate representing any share of Company Preferred Stock so
converted shall cease to have any rights with respect thereto, except the right
to receive the consideration set forth in this Section 3.1(b) following the
surrender of such certificate in accordance with Sections 2.6(d), 3.1 and 3.2
hereof.

        (c)    Options.    As soon as reasonably practicable following the
Agreement Date, the Company Board (or, if appropriate, any committee thereof
administering the Company Plan) shall take all necessary action, including
obtaining the consent of any holder of a Company Option, if necessary, to:
(i) terminate, as of the Effective Time, the Company Plan; (ii) 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); (iii) exchange
all such Company Options to the extent vested (including any such acceleration)
as of the Effective Time (an "Eligible Company Option"), for the right to
receive, in the case of each Eligible Company Option, subject to the holder of
such Eligible Company Option executing and delivering the

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Option Notice and Termination Agreement attached as Exhibit B to the LLC
Agreement, a portion of any Contingent Consideration that may be paid or become
payable by the Parent to the Holders Representative, such portion to be
determined in accordance with the provisions of Section 3.1 of the LLC
Agreement; and (iv) terminate all unvested Company Options without
consideration. Notwithstanding the foregoing, the portion of the Contingent
Consideration, if any, that any holder of an Eligible Company Option shall be
entitled to receive in exchange for such Eligible Company Option shall be
reduced by the total amount (including all principal and interest), if any, owed
by such holder to the Company under any promissory note outstanding at the
Effective Time that was made by such holder to the Company in connection with
the exercise of any such Eligible Company Option. All Company Options, when
terminated as contemplated under this Section 3.1(c), 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, except the right to
receive the consideration set forth in this Section 3.1(c) with respect to any
Company Option that is an Eligible Company Option.

        (d)    Common Warrants.    As soon as reasonably practicable following
the Agreement Date, the Company Board shall take all necessary action, including
obtaining the consent of any and all holders of Common Warrants, if necessary,
to: (i) terminate, as of the Effective Time, each Common Warrant that is then
outstanding and unexercised (without the creation of additional liability to the
Company or any of its Subsidiaries); and (ii) exchange all such Common Warrants,
for the right to receive, in the case of each Common Warrant, subject to the
holder of such Common Warrant executing and delivering the Warrant Notice and
Termination Agreement attached as Exhibit C to the LLC Agreement, a portion of
any Contingent Consideration that may be paid or become payable by the Parent to
the Holders Representative, such portion to be determined in accordance with the
provisions of Section 3.1 of the LLC Agreement. All Common Warrants, when
terminated as contemplated under this Section 3.1(d), shall no longer be
outstanding and shall automatically cease to exist, and each holder of a Common
Warrant shall cease to have any rights with respect thereto, except the right to
receive the consideration set forth in this Section 3.1(d).

        (e)    Treasury Stock; Stock Held by Disqualified
Shareholders.    Notwithstanding anything to the contrary expressed or implied
herein, each share of Company Stock held by any Subsidiary of the Company or by
any Disqualified Shareholder, in each case 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.

        (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.

        3.2    Exchange of Certificates and Instruments.    

        (a)    Exchange Procedures.    Not less than five (5) business days
prior to the Closing Date, Parent will send to each Participating Holder that is
a holder of Company Stock or of Eligible Company Options or Common Warrants a
letter of transmittal, in substantially the form attached hereto as Exhibit H,
for the delivery to Parent, together with the certificate or certificates
representing the shares of Company Stock held by such Participating Holder (each
a "Certificate"

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and collectively the "Certificates") and the grant and other documents
evidencing any Eligible Company Options or Common Warrants (the "Rights
Documents") held by such Participating Holder, or Lost Certificate or Document
Affidavits pursuant to Section 3.4 hereof. Pursuant to Section 2.6(d), the
receipt by Parent and the Holders Representative of such transmittal letter and
the Certificates for outstanding shares of Company Preferred Stock shall be a
condition precedent to the delivery by Parent to holders of any such shares of
Company Preferred Stock of any portion of the Preferred Stock Closing Amount to
which such Participating Holder may be entitled under Sections 2.6(a) and 2.6(d)
of this Agreement in respect of the shares of Company Preferred Stock held by
such Participating Holder. Pursuant to Section 3.1 of the LLC Agreement, the
receipt by Parent and the Holders Representative of such transmittal letter and
the Certificates and Rights Documents for all other shares of Company Stock,
Eligible Company Options or Common Warrants held by any Participating Holder
shall be a condition precedent to the distribution by the Holders Representative
of any portion of the Contingent Consideration to which such Participating
Holder may be or become entitled under Sections 2.7(a) or 2.7(b) of this
Agreement. Whether or not surrendered as contemplated by this Section 3.2(a),
each Certificate and Rights Document shall be deemed at any time after the
Effective Time to represent only the right to receive following such surrender
the applicable amounts of the Merger Consideration payable with respect thereto
pursuant to this Agreement and Section 3.1 of the LLC Agreement. The transmittal
materials contemplated by this Section 3.2(a) 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.

        (b)    No Further Rights as Shareholders or Option or Warrant
Holders.    After the Effective Time, holders of Company Stock, Company Options,
or Common Warrants outstanding immediately prior to the Effective Time will
cease to be, and will have no rights as, shareholders or option or warrant
holders of the Company or the Surviving Corporation, other than (i) in the case
of Company Stock (other than Dissenting Shares and other than any shares held by
Disqualified Shareholders), Company Options or Common Warrants, the rights to
receive the applicable portions of the Merger Consideration payable with respect
thereto pursuant to Sections 2.6 and 2.7 of this Agreement and Section 3.1 of
the LLC Agreement, and (ii) in the case of Dissenting Shares, the rights
afforded to the holders thereof under Washington Law.

        (c)    Abandoned Property.    None of Parent, the Surviving Corporation
or the Holders Representative shall be liable to any holder of Company Stock,
Common Warrants or Company Options for any portion of the Merger Consideration
properly delivered to an appropriate public official pursuant to any abandoned
property, escheat or similar law.

        (d)    Withholding Rights.    Each of the Surviving Corporation, Parent
and the Holders Representative shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock, Company Preferred Stock or Company Options such amounts as
are required to be deducted and withheld (or previously to have been deducted
and withheld) under the Code, or under any provision of state, local or foreign
Tax law, from such consideration (or from any prior payment of Merger
Consideration). To the extent that amounts are so withheld by the Surviving
Corporation, Parent or the Holders Representative, 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.

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        3.3    No Transfers.    

        (a)   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 Stock thereafter on the records of the Company. If, after the Effective
Time, Certificates are presented (for transfer or otherwise) to the Surviving
Corporation or the Holders Representative, they will be canceled and exchanged
for the right to receive that portion of the Merger Consideration payable in
respect thereof pursuant to Sections 2.6 and 2.7 of this Agreement and
Section 3.1 of the LLC Agreement (or returned to the presenting person, if such
certificate represents Dissenting Shares), provided that each person
surrendering the Certificate or Certificates complies with all of the provisions
of Section 3.2(a) hereof and this Section 3.3.

        (b)   To the extent permitted by applicable law, the right of each
Participating Holder to receive the portion of the Merger Consideration, if any,
to which such Participating Holder is entitled pursuant to Sections 2.6 and 2.7
of this Agreement upon consummation of the Merger: (i) shall be personal to such
Participating Holder; (ii) shall not be transferable by such Participating
Holder or any person claiming under such Participating Holder, whether by sale,
assignment, pledge or otherwise, except as set forth below in this
Section 3.3(b), and any other purported transfer shall be void and of no force
or effect; (iii) shall not constitute or represent any equity or ownership
interest in Parent or the Surviving Corporation; and (iv) shall not entitle such
Participating Holder to any voting or dividend rights, or to any other rights
common to shareholders in the Surviving Corporation. Notwithstanding the
foregoing, this Agreement shall not restrict any Participating Holder from
transferring any part or all of such Participating Holder's right to receive the
portion of the Merger Consideration, if any, to which such Participating Holder
is entitled pursuant to Sections 2.6 and 2.7 of this Agreement upon consummation
of the Merger (A) to the Holders Representative for application and distribution
in accordance with the terms of the LLC Agreement, or indirectly by means of any
transfers of part or all of the Participating Holder's membership interest in
the Holders Representative, (B) to other entities controlled by such
Participating Holder, (C) in the case of any Participating Holder that is a
corporation, general partnership, limited partnership, limited liability company
or venture capital firm, to such Participating Holder's shareholders, partners,
members or other holders of equity securities in such Participating Holder, as
applicable, (D) in connection with tax, estate or financial planning, (E) upon
the death of such Participating Holder, (F) to such Participating Holder's
ancestors, descendants, spouse, siblings or other family members, or to a trust
for the benefit of some or all of such persons, or (G) by operation of law,
provided that, (1) such Participating Holder (or in the event of death, if
applicable, such Participating Holder's executor or legal representative)
provides to Parent and the Holders Representative prompt written notice of such
transfer, which written notice shall be given in accordance with the provisions
of Section 11.4 hereof and shall set forth the name and address of each
transferee, (2) such Participating Holder does not receive any consideration in
connection with such transfer, (3) any such permitted transferee agrees to
assume that portion of the obligations of such Participating Holder under this
Agreement and the LLC Agreement to the extent such obligations are applicable to
the portion of the Merger Consideration so transferred to such permitted
transferee, and (4) such transfer shall not violate, or cause Parent to be in
violation, of any federal or state securities laws, as reasonably determined by
Parent's legal counsel. Subsequent transfers by any such transferee of the right
to receive a portion of the Merger Consideration shall also be made pursuant to,
and in accordance with, all of the provisions of this Section 3.3(b) to the same
extent as if each such transferee were a Participating Holder.

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        3.4    Lost Certificates, Etc.    In the event that any Certificate or
Rights Document has been lost, stolen, or destroyed, then upon receipt by Parent
or the Holders Representative, as applicable, of appropriate evidence as to such
loss, theft, or destruction, and to the ownership of such Certificate or Rights
Document by the person claiming such Certificate or Rights Document to be lost,
stolen, or destroyed, the receipt by Parent or the Holders Representative, as
applicable, (or their designees) of an affidavit (a "Lost Certificate or
Document Affidavit") with appropriate and customary indemnification and the
surrender pursuant to Section 3.2(a) hereof by such person of all other
Certificates and Rights Documents registered in the name of such person that
have not been lost, stolen, destroyed or previously surrendered, then such
person shall be entitled to receive the appropriate portion of the Merger
Consideration pursuant to the provisions of Sections 2.6 and 2.7 hereof and
Section 3.1 of the LLC Agreement.

        3.5    No Interest.    Except as otherwise provided in Section 2.7(l),
no interest shall be paid or shall accrue on the Merger Consideration or any
portion thereof payable by Parent or the Holders Representative pursuant to, and
in accordance with, the provisions of this Agreement or the LLC Agreement.

        3.6    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 Washington Law.
All Dissenting Shares held by shareholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their appraisal 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
Sections 2.6 and 2.7 of this Agreement and Section 3.1 of the LLC Agreement,
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 prompt notice of any demands for (or
notice of intent to demand) appraisal of shares of Company Stock received by the
Company, any withdrawals of such demands, and any other related instruments
served pursuant to Washington Law, if any, and received by the Company. All
negotiations and proceedings with respect to any demands for the payment of fair
value for shares of Company Stock under Washington Law shall be controlled by
the Company prior to the Effective Time, and shall be jointly controlled by
Parent and the Holders Representative after the Effective Time. During any
period of joint control of such negotiations and proceedings, Parent or the
Holders Representative, as applicable, shall consult with the other
periodically, shall allow the other to participate at its own expense in any
such negotiations or proceedings and shall not, except with the prior written
consent of the other, which consent shall not be unreasonably withheld, make any
payment with respect to any demands for the appraisal of shares of Company 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 Shareholder exercises his, her or its appraisal rights pursuant
to Washington Law, then Parent shall be entitled to seek indemnification
pursuant to,

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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 (other than costs incurred by Parent as a result of
participation at its own expense, as described above).

        3.7    Holders Representative.    

        (a)    Appointment of Holders Representative.    IB Securityholders, LLC
is hereby appointed, effective from and after the Effective Time of the Merger,
to act as the Holders Representative under this Agreement in accordance with the
terms of this Section 3.7 and the Escrow Agreement. The member(s) of the limited
liability company acting as the Holders Representative under this Agreement are,
pursuant to Section 2.7 of the LLC Agreement required to designate (and notify
Parent of such designation) a single member of the board of managers of such
limited liability company (the "Board of Managers") 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. Any provision of this Agreement that
requires that any Member of the Buyer Group take any action with respect to the
Holders Representative (including, without limitation, any notice given, or
payment made, by Parent to the Holders Representative) shall be deemed fully
performed and complied with by such Buyer Group member in the event that any
such action is taken by such Buyer Group member with respect to such single
member of the Board of Managers so designated by the members of such limited
liability company pursuant to the provisions of the immediately preceding
sentence.

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

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

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

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

        (iv)  subject to Section 3.6 hereof, jointly control with Parent the
negotiation, conduct and settlement of any claims or proceedings relating to
Dissenting Shares;

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

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

       (vii)  approve of and execute amendments to this Agreement in accordance
with this Agreement;

      (viii)  apply, out of the Holders Representative Reimbursement Amount or
any portion of the Escrow Funds to which the Participating Holders are entitled
pursuant to this Agreement or the Escrow Agreement, to the payment of (or
reimbursement of the Holders Representative for) expenses and liabilities which
the Holders Representative may incur pursuant to this Section 3.7;

        (ix)  receive and manage the Grantback Assets pursuant to Section 6.10
hereof;

         (x)  receive and distribute all or any portion of the Contingent
Consideration pursuant to, and in accordance with, the provisions of Section 2.7
hereof and Section 3.1 of the LLC Agreement; and

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

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

        (B)  taking any actions required or permitted under the Escrow Agreement
or the LLC Agreement; and

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

        (c)    Extent and Survival of Authority.    The appointment of the
Holders Representative is intended to be an agency coupled with an interest and
is irrevocable and any action taken by the Holders Representative pursuant to
the authority granted in this Section 3.7 or under the Escrow Agreement shall be
effective and absolutely binding on each Participating Holder notwithstanding
any contrary action of or direction from such Participating Holder, except for
actions or omissions of the Holders Representative constituting willful
misconduct or gross

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negligence. The death or incapacity, or dissolution or other termination of
existence, of any Participating Holder shall not terminate the authority and
agency of the Holders Representative. By virtue of the adoption of this
Agreement and the approval of the Merger by the shareholders of the Company,
each Participating Holder (regardless of whether or not such Participating
Holder votes in favor of the adoption of this 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 this Section 3.7 and Article 9 hereof.

        (d)    Release from Liability; Indemnification.    Each Participating
Holder hereby releases the Holders Representative from and each Participating
Holder (in the same proportion as the portion of the Merger Consideration to
which such Participating Holder is entitled as of the Effective Time bears to
the portion of the Merger Consideration to which all Participating Holders
collectively are entitled as of the Effective Time) agrees to indemnify the
Holders Representative, and each of its managers, members, officers, agents and
representatives, against, liability for any action taken or not taken by it or
any of them relating to the Holders Representative's non-performance, actions or
omissions as such agent, except for the liability of the Holders Representative
to Participating Holders for loss which such holder may suffer from the willful
misconduct or gross negligence of the Holders Representative in carrying out its
duties hereunder or under the Escrow Agreement.

        (e)    Reimbursement of Expenses.    The Holders Representative shall
receive no compensation for services performed as the Holders Representative,
but shall receive reimbursement from, and be indemnified by, the Participating
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 Representative in the performance or
discharge of its duties pursuant to this Section 3.7, the Escrow Agreement and
the LLC Agreement, which expenses, charges and liabilities shall be (1) first,
charged against any Holders Representative Reimbursement Amounts retained on
behalf of the Holders Representative, (2) second, charged against any Escrow
Funds that would be distributed to the Participating Holders pursuant to this
Agreement, the Escrow Agreement or the LLC Agreement and (3) third, offset
against the Contingent Consideration, if any, paid to the Holders Representative
pursuant to this Agreement. Unless the Participating Holders pay all such
expenses, charges and liabilities upon demand by the Holders Representative, the
Holders Representative shall have no obligation to incur such expenses, charges
or liabilities, or to continue to perform any duties hereunder.

        (f)    Amendment of the LLC Agreement.    Without the prior written
consent of Parent, which consent shall not be unreasonably withheld, Section 3.1
of the LLC Agreement governing the distribution of the payments of the Merger
Consideration to the Participating Holders shall not be amended. The Holders
Representative and the Participating Holders shall indemnify and hold Parent
harmless from any liability arising out of errors or other breaches of the
distributions provisions of the LLC Agreement in connection with the allocation
or payment of Merger Consideration to the Participating Holders for payment of
the Merger Consideration.

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        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's disclosure schedule attached to this Agreement which disclosure
schedule complies with Section 11.5 hereof (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
Washington 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 is duly qualified to
transact business and is in good standing in each jurisdiction where such
qualification is required and in which failure to so qualify would have a
Material Adverse Effect on the Company. The Company has delivered to Parent
complete and correct copies of its articles of incorporation and by-laws, in
each case with all amendments thereto, which articles 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 the adoption of this Agreement by the
Company's shareholders. The Company Board has (i) approved and declared the
advisability of this Agreement and the transactions contemplated hereby and
(ii) determined that the Merger is in the best interests of the shareholders of
the Company and is on terms that are fair to such shareholders. 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 Merger Documents with the Delaware Secretary of State and Washington
Secretary of State, as applicable; and (ii) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
have a Material Adverse Effect on the Company and would not 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 articles of incorporation or by-laws, as amended and in effect at the
Effective Time, (b) any order, judgment, injunction, award or decree of any
court or state or federal governmental or regulatory body applicable to the
Company, or (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, which violation will
not have a Material Adverse Effect on the Company.

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        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 including (1) the total number of shares of Company
Common Stock for which all shares of Company Preferred Stock outstanding
immediately prior to the Effective Time are then convertible in the aggregate,
(2) the number of shares of Company Common Stock for which each share of Company
Preferred Stock outstanding immediately prior to the Effective Time is then
convertible, (3) the total number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time, (4) a list of each Eligible
Company Option and each Common Warrant, the exercise price per share thereof,
the aggregate exercise price thereof and the name of the holder thereof, (5) the
number of shares of Company Common Stock issuable upon exercise of the Common
Warrants immediately prior to the Effective Time, (6) the total number of shares
of Company Common Stock issuable upon exercise of all Eligible Company Options,
(7) the aggregate exercise price of those Eligible Company Options that are
entitled to receive any portion of the Merger Consideration pursuant to
Section 3.1(c) hereof, and (8) the aggregate exercise price of those Common
Warrants, if any, that are outstanding immediately prior to the Effective Time
and that are entitled to receive any portion of the Merger Consideration
pursuant to Section 3.1(d)(II) hereof. 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. No person
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 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. Each option set forth on Schedule 4.4 of the Company
Disclosure Schedule, and all options outstanding immediately prior to the
Effective Time, have been, or shall be, as the case may be, granted under, and
are or shall be, as the case may be, subject to, all of the terms of the Company
Plan.

        4.5    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.

        4.6    Financial Statements.    Attached to Schedule 4.6 of the Company
Disclosure Schedule are copies of the audited balance sheet of the Company as of
December 31, 2006, 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 Moss Adams LLC, independent

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public accountants, and copies of the unaudited balance sheet of the Company as
of June 30, 2007, and the related unaudited statements of income and retained
earnings and cash flows, respectively, of the Company for the six months then
ended (collectively, the "Financial Statements" and such unaudited balance sheet
as of June 30, 2007, the "Company's Most Recent Balance Sheet"). Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods; such balance sheet
presents fairly and accurately in all material respects the financial condition
of the Company as of its respective date; and 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,
except, in the case of unaudited interim financial statements, subject to normal
year-end adjustments that have not been and are not expected to be material in
amount.

        4.7    Absence of Certain Changes.    Since the date of the Company's
Most Recent Balance Sheet, except as disclosed on Schedule 4.7 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; (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 4.7 of the Company Disclosure Schedule.

        4.8    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

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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 4.8 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 4.8
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 could 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.

        4.9    Intellectual Property.    

        (a)   Schedule 4.9(a) of the Company Disclosure Schedule lists all inter
partes proceedings or actions known to the Company before any court or tribunal
(including the PTO or equivalent authority anywhere in the world) related to any
Company Intellectual Property. To the Company's knowledge, no Company
Intellectual Property is the subject of any inter partes proceeding or
outstanding decree, order, judgment, agreement, or stipulation restricting in
any manner the use, transfer, or licensing thereof by the Company, or which may
affect the validity, use or enforceability of such Company Intellectual
Property.

        (b)   With respect to each item of Company Registered Intellectual
Property, necessary registration, maintenance, annuities and renewal fees in
connection with such Company Registered Intellectual Property have been made and
all necessary documents and certificates in connection with such Company
Registered Intellectual Property have been filed with the relevant patent
authorities in the United States and elsewhere in the world for the purposes of
maintaining such Company Registered Intellectual Property and no information
material to patentability under applicable law has been withheld from the
examining office that would constitute fraud or inequitable conduct.

        (c)   All Company Registered Intellectual Property is, and all
agreements related thereto are, listed on Schedule 4.9(c) of the Company
Disclosure Schedule. The Company owns and has good and exclusive title, or the
Company exclusively licenses, in each case free and clear of any Lien, all
Company Registered Intellectual Property listed on Schedule 4.9(c) of the
Company Disclosure Schedule.

        (d)   To the extent that any work, invention, or material has been
developed or created by a third party for the Company, the Company has a written
agreement with such third party with respect thereto and the Company has
obtained ownership of, and is the exclusive owner of, or has a valid

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license to use, all Company Intellectual Property in such work, material or
invention by operation of law or by valid assignment or by agreement, as the
case may be. Schedule 4.9(d) of the Company Disclosure Schedule lists each such
agreement referred to in the previous sentence of this Section 4.9(d). To the
knowledge of the Company and any of its Subsidiaries, no employee, independent
contractor or agent of the Company or any of its Subsidiaries is in material
default or breach of any term of any employment agreement, non-disclosure
agreement, assignment of invention agreement or similar agreement, contract or
company policy or practice relating in any way to the protection, ownership,
development, use or transfer of Company Intellectual Property.

        (e)   Except as set forth on Schedule 4.9(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 4.9(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)    Schedule 4.9(f) 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.

        (g)   To the Company's knowledge, the contracts, licenses and agreements
listed on Schedules 4.9(e) and 4.9(f) of the Company Disclosure Schedule 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 listed on Schedules 4.9(e) and
4.9(f) of the Company Disclosure Schedule. The Company is in compliance with,
and has not breached any term any of such contracts, licenses and agreements
listed on Schedules 4.9(e) and 4.9(f) of the Company Disclosure Schedule and, to
the knowledge of the Company, all other parties to such contracts, licenses and
agreements listed on Schedules 4.9(e) and 4.9(f) of the Company Disclosure
Schedule are in compliance with, and have not breached any term of, such
contracts, licenses and agreements. To the Company's knowledge, following the
Closing Date, the Surviving Corporation will be permitted to exercise all of the
Company's rights under the contracts, licenses and agreements listed on
Schedules 4.9(e) and 4.9(f) of the Company Disclosure Schedule 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.

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        (h)   The Company (including its executive officers, directors and, to
the Company's knowledge, employees) has not received notice from any third
party, nor does the Company have knowledge of any basis for any third-party
claim that could assert, that (i) the operation of its business, (ii) the
research, development, use, manufacture, sale, other commercialization or
importation of any product or product candidate of the Company or (iii) the
provision by the Company of any services, would, or is reasonably likely to,
infringe or misappropriate the Intellectual Property of any third party (other
than any infringement of claims under patent applications of third parties that
have not yet published) or constitute unfair competition or trade practices
under the laws of any jurisdiction.

        (i)    Except as set forth in Schedule 4.9(i) of the Company Disclosure
Schedule, to the Company's knowledge, (i) no person has infringed or
misappropriated or is infringing or misappropriating any Company Intellectual
Property and (ii) there have been, and are, no claims asserted against the
Company or against any licensee of the Company with respect to the Company
Intellectual Property.

        (j)    The Company maintains reasonable security measures for the
preservation of the secrecy and proprietary nature of such of the Company
Intellectual Property as constitute trade secrets or other confidential
information. No officer, director, employee, or consultant of the Company is
obligated under or bound by any agreement or instrument, or any judgment,
decree, or order of any court of administrative agency, that (i) conflicts or
may conflict with his agreements and obligations to use his best efforts to
promote the interest of the Company, (ii) conflicts or may conflict with the
business or operations of the Company, or (iii) restricts or may restrict the
use or disclosure of any information that may be useful to the Company.

        (k)   Schedule 4.9(k) of the Company Disclosure Schedule lists all
patent searches that have been performed, initiated or requested by the Company
or any of its employees, attorneys or agents.

        4.10    Indebtedness.    The Company has no Indebtedness outstanding
except as set forth in Schedule 4.10 of the Company Disclosure Schedule. The
Company is not in default with respect to any outstanding Indebtedness or any
agreement, instrument, or other obligation relating thereto and no such
Indebtedness or any agreement, instrument or other obligation relating thereto
purports to limit the issuance of any securities by the Company, or (except as
set forth on Schedule 4.10 of the Company Disclosure Schedule) the operation of
its businesses. Complete and correct copies of all agreements, instruments, and
other obligations (including all amendments, supplements, waivers, and consents)
relating to any Indebtedness of the Company have been furnished to Parent.

        4.11    Absence of Undisclosed Liabilities.    Except to the extent
(a) reflected or reserved against in the Company's Most Recent Balance Sheet,
(b) described on Schedule 4.11 of the Company Disclosure Schedule, or (c) the
payment or satisfaction of which has been provided for by cash in the Company's
bank accounts or otherwise in its possession, the Company does not have any
liabilities or obligations, whether accrued, absolute, contingent, or otherwise
(including, without limitation, liabilities, as guarantor or otherwise, in
respect of obligations of others) that would be required to be reflected or
reserved against in a balance sheet prepared in accordance with generally
accepted accounting principles or referred to in the notes thereto.

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        4.12    Taxes.    

        (a)    Filing of Tax Returns and Payment of Taxes.    The Company has
timely filed all Tax Returns required to be filed by it, each such Tax Return
has been prepared in compliance with all applicable laws and regulations, and
all such Tax Returns are true, accurate and complete in all respects. All Taxes
that have become due and payable by the Company have been timely paid, and the
Company is not and will not be liable for any additional Taxes in respect of any
Taxable period or any portion thereof ending on or before the date of the
unaudited consolidated financial statements forming part of the Financial
Statements included in the Company Disclosure Schedule in an amount that exceeds
the corresponding reserve therefor separately identified in Schedule 4.12(a) of
the Company Disclosure Schedule, if any, as reflected in such Financial
Statements. Taxes of the Company arising after such date and at or before the
Effective Time have been or will be incurred in the ordinary course of the
business of the Company. The Company has delivered to Parent true, correct and
complete copies of all Tax Returns with respect to income Taxes filed by or with
respect to it with respect to Taxable periods ended on or after December 31,
2002 (the "Delivered Tax Returns"), and has delivered or made available to
Parent all relevant documents and information with respect thereto, including
without limitation work papers, records, examination reports, and statements of
deficiencies proposed, assessed against or agreed to by the Company.

        (b)    Deficiencies.    No deficiency or adjustment in respect of Taxes
has been proposed, asserted or assessed by any Taxation Authority against the
Company. There are no outstanding refund claims with respect to any Tax or Tax
Return of the Company.

        (c)    Liens.    There are no liens for Taxes (other than liens for
current Taxes not yet due and payable) on any of the assets of the Company.

        (d)    Extensions to Statute of Limitations for Assessment of
Taxes.    The Company has not consented to extend the time in which any Tax may
be assessed or collected by any Taxation Authority which extension is still in
effect.

        (e)    Extensions of the Time for Filing Tax Returns.    The Company has
not requested or been granted an extension of the time for filing any Tax Return
that has not yet been filed.

        (f)    Pending Proceedings.    There is no action, suit, Taxation
Authority proceeding, or audit with respect to any Tax now in progress, pending
or, to the knowledge of the Company, threatened against or with respect to the
Company. No claim for assessment or collection of Taxes which previously has
been asserted relating in whole or in part to the Company remains unpaid.

        (g)    No Failures to File Tax Returns.    No claim has ever been made
by a Taxation Authority in a jurisdiction where the Company does not pay Tax or
file Tax Returns that the Company is or may be subject to Taxes assessed by such
jurisdiction.

        (h)    Elections.    All elections with respect to Taxes affecting the
Company that were not made in the Delivered Tax Returns are described in
Schedule 4.12(h) of the Company Disclosure Schedule.

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        (i)    Membership in Affiliated Groups, Liability for Taxes of Other
Persons, Etc.    Except for the affiliated group of corporations of which the
Company was the common parent corporation, the Company has never been a member
of any affiliated group of corporations (as defined in Section 1504(a) of the
Code) or filed or been included in a combined, consolidated or unitary Tax
Return. The Company is neither a party to nor bound by any Tax sharing or
allocation agreement. The Company is not presently liable, nor does the Company
have any potential liability, for the Taxes of another person other than the
Company or any Subsidiary (i) under Treasury Regulations Section 1.1502-6 (or
comparable provision of state, local or foreign law), (ii) as transferee or
successor, or (iii) by contract or indemnity or otherwise.

        (j)    Adjustments under Section 481.    The Company will not be
required, as a result of a change in method of accounting for any period ending
on or before or including the Effective Time, to include any adjustment under
Section 481(c) of the Code (or any similar or corresponding provision or
requirement under any other Tax law) in Taxable income for any period ending on
or after the Effective Time. The Company will not be required to include any
item of income in Taxable income for any Taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) prepaid amount received on
or prior to the Closing Date, or (ii) "closing agreement" described in
Section 7121 of the Code (or any similar or corresponding provision of any other
Tax law).

        (k)    Withholding Taxes.    The Company has timely withheld and timely
paid all Taxes which are required to have been withheld and paid by it in
connection with amounts paid or owing to any employee, independent contractor,
creditor, supplier, shareholder or other person.

        (l)    Permanent Establishments and Branches Outside the United
States.    Except as set forth in Schedule 4.12(l) of the Company Disclosure
Schedule, the Company does not have a "permanent establishment" as defined in
the applicable Tax convention or treaty, in any country with which the United
States of America has such a Tax convention or treaty, and does not otherwise
operate or conduct business through any branch subject to income Tax in any
country other than the United States.

        (m)    U.S. Real Property Holding Corporation.    The Company is not and
has not been a United States real property holding corporation, within the
meaning of Code Section 897(c)(2), during the applicable period specified in
Code Section 897(c)(1)(A)(ii).

        (n)    Safe Harbor Lease Property.    None of the property owned or used
by the Company is subject to a Tax benefit transfer lease executed in accordance
with Section 168(f)(8) of the Internal Revenue Code of 1954, as amended by the
Economic Recovery Tax Act of 1981.

        (o)    Tax-Exempt Use Property.    None of the property owned by the
Company is "tax-exempt use property" within the meaning of Section 168(h) of the
Code.

        (p)    Security for Tax-Exempt Obligations.    None of the assets of the
Company directly or indirectly secures any Indebtedness, the interest on which
is tax-exempt under Section 103(a) of the Code, and the Company is not directly
or indirectly an obligor or a guarantor with respect to any such Indebtedness.

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        (q)    Section 341(f) Consent.    The Company has not filed any consent
agreement under Section 341(f) of the Code (as in effect prior to its repeal by
the Jobs and Growth Tax Relief Reconciliation Act of 2003) or agreed to have
Section 341(f)(2) of the Code (as in effect prior to such repeal) apply to any
disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the
Code prior to such repeal) owned by the Company.

        (r)    Parachute Payments, Etc.    The Company has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that could obligate it, in connection with this Agreement or the
transactions contemplated by this Agreement, to make any payments, that will not
be deductible under Code Sections 162(m) or 280G, other than any payments for
which stockholder approval satisfying the requirements of Code
Section 280G(b)(5) and the Treasury Regulations thereunder will be obtained
prior to the Closing.

        (s)    Rulings.    There are no outstanding rulings of, or requests for
rulings by, any Taxation Authority addressed to the Company that are, or if
issued would be, binding on the Company.

        (t)    Divisive Transactions.    The Company has never been either a
"distributing corporation" or a "controlled corporation" in connection with a
distribution of stock qualifying for tax-free treatment, in whole or in part,
pursuant to Section 355 of the Code.

        (u)    Section 83(b) Elections.    To the knowledge of the Company, all
persons who have purchased shares of the Company's stock that at the time of
such purchase were and at the Effective Time will be subject to a substantial
risk of forfeiture under Section 83 of the Code have timely filed elections
under Section 83(b) of the Code and any analogous provisions of applicable
foreign, state and local Tax laws.

        (v)    Nonqualified Deferred Compensation Plans.    Each plan, program,
arrangement or agreement maintained by the Company which constitutes in any
part a nonqualified deferred compensation plan within the meaning of
Section 409A of the Code is identified as such in Schedule 4.12(v) of the
Company Disclosure Schedule. Since December 31, 2004, each plan, program,
arrangement or agreement there identified has been operated and maintained in
accordance with a good faith, reasonable interpretation of Section 409A of the
Code and its purpose, as determined under applicable guidance of the U.S.
Department of Treasury and the IRS, with respect to amounts deferred (within the
meaning of Section 409A of the Code) after December 31, 2004.

        (w)    Reportable Transactions, Etc.    The Company has not
participated, within the meaning of Treasury Regulations Section 1.6011-4(c), in
(i) any "reportable transaction" within the meaning of Section 6011 of the Code
and the Treasury Regulations thereunder, (ii) any "confidential corporate tax
shelter" within the meaning of Section 6111 of the Code and the Treasury
Regulations thereunder, or (iii) any "potentially abusive tax shelter" within
the meaning of Section 6112 of the Code and the Treasury Regulations thereunder.

        (x)    Tax Exemptions and Holidays, Etc.    The Company is in compliance
in all material respects with all terms and conditions of any Tax exemptions,
Tax holiday or other Tax reduction agreements, approvals or orders of any
Taxation Authority and, to the Company's knowledge, the consummation of the
Merger will not have any adverse effect on the validity and effectiveness of any
such Tax exemptions, Tax holidays or other Tax reduction agreements or orders.

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        (y)    Tax Attributes, Etc.    To the best of the Company's knowledge,
it has never had any outstanding option that has been at any time treated as
exercised under and within the meaning of Treasury Regulations
Section 1.382-4(d). The Company has not experienced an "ownership change" within
the meaning of Section 382(g)(1) of the Code to which either Section 382(l)(5)
or Section 382(l)(6) applied.

        For purposes of this Section 4.12, references to the Company shall be
deemed to include the Company and all of its Subsidiaries.

        4.13    Employee Benefit Plans.    

        (a)   Except as described on Schedule 4.13(a) of the Company Disclosure
Schedule, the Company does not now maintain or contribute to, or have any
liability (contingent or otherwise) in respect of, any pension, profit-sharing,
deferred compensation, bonus, stock option, share appreciation right, severance,
group or individual health, dental, medical, life insurance, survivor benefit,
or similar plan, policy, or arrangement, whether formal or informal, for the
benefit of any director, officer, consultant or employee, whether active or
terminated, of the Company. Each of the arrangements set forth on
Schedule 4.13(a) of the Company Disclosure Schedule is hereinafter referred to
as a "Company Employee Benefit Plan".

        (b)   The Company has delivered or made available to Parent true,
correct, and complete copies of each Company Employee Benefit Plan, and with
respect to each such Company Employee Benefit Plan (i) any associated trust,
custodial, insurance, or service agreements, (ii) any annual report, actuarial
report, or disclosure materials (including specifically any summary plan
descriptions) submitted to any governmental agency or distributed to
participants or beneficiaries thereunder in the current calendar year or any of
the three (3) preceding calendar years, and (iii) the most recently received
U.S. Internal Revenue Service ("IRS") determination letters and any governmental
advisory opinions or rulings.

        (c)   Each Company Employee Benefit Plan is and has heretofore been
maintained and operated in material compliance with the terms of such Plan and
with the requirements prescribed (whether as a matter of substantive law or as
necessary to secure favorable tax treatment) by any and all statutes,
governmental or court orders, and governmental rules or regulations in effect
from time to time, including, but not limited to, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code, and applicable to such
Plan. Each Company Employee Benefit Plan that is intended to qualify under
Section 401(a) of the Code is specifically so identified in Schedule 4.13(a) of
the Company Disclosure Schedule and has been determined by the IRS to be so
qualified, and to the Company's knowledge, nothing has occurred since the date
of the last such determination as to each such Plan or trust that has resulted
or is likely to result in the revocation of such determination as to such Plan
or trust, other than such failures as may be corrected without expenditure of
more than ten thousand dollars ($10,000).

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        (d)   There is no pending, or to the Company's knowledge, threatened,
legal action, proceeding, or investigation, other than routine claims for
benefits, concerning any Company Employee Benefit Plan, or to the Company's
knowledge, any fiduciary thereof, and to the Company's knowledge, there is no
basis for any such legal action, proceeding, or investigation.

        (e)   No Company Employee Benefit Plan nor any party in interest with
respect thereto, has engaged in a prohibited transaction that could subject the
Company directly or indirectly to liability under Section 409 or 502(i) of ERISA
or Section 4975 of the Code.

        (f)    To the Company's knowledge, no communication, report, or
disclosure has been made that, at the time made, did not reflect accurately in
all material respects the terms and operations of any Company Employee Benefit
Plan.

        (g)   No Company Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their beneficiaries
(except to the extent required by applicable state insurance laws and Title I,
Part 6 of ERISA), other than (A) coverage mandated by applicable law,
(B) benefits the full cost of which is borne by the current or former employees
(or their beneficiaries), or (C) benefits that have already been satisfied in
full.

        (h)   The Company has not undertaken to maintain any Company Employee
Benefit Plan for any period of time and each such Plan is terminable at the sole
discretion of the Company, subject only to such constraints as may be imposed by
applicable law.

        (i)    With respect to each Company Employee Benefit Plan for which a
separate fund of assets is or is required to be maintained, full payment has
been made of all amounts that the Company is required, under the terms of each
such Plan, to have paid as contributions to that Plan as of the end of the most
recently ended plan year of that Plan. The current value of the assets of each
such Company Employee Benefit Plan, as of the end of the most recently ended
plan year of that Plan, exceeded the current value of all accrued benefits under
that Plan.

        (j)    The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due from any Company Employee Benefit Plan.
to any current or former director, officer, consultant, or employee of the
Company or result in the vesting, acceleration of payment, or increases in the
amount of any benefit payable to or in respect of any such current or former
director, officer, consultant, or employee.

        (k)   No Company Employee Benefit Plan nor any retirement plan of an
ERISA Affiliate of the Company is a multiemployer plan or subject to Section 412
of the Code or Title IV of ERISA.

        (l)    For purposes of this Section 4.13, "multiemployer plan" and
"party in interest" have the same meaning assigned such terms under Section 3 of
ERISA, and "ERISA Affiliate" means any entity that under Section 414 of the Code
is treated as a single employer with the Company.

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        4.14    Safety and Environmental Matters.    Except as set forth on
Schedule 4.14 of the Company Disclosure Schedule:

        (a)   None of the activities carried on by the Company at any plants,
offices, or properties in or on which the Company operates are in violation of
any zoning, health, or safety law or regulation, including without limitation
the Occupational Safety and Health Act of 1970, as amended, excluding only such
violations as will not, either individually or in the aggregate, have a Material
Adverse Effect on the Company.

        (b)   Neither the Company, nor to the Company's knowledge, any operator
of any real property presently or formerly owned, leased, or operated by the
Company is in violation or alleged violation of any judgment, decree, order,
law, license, rule or regulation pertaining to environmental matters, including
without limitation the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, and applicable federal, state, foreign, and local
statutes, regulations, ordinances, orders, and decrees relating to Hazardous
Substances (as defined in Section 4.14(c) hereof), natural resources, pollutants
or protection of human health (as it relates to exposure to Hazardous
Substances), safety, or the environment (all of the foregoing, collectively,
"Environmental Laws"), excluding only such violations as will not, either
individually or in the aggregate, have a Material Adverse Effect on the Company.

        (c)   The Company has not received notice from any third party,
including without limitation any federal, state, foreign, or local governmental
authority, that (i) the Company has been identified by the United States
Environmental Protection Agency (the "EPA") as a potentially responsible party
under CERCLA with respect to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B (1986); (ii) any hazardous waste as defined by 42
U.S.C. §6903(5), any hazardous substance as defined by 42 U.S.C. § 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. § 9601(33) or any toxic
substance, oil, or hazardous material or other chemical or substance regulated
by or forming the basis of liability under any Environmental Laws (collectively,
"Hazardous Substances") that the Company has generated, transported, handled,
used, or disposed of has been found at any site at which a federal, state,
foreign, or local agency or other third party has conducted or has ordered that
the Company conduct a remedial investigation, removal, or other response action
pursuant to any Environmental Law; or (iii) the Company is or will be a named
party to any claim, action, cause of action, complaint (contingent or
otherwise), or legal or administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses, or damages of any kind whatsoever
in connection with the release of Hazardous Substances.

        (d)   (i)    No portion of any real property presently or formerly
owned, leased, or operated by the Company has been used by the Company, to
handle, use, manufacture, transport, store, or dispose of Hazardous Substances
except in accordance with applicable Environmental Laws; (ii) to the Company's
knowledge, no portion of any real property presently owned, leased, or operated
by the Company has been used by any other person to handle, use, manufacture,
transport, store or dispose of Hazardous Substances except in accordance with
applicable Environmental Laws; (iii) no underground tank or other underground
storage receptacle for Hazardous Substances used by the Company is located on
any real property presently owned, leased, or operated by the Company, or to the
Company's knowledge, any real property formerly owned, leased, or operated by
it; (iv) to the Company's knowledge, there have been no releases (i.e. any past
or present releasing, spilling, leaking, pumping, pouring, emitting, emptying,

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discharging, injecting, escaping, disposing, or dumping) or threatened releases
of Hazardous Substances by the Company on, upon, into, or from any real property
presently or formerly owned, leased, or operated by the Company; (v) to the
Company's knowledge, there have been no releases on, upon, from, or into any
real property in the vicinity of any real property presently owned, leased, or
operated by the Company that, through soil or groundwater contamination, have
come to be located on, any of the real property presently owned, leased, or
operated by the Company; and (vi) any Hazardous Substances that have been
generated by the Company, on any real property presently or formerly owned,
leased, or operated by the Company, will have been transported offsite prior to
the Effective Time, and, to the Company's knowledge, treated or disposed of to
the extent required by and in accordance with applicable Environmental Laws.
Notwithstanding anything to the contrary in this Section 4.14(d), for the
purpose of continuing to develop the Company Program, small quantities of
certain hazardous substances may be maintained within the real property leased
by the Company, but only to the extent necessary to continue the development of
the Company Program at the request of Parent, and only in the type and quantity
consistent with normal biotechnology research and development and in accordance
with applicable Environmental Laws.

        (e)   No real property presently owned, leased, or operated by the
Company, and to the Company's knowledge, no real property formerly owned,
leased, or operated by the Company, and as a result of the present or past
activities of the Company, is subject to any Environmental Law requiring the
performance of any Hazardous Substances site assessment, the removal or
remediation of any Hazardous Substances, the giving of notice to any
governmental agency or other person, or the recording and/or delivery to any
governmental agency or other person of any environmental disclosure statement or
document, by reason of, or as a condition to the effectiveness of, the Merger
and/or any other transaction contemplated hereby.

        (f)    The Company has and maintains, in full force and effect, all
licenses, permits, registrations, consents, authorizations and other approvals
(the "Environmental Permits") from all governmental authorities as are required
under Environmental Laws or are otherwise necessary for the conduct of the
business or operation of the Company, and the Company is in compliance with all
of the Environmental Permits, excluding only such matters as will not, either
individually or in the aggregate, have a Material Adverse Effect on the Company.

        4.15    Labor Relations.    The Company is and has been in compliance
with all federal and state laws respecting employment and employment practices,
terms and conditions of employment, wages and hours, and nondiscrimination in
employment, and is not and has not been engaged in any unfair labor practice.
There is no charge or proceeding pending, or to the Company's knowledge,
threatened, against the Company alleging unlawful discrimination in employment
practices or unfair labor practice before any court or agency, including without
limitation the National Labor Relations Board. There is no labor strike,
dispute, work slow-down, or work stoppage pending, or to the Company's
knowledge, threatened against or involving the Company. No one has petitioned
within the last five years or is now petitioning for union representation of any
of the employees of the Company. No grievance or arbitration proceeding arising
out of or under any collective bargaining agreement is pending against the
Company and no claim therefor has been asserted. None of the employees of the
Company is covered by any collective bargaining agreement, and no collective
bargaining agreement is currently being negotiated by the Company. The Company
has not experienced any work stoppage or other labor difficulty during the last
five years.

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        4.16    Litigation.    Except as set forth in Schedule 4.16 of the
Company Disclosure Schedule, no litigation, arbitration, action, suit,
proceeding, or investigation (whether conducted by any judicial or regulatory
body, arbitrator, or other person) is pending (as evidenced by the Company's
receipt of service of process or other written notice of such pendency), or to
the Company's knowledge, threatened, against the Company, nor is there any basis
therefor known to the Company.

        4.17    Material Contracts.    

        (a)   Schedule 4.17(a)(i) of the Company Disclosure Schedule sets forth
a complete and accurate list of all Company Program Contracts (as defined
below). Schedule 4.17(a)(ii) of the Company Disclosure Schedule sets forth a
complete and accurate list of all Material Contracts (as defined below). As used
in this Agreement, the term "Company Program Contract" means any agreements or
understanding of any kind, written or oral, that is legally enforceable by or
against or otherwise binding on the Company and relates to the Company Program.
As used in this Agreement, the term "Material Contract" means every agreement or
understanding of any kind, written or oral, that is legally enforceable by or
against or otherwise binding on the Company and which is material to the
Company's business, and specifically includes without limitation: (i) agreements
with any current or former officer, director, employee, consultant, or
shareholder, or any partnership, corporation, joint venture, or any other entity
in which any such person has an interest (other than agreements terminable by
the Company upon thirty (30) days notice and which termination does not result
in any obligations or liabilities to the Company); (ii) agreements with any
labor union or association representing any employee; (iii) agreements for the
provision of services by or to the Company in excess of $100,000; (iv) bonds or
other security agreements provided by any party in connection with the business
of the Company; (v) agreements for the purchase or other acquisition or the sale
or other disposition of assets or properties (other than in the ordinary course
of business), or for the grant to any person of any preferential rights to
purchase any such assets or properties; (vi) joint venture agreements relating
to the assets, properties, or business of the Company or by or to which it or
any of its assets or properties is bound or subject; (vii) agreements under
which the Company agrees to indemnify any party, to share tax liability of any
party, or to refrain from competing with any party; (viii) agreements with
regard to Indebtedness, including, without limitation, any indenture or other
agreements in connection with issuances of bonds, debentures or other debt
securities by the Company and any agreements in connection with bank financings
by the Company; (ix) any agreement, contract, commitment, transaction or series
of transaction for any purpose relating to capital expenditures or commitments
or long-term obligations; (x) any purchase order or contract for the purchase of
raw materials; (xi) any distribution, joint marketing or development agreement;
(xii) any assignment, license or other agreement with respect to any form of
intangible property; (xiii) any research collaboration agreement; (xiv) any
agreements relating to venture capital and other equity financings by the
Company; (xv) any shareholder agreements or other agreements with any of the
Company Shareholders pertaining to the shares of Company Stock held by them or
their rights as shareholders of the Company; (xvi) any voting trust or voting
agreements among the Company Shareholders and (xvii) all Company Program
Contracts.

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        (b)   All of the Material Contracts are in full force and effect, and
neither the Company nor, to the Company's knowledge, any other party thereto is
in default under or in breach of any of the terms thereof, nor does any event or
condition exist that after notice or lapse of time or both could constitute a
default thereunder or breach thereof on the part of the Company, or to the
Company's knowledge, any other party thereto. All payments required under each
contract, agreement or understanding of any kind, written or oral, that is
legally enforceable by or against or otherwise binding on the Company have been
accrued for in accordance with generally accepted accounting principles,
consistently applied, and are reflected in the Company's financial statements.
No approval or consent of any person that has not already been obtained and
listed on Schedule 4.17 of the Company Disclosure Schedule is needed in order
that the Material Contracts continue in full force and effect following the
consummation of the Merger and the other transactions contemplated hereby, and,
except as set forth on Schedule 4.17 of the Company Disclosure Schedule, no such
Material Contract includes any provision, the effect of which may be to
terminate (or give rise to a right of termination under) such Material Contract,
to enlarge or accelerate any obligations of the Company thereunder, or to give
additional rights to any other person, as a result of the consummation of the
Merger or the other transactions contemplated hereby. The Company has delivered
to Parent true, correct, and complete copies of all such Material Contracts,
including all amendments, modifications, and supplements thereto.

        4.18    Potential Conflicts of Interest.    No officer, director, or, to
the Company's knowledge, shareholder of the Company (a) owns, directly or
indirectly, any interest (excepting not more than five percent (5%) stock
holdings for investment purposes in securities of publicly held and traded
companies) in, or is an officer, director, employee, or consultant of, any
person that furnishes or sells services, drug candidates or products that the
Company furnishes or sells or proposes to furnish or sell or is a lessor,
lessee, customer, or supplier of the Company; (b) owns, directly or indirectly,
in whole or in part (other than solely as a result of his or its ownership of
Company Stock), any tangible or intangible property that the Company is using or
the use of which is necessary for the business of the Company; or (c) to the
Company's knowledge, has any cause of action or other claim whatsoever against,
or owes any amount to, the Company, except for claims in the ordinary course of
business, including, without limitation, claims for accrued vacation pay,
accrued benefits under Employee Benefit Plans, and similar matters and
agreements.

        4.19    Insurance.    Schedule 4.19 of the Company Disclosure Schedule
lists the policies of products liability, theft, fire, liability, worker's
compensation, life, property and casualty, directors and officers, and other
insurance owned or held by the Company. Such policies of insurance are of the
kinds, cover such risks, and are in such amounts and with such deductibles and
exclusions, as are consistent with prudent business practice for companies in
the Company's line of business and of a similar size and location. All such
policies are in full force and effect; are sufficient for compliance by the
Company with all requirements of law and of all agreements to which the Company
is a party; are valid, outstanding, and enforceable policies and provide that
they will remain in full force and effect through the respective dates set forth
on Schedule 4.19 of the Company Disclosure Schedule; and will not in any way be
affected by, or terminate or lapse as a result of the consummation of, the
transactions contemplated by this Agreement.

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        4.20    Bank Accounts, Signing Authority, Powers of
Attorney.    Schedule 4.20 of the Company Disclosure Schedule sets forth a
complete and accurate list of all bank, brokerage, and other accounts, and all
safe-deposit boxes, of the Company, together with the balances and contents of
each, and the persons with signing or other authority to act with respect
thereto. Except as so listed, the Company does not have any account or safe
deposit box in any bank, and no person has any power, whether singly or jointly,
to sign any checks on behalf of the Company, to withdraw any money or other
property from any bank, brokerage, or other account of the Company, or to act
under any agency or power of attorney granted by the Company at any time for any
purpose. Schedule 4.20 of the Company Disclosure Schedule also sets forth the
names of all persons authorized to borrow money or sign notes on behalf of the
Company.

        4.21    Relationships With Suppliers and Licensors.    No current
supplier to the Company has notified the Company of an intention to terminate or
substantially alter its existing business relationship with the Company, nor has
any licensor under a license agreement with the Company notified the Company of
an intention to terminate or substantially alter the Company's rights under such
license, which termination or alteration would have a Material Adverse Effect on
the Company.

        4.22    Employment of Officers, Employees.    The name and current
annual salary and other compensation payable by the Company to each of its
employees including but not limited to wages, salary, commissions, normal bonus,
profit sharing, deferred compensation, and other extra compensation) are as set
forth on Schedule 4.22 of the Company Disclosure Schedule. Except to the extent
otherwise disclosed on Schedule 4.22 of the Company Disclosure Schedule, none of
the current or former officers, directors, employees or consultants of the
Company is a party to, or the beneficiary of, any agreement, plan or arrangement
that provides for any payment (whether of severance pay or otherwise) becoming
due to such current or former officer, director, employee or consultant upon
termination of his or her relationship with the Company or as a result of the
Merger, or that provides for the vesting, acceleration of payment, or increases
in the amount of any benefit payable to or in respect of such current or former
director, officer, consultant, or employee upon termination of his or her
relationship with the Company or as a result of the Merger.

        4.23    Minute Books.    The minute books of the Company made available
to Parent for inspection accurately record therein all actions taken by the
Company Board, all committees thereof, and the Company's shareholders.

        4.24    Brokers.    Except as set forth on Schedule 4.24 of the Company
Disclosure Schedule, no finder, broker, agent, or other intermediary has acted
for or on behalf of the Company in connection with the negotiation, preparation,
execution, or delivery of this Agreement or the consummation of the Merger or
the other transactions contemplated hereby. Schedule 4.24 of the Company
Disclosure Schedule sets forth the compensation or payment obligations of the
Company with respect to any such finder, broker, agent or other intermediary.
The Company shall have provided to Parent a true, correct and complete copy of
any and all engagement letters or other agreements between the Company and any
such finder, broker, agent or other intermediary.

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        4.25    Regulatory Compliance.    

        (a)   All biological and drug products being manufactured, distributed
or developed by the Company ("Company Products") that are subject to the
jurisdiction of the FDA are being manufactured, labeled, stored, tested,
distributed and marketed in compliance with all applicable requirements under
the Food and Drug and Cosmetic Act ("FDCA"), the Public Health Service Act,
their applicable implementing regulations and all comparable applicable foreign,
state and local laws and regulations. The Company has obtained all applicable
approvals, clearances, authorizations, licenses, and registrations required by
the FDA or any other Governmental Entity to permit any manufacturing,
distribution, marketing, storing, or testing of Company Products as previously
conducted or currently being conducted by the Company, and the Company is in
compliance with all reporting requirements related thereto.

        (b)   All human clinical trials conducted by or on behalf of the Company
have been, and are being, conducted in compliance with the applicable
requirements of current Good Clinical Practice, Informed Consent and all other
applicable requirements relating to protection of human subjects specifically
contained in 21 CFR Parts 312, 50, 54, 56 and 11 and all applicable guidelines,
and all applicable foreign, state and local laws and regulations. The Company
has filed with the FDA or other appropriate Governmental Entities all required
notices, and annual or other reports, including notices of adverse events,
serious and/or unexpected adverse events, and serious injuries or deaths related
to the use of the Company Products in human clinical trials, and the Company has
provided copies of such notices to Parent.

        (c)   All manufacturing, warehousing, distributing, and testing
operations conducted by or for the benefit of the Company with respect to
Company Products being used in human clinical trials have been and are being
conducted in accordance with the FDA's recommended current Good Manufacturing
Practices continuum for drug and biological products, as set forth in 21 CFR
Parts 210 and 211. In addition, the Company is in compliance with all applicable
registration and listing requirements set forth in 21 U.S.C. Section 360 and 21
CFR Part 207 and all similar applicable laws and regulations.

        (d)   The Company has not received any notice that the FDA or any other
Governmental Entity or Institution Review Board ("IRB") has initiated, or
threatened to initiate, any action to suspend any clinical trial (i.e. clinical
hold), suspend or terminate any Investigational New Drug Application sponsored
by the Company or otherwise restrict the preclinical or nonclinical research on
or clinical study of any Company Product or any biological or drug product being
developed by the Company, or to recall, suspend or otherwise restrict the
manufacture of any Company Product.

        (e)   Neither the Company nor any of its officers, key employees or, to
the knowledge of the Company, agents or clinical investigators acting for the
Company, has committed any act, made any statement or failed to make any
statement that would reasonably be expected to provide a basis for the FDA to
invoke its policy with respect to "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities" set forth in 56 Fed. Reg. 46191 (September 10,
1991) and any amendments thereto. Neither the Company nor any officer, key
employee or, to the knowledge of the Company, independent contractor, or agent
of the Company has been convicted of any crime or engaged in any conduct that
has resulted in or would reasonably be expected to result in (i) debarment under
21 U.S.C. Section 335a or any similar state law or (ii) exclusion under 42
U.S.C. Section 1320a-7 or any similar state law or regulation.

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        (f)    All animal studies or other preclinical tests performed in
connection with or as the basis for any regulatory approval that has been sought
or obtained for Company Products either (x) have been conducted in accordance
with all applicable statutes, laws and rules, including Good Laboratory Practice
requirements, contained in 21 CFR Part 58, the United States Animal Welfare Act,
the International Conferences of Harmonization's (ICH) Guidance on Nonclinical
Safety Studies for the Conduct of Human Clinical Trials for Pharmaceuticals or
the ICH Guideline on Safety Pharmacology Studies for Human Pharmaceuticals or
(y) involved experimental research techniques that were performed for
informational purposes only, whether or not included in a regulatory filing, or
could not be performed by a registered GLP testing laboratory (with appropriate
notice being given to the FDA in regulatory filings) and have employed the
procedures and controls generally used by qualified experts in animal or
preclinical studies of products comparable to those being developed by the
Company.

        (g)   There are no lawsuits, actions, arbitrations, proceedings,
charges, complaints or investigations pending with respect to a violation by the
Company of the FDCA, PHSA, FDA regulations adopted thereunder, the Controlled
Substance Act or any other legislation or regulation promulgated by any other
United States governmental entity.

        (h)   The Company has not received any warning or untitled letter,
reports of inspection observations, including FDA Form 483s, established
inspection reports, notices, clinical holds, or other documents from the FDA,
any other Governmental Entity, or IRB since inception relating to Company
Products and alleging a lack of compliance by the Company with any applicable
laws or regulatory requirements (including those of the FDA).

        (i)    The Company has provided to Parent copies of all written
communications to and from the FDA, any other Governmental Entity, or IRB
relating specifically to Company Products, and their respective operations or
business, including any official notices, citations, decisions, warning or
untitled letters, material reports of inspection observations and establishment
inspections.

        4.26    Compliance with Other Agreements, Laws, Etc.    To Company's
knowledge, it has complied with, and is in compliance with, (a) all laws,
statutes, governmental regulations and all judicial or administrative tribunal
orders, judgments, writs, injunctions, decrees or similar commands applicable to
its business, (b) all unwaived terms and provisions of all contracts, agreements
and indentures to which the Company is a party, or by which the Company or any
of its properties is subject, and (c) its articles of incorporation and by-laws,
respectively, each as amended to date; in the case of the preceding clauses (a)
and (b), excepting only any such noncompliance that, both individually and in
the aggregate, have not resulted and will not result in any Material Adverse
Effect with respect to the Company. The Company has not been charged with, or to
its knowledge, been under investigation with respect to, any violation of any
provision of any federal, state, or local law or administrative regulation.

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        4.27    Permits, Licenses, and Programs; No Debarment.    

        (a)   Schedule 4.27 of the Company Disclosure Schedule contains a
complete and correct copy of (i) each pending application or registration for
governmental approval and each governmental approval held by the Company to
develop, manufacture, test (including, without limitation, preclinical tests and
clinical trials), import, export, store, market and sell the Company's Products
or drug candidates, (ii) the most recent report by or on behalf of the FDA or
any other governmental body involving or relating to any facility inspection of
the Company's facilities, and (iii) a description of all ongoing proprietary
internal research and development programs. Except as are set forth on
Schedule 4.27 of the Company Disclosure Schedule, (i) the Company possesses such
governmental approvals from all governmental bodies including, without
limitation, all FDA approvals, necessary to permit the operation of its business
in the manner as the same is currently conducted, and to operate, own or occupy
its properties, (ii) there have been no product recalls, field corrective
activity, medical device reports, warning letters or administrative actions by
the FDA or any other governmental body, and (iii) to the Company's knowledge,
(A) there is no administrative action pending or threatened for the revocation
of any such governmental approval and (B) assuming the obtaining of the
authorizations, consents, approvals and other actions listed on Schedule 4.27 of
the Company Disclosure Schedule, no governmental approvals and other actions
listed on Schedule 4.27 of the Company Disclosure Schedule, no governmental
approval by any governmental body having jurisdiction over the operation of the
Company's business, whether in whole or in part, will, to the knowledge of the
Company, be revoked, or become ineffective or subject to revocation, as a
consequence of the transactions contemplated by this Agreement.

        (b)   The Company (i) has not been debarred or received notice of action
or threat of action with respect to its debarment under the provisions of the
Generic Drug Enforcement Act of 1992, 31 U.S.C. Section 335(a) and (b), or
(ii) to the Company's knowledge, has used in any capacity the services of any
person which has been debarred under the provisions of the Generic Drug
Enforcement Act of 1992, 21 U.S.C. Section 335(a) and (b).

        4.28    Manufacturing and Marketing Rights.    The Company has not
granted rights to manufacture, produce, distribute, assemble, license, market,
or sell its products to any other person and is not bound by any agreement that
affects the Company's exclusive right to manufacture, produce, distribute,
assemble, license, market, or sell its products.

        4.29    Distribution of Merger Consideration.    The Merger
Consideration, when distributed in accordance with the terms of this Agreement
and the LLC Agreement, will have been distributed to the holders of Company
Stock in accordance with the provisions of the Company's articles of
incorporation in effect immediately prior to the Effective Time and any other
document or agreement among the Company and such holders related to the
distribution of the Merger Consideration.

        4.30    Required Shareholder Approval.    The only votes, consents and
approvals of the shareholders of the Company required pursuant to Title 23B of
the Revised Code of Washington to adopt this Agreement, approve the terms of
this Agreement and approve the Merger and the transactions contemplated hereby
(the "Required Shareholder Approval") are as follows: (A) the affirmative vote
of the holders of a majority of the outstanding voting power of the Company
Preferred Stock and the Company Common Stock, voting together as single class,
in favor of the adoption of this Agreement and the approval of the Merger and
the terms thereof; (B) the affirmative vote of the holders of a majority of the
outstanding shares of Company Preferred Stock, voting separately as a class, in
favor of the adoption of this Agreement and the approval of the Merger and the
terms thereof; and (C) the affirmative vote of (i) the holders of a majority

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of the outstanding voting power of the Company Preferred Stock and the Company
Common Stock, voting together as single class, (ii) the holders of a majority of
the outstanding shares of Company Preferred Stock, voting separately as a class,
and (iii) the holders of a majority of the outstanding voting power of the
Company Common Stock, approving the amendment of the Company's Articles of
Incorporation substantially in the form of Exhibit I attached hereto (the
"Amended Articles").

        4.31    Government Contract Matters.    

        (a)   The Company has been, and has conducted its business, in
compliance with all applicable laws and regulations relating to its performance
of commercial and government contracts, all terms and conditions of its
government and commercial contracts, all applicable import and export laws,
regulations, licenses and provisos, and all applicable anti-corruption laws and
regulations. The Company has not received any notice from any Governmental
Entity including, but not limited to the Defense Contract Audit Agency ("DCAA")
and Defense Contract Management Agency ("DCMA"), alleging any violation by the
Company of any applicable law or regulation or notice regarding disallowance of
costs under a government contract. None of the Company's assets or businesses is
subject to any judicial or administrative proceeding, order, or to the Company's
knowledge, investigation of or by a Governmental Entity.

        (b)   With respect to each Government Contract and Bid listed on
Schedule 4.31(b) of the Company Disclosure Schedule: (i) the Company has
complied in all material respects with all terms and conditions of such
Government Contract and Bid and any requirements of law pertaining to such
Government Contract and Bid; (ii) each representation and certification executed
by the Company pertaining to such Government Contract and Bid was true and
correct in all material respects as of its effective date; (iii) the Company has
not submitted any inaccurate or untruthful cost or pricing data or any claim for
payment to any Governmental Entity in connection with such Government Contract
or Bid; (iv) there is no suspension, stop work order, cure notice or show cause
notice in effect for such Government Contract nor, to the Company's knowledge,
is any Governmental Entity threatening to issue one; and (v) no protest of any
Government Contract or Bid is pending.

        (c)   There is no pending or, to the Company's knowledge, threatened:
(i) civil fraud or criminal investigation that exists or has been threatened,
indictment or information of the Company by any Governmental Entity;
(ii) suspension or debarment proceeding against the Company; or
(iii) contracting officer's decision or legal proceeding by which a Governmental
Entity claims that the Company has breached or is liable to a Governmental
Entity, in each case with respect to any Government Contract. The Company has
not conducted or initiated any internal investigation, or made a voluntary
disclosure to the United States Government, with respect to any alleged
misstatement or omission arising under or relating to any Government Contract or
Bid at any time since its inception and no such investigation or voluntary
disclosure is anticipated.

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        (d)   Except as set forth on Schedule 4.31(d) of the Company Disclosure
Schedule, there are no pending or, to the Company's knowledge, threatened
material claims or disputes by or between the Company and any prime contractor,
subcontractor or vendor relating to any Government Contract. Except as set forth
on Schedule 4.31(d) of the Company Disclosure Schedule, the Company has not
received any notice of termination for convenience or default of any Government
Contract, in whole or in part, and to the Company's knowledge, no such
termination has been threatened or is otherwise anticipated.

        (e)   None of the officers, directors or employees of the Company has:
(i) made any payments or used any funds to influence federal transactions in
violation of federal laws and regulations and or failed to make any required
disclosures; (ii) used any corporate or other funds or given anything of value
for unlawful commissions, gratuities, contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds in violation of any applicable foreign, federal or state law;
or (iii) accepted or received any unlawful contributions, payments, expenditures
or gifts.

        (f)    Except for those liens or assignments listed on Schedule 4.31(f)
of the Company Disclosure Schedule, made in accordance with 31 U.S.C. § 3727 (as
amended), otherwise known as the Assignment of Claims Act, and 41 U.S.C. § 15
(as amended), otherwise known as the Assignment of Contracts Act, the Company
has not assigned or agreed to assign to any Person, or otherwise encumbered or
agreed to encumber for the benefit of any Person, any right, title or interest
in or to any of the Government Contracts, or any account receivable relating
thereto.

        (g)   No Person or Governmental Entity has notified the Company in
writing or orally that any Governmental Entity intends to seek to lower rates
under any Government Contract or task order or delivery order thereunder.

        4.32    Disclosure.    No representation or warranty by the Company in
this Agreement or in any exhibit or Schedule hereto contains or will contain at
the time made or deemed to be made pursuant to this Agreement any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein on the whole not false or misleading.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE MERGER SUB

        Parent and the Merger Sub hereby represent and warrant to the Company 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 Parent Disclosure
Schedule attached to this Agreement (the "Parent Disclosure Schedule"):

        5.1    Incorporation; Authority.    Each of Parent and the Merger Sub is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware 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. Each
of Parent and the Merger Sub is duly qualified to transact business and is in
good standing in each jurisdiction where such qualification is required and in
which failure to so qualify would have a Material Adverse Effect on the Parent.

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        5.2    Ownership of Merger Sub; No Prior Activities.    Merger Sub is a
direct, wholly-owned Subsidiary of Parent, was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has engaged in
no business activity other than as contemplated by this Agreement.

        5.3    Authorization and Enforceability.    Each of Parent and the
Merger Sub 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 Parent and
the Merger Sub, subject only to the adoption of this Agreement by Parent as the
sole stockholder of Merger Sub (which shall be effected by written consent
immediately following the execution and delivery of this Agreement). This
Agreement has been duly executed and delivered by each of Parent and the Merger
Sub and constitutes the valid and binding obligation of each of Parent and the
Merger Sub, 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.

        5.4    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 Parent or Merger Sub 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 Merger Documents with the Delaware Secretary of State and Washington
Secretary of State, as applicable; (ii) the filing by Parent of such reports and
information with the Securities and Exchange Commission ("SEC") under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the SEC thereunder, as may be required in connection with this
Agreement, the Merger and the other transactions contemplated by this Agreement;
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 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 Parent's or the Merger Sub'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 Parent or the Merger Sub, or (c) any judgment,
decree, order, statute, rule, regulation, agreement, instrument, or other
obligation to which Parent or the Merger Sub is a party or by or to which such
entity or any of its assets is bound or subject, which violation will not have a
Material Adverse Effect on Parent or Merger Sub. Parent's Board of Directors has
in good faith estimated that the present value of the Merger Consideration as of
the Effective Time will not equal or exceed the minimum size-of-transaction
threshold that would require notification under the HSR Act.

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        5.5    Brokers.    Except as set forth on Schedule 5.5 of the Parent
Disclosure Schedule, neither Parent nor Merger Sub have incurred, nor will they
incur, any liability for brokerage or finders' fees or agents' commissions or
investment bankers' fees or any similar charges in connection with this
Agreement or the consummation of the transactions contemplated hereby.

        5.6    Adequacy of Funds.    Parent currently has and will at the
Closing have adequate financial resources to pay the Closing Consideration as
contemplated by Section 2.6 hereof, and Parent will have adequate financial
resources to satisfy its payment obligations under Section 2.7 hereof, when such
payment obligations are due.

        5.7    Absence of Certain Changes.    Since March 31, 2007, there has
not been any change in the business, financial condition or prospects, or
business relationships of Parent that has or is reasonably likely to have a
materially adverse effect on the ability or commitment of Parent to fulfill its
obligations under this Agreement, including but not limited to those under
Section 6.9 hereof.

ARTICLE 6
MUTUAL COVENANTS.

        6.1    Satisfaction of Conditions.    Each of the parties will use
commercially reasonable efforts to cause the satisfaction as promptly as
possible of the conditions contained in Sections 8.1 through 8.3 hereof that
impose obligations on it or require action on its part or the part of any of its
shareholders or Affiliates.

        6.2    Further Assurances.    Subject to the terms and conditions set
forth in this Agreement, from time to time both before and after the Effective
Time, the Company, Parent, Merger Sub and the Holders Representative will use
(and each of the foregoing will use commercially reasonable efforts to cause
their respective members, officers and directors to use) their respective
commercially reasonable efforts, as promptly as is practicable, to take or cause
to be taken all actions, and to do or cause to be done all other things, as are
necessary, proper, or advisable to consummate and make effective the Merger and
the other transactions contemplated hereby.

        6.3    Regulatory Approval; Further Assurances.    

        (a)   Parent and the Company shall use commercially reasonable efforts
to effectuate the Merger and make effective the other transactions contemplated
by this Agreement as soon as practicable following the Agreement Date. Without
limiting the generality of the foregoing, each party to this Agreement shall:
(i) make any filings and give any notices required to be made or given by such
party in connection with the Merger and the other transactions contemplated by
this Agreement; (ii) use commercially reasonable efforts to obtain any consent,
action or non-action required (pursuant to any applicable legal requirement,
contract or otherwise) in order to implement the Merger or any of the other
transactions contemplated by this Agreement; and (iii) use commercially
reasonable efforts to lift any restraint, injunction or other legal bar to the
Merger. To the extent permitted by law, each of Parent and the Company shall
promptly deliver to the other a copy of each such filing made, each such notice
given and each

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such consent obtained after the Agreement Date and prior to the Effective Time.
For the avoidance of doubt, the term "commercially reasonable efforts" as used
in this paragraph is not the defined term "Commercially Reasonable Efforts," and
shall include, without limitation, the prompt submission of responsive materials
in response to a request from a Governmental Entity for voluntary submission of
information and documents, and substantial compliance with a formal request for
information and documentary materials issued by a Governmental Entity under any
foreign, federal or state antitrust, competition or fair trade law.

        (b)   Parent and the Company shall respond as promptly as practicable to
(i) all inquiries or requests received by the Federal Trade Commission or the
Department of Justice for information or documentation and (ii) all inquiries or
requests received from any state attorney general or other Governmental Entity
in connection with antitrust or related matters. Each of the Company and Parent
shall (A) give the other party prompt notice of the commencement of any legal
proceeding by or before any Governmental Entity with respect to the Merger or
any of the other transactions contemplated by this Agreement; (B) keep the other
party informed as to the status of any such legal proceeding; and (C) promptly
inform the other party of any communication to or from the Federal Trade
Commission, the Department of Justice or any other Governmental Entity regarding
the Merger. The Company and Parent will consult and cooperate with one another,
and will consider in good faith the views of one another, in connection with any
analysis, appearance, presentation, memorandum, brief, argument, opinion or
proposal made or submitted by either of them in connection with any legal
proceeding under or relating to the HSR Act or any other foreign, federal or
state antitrust, competition or fair trade law. In addition, except as may be
prohibited by any Governmental Entity or by any applicable law, in connection
with any legal proceeding under or relating to the HSR Act or any other foreign,
federal or state antitrust, competition or fair trade law or any other similar
legal proceeding relating to the Merger to which either the Company or Parent is
a party, each of the Company and Parent will permit authorized representatives
of the other party to be present at each meeting or conference relating to any
such legal proceeding (except with respect to meetings or conferences involving
only a party and its own employees, representatives, legal advisors, or
consultants) and to have access to and be consulted in connection with any
document, opinion or proposal made or submitted to any Governmental Entity in
connection with any such legal proceeding. For the avoidance of doubt, the term
"legal proceeding" as used in this paragraph shall include, without limitation,
an investigation relating to the Merger by any Governmental Entity under the HSR
Act or any other foreign, federal or state antitrust, competition or fair trade
law.

        6.4    Amended Articles and Required Shareholder Approval.    Following
the execution of this Agreement, the Company will (i) promptly solicit the
Required Shareholder Approval by written consent and (ii) after having received
the Required Shareholder Approval, file the Amended Articles with the Secretary
of State of the State of Washington. The Company Board will recommend to its
shareholders the adoption and approval of this Agreement and the transactions
contemplated hereby and the other matters to be submitted to its shareholders in
connection therewith, subject to withdrawal only as allowed under
Section 7.24(d).

        6.5    Notice of Merger and Appraisal Rights; Notice of Shareholder
Approval.    As promptly as practicable following the Agreement Date, the
Company shall prepare and deliver to the shareholders of the Company a Notice of
Merger and Appraisal Rights (the "Shareholder Notice"), which Shareholder Notice
shall comply in all respects with the requirements of

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Washington Law. As promptly as practicable after the Required Shareholder
Approval has been obtained, the Company shall prepare and deliver a notice (the
"Post-Approval Notice") informing the Company's shareholders of the written
consent obtaining the Required Shareholder Approval, which Post-Approval Notice
shall comply in all respects with the requirements of Washington Law.

        6.6    Consents.    The Company shall use commercially reasonable
efforts to obtain the consents, waivers and approvals necessary for the
consummation of the Merger and the transactions contemplated under this
Agreement (all of such consents, waivers and approvals having been set forth in
Schedule 6.6 of the Company Disclosure Schedule), including, but not limited to,
all consents, waivers and approvals that are necessary or required in connection
with, or as a result of, the Merger to preserve all of the Company's rights and
benefits in its business, assets, properties, leases and contracts following the
Merger and without incurring any additional or special liability, or
accelerating any existing liability or obligation, in connection with or under
its business, assets, properties, leases and contracts following the Merger.

        6.7    Notification of Certain Matters.    

        (a)   Between the date hereof and the Effective Time, each of Parent and
the Company shall, upon obtaining knowledge of any of the following, promptly
notify the other of:

          (i)  any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the Merger;

         (ii)  any actions, suits, claims, investigations or other judicial
proceedings known to its executive officers commenced or threatened against such
party or any of its Subsidiaries which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to
Section 4.16 hereof or which relate to the consummation of the Merger;

        (iii)  occurrence or non-occurrence of any other event known to its
executive officers which is likely to cause any representation or warranty of
such party contained in this Agreement to be materially untrue or inaccurate at
or prior to the Effective Time; and

        (iv)  any failure of such party known to its executive officers to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder.

        (b)   In addition to its obligations set forth in Section 6.7(a) hereof,
the Company shall promptly notify Parent of any adverse determination or
recommendation in connection with any governmental proceeding to license any of
the Company's products and any report filed with the FDA regarding an unexpected
fatal or life-threatening experience with respect to any such product.

        (c)   The delivery of any notice pursuant to this Section 6.7 shall not
limit or otherwise affect any remedies available to a party.

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        6.8    Indemnification of Directors and Officers.    From and after the
Effective Time, Parent shall cause the Surviving Corporation to fulfill and
honor in all respects the obligations, to the extent legally permissible, of the
Company to its directors and officers pursuant to the indemnification provisions
under the Company's articles of incorporation or by-laws as in effect on the
date hereof. Parent shall use commercially reasonable efforts to cause the
Surviving Corporation to maintain in effect for six (6) years from the Effective
Time the current policies of directors' and officers' liability insurance (the
"D&O Policy") maintained by the Company (provided that Surviving Corporation may
substitute in place thereof policies reasonably satisfactory to it of at least
the same coverage containing terms and conditions which are not materially less
advantageous to the individuals covered by the D&O Policy); provided, that in no
event shall the Surviving Corporation be required to pay premiums for such
insurance in excess of one hundred seventy-five percent (175%) of premiums
currently paid by the Company (the "Maximum Amount") and if current insurance
coverage cannot be maintained or obtained for the Maximum Amount, the Surviving
Corporation shall obtain as much directors' and officers' liability insurance as
can be obtained by paying an annual premium not in excess of the Maximum Amount.
Nothing in this Section 6.8 shall obligate Parent or the Surviving Corporation
to make any payments, other than for premiums not to exceed the Maximum Amount,
in respect of the D&O Policy. If at any time the Surviving Corporation or Parent
is required to make indemnification payments to persons who were directors,
officers or employees of the Company at or prior to the Effective Time pursuant
to this Section 6.8, then Parent shall have the right to make a claim for
indemnification therefor pursuant to Section 9.2 hereof, provided the
indemnifiable claim against the former Company director, officer or employee is
of a type that is subject to indemnification coverage pursuant to Section 9.2.

        6.9    Due Diligence Obligations.    

        (a)   Subject to the provisions of this Section 6.9, Parent shall use
Commercially Reasonable Efforts to []*. Parent may satisfy its obligations under
this Section 6.9(a) through the efforts of any of the Members of the Buyer
Group. Notwithstanding anything express or implied in the foregoing provisions
of this Section 6.9(a) or in any other provision of this Agreement, Parent shall
not be deemed to be in breach of any of its obligations in this Section 6.9(a)
[]*.

        (b)   If one or more Members of Buyer Group collectively have, on or
before the []*, either (i) []* or (ii) entered into []* with respect to a
Contingent Payment Product with an indication for the treatment of infections
caused by HCV, then Parent will be deemed to have performed and satisfied its
obligations under Section 6.9(a) throughout the period commencing on []*. If one
or more Members of the Buyer Group collectively have not, on or before the []*
in this Section 6.9(b) (together, the "Presumed Breach Events"), then Parent
shall be presumed to have breached its obligations under Section 6.9(a) above
(which presumption may be rebutted by Parent as further provided below in this
Section 6.9(b)). Upon such a presumed breach, Holders Representative may, if it
so elects, deliver a Non-Compliance Notice to Parent pursuant to Section 6.10(b)
hereof and this Section 6.9(b) no later than sixty (60) days after the []*. If
Holders Representative does not deliver a Non-Compliance Notice to Parent
pursuant to Section 6.10(b) and this Section 6.9(b) within such sixty (60) day
period, Holders Representative, for itself and on behalf of all Holders, shall
be deemed to have waived all rights and remedies against Parent for such
presumed breach. If Holders Representative delivers a Non-Compliance Notice to
Parent pursuant to Section 6.10(b) and this Section 6.9(b) within such sixty
(60) day period, Parent may

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elect, in its sole and absolute discretion by giving to the Holders
Representative a Breach Dispute Notice pursuant to Section 6.10(c), either to
challenge that the Presumed Breach Events have occurred or to rebut any
presumption that Parent has breached its obligations under Section 6.9(a) hereof
solely because the Presumed Breach Events have occurred. If, upon receipt of any
Breach Dispute Notice from Parent that sets forth Parent's election to rebut any
presumption that Parent has breached its obligations under Section 6.9(a) hereof
solely because the Presumed Breach Events have occurred, the Holders
Representative elects thereafter to initiate judicial proceedings pursuant to
Section 6.10(c), then, in such proceedings, Parent shall have the burden of
proof to establish that it has satisfied its obligations under Section 6.9(a)
hereof notwithstanding that the Presumed Breach Events have occurred.

        (c)   On each successive six-month anniversary of the Closing Date
during the period in which a Section 6.9 Contingent Payment Product is being
developed by Parent until the satisfaction of HCV Milestone Five or HCV []*
Milestone Five, and thereafter on each successive anniversary of the Closing
Date for so long as Parent is developing or commercializing a Section 6.9
Contingent Payment Product, Parent shall provide to the Holders Representative
[]* in connection with such Section 6.9 Contingent Payment Product during the
preceding six or twelve month period, as applicable, including []* incurred
during such period. In addition, within the period of sixty (60) days after each
successive six-month anniversary of the Closing Date in which a Section 6.9
Contingent Payment Product is being developed by Parent until the satisfaction
of HCV Milestone Five or HCV []* Milestone Five, and thereafter within the
period of sixty (60) days after each successive anniversary of the Closing Date
in which a Section 6.9 Contingent Payment Product is being developed or
commercialized by Parent, Parent will, upon reasonable advance notice from
Holders Representative, make []* with respect to such Section 6.9 Contingent
Payment Product []* and for a period not to exceed []*. The Holders
Representative may suggest other []*, and, if not unduly burdensome to Parent or
such other []* and not in conflict with other responsibilities or activities
that such other []* may have, such []* and encourage such other []*. For a
period of sixty (60) days following the delivery of any such []*, as applicable,
Parent will require that such []*, if not unduly burdensome to Parent or to such
[]*, via telephone or email communications related to matters []*; provided that
in []*. Notwithstanding anything in this Section 6.9(c) to the contrary, Parent
shall not be required to provide any such []*, (x) unless and until the Holders
Representative executes and delivers a confidentiality agreement reasonably
acceptable to the Parent for purposes of preserving the confidentiality of all
[]* and information provided by Parent pursuant to this Section 6.9(c), and
(y) if any such []* or information could adversely affect the attorney-client
privilege between Parent and its counsel, unless such privilege could be
protected by a joint defense agreement between Parent and the Holders
Representative and the Holders Representative has expressed a willingness to
enter into such an agreement on terms reasonably acceptable to Parent.

        (d)   In carrying out Parent's development activities in connection with
the development of a Section 6.9 Contingent Payment Product, Parent shall, and
shall ensure that the Surviving Corporation shall, comply in all material
respects with all applicable laws, rules and regulations applicable to such
development activities.

        (e)   The Participating Holders are intended third party beneficiaries
of the provisions of this Section 6.9, and the Holders Representative may
enforce the Participating Holders' interests under this Section 6.9 in case of
breach hereof by Parent.

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        6.10    Grantback Provisions.    

        (a)   Within ninety (90) days following receipt by the Holders
Representative of an Abandonment Notice, the Holders Representative shall be
entitled to require, by means of a written notice to Parent disclosing the
election of the Holders Representative to exercise such right (an "Abandonment
Grantback Notice"), that Parent (and its Subsidiaries and controlled Affiliates)
grant to the Holders Representative for the benefit of the Participating Holders
(X) a []* (except to the extent otherwise provided below in this Section 6.10),
[]* under all right, title and interest of Parent (and its Subsidiaries and
controlled Affiliates) in and to []*, in either case only to the extent owned by
Company at the Effective Time (collectively, the "Company Grantback Assets"), to
[]* a Contingent Payment Product for []*, provided that the obligations of
Parent (and its Subsidiaries and controlled Affiliates) under this clause (X)
shall be subject to the limitations set forth below in this Section 6.10(a),
(Y) a []* (except to the extent otherwise provided below in this Section 6.10),
[]* under all right, title and interest of Parent (and its Subsidiaries and
controlled Affiliates) in and to []*, in each case only to the extent []*
(collectively, the "Parent Grantback Work Product"), []* Parent Grantback Work
Product []* a Contingent Payment Product for []*, provided that the obligations
of Parent (and its Subsidiaries and controlled Affiliates) under this clause (Y)
shall be subject to the limitations set forth below in this Section 6.10(a), and
(Z) a []* (except to the extent otherwise provided below in this Section 6.10),
[]* under all right, title and interest of Parent (and its Subsidiaries and
controlled Affiliates) in and to []* at any time after the Effective Time and
prior to the date of the Abandonment Grantback Notice and that []* a Contingent
Payment Product (collectively, the "Parent Grantback Assets" and together with
the Company Grantback Assets and the Parent Grantback Work Product, the
"Grantback Assets"), []* a Contingent Payment Product, provided that the
obligations of Parent (and its Subsidiaries and controlled Affiliates) under
this clause (Z) shall be subject to the limitations set forth below in this
Section 6.10(a). Notwithstanding anything express or implied in any of the
foregoing provisions of this Section 6.10(a) to the contrary, (i) the
obligations of Parent (and its Subsidiaries and controlled Affiliates) under
clause (X), (Y) or (Z) of this Section 6.10 to grant any rights to the Holders
Representative for the benefit of the Participating Holders shall be subject the
provisions of any third party agreements entered into by Parent (or any of its
Subsidiaries or controlled Affiliates) that may prohibit, limit or prevent
Parent (or any of its Subsidiaries or controlled Affiliates) from complying with
the provisions of any of such clauses (X), (Y) or (Z), provided that any such
third party agreement complies with the provisions (other than the provisions of
clause (B)) of Section 11.3(b) hereof, and (ii) neither Parent nor any of its
Subsidiaries or controlled Affiliates shall have any obligation to grant to the
Holders Representative for the benefit of the Participating Holders []* pursuant
to any of clauses (X), (Y) or (Z) of this Section 6.10(a) []* a Contingent
Payment Product for the treatment of any non-HCV Indication if Parent (or any of
its Subsidiaries or controlled Affiliates) has granted to any third party []* a
Contingent Payment Product in such non-HCV Indication, and, in the case of []*,
Parent is contractually prohibited from transferring its []* to any third party,
in which case Parent hereby agrees that from and after the date of receipt by
Parent of the Abandonment Grantback Notice, Parent shall not pursue the further
development of any product in such Non-HCV Indication. Such grant shall be
consummated no later than thirty (30) days following delivery to the Parent of
the Abandonment Grantback Notice, by means of execution and delivery by the
Parent (and any of its Subsidiaries or controlled Affiliates having any right or
interest in the Grantback Assets) and the Holders Representative []*, without
[]* previously received by the Holders Representative or the Participating
Holders. Notwithstanding any provision in this Section 6.10(a) that states or
implies that []* by the Holders Representative in connection with the []* to be
granted by Parent under this Section 6.10(a), the Holders Representative shall
be required to make payment of all payments and royalties required to be made
under any and all third party licenses that are sublicensed by Parent to Holders
Representative in connection with the implementation by Parent of all of its
obligations under this Section 6.10(a).

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        (b)   In the event that Parent has breached its obligations under
Section 6.9(a) hereof, the Holders Representative shall be entitled, subject to
the provisions of the next sentence and Section 6.9(b) hereof, as applicable, to
deliver a written notice (a "Non-Compliance Notice") to Parent specifying in
reasonable detail the facts and circumstances surrounding such breach and
reasons as to why the Holders Representative believes that such facts and
circumstances give rise to such breach. Notwithstanding anything express or
implied in the foregoing provisions of this Section 6.10(b), but subject to the
provisions of Section 6.9(b) hereof, (i) the Holders Representative shall only
be entitled to deliver a Non-Compliance Notice pursuant to this Section 6.10(b)
within sixty (60) days after any meeting held pursuant to Section 6.9(c) hereof
(or, if later, within sixty (60) days after the last day on which any such
meeting was required to be held pursuant to Section 6.9(c) hereof) and
(ii) subject to the provisions of Section 6.9(b) hereof and absent fraud or
intentional misconduct or the discovery by the Holders Representative after the
expiration of the applicable period described in clause (x) or (y) below, as
applicable, of material facts or circumstances in existence during such period
that reasonably relate to an ongoing breach by Parent of its obligations set
forth in Section 6.9(a) and would have been discovered or known by Holders
Representative during such period if Parent had not breached any of its
obligations under Section 6.9(c) hereof to the extent applicable to such period,
the facts and circumstances that constitute or give rise to the breach by Parent
of its obligations under Section 6.9(a) must have occurred or failed to occur
either (x) if under Section 6.9(c) meetings are required to be held every six
months, during the six-month period prior to the date when the meeting relating
to such Non-Compliance Notice was held or required to be held pursuant to
Section 6.9(c) or (y) otherwise, during the 12-month period prior to the date
when the meeting relating to such Non-Compliance Notice was held or required to
be held pursuant to Section 6.9(c) and Holders Representative shall not
otherwise be entitled to allege facts or circumstances that occurred or did not
occur at any time prior to the applicable period under the foregoing clause (x)
or (y), as applicable, to support an argument or finding that Parent has
breached its obligation under Section 6.9(a) hereof.

        (c)   Within thirty (30) days after its receipt of any Non-Compliance
Notice, Parent shall have the option either (i) to provide written notice to the
Holders Representative of its acknowledgement of the breach asserted in such
Non-Compliance Notice and a proposed plan to cure such breach (a "Cure Notice"),
which plan (and the proposed timetable for its completion) must be reasonably
satisfactory to the Holders Representative, or (ii) to provide written notice to
the Holders Representative that it intends to dispute the asserted breach of its
obligations under Section 6.9(a) (a "Breach Dispute Notice"). If Parent fails to
provide either a Cure Notice or Breach Dispute Notice within such thirty
(30) day period, Parent will be presumed to have provided a Breach Dispute
Notice. In the event that Parent provides a Cure Notice and, within thirty
(30) days after receipt by the Holders Representative of such Cure Notice,
Parent and Holders Representative cannot agree on the proposed plan to cure the
breach, Parent and Holders Representative shall engage in mediation, which shall
last for a period of no more than sixty (60) days,

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pursuant to the International Institute for Conflict Prevention and Resolution
("CPR") Mediation Procedure then in effect. Each party shall pay its own
expenses incurred in connection with such mediation, and the fees and expenses
of the mediator shall be divided evenly between the parties. Notwithstanding
anything else contained herein, any party to such mediation shall have the right
to commence litigation pursuant to Section 11.14 hereof at any time after the
expiration of sixty (60) days after service of a demand for mediation under this
subsection. In the event that Parent provides or is deemed to have provided a
Breach Dispute Notice, or in the event that Parent has provided a Cure Notice
and Parent and the Holders Representative have not, after mediation, agreed upon
a plan to cure the breach, then Holders Representative shall be entitled to
seek, pursuant to Section 11.14 hereof, a judicial declaration that Parent is in
breach of its obligations under Section 6.9(a). At Holders Representative's
election, Holders' Representative may accompany such request for a judicial
declaration with a request for relief in the form of either money damages or
implementation of the provisions of Sections 6.10(d) and 6.10(e) below; any such
judicial proceedings shall be conducted in accordance with Section 11.14 hereof.
The remedy for any breach by Parent of its obligations under Section 6.9(a)
hereof shall be, at the election of the Holders Representative, either money
damages or implementation of the provisions of Section 6.10(d) and 6.10(e), but
not both such remedies. In no event shall the Holders Representative be entitled
to any money damages upon any breach by Parent of its obligations under
Section 6.9(a) hereof in the event that the Holders Representative elects, in
the manner provided above, to enforce its rights under Sections 6.10(d) and
6.10(e) below.

        (d)   In the event that the Holders Representative makes an election, in
accordance with the provisions of Section 6.10(c), for the implementation of
this Section 6.10(d) and Section 6.10(e) below in lieu of money damages, and in
the event that a court finally determines, with no opportunity for further
appeal, that Parent is in breach of its obligations under Section 6.9(a),
Holders Representative shall be entitled to deliver a written notice (a
"Non-Compliance Grantback Notice") to Parent requiring Parent (and its
Subsidiaries and controlled Affiliates) to perform all of their respective
obligations under Section 6.10(a) to the same extent as if Parent had provided
to the Holders Representative an Abandonment Notice and the Holders
Representative had provided to Parent an Abandonment Grantback Notice; provided,
however, that, notwithstanding any provision of Section 6.10(a) hereof stating
or implying that the grant of any and all []* pursuant to Section 6.10(a) hereof
to the Holders Representative shall be without any []*, in the event that the
grant of []* arises by virtue of the implementation of the provisions of this
Section 6.10(d), then Parent shall be entitled to []* in connection with the
grant []* if and to the extent so provided in Section 6.10(e) below (the grant
[]* by virtue of the implementation of, and in accordance with, the provisions
of this Section 6.10(d) to the Holders Representative shall be referred to in
this Agreement as the "Non-Compliance Grantback"). For the avoidance of doubt,
the parties agree that the right to demand performance of this Section 6.10(d)
and Section 6.10(e) is a purely contractual remedy governed by the terms of this
Agreement, and that any request for court assistance in enforcing such right
shall not be subject to the same principles of equity applied to requests for
rescission. Notwithstanding anything express or implied in this Section 6.10 or
elsewhere in this Agreement to the contrary, in no event shall the foregoing
provisions of this Section 6.10(d) or the provisions of Section 6.10(e) below
apply or be implemented or enforced at any time after []*.

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        (e)   If the Non-Compliance Grantback occurs at any time before the
earlier to occur of []*, then, subject to the provisions set forth below in this
Section 6.10(e) and Section 6.10(f), the grant []* to the Holders Representative
that constitute the Non-Compliance Grantback shall occur without []*. If the
Non-Compliance Grantback occurs at any time following the occurrence of []*, but
prior to the occurrence of []*, and if the Holders Representative thereafter
effects a subsequent sublicense or other disposition of all or any portion of
the []* granted by Parent (or its Subsidiaries or controlled Affiliates)
pursuant to Section 6.10(d) in order to implement the Non-Compliance Grantback,
or if there is any sale of the Holders Representative or any other person that
is the direct or indirect owner or holder of []*, in either case for cash or
other liquid consideration, then the Holders Representative shall, within
forty-five (45) days after receipt of such consideration, deliver or cause to be
delivered to Parent a written report specifying the source and calculation of
such consideration received, []*. []* shall be calculated based on the fair
market value of such non-marketable securities or other illiquid assets at the
time of such sublicense or other disposition or such sale of Holders
Representative or other person based on valuation methods reasonably acceptable
to both Parent and Holders Representative) shall be deferred until the earlier
of the date on which such consideration is converted into cash or the date on
which Parent is permitted to receive its []* without violating applicable
securities laws. If the Non-Compliance Grantback occurs at any time following
the occurrence of []*, but prior to the occurrence of []*, and if the Holders
Representative thereafter develops and commercializes a Contingent Payment
Product, then the Holders Representative shall make payment to Parent of []*. In
the event that the provisions of the immediately preceding sentence become
applicable, the provisions set forth in Sections 2.7(g) through 2.7(k) hereof
with respect to reporting, audit and dispute rights and obligations of the
Parent and the Holders Representative, as applicable, pertaining to []* shall be
applied mutatis mutandis to create reporting, audit and dispute rights and
obligations of the Parent and the Holders Representative, as applicable,
pertaining to []*. Notwithstanding any provision in Section 6.10(d) that states
or implies that []* by the Holders Representative in connection with the []* to
be granted by Parent in connection with the Non-Compliance Grantback and in
addition to []*, the Holders Representative shall be required to make payment of
all payments and royalties required to be made under []* in connection with the
implementation by Parent of all of its obligations under Section 6.10(d) and the
Holders Representative shall be required to comply with its []* under
Section 6.10(f) below.

        (f)    Subject to the provisions of this Section 6.10(f), upon the grant
by Parent []* to the Holders Representative pursuant to Section 6.10(a) or
Section 6.10(d), as applicable, Parent shall []* (collectively, the "Grantback
Licensed Patents"). The Holders Representative shall be obligated to []*;
provided, however, that, (i) in the event that any of the Grantback Licensed
Patents are also []*, then the []*, and (ii) until the earlier of (x) the
granting by Holders Representative of a license to a third party to the right,
title and interest of the Participating Rights Holders and/or the Holders
Representative in and to any of the Grantback Licensed Patents or (y) the []* of
the Grantback Date, Holders Representative shall have the right to elect to
defer its obligation under the foregoing provisions of this Section 6.10(f) to
[]* is subject to compliance by the Holders Representative with the provisions
of this Section 6.10(f). Parent may at any time terminate its obligation to []*
to the Holders Representative or to any third party that is also a []* Grantback
License Patent, provided that, in the case of any such third party []*. In the
case of any such []* of a Grantback License Patent that has more than one []*.

        (g)   For purposes of clarification, if, at any time before the grant
[]* by Parent to the Holders Representative pursuant to Section 6.10(a) hereof
or the occurrence of the Non-Compliance Grantback, Parent grants to any Member
of the Buyer Group []* any Contingent Payment Product, the grant []* to the
Holders Representative shall not release Parent from any of its obligations
under this Agreement with respect to such Contingent Payment Product except for
those obligations, if any, of Parent under this Agreement that correspond to the
portion of Parent's right, title and interest in and to such Contingent Payment
Product that have been []* to the Holders Representative pursuant to []*.

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        6.11    Confidentiality.    Any and all non-public information disclosed
or made available by Parent to the Company or by the Company to Parent as a
result of the negotiations or due diligence investigations leading to the
execution of this Agreement and the consummation of the transactions
contemplated under this Agreement, or in furtherance thereof, including, without
limitation, any information disclosed or made available pursuant to Section 7.1
hereof, shall remain subject to the terms and conditions of that certain Mutual
Confidentiality Agreement, by and between the Company and Parent, dated May 19,
2006 (the "Confidentiality Agreement").

        6.12    Employees.    The Company shall terminate, and shall cause its
Subsidiaries, to the extent necessary, to terminate, all employees of the
Company and its Subsidiaries, respectively, effective as of immediately prior to
the Effective Time.

        6.13    Non-Company Program Liabilities.    Prior to the Effective Time,
the Company shall satisfy, discharge or pay, or provide for the satisfaction,
discharge or payment of (which may include requesting Parent to pay or assume at
Closing, and deduct from the Closing Consideration, the Closing Liabilities set
forth in the Merger Consideration Certificate pursuant to Section 2.6(b)), all
of its and its Subsidiaries' liabilities or obligations (whether accrued or
contingent), including, without limitation, (i) accounts payable accrued for in
the books and records of the Company immediately prior to the Effective Time,
(ii) Transaction Expenses and (iii) employee-related liabilities of any kind or
nature; provided, however, that, notwithstanding the foregoing, the Company may
have liabilities under any written executory Company Program Contracts, but only
if and to the extent that such liabilities accrue and arise from and after the
Closing.

        6.14    Bank Accounts; Maintenance of Cash Balances.    Except for those
bank accounts listed on Schedule 4.20 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries shall open or maintain any bank,
brokerage or other accounts, or safe-deposit boxes. At Closing, all cash held by
the Company or any of its Subsidiaries shall be held in one or more of those
bank accounts listed on Schedule 4.20 of the Company Disclosure Schedules that
are not foreign bank accounts.

        6.15    Termination of Company Employee Benefit Plans.    Effective
immediately prior to the Closing and contingent upon the Closing, the Company
will terminate any and all Company Employee Benefit Plans intended to qualify as
a qualified cash or deferred arrangement under Section 401(k) of the Code and
effective as of such termination, no employee of the Company shall have any
right to contribute any amounts to any Company Employee Benefit Plan intended to
qualify as a qualified cash or deferred arrangement under Section 401(k) of the
Code. At the request of Parent, the Company will provide Parent with evidence
that such Company Employee Benefit Plans have been terminated effective
immediately prior to the Closing pursuant to resolutions duly adopted by the
Company Board. In addition, the Company will terminate any and all other Company
Employee Benefit Plans, including any group health, dental, severance,
separation or salary continuation plans, programs or arrangements, effective
immediately prior to the Closing and contingent upon the Closing, and, at the
request of Parent, the Company will provide Parent with evidence that such
Company Employee Benefit Plans have been so terminated pursuant to resolutions
duly adopted by the Company Board. The Company also shall take such other
actions in furtherance of terminating such Company Employee Benefit Plans as
Parent may reasonably require.

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        6.16    Employees and Compensation.    

        (a)   No Member of the Buyer Group (including for the avoidance of doubt
the Surviving Corporation) shall have any obligation to employ or continue the
engagement of any officer, director, employee or independent contractor employed
or otherwise engaged by the Company and its Affiliates as of the Closing Date
(collectively, the Company's "Personnel"). After satisfaction of all applicable
legal and contractual requirements, if any, the Company shall terminate the
employment or engagement, as the case may be, of each of its Personnel effective
not later than the Closing Date.

        No Member of the Buyer Group (including for the avoidance of doubt the
Surviving Corporation) shall have any obligation to provide or liability for the
provision of compensation or benefits to any of the Company's Personnel, current
or former, whether in connection with their employment or engagement or the
termination of the same and including without limitation under or in connection
with the establishment, maintenance, or termination of any Company Employee
Benefit Plan (collectively, "Compensation Liabilities").

        6.17    Tax Certificate.    At the Closing, the Company shall deliver to
Parent a certificate dated as of immediately prior to the Effective Time,
setting forth the following information as to each share of the Company's stock
(as defined in Treas. Reg. § 1.382-2(a)(3)), as of the Closing Date: (i) the
date of issuance, (ii) the holder at issuance, (iii) the issue price and (if
different), in the case of common stock or options on common stock, the most
recent fair market value determination of such common stock made by the
Company's board of directors for purposes of option grants, (iv) the date(s) of
any transfer(s), (v) any information available to the Company as to the fair
market value at the time of transfer, (vi) any information as to the holder of
that share from time to time that is described in Treas. Reg. §§ 1.382-2T(h)(6)
and/or 1.382-2T(k) and is actually known to the Company (it being understood
that the Company shall be considered to actually know only such information as
is available from existing Company records and shall not require the Company to
make any investigation), and (vii) a summary of any written materials indicative
of, or other information or estimates as to, the fair market value of that share
from time to time (including, e.g., the exercise price of any incentive stock
options granted at any time at or following the issuance date of that share to
acquire shares of the same class of stock), provided that no obligation to
indemnify shall arise as a result of any good-faith valuation errors that may be
reflected in the information provided pursuant to this Section 6.17.

        6.18    Patent Diligence.    Without limiting Parent's obligations set
forth in Section 6.9(a), following the Effective Time, Parent shall use
commercially reasonable efforts to obtain and maintain an issued Company Patent
in each of []*. In addition, Parent shall use commercially reasonable efforts to
obtain issued patents from those patent applications within the Company Patents
for which claims are allowed by the applicable patent authorities and for which
the issuance of a patent by such applicable patent authorities for such allowed
claims would satisfy HCV Milestone One or HCV Milestone Two. Notwithstanding the
foregoing, from and after the Grantback Date, the provisions of this
Section 6.18 shall be of no further force or effect and the provisions of
Section 6.10(f) shall thereafter apply.

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ARTICLE 7
CONDUCT OF BUSINESS PENDING THE CLOSING

        From and after the date of this Agreement and until the Closing, except
as otherwise specifically agreed by Parent:

        7.1    Full Access.    Subject to applicable law, the Company will
afford to Parent and its authorized representatives full access, upon request
and reasonable notice and during normal business hours, to all of the
properties, books, records, contracts, and documents of the Company, and a
reasonable opportunity to make such investigations as Parent desires to make,
and will furnish or cause to be furnished to Parent and its authorized
representatives all such information with respect to the Company's affairs and
businesses as Parent reasonably requests. No information or knowledge obtained
by Parent in any investigation pursuant to this Section 7.1 shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions of the parties to consummate the Merger.

        7.2    Course of Business Pending the Closing.    Subject to the
provisions set forth below in this Article 7, the Company shall operate the
Company's business in the ordinary course consistent with past practices.

        7.3    No Dividends, Issuances, Repurchases, Etc.    Except as set forth
on Schedule 7.3 of the Company Disclosure Schedule, the Company will not
declare, set aside, or pay any dividends (whether in cash, shares of stock,
other property, or otherwise) on, or make any other distribution in respect of,
any shares of its capital stock or other securities, or purchase, redeem, or
otherwise acquire for value any shares of its capital stock or other securities.
Except as set forth on Schedule 7.3 of the Company Disclosure Schedule, the
Company will not issue any shares of its capital stock or other securities
(including without limitation any options, warrants, or other rights to acquire
Company Stock), other than shares of Company Stock issued upon the due exercise
or conversion of Eligible Company Options, Company Preferred Stock or Common
Warrants listed in Schedule 4.4 of the Company Disclosure Schedule (which
exercises or conversions will be disclosed by the Company in a supplement to the
Company Disclosure Schedule pursuant to Section 7.25 hereof).

        7.4    No Compensation Changes.    Except in the ordinary course of
business consistent with past practices, the Company will not increase the base
salary payable or to become payable to any of its officers, directors,
employees, consultants or agents, or pay or increase any severance, bonus,
insurance, pension, or other benefit plan, payment, or arrangement made to, for,
or with any such officers, directors, employees, consultants or agents, except
as described in Schedule 7.4 of the Company Disclosure Schedule. The Company
shall not pay any severance benefits to, enter into any contract, agreement or
arrangement to provide severance benefits to, or implement any severance plan
for the benefit of, any of the Company's officers, directors, employees or
consultants, except pursuant to any severance plan, contract or arrangement
described in Schedule 4.13 or Schedule 7.4 of the Company Disclosure Schedule.

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        7.5    Contracts and Commitments.    Except as set forth on Schedule 7.5
of the Company Disclosure Schedule, the Company will not enter into any material
contract or commitment, or engage in any other transaction, other than as
specifically contemplated by this Agreement or in the schedules hereto or with
the prior written consent of Parent.

        7.6    Purchase and Sale of Assets.    Except as set forth on
Schedule 7.6 of the Company Disclosure Schedule, the Company will not purchase,
lease as lessee, license as licensee, or otherwise acquire any interest in, or
sell, lease as lessor, license as licensor, or otherwise dispose of any interest
in, any assets (including, without limitation, any Company Intellectual
Property), other than purchases and sales of assets, leases, or licenses in the
ordinary course of business or in amounts not exceeding ten thousand dollars
($10,000) individually or fifty thousand dollars ($50,000) in the aggregate.
Notwithstanding the foregoing, in no event shall the Company sell, lease,
license or otherwise dispose of any Company Intellectual Property, computer hard
drives, computer servers, computer network hardware, physical or electronic
offsite storage materials, electronic tapes and/or other backup media materials
or material written documents of the Company.

        7.7    Liabilities.    The Company shall not incur any Indebtedness or
enter into any contracts or commitments involving potential payments to or by
the Company or any Subsidiary of the Company, except for accounts payable and
payroll and other services liabilities incurred or entered into by the Company
in the ordinary course of business consistent with past practices and expenses
incurred in furtherance of the Merger.

        7.8    Charter and By-Laws.    Except as set forth on Schedule 7.8 of
the Company Disclosure Schedule, the Company shall not cause, permit or propose
any amendments to its articles of incorporation or by-laws except as
contemplated under this Agreement.

        7.9    Acquisitions.    Except to the extent permitted under Section 7.6
above, the Company shall not make, or permit to be made, any acquisition of
property, assets or businesses.

        7.10    Capital Expenditures.    The Company shall not authorize or
incur any single capital expenditure in excess of ten thousand dollars ($10,000)
or capital expenditures which in the aggregate exceed fifty thousand dollars
($50,000).

        7.11    Accounts Payable.    The Company shall make payment with respect
to all of its accounts payable and its Indebtedness in a timely manner in
accordance with their respective terms in the ordinary course of business
consistent with the Company's past practices, and shall make payment of or
provision for all such accounts payable and Indebtedness prior to Closing in
accordance with Section 6.13 hereof.

        7.12    Employees.    The Company shall not hire any employee without
the prior written consent of Parent.

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        7.13    Accounting Policies.    Except as may be required as a result of
a change in law or in generally accepted accounting principles, change any of
the accounting practices or principles used by it.

        7.14    Taxes.    The Company shall not, and shall not permit any
Subsidiary to, make any Tax election or settle or compromise any material
federal, state, local or foreign Tax liability (other than settlements or
compromises not involving any payments of Taxes), change its annual tax
accounting period, change any method of Tax accounting, enter into any closing
agreement relating to any Tax, surrender any right to claim a Tax refund, or
consent to any extension or waiver of the limitations period applicable to any
Tax claim or assessment. The Company shall, and shall cause each of its
Subsidiaries to, timely file all of its Tax Returns as they become due (taking
all timely filed proper extension requests into account), all such Tax Returns
to be true, correct and complete, and the Company shall, and shall cause each of
its Subsidiaries to, timely pay and discharge as they become due and payable all
Taxes (other than Taxes contested in good faith by the Company or its
Subsidiaries in appropriate proceedings), assessments and other governmental
charges or levies imposed upon it or its income or any of its property.

        7.15    Legal.    The Company shall not settle or compromise any pending
or threatened suit, action or claim.

        7.16    Extraordinary Transactions.    The Company shall not adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company (other
than the Merger, or except as permitted under Section 7.24(d)).

        7.17    New Agreements; Amendments.    Except as set forth on Schedule
7.17 of the Company Disclosure Schedule, the Company shall not enter into or
modify, or permit any Subsidiary to enter into or modify, any supply, license,
development, research or collaboration agreement with any other person or
entity.

        7.18    Obligations.    The Company shall not obligate itself to do any
of the things that the Company is prohibited from doing pursuant to any of the
provisions of this Section 7.

        7.19    Preservation of Organization.    The Company will use
commercially reasonable efforts to preserve its business organization intact, to
preserve for the benefit of the Surviving Corporation its present business
relationships with its suppliers, customers, employees, consultants and others
having business relationships with it.

        7.20    Intellectual Property Rights.    The Company will maintain,
preserve and protect the Company Intellectual Property.

        7.21    No Default.    The Company will not take or omit to take any
action, or permit any action or omission to act, that would cause a default
under or a breach of any of its contracts, commitments, or obligations.

        7.22    Compliance with Laws.    The Company will duly comply in all
material respects with all applicable laws, regulations, and orders.

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        7.23    Advice of Change.    The Company will promptly advise Parent in
writing of any event or occurrence which results in or is reasonably likely to
result in a Material Adverse Effect on the Company.

        7.24    No Solicitation by Target; Board Recommendation; Fiduciary
Exceptions.    

        (a)   For purposes of this Agreement:

          (i)  The term "Takeover Proposal" means any written proposal or offer
from any person that would reasonably be expected to lead to any acquisition or
purchase, in one transaction or a series of related transactions, of assets or
businesses that constitute 50% or more of the revenues, net income or the assets
of the Company and its Subsidiaries, taken as a whole, or 50% or more of any
class of equity securities of the Company, any tender offer or exchange offer
that if consummated would result in any person beneficially owning 50% or more
of any class of equity securities of the Company, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution, joint venture,
binding share exchange or similar transaction involving the Company pursuant to
which any person or the shareholders of any person would own 50% or more of any
class of equity securities of the Company or of any resulting parent of the
Company, other than the transactions contemplated by this Agreement; provided,
that the term "Takeover Proposal shall not be deemed to include additional
purchases of newly issued Company Stock by Pacific Horizon Ventures or any of
its Affiliates.

         (ii)  The term "Superior Proposal" means any written proposal made by a
third party that if consummated would result in such person (or its
shareholders) owning, directly or indirectly, (A) all or substantially all of
the shares of capital stock of the Company then outstanding, or (B) all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, in each case which was not in any way solicited by the Company or any of
its Subsidiaries, affiliates, agents or representatives after the Agreement Date
and did not otherwise result from a breach of this Agreement and which a
majority of the members of the Company Board determines in good faith (after
consultation with a financial advisor of recognized reputation) to be (x) on
terms, taking into account all the terms and conditions of such proposal and
this Agreement (including any proposal by Parent to amend the terms of this
Agreement and the transactions contemplated hereby) more favorable to the
shareholders of the Company from a financial point of view than the transactions
contemplated by this Agreement and (y) that has a high likelihood of being
completed, taking into account all financial, legal, regulatory and other
aspects of such proposal.

        (b)   Subject to Section 7.24(c), the Company shall not, nor shall it
authorize or permit any of its Subsidiaries or any of their respective directors
or officers to (and the Company shall use its best efforts to cause its
employees and any investment banker, financial advisor, attorney, accountant or
other advisor, agent or representative retained by it or any of its Subsidiaries
not to), directly or indirectly, (i) solicit, initiate or encourage, or take any
other action designed to facilitate, any Takeover Proposal or (ii) enter into
any discussions or negotiations with any third party regarding, or furnish to
any person any information in connection with, any Takeover Proposal. The
Company shall, and shall cause its Subsidiaries to, immediately cease and cause
to be terminated all existing discussions or negotiations with any person
conducted heretofore with respect to any Takeover Proposal or that may
reasonably be expected to lead to a Takeover Proposal.

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        (c)   Notwithstanding the provisions of clause (b) of this Section 7.24
or anything else in this Agreement, but subject to the termination provisions
set forth below in this Section 7.24(c), in response to any written Takeover
Proposal received by the Company Board that constitutes a Superior Proposal or
that a majority of the members of the Company Board determines in good faith
(after consultation with a financial advisor of recognized reputation and
outside legal counsel) has a high likelihood of resulting in the completion of a
Superior Proposal, and which Takeover Proposal did not result from a breach of
this Section 7.24 by the Company and was not in any way solicited by the Company
or any of its Subsidiaries, affiliates, agents or representatives after the
Agreement Date, the Company may, if a majority of the members of the Company
Board determines in good faith (after consultation with outside counsel) that
the failure to do so would be inconsistent with the fiduciary duties of the
Company Board to the shareholders of the Company under applicable laws,
(x) furnish information with respect to the Company and its Subsidiaries to the
person making such Takeover Proposal and such person's representatives pursuant
to a customary confidentiality agreement not less restrictive of the other party
than the Confidentiality Agreement, provided that all such information has
previously been provided to Parent or is provided to Parent prior to or
substantially concurrent with the time it is provided to such person and
(y) participate in discussions or negotiations with the person making such
Takeover Proposal (and such person's representatives) regarding such Takeover
Proposal. Notwithstanding anything to the contrary expressed or implied in this
Agreement, the provisions of this Section 7.24(c) and the rights of the Company
and the Company Board under this Section 7.24(c) shall terminate immediately
upon receipt of the Required Shareholder Approval.

        (d)   Except as permitted by this Section 7.24(d), neither the Company
Board nor any committee thereof shall (i) (A) withdraw (or modify in a manner
adverse to Parent), or publicly propose to withdraw (or modify in a manner
adverse to Parent), the approval, recommendation or declaration of advisability
by the Company Board or any such committee thereof of this Agreement, the Merger
or the other transactions contemplated by this Agreement or (B) recommend, adopt
or approve, or propose publicly to recommend, adopt or approve, any Takeover
Proposal (clauses (i)(A) and (i)(B) being collectively referred to herein as an
"Adverse Recommendation") or (ii) allow, cause or authorize the Company or any
of its Subsidiaries to execute or enter into, any letter of intent, memorandum
of understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, partnership agreement or
other similar agreement providing for or contemplating the consummation of any
Takeover Proposal (other than a confidentiality agreement as provided in
Section 7.24(c)). Notwithstanding the foregoing or any other provision of this
Agreement, but subject to the termination provisions set forth below in this
Section 7.24(d), (x) the Company Board may make an Adverse Recommendation as a
result of a Superior Proposal, if (I) such Superior Proposal has been actually
received by the Company Board, (II) in light of such Superior Proposal a
majority of the members of the Company Board determines in good faith (after
consultation with outside counsel) that the failure to do so would constitute a
breach by the Company Board of its fiduciary obligations to the shareholders of
the Company under applicable laws, (III) the Company has notified Parent in
writing of the determination described in clause (II) above, (IV) at least five
(5) business days following receipt by Parent of the notice referred to in
clause (III) above, and taking into account any revised proposal made by Parent
since receipt of the notice referred to in clause (III) above, such Superior
Proposal remains a Superior Proposal and a majority of the members of the
Company Board has again made the determinations referred to in clause (II)
above, (V) the Company is in compliance with this Section 7.24 and (VI) Parent
is not at such time entitled to terminate this Agreement pursuant to
Section 10.1(c), and (y) if the Company Board receives a written Takeover
Proposal that constitutes a Superior Proposal, and which Takeover Proposal was
not in any way solicited by the Company or any of its Subsidiaries, affiliates,
agents or representatives after the Agreement Date (other than to the limited
extent allowed under Section 7.24(c)(x) and (y) above) and did not otherwise
result from a breach of this Agreement, the Company may, contemporaneously with
the termination of this Agreement pursuant to Section 10.1(h) and within
24 hours after the three (3) business day period described in the following
proviso, enter into a definitive agreement with respect to such Superior
Proposal, provided, however, that the Company may not enter into any such
agreement until the third business day following Parent's receipt of written
notice from the Company advising Parent that the Company Board has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal, identifying the person making such Superior Proposal and stating that
the Company Board intends to exercise its right to enter into an agreement with
respect to such Superior Proposal (it being understood that, prior to entering
into any such agreement, any amendment to the price or any other material terms
of such Superior Proposal shall require a new notice to Parent and a new three
business day period). Notwithstanding anything to the contrary expressed or
implied in this Agreement, the provisions of this Section 7.24(d) and the rights
of the Company and the Company Board under this Section 7.24(d), including the
provisions of this Section 7.24(d) that allow the Company and the Company Board
to take the actions described in clause (x) or clause (y) above shall terminate
immediately upon receipt of the Required Shareholder Approval.

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        (e)   In addition to the obligations of the Company set forth in this
Section 7.24, the Company shall promptly advise Parent orally and in writing
after any director or officer of the Company, or any investment banker,
financial advisor, attorney or other advisor retained by the Company or any of
its Subsidiaries in connection with the Merger, has become aware of any Takeover
Proposal (whether such Takeover Proposal was directed to any such director,
officer, investment banker, financial advisor, attorney or other advisor or to
any other person), of the material terms and conditions of any such Takeover
Proposal (including any changes to the price or other material terms thereof)
and the identity of the person making any such Takeover Proposal. The Company
shall keep Parent reasonably informed of the status and details of any such
Takeover Proposal and provide to Parent as soon as practicable after receipt or
delivery thereof with copies of all correspondence and other written material
sent or provided to the Company from any third party in connection with any
Takeover Proposal or sent or sent or provided by the Company to any third party
in connection with any Takeover Proposal.

        (f)    Nothing contained in this Section 7.24 shall prohibit the Company
from making any required disclosure to the Company's shareholders if, in the
good faith judgment of the Company Board, after consultation with outside
counsel, failure so to disclose would be inconsistent with its obligations under
applicable law. Notwithstanding anything in this Section 7.24, the Company Board
may not take any action that would result in the Company's shareholders no
longer being legally capable under Washington Law of validly adopting the Merger
Agreement.

        7.25    Disclosure Supplements.    From time to time before the Closing,
and in any event immediately before the Closing, each of Parent and the Company
will promptly advise the other in writing of any matter hereafter arising or
becoming known to the disclosing party that, if existing, occurring, or known at
or before the date of this Agreement, would have been required to be set forth
or described in the Company Disclosure Schedule or Parent Disclosure Schedule,
as the case may be, or that is necessary to correct any information in such
Disclosure Schedule that is or has become inaccurate. No such disclosure will be
taken into account in determining whether the conditions to (i) in the case of
any such supplemental disclosure by Parent, the obligations of the Company, and
(ii) in the case of any such supplemental disclosure by the Company, the
respective obligations of Parent and Merger Sub, to consummate the transactions
contemplated by this Agreement have been satisfied. If the Merger is
consummated, then for purposes of the indemnification provisions of this
Agreement, such supplemental disclosures pursuant to this Section 7.25 will have
no effect on the availability of indemnification hereunder.

        7.26    Subsidiaries.    The Company shall not permit any Subsidiary to
take any action that the Company is not permitted to do pursuant to this
Section 7.

ARTICLE 8
CONDITIONS TO THE PARTIES' OBLIGATIONS

        8.1    Mutual Conditions.    The parties' obligations to consummate the
Merger are subject to the satisfaction (or waiver by each such party, in its
sole discretion) of each of the conditions set forth in this Section 8.1 on or
before the Closing Date. If the Merger is consummated, such conditions will
conclusively be deemed to have been satisfied or waived.

        (a)    No Injunctions or Restraints.    No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction, or other legal restraint or prohibition preventing the
consummation of the Merger, shall be in effect, and no petition or request for
any such injunction or other order shall be pending.

        (b)    Proceedings and Documents Satisfactory.    All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and other documents delivered to such party pursuant to this
Agreement or in connection with the Closing will be reasonably satisfactory to
such party and its counsel.

        (c)    Escrow Agreement.    The Escrow Agreement shall have been
executed and delivered by the Escrow Agent.

        8.2    Conditions to the Company's Obligations.    The obligations of
the Company to consummate the Merger are subject to the satisfaction (or waiver
by the Company, in its sole discretion) of each of the conditions set forth in
this Section 8.2 on or before the Closing Date. If the Merger is consummated,
such conditions will conclusively be deemed to have been satisfied or waived.

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        (a)    Representations and Warranties.    Each of the representations
and warranties made by Parent and/or Merger Sub in or pursuant to this Agreement
or in any statement, certificate, or other document delivered to the Company in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby (a) that is qualified as to materiality or Material Adverse
Effect shall be true and correct in all respects when made and shall be true and
correct in all respects as of the Closing Date as though each such
representation and warranty had been made on and as of the Closing Date, except
to the extent any such representation and warranty expressly speaks only as of
an earlier date (in which case as of such earlier date), and (b) that is not so
qualified shall be true and correct in all material respects when made and shall
be true and correct in all material respects as of the Closing Date as though
each such representation and warranty had been made on and as of the Closing
Date, except to the extent any such representation and warranty expressly speaks
only as of an earlier date (in which case as of such earlier date).

        (b)    Compliance with Agreement.    Parent and Merger Sub shall have
performed and complied in all material respects with all of their respective
obligations under this Agreement to be performed or complied with by them before
or at the Closing.

        (c)    Closing Certificate.    Parent and Merger Sub shall have executed
and delivered to the Company, at and as of the Closing, a certificate certifying
that the conditions referred to in Sections 8.2(a) and 8.2(b) hereof have been
satisfied.

        (d)    Opinion of Counsel.    Bingham McCutchen LLP, counsel to Parent
and Merger Sub, shall have delivered to the Company a written legal opinion
addressed to the Company, dated on and as of the Closing Date, in a form
reasonably satisfactory to the Company.

        (e)    Escrow Agreement.    The Escrow Agreement shall have been
executed and delivered by Parent and Escrow Agent.

        (f)    Third Party Consents of Parent.    Company shall have been
furnished with evidence reasonably satisfactory to it that the Parent has
obtained the consents, approvals and waivers required pursuant to Section 5.4
hereof and any other consents, approvals and waivers that are necessary or
required in connection with, or as a result of, the Merger.

        (g)    Services Agreement.    The Services Agreement shall have been
executed and delivered by Parent.

        8.3    Conditions to Parent's and Merger Sub's Obligations.    The
obligations of each of Parent and Merger Sub, respectively, to consummate the
Merger are subject to the satisfaction (or waiver by Parent, in its sole
discretion) of each of the conditions set forth in this Section 8.3 on or before
the Closing Date. If the Merger is consummated, such conditions will
conclusively be deemed to have been satisfied or waived.

        (a)    Representations and Warranties.    Each of the representations
and warranties made by the Company in or pursuant to this Agreement or in any
statement, certificate, or other document delivered to Parent or Merger Sub in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby (a) that is qualified as to materiality or Material Adverse
Effect shall be true and correct in all respects when made and shall be true and
correct in all respects as of the Closing Date as though each such
representation and warranty had been made on and as of the Closing Date, except
to the extent any such representation and warranty expressly speaks only as of
an earlier date (in which case as of such earlier date), and (b) that is not so
qualified shall be true and correct in all material respects when made and shall
be true and correct in all material respects as of the Closing Date as though
each such representation and warranty had been made on and as of the Closing
Date, except to the extent any such representation and warranty expressly speaks
only as of an earlier date (in which case as of such earlier date).

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        (b)    Required Shareholder Approval.    The Required Shareholder
Approval shall have been obtained.

        (c)    Compliance with Agreement.    The Company shall have performed
and complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it before or at the Closing.

        (d)    Closing Certificates.    The Company will have executed and
delivered to Parent, at and as of the Closing,

          (i)  a certificate certifying that the conditions referred to in
Sections 8.3(a), 8.3(b), 8.3(c), 8.3(f) and 8.3(g) hereof have been satisfied;

         (ii)  a certificate that incorporates by reference the representations
and warranties set forth in Section 4.4 hereof and sets forth the information
required to be set forth on Schedule 4.4 of the Company Disclosure Schedule as
of the Effective Time (the "Capitalization Certificate"), which Capitalization
Certificate shall be deemed to be a representation and warranty of the Company
as of immediately prior to the Effective Time hereunder, together with a list of
all Participating Holders and their respective percentage interests in the
Preferred Stock Closing Amount; and

        (iii)  the Merger Consideration Certificate, together with duly executed
pay-off letters with respect to all Transaction Expenses (and anticipated
Transaction Expenses).

        (e)   Opinion of Counsel.    Heller Ehrman LLP, counsel to the Company,
will have delivered to Parent a written legal opinion addressed to Parent, dated
on and as of the Closing Date, and in a form reasonably satisfactory to Parent.

        (f)    No Pending Litigation.    No action, suit or proceeding shall be
pending against the Company or any of its Subsidiaries wherein any unfavorable
injunction, judgment, order, decree ruling or charge would have a Material
Adverse Effect on the Company.

        (g)    Third Party Consents.    Parent shall have been furnished with
evidence reasonably satisfactory to it that the Company has obtained the
consents, approvals and waivers set forth in Schedule 4.17 of the Company
Disclosure Schedule and any other consents, approvals and waivers that are
necessary or required in connection with, or as a result of, the Merger to
preserve all of the Company's rights and benefits in its business, assets,
properties, leases and contracts following the Merger and without incurring any
additional or special liability, or accelerating any existing liability or
obligation, in connection with or under its business, assets, properties, leases
and contracts following the Merger.

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        (h)    Resignation of Directors and Officers.    The directors and
officers of the Company in office immediately prior to the Effective Time shall
have resigned as directors and officers of the Surviving Corporation effective
as of the Effective Time.

        (i)    Dissenters' Rights.    Either (i) the period provided under
Washington Law for the exercise by Company Shareholders of their rights of
dissent and appraisal under Washington Law with respect to their shares of
Company Stock by virtue of the Merger shall have expired with no Company
Shareholders having exercised or perfected such rights, or (ii) Company
Shareholders that collectively hold shares of Company Stock representing no more
than five percent (5%) of the issued and outstanding shares of Company Stock,
shall have exercised, or shall continue to be entitled to assert rights of
dissent and appraisal under Washington Law with respect to their shares of the
Company Stock by virtue of the Merger.

        (j)    Escrow Agreement.    The Escrow Agreement shall have been
executed and delivered by the Holders Representative.

        (k)    FIRPTA Certificate.    The Company shall have delivered to Parent
a properly executed statement, dated as of the Closing Date, in a form
reasonably acceptable to Parent conforming to the requirements of Treasury
Regulations Section 1.1445-2(c)(3).

        (l)    Facility Leases.    With respect to each Facility Lease,
ServicesCo the Company and shall have entered into an agreement, which shall,
among other things, (x) provide for the assumption of such Facility Lease and
all of the Company's obligations thereunder by ServicesCo, and (y) be in form
and substance reasonably satisfactory to Parent.

        (m)    Equipment Leases.    The Company shall have provided evidence
reasonably satisfactory to Parent that all of the Company's obligations under
any and all equipment leases to which the Company is a party immediately prior
to the Effective Time have been satisfied and discharged in full without the
imposition of any obligation on Parent under such equipment leases.

        (n)    Services Agreement.    

          (i)  Parent and ServicesCo shall have entered into a services
agreement substantially in the form of Exhibit C attached hereto (the "Services
Agreement");

         (ii)  Parent shall be reasonably satisfied (x) that ServicesCo has
sufficient facilities, equipment, and other assets and resources required to
perform its obligations under the Services Agreement and (y) that each of
Charles Magness, Shawn Iadonato, Christina Scherer and Maralee McVean are
full-time employees of ServicesCo; and

        (iii)  All of the asset transfers and/or license grants contemplated by
the Services Agreement shall have occurred.

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        (o)    P2 Partners, LLC.    P2 Partners, LLC shall have agreed in
writing to seek satisfaction of any payments owing to it in connection with the
Merger solely from the Holders Representative.

        (p)    License Agreement Amendment.    The License Agreement, dated as
of January 14, 2005, by and between the Company and the University of South
Florida Research Foundation, Inc., as amended by that certain Amendment No. 1 to
License Agreement, dated as of August 14, 2007, by and between the Company and
the University of South Florida Research Foundation, Inc., shall remain in full
force and effect and shall not have been further amended unless Parent shall
have approved of any such further amendment in writing to the Company.

        (q)    Asset Transfer Agreement.    

          (i)  The Company and ServicesCo shall have entered into an Asset
Transfer Agreement substantially in the form of Exhibit J attached hereto (the
"Asset Transfer Agreement");

         (ii)  All of the transactions contemplated by the Asset Transfer
Agreement shall have been consummated; and

        (iii)  The Promissory Note (as defined in the Asset Transfer Agreement)
shall have been assigned by the Company to the Holders Representative.

ARTICLE 9
INDEMNIFICATION

        9.1    Effectiveness.    The provisions of this Article 9 shall apply
and become effective only if the Merger is consummated.

        9.2    Joint and Several Indemnification by Participating
Holders.    Subject to the limitations set forth in Section 9.6 hereof, the
Participating Holders, jointly and severally, shall indemnify, defend, and hold
harmless Parent, the Surviving Corporation and each of the directors, officers,
employees, agents, representatives and other Affiliates of Parent and/or Merger
Sub (all persons entitled to indemnification under this Section 9.2 being
hereinafter referred to as the "Parent Indemnified Parties") from and against
any and all Damages related to or arising, directly or indirectly, out of or in
connection with (i) any breach by the Company of any representation, warranty,
covenant, agreement, obligation, or undertaking made by the Company in this
Agreement (including any schedule or exhibit hereto), or any other agreement,
instrument, certificate, or other document delivered by or on behalf of the
Company in connection with this Agreement, the Merger, or any of the other
transactions contemplated hereby, (ii) any payments (and the amount thereof)
made or to be made by Parent, the Merger Sub or the Surviving Corporation after
the Effective Time with respect to any Dissenting Shares, to the extent that
such payments exceed the portion of the Merger Consideration that would have
been paid with respect to such Dissenting Shares pursuant to Section 3.1 had
such Dissenting Shares not been Dissenting Shares, (iii) any claim made by any
third party, other than any

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Participating Rights Holder or holder of Dissenting Shares, that all or any
portion of the Merger Consideration is owed to such third party (a "Third Party
Consideration Claim"), (iv) any claim made by any Participating Rights Holder
that all or any portion of the Merger Consideration to which such Participating
Rights Holder is entitled to under the Company's Certificate of Incorporation,
as amended and in effect immediately prior to the Effective Time, any other
agreement between the Company and such Participating Rights Holder and/or
applicable law has not been paid to or received by such Participating Rights
Holder, (v) any claim arising as a result of any inaccuracy or error in the
Capitalization Certificate or the Merger Consideration Certificate, (vi) any
claims made by any Company Shareholder in connection with this Agreement or the
transactions contemplated hereby, whether based upon any alleged breach of
fiduciary or other duty by any officer, director or shareholder of the Company
or otherwise, or any claims by any officer, director, employee or shareholder of
the Company to indemnification by the Company or the Surviving Corporation with
respect to any such claim, (vii) any Transaction Expenses that are not paid by
the Company prior to the Effective Time, (viii) severance liabilities or
obligations of the Company or any other employee-related liabilities of any kind
of the Company, including, without limitation, any and all Compensation
Liabilities and any and all claims for post-termination health insurance
benefits, (ix) any and all other liabilities arising from the operation of the
business of the Company and its Subsidiaries prior to the Effective Time,
(x) any and all liabilities arising from or related to any Facility Lease
whether arising prior to or after the Effective Time, or (xi) any and all
liabilities arising from or related to (A) that certain DAAD audit referred to
on Schedule 4.11 of the Company Disclosure Schedule, (B) that certain U.S. Army
Contract No. DAAD19-03-C-005 dated April 8, 2005 or (c) a breach of any of the
representations or warranties set forth in Section 4.31 of this Agreement, in
all such cases, whether arising prior to or after the Effective Time; provided,
however, that the foregoing clauses (vii), (viii) and (ix) shall in no event
include any of the liabilities referred to in such clauses if and to the extent
that such liabilities are paid by Parent and deducted from the Closing
Consideration pursuant to Section 6.13 hereof.

        9.3    Indemnification by Parent.    Subject to the limitations set
forth in Section 9.7 hereof, Parent shall indemnify, defend, and hold harmless
Company, the Participating Holders and the Holders Representative and each of
the directors, officers, employees, agents, representatives and other Affiliates
of the Company and the Holders Representative (all persons entitled to
indemnification under this Section 9.3 being hereinafter referred to as the
"Company Indemnified Parties") from and against any and all Damages related to
or arising, directly or indirectly, out of or in connection with any breach by
the Parent of any representation, warranty, covenant, agreement, obligation, or
undertaking made by the Parent in this Agreement (including any schedule or
exhibit hereto), or any other agreement, instrument, certificate, or other
document delivered by or on behalf of the Parent in connection with this
Agreement, the Merger, or any of the other transactions contemplated hereby. The
Holders Representative shall have the exclusive right to bring or defend, as
applicable, any claims on behalf of any Company Indemnified Party.

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        9.4    Third Party Claims.    Each Parent Indemnified Party or Company
Indemnified Party (each, an "Indemnified Party"), as applicable, shall give
prompt written notification to the other party (the "Indemnifying Party") of the
commencement of any action, suit or proceeding relating to a third party claim
for which indemnification pursuant to this Section 9 may be sought; provided,
however, that no delay on the part of such Indemnified Party in notifying the
other party shall relieve the Indemnifying Party of any liability or obligation
hereunder except to the extent of any damage or liability caused by or arising
out of such delay. Within twenty (20) days after delivery of such notification,
the Indemnifying Party may (except to the extent otherwise provided below in
this Section 9.4), upon written notice to such Indemnified Party, assume control
of the defense of such action, suit or proceeding with counsel reasonably
satisfactory to such Indemnified Party, provided that, the third party seeks
monetary damages only. If the Indemnifying Party does not so assume control of
such defense, the Indemnified Party may elect to control such defense. The party
not controlling such defense may participate therein at its own expense;
provided that if the Indemnifying Party assumes control of such defense and such
Indemnified Party reasonably concludes that the Indemnifying Party and such
Indemnified Party have conflicting interests or different defenses available
with respect to such action, suit or proceeding, the reasonable fees and
expenses of counsel to such Indemnified Party shall be considered "Damages" for
purposes of this Agreement. The party controlling such defense shall keep the
other party advised of the status of such action, suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
other party with respect thereto. The Indemnified Party shall not agree to any
settlement of such action, suit or proceeding without the prior written consent
of the Indemnifying Party which shall not be unreasonably withheld or delayed.
The Indemnifying Party shall not agree to any settlement of or the entry of a
judgment in any action, suit or proceeding without the prior written consent of
the applicable Indemnified Party, which shall not be unreasonably withheld or
delayed (it being understood that it is reasonable to withhold such consent if,
among other things, the settlement or the entry of a judgment (A) lacks a
complete release of all Indemnified Parties for all liability with respect
thereto or (B) imposes any liability or obligation on any Indemnified Party).
For the avoidance of doubt, the Holders Representative shall be granted the
right to bring or defend, as applicable, any claims on behalf of any Company
Indemnified Party. Notwithstanding anything to the contrary expressed or implied
herein, Parent shall control all claims relating to any Third Party
Consideration Claim, Taxes and all claims relating to any Compound, Contingent
Payment Product or intellectual property of the Company or any of its Affiliates
or Subsidiaries.

        9.5    Payment of Claims.    (a)    In the event of any claim for
indemnification pursuant to Section 9.2 or 9.3 hereof, the Indemnified Party
will advise the Indemnifying Party in writing with reasonable specificity of the
amount and circumstances surrounding such claim. If within thirty (30) days of a
claim for indemnification the Indemnifying Party has not contested pursuant to
Section 11.13 such claim in writing, the full amount thereof shall be paid
(i) with respect to any Parent Indemnified Party, out of the Escrow Funds to the
extent available and subject to the limitations set forth in Section 9.6 below,
within two (2) days after the expiration of such period, and (ii) with respect
to any Company Indemnified Party, by Parent, subject to the limitations set
forth in Section 9.7 below, via wire transfer to the Holders Representative
within two (2) days after the expiration of such period. With respect to the
Parent Indemnified Party, to the extent the Escrow Funds are insufficient or not
available to satisfy the full amount of such claim for indemnification, Parent
shall be entitled to set off, and accordingly reduce, any Contingent Payment
that Parent would otherwise be required to pay to the Holders Representative
pursuant to Section 2.7 hereof, subject to the limitations set forth in
Section 9.6 hereof, provided, however, that any Parent Indemnified Party shall
not be entitled to set-off or reduce any Contingent Payment in the event and to
the extent that adequate funds have been reserved in escrow, or previously
offset by the Parent. Upon the final determination of any indemnified claim
pursuant to Section 9.2, the full amount of any excess offset or reduction
amount shall be released by the Parent Indemnified Party and paid by wire
transfer to the Holders Representative within five (5) business days after such
final determination.

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        (b)   Notwithstanding anything to contrary set forth herein, in the
event that any Closing Liability or any inaccuracy in the Merger Consideration
Certificate, including but not limited to the amount of Available Closing Cash
or the amount of Transaction Expenses, or the Capitalization Certificate is
discovered by Parent after the Effective Time and prior to the Closing
Consideration Payment Date that was not listed on the Merger Consideration
Certificate, Parent shall be entitled to set off, and accordingly reduce the
Closing Consideration that Parent would otherwise be required to pay to the
Holder's Representative pursuant to Section 2.6(a) hereof. Other than as
provided in the preceding sentence, Parent's remedies and recourse with respect
to the Closing Consideration shall be limited in accordance with Sections 9.6(b)
and 9.10 below.

        9.6    Limitations of Liability of Company.    

        (a)    Threshold.    There shall be no liability for any claim for
indemnification under Section 9.2 hereof unless and until the aggregate amount
of Damages in connection with all claims for indemnification under Section 9.2
hereof by any Parent Indemnified Party and all other Parent Indemnified Parties
(including, without limitation, prior claims for indemnification regardless of
whether or not they are still pending) exceeds $100,000 (the "Threshold
Amount"), whereupon each Parent Indemnified Party shall be entitled to be paid
the full amount of all Damages in connection with all claims for indemnification
under this Article 9 by such Parent Indemnified Party irrespective of such
Threshold Amount; provided, however that, notwithstanding the foregoing, (i) the
liability for any claim for indemnification under Section 9.2 shall be subject
to the limitations set forth in Section 9.6(b), (ii) the provisions of this
Section 9.6(a) shall not apply to any claim for intentional fraud under
applicable laws (a "Fraud Claim") and (iii) the provisions of this
Section 9.6(a) shall not apply to any claim for indemnification made by a Parent
Indemnified Party pursuant to clause (ii), (iii), (iv),(v), (vii), (viii),
(x) or (xi) of Section 9.2 or with respect to a breach by the Company in the
performance of any covenant, agreement, obligations or undertaking made by the
Company in this Agreement.

        (b)    Limited Recourse.    Notwithstanding anything expressed or
implied in this Agreement to the contrary, other than as set forth in
Section 9.10 and other than with respect to any Fraud Claim, the sole recourse
available to any Parent Indemnified Party in connection with any claim for
indemnification under Section 9.2 hereof, or under any other common law or
statutory recovery theory relating to the financial or other condition of the
Company or any of the subject matters described in Article 4, shall be limited
to (i) proceeding against the Escrow Funds pursuant to, and in accordance with,
the terms and conditions of the Escrow Agreement and/or (ii) setting off against
the Contingent Consideration, if any, that Parent would otherwise be required to
pay to the Holders Representative, pursuant to Section 9.5 hereof.

        (c)    Time Limit.    Except with respect to any Fraud Claim or claim
based on intentional misconduct, there shall be no liability in connection with
any claim for indemnification under Section 9.2 hereof by any applicable Parent
Indemnified Party unless such claim for indemnification is made in writing by
such Parent Indemnified Party on or prior to the date on which the Parent is
required to make any final payment of the Contingent Consideration, if any,
pursuant to Section 2.7 hereof.

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        (d)    Reduction of Indemnification Amounts.    The amount of any
Damages otherwise payable to any Parent Indemnified Party hereunder will be
reduced by (i) any insurance proceeds actually received by such Parent
Indemnified Party in respect thereof, to the extent that such reduction is
permitted without reduction of the amount of such proceeds payable under the
applicable insurance policy, and (ii) shall also be reduced to the extent of any
offsets taken pursuant to Sections 2.7(d) or 2.7(f) hereof.

        9.7    Limitations of Liability of Parent.    

        (a)    Threshold.    There shall be no liability for any claim for
indemnification under Section 9.3 hereof unless and until the aggregate amount
of Damages in connection with all claims for indemnification under Section 9.3
hereof by any Company Indemnified Party and all other Company Indemnified
Parties (including, without limitation, prior claims for indemnification
regardless of whether or not they are still pending) exceeds the Threshold
Amount, whereupon each Company Indemnified Party shall be entitled to be paid
the full amount of all Damages in connection with all claims for indemnification
under this Article 9 by such Company Indemnified Party irrespective of such
Threshold Amount; provided, however that, notwithstanding the foregoing, the
liability for any claim for indemnification under Section 9.3 shall not apply to
any Fraud Claim or with respect to a breach by Parent, Merger Sub or the
Surviving Corporation in the performance of any covenant, agreement, obligation
or undertaking made by it or them in this Agreement.

        (b)    Time Limit.    Subject to Section 9.10 below and except with
respect to any Fraud Claim or claim based on intentional misconduct, there shall
be no liability in connection with any claim for indemnification under
Section 9.3 hereof by any applicable Company Indemnified Party hereby, unless
(x) in the case of any such claim for indemnification resulting from a breach of
a representation or warranty made by Parent, such claim for indemnification is
made in writing by the Holders Representative on or prior to the second
anniversary of the Closing Date, (y) in the case of any such claim for
indemnification resulting from a breach of a covenant or agreement made by
Parent (other than a breach of a covenant or agreement made by Parent in
Sections 2.7, 6.9, 6.10, 6.18 or 11.3(b) hereof), such claim for indemnification
is made in writing by the Holders Representative on or prior to the one year
anniversary of such breach, and (z) in the case of any such claim for
indemnification resulting from a breach of a covenant or agreement made by
Parent in Sections 2.7, 6.9, 6.10, 6.18 or 11.3(b) hereof, such claim for
indemnification is made in writing by the Holders Representative on or prior to
the later of the one year anniversary of such breach or the expiration of one
year after the Holders Representative acquires actual knowledge of previously
undisclosed material facts that provide a basis for a claim against Parent under
any of Sections 2.7, 6.9, 6.10, 6.18 or 11.3(b) hereof; provided, however, that
in no event shall any claim for indemnification under this clause (z) be made at
any time after the one year anniversary of the date of the final Contingent
Payment payable pursuant to the terms of Section 2.7 hereof.

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        (c)    Reduction of Indemnification Amounts.    The amount of any
Damages otherwise payable to any Company Indemnified Party hereunder will be
reduced by any insurance proceeds actually received by such Company Indemnified
Party in respect thereof, to the extent that such reduction is permitted without
reduction of the amount of such proceeds payable under the applicable insurance
policy.

        9.8    Insurance Collection.    The Indemnified Party shall use
commercially reasonable efforts to pursue, and to cause its Affiliates to use
commercially reasonable efforts to pursue, all insurance claims to which it may
be entitled in connection with any Damages it incurs for which it makes a claim
for indemnification pursuant to this Article 9, provided that (i) the foregoing
provisions of this Section 9.8 shall not be a condition precedent for any
Indemnified Party to make any claim for indemnification pursuant to this
Article 9 and (ii) the foregoing provisions of this Section 9.8 shall not apply
to any Fraud Claim. The parties shall cooperate with each other in pursuing any
such insurance claims. If any Indemnified Party recovers any amount from any
insurer after payment to such Indemnified Party of all Damages suffered or
incurred by such Indemnified Party in respect of the matters to which such
insurance payment relates, then such Indemnified Party will promptly pay over to
the Indemnifying Party the amount so recovered, to the extent not in excess of
the amount previously paid to such Indemnified Party in respect of such matter.

        9.9    Subrogation.    In the event that a Indemnified Party is
indefeasibly indemnified in full pursuant to this Article 9 with respect to any
matter, the Indemnifying Party shall be subrogated, to the extent of the amount
of indemnification received by such Indemnified Party, to the rights of such
Indemnified Party against all other persons in respect of the matter for which
such indemnification was received by such Indemnified Party, to the extent
permitted by applicable insurance policies of such Indemnified Party, and, upon
such subrogation, the Indemnifying Party may assert such rights against such
other persons.

        9.10    Exclusive Remedies.    The parties hereby acknowledge and agree
that, if the Merger is consummated, the sole and exclusive remedies of any and
all Indemnified Parties in respect of any and all claims (except any Fraud
Claim) relating to any breach or purported breach of any representation,
warranty, covenant, agreement, obligation, or undertaking that is contained in
this Agreement or otherwise relating thereto will be pursuant to the
indemnification provisions of this Article 9; provided, however, that the
foregoing provisions of this Section 9.10 shall not apply to limit the exercise
of any remedy seeking specific performance or injunctive relief or the exercise
by the Holders Representative of its rights under Sections 6.10(d) and 6.10(e)
to obtain the Non-Compliance Grantback). Notwithstanding anything to the
contrary in this Agreement, including but not limited to the provisions of this
Section 9.10 or any other provisions of this Article 9, in the event that the
Holders Representative obtains, or elects to require, the license of the
Grantback Assets pursuant to Section 6.10 above, then such license shall be the
sole and exclusive remedy with respect to any breach by Parent of its
obligations under Section 6.9 hereof.

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ARTICLE 10
TERMINATION

        10.1    Termination.    This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time (whether before or after
approval of the Merger by the shareholders of the Company or by Parent as sole
stockholder of Merger Sub) only as follows:

        (a)   at any time by mutual written agreement of Parent, Merger Sub and
the Company;

        (b)   by the Company, upon written notice to Parent and Merger Sub if
there has been a material breach by Parent or Merger Sub of any representation,
warranty, covenant or agreement set forth in this Agreement and such material
breach is not curable, or, if curable, is not cured within thirty (30) days
after written notice of such breach is given by the Company to Parent and Merger
Sub;

        (c)   by Parent, upon written notice to the Company and the Holders
Representative if there has been a material breach by the Company of any
representation, warranty, covenant or agreement set forth in this Agreement and
such material breach is not curable, or, if curable, is not cured within thirty
(30) days after written notice of such breach is given by Parent to the Company
and the Holders Representative;

        (d)   by Parent, if Company or any of its directors or officers shall
participate in discussions or negotiations in breach of, or otherwise breach,
Section 7.24;

        (e)   by Parent if the Company Board or any committee thereof makes an
Adverse Recommendation;

        (f)    by the Company or Parent, upon written notice to the other
parties to this Agreement if a court of competent jurisdiction or Governmental
Authority have issued a non-appealable final and permanent injunction, or other
binding legal restraint or prohibition, having the effect of permanently
preventing the consummation of the Merger or the other transactions contemplated
hereby;

        (g)   by the Company or Parent, upon written notice to the other parties
to this Agreement if the Merger has not been consummated on or before the
thirtieth (30th) day following the date of this Agreement or on or before any
later date that the Company and Parent shall mutually determine (such thirtieth
(30th) day following the date of this Agreement or such later date, as the case
may be, being referred to herein as the "Outside Date"), provided, however, that
the right to terminate this Agreement pursuant to this Section 10.1(g) shall not
be available to any party whose material breach of a representation or warranty
or failure to fulfill any covenant or other agreement under this Agreement has
been the cause of, or resulted in the failure of, the Merger to occur on or
before the Outside Date, and shall not be available to the Company if the
Required Shareholder Approval has not been obtained prior to the Outside Date;
or

        (h)   by the Company if (i) the Company has not breached Section 7.24,
(ii) the Required Shareholder Approval has not been obtained and the Company has
not breached any of its obligations under Section 6.4 and (iii) concurrently
with such termination the Company enters into a definitive agreement with
respect to a Superior Proposal.

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        (i)    by Parent if the Required Stockholder Approval is not obtained
within one day following the Agreement Date.

        10.2    Effect of Termination.    If this Agreement is terminated
pursuant to Section 10.1 hereof, then (a) the provisions of this Section 10.2,
Section 10.3 and Article 11 shall survive any such termination, (b) such
termination shall not relieve any party hereto from liability arising from any
breach by such party of any provision of this Agreement if such breach occurred
prior to such termination, (c) each party will redeliver all documents, work
papers and other material of the other party or parties relating to the
transactions contemplated hereby including such memoranda, notes, lists, records
or other documents compiled or derived from such material, whether so obtained
before or after the execution hereof, to the party furnishing the same and
(d) all information received by any party hereto with respect to the business of
the other parties or their affiliated companies shall remain subject to the
terms of the Confidentiality Agreement.

        10.3    Costs and Expenses.    

        (a)   If (i) this Agreement is validly terminated pursuant to
Section 10.1(h) hereof, and (ii) neither Parent nor Merger Sub shall have
materially breached any of their representations, warranties or covenants under
this Agreement, then the Company shall pay to Parent, in cash, a fee in the
amount equal to the sum of (x) one million five hundred thousand dollars
($1,500,000) plus all costs and expenses incurred by Parent and Merger Sub in
connection with the transactions contemplated by this Agreement. Any fee due
under this Section 10.3(a) shall be paid by wire transfer of same-day funds on
the date of termination of this Agreement.

        (b)   Except as otherwise provided in this Agreement and whether or not
the transactions contemplated by this Agreement are consummated, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be borne by the party incurring such expenses. The fees and
expenses of the Escrow Agent shall be borne and paid by Parent. Parent
acknowledges and agrees that Company has disclosed that it is obligated and will
become further obligated for Transaction Expenses incurred by the Company in
connection with the Merger and the transactions contemplated hereby (including
fees and expenses of its legal counsel and other advisors). It is understood and
agreed that all of such Transactions Expenses (including amounts reasonably
expected to be incurred through the Closing Date and thereafter for post-Closing
services related to the Merger) shall to the extent practicable be paid and
pre-paid by the Company prior to the Closing, but that all Transaction Expenses
(including estimated prepayments) not paid by the Company prior to Closing shall
be paid by Parent at the Closing, provided that all of such Transaction Expenses
shall have been disclosed to Parent prior to Closing and shall be deducted from
the Closing Consideration as a Closing Liability pursuant to the definition of
"Closing Consideration" set forth herein.

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ARTICLE 11
GENERAL

        11.1    Cooperation.    Each of the parties will cooperate with the
others and use commercially reasonable efforts to prepare all necessary
documentation, to effect all necessary filings, and to obtain all necessary
permits, consents, approvals, and authorizations of all governmental bodies and
other third parties necessary to consummate the transactions contemplated by
this Agreement.

        11.2    Survival of Provisions.    The provisions of this Agreement,
including without limitation the representations and warranties of the parties,
and the provisions of the other documents executed and delivered in connection
with this Agreement, the Merger, and the other transactions contemplated hereby
will be deemed material, and, notwithstanding any investigation by or on behalf
of any party or any knowledge that any party has or should have as a result of
such investigation, will be deemed to have been relied on by each party, and
will survive the Closing and the consummation of the Merger and the other
transactions contemplated hereby, subject to all of the limitations set forth in
Article 9 hereof, including, without limitation, the limitations set forth in
Section 9.5(c) hereof.

        11.3    Benefits of Agreement; No Assignments; No Third-Party
Beneficiaries.    

        (a)   This Agreement will bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns.

        (b)   Except to the extent otherwise provided or permitted elsewhere in
this Agreement, Parent shall not sell or license the rights to develop, make,
use and sell any Contingent Payment Product without the consent of the Holders
Representative (which consent shall not be unreasonably withheld or delayed);
provided, however, that the consent of the Holders Representative shall not be
required (i) in the case of any such sale, license or other transfer to any of
Parent's Affiliates or Subsidiaries, provided such Affiliate or Subsidiary signs
an instrument of accession hereto in which it agrees to be bound by and adhere
to all of Parent's obligations hereunder with respect to the rights so
transferred, (ii) in connection with (x) a merger or consolidation of Parent or
sale of all or substantially all of the assets of Parent (provided that the
acquiror agrees in writing to be bound by the obligations of Parent under this
Agreement), (y) a merger or consolidation of any Affiliate or Subsidiary of
Parent referred to in the foregoing clause (i) of this Section 11.3(b) (provided
that the acquiror agrees in writing to be bound by the obligations of such
Affiliate or Subsidiary under this Agreement, and further provided that if such
Affiliate or Subsidiary is the licensee or transferee of all of Parent's rights
to develop, make, use and sell all Contingent Payment Products, []*) or (z) a
sale, license or other transfer of all of Parent's rights to develop, make, use
and sell all Contingent Payment Products, provided that []*, and must agree in
writing to be bound by the obligations of Parent under this Agreement with
respect to such Contingent Payment Product, (iii) a sale, license or other
transfer of Parent's right to develop, make, use or sell any Section 6.9
Contingent Payment Product, provided that []*, (iv) a sale or assignment of
Parent's right to develop, make, use or sell any Contingent Payment Product that
is not a Section 6.9 Contingent Payment Product, provided that []*, or (v) a
license of Parent's rights to develop, use and sell any Contingent Payment
Product for the treatment of a Non-HCV Indication, provided that (1) []*, and
(2) if such Contingent Payment Product is also being developed or commercialized
by Parent for the treatment of infections caused by HCV, []*; and further
provided, that (A) in the event of any sale or assignment described in
clauses (iii) and (iv) above, the buyer or assignee shall have agreed in writing
to be bound by all of the obligations of Parent under this Agreement with
respect to the Contingent Payment Product sold or assigned, and (B) in the event
of any license described in clauses (iii) and (v), []*. Parent shall not sell or
license the rights to develop, make, use and sell any Contingent Payment Product
except in strict compliance with the foregoing restrictions, and any attempt to
do so will be void. Any license by Parent of the rights to develop, make, use
and sell any Contingent Payment Product shall not release Parent from any of its
obligations under this Agreement with respect to such Contingent Payment
Product.

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        (c)   None of the Company, the Holders Representative or the
Participating Holders, shall have the right to assign any rights or delegate any
obligations under this Agreement without the consent of the Parent; provided,
however, that the consent of the Parent shall not be required other than, in the
case of the Holders Representative and the Participating Holders, any assignment
or delegation by (i) the Holders Representative to any of the Participating
Holders of any rights or obligations of the Holders Representative under this
Agreement (other than any assignment or delegation by the Holders Representative
or any Participating Holder of any rights or obligations under Section 6.10
hereof) or (ii) any of the Participating Holders as permitted under
Section 3.3(b). Parent shall have the right to assign any rights or delegate any
obligations under this Agreement without the consent of the Holders
Representatives or the Participating Holders, provided that (x) any such
assignment or delegation does not violate or breach any of the provisions of
Section 11.3(b) and (y) any such assignment or delegation shall not release
Parent from its obligations under this Agreement.

        (d)   Nothing in this Agreement is intended to or will confer any rights
or remedies on any person other than the parties hereto and their respective
heirs, successors, and permitted assigns; provided however, that, if, but only
if, the Merger is consummated, the provisions in Section 3 hereof concerning the
payment of the Merger Consideration for the Company Stock, Company Options and
Common Warrants are intended, and shall be, for the benefit of the Participating
Holders as third party beneficiaries, provided further that Participating Holder
rights shall only be exercised by the Holders Representative on behalf of such
Participating Holders.

        11.4    Notices.    All notices, requests, payments, instructions, or
other documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five (5) business
days after dispatch), (iii) sent by a reputable, established courier service
that guarantees next business day delivery (effective the next business day), or
(iv) sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have furnished to the sending party for the purpose pursuant to this section):

        (a)   If to Parent, Merger Sub, and/or (after the Effective Time), the
Surviving Corporation to:

    Cubist Pharmaceuticals, Inc.
65 Hayden Avenue
Lexington, Massachusetts 02421
Attention:    Chief Executive Officer
Telecopier No.: 781-861-0566

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with a copy sent at the same time and by the same means to:

    Cubist Pharmaceuticals, Inc.
65 Hayden Avenue
Lexington, Massachusetts 02421
Attention:    General Counsel
Telecopier No.: 781-861-0566
 
 
and
 
 
 
Bingham McCutchen LLP
150 Federal Street
Boston, Massachusetts 02110     Attention: Julio E. Vega, Esq.       Matthew J.
Cushing, Esq.     Telecopier No.: (617) 951-8736

        (b)   If to the Company (before the Effective Time) to:

    Illumigen Biosciences Inc.
201 Elliott Ave. West, Suite 500
Seattle, Washington 98119
Attention:    Charles Magness
Telecopier No.: (206) 378-0408

        (c)   If to the Company (after the Effective Time) or to the Holders
Representative to:

    IB Securityholders, LLC,
Attn: Donald J. Elmer c/o Pacific Horizon Ventures
701 Fifth Avenue, Suite 4970
Seattle, Washington 98104
Telecopier No.: (206) 682 1181

with a copy sent at the same time and by the same means to:

    DLA Piper US LLP
701 Fifth Avenue, Suite 7000
Seattle, Washington 98104-7044
Attention:    John M. Steel
Telecopier No.: (206) 839-4801
 
 
Heller Ehrman LLP
701 Fifth Avenue, Suite 6100
Seattle, Washington 98104-7098
Attention:    Greg Papciak
Telecopier No. (206) 515-8885

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        11.5    Disclosure in Schedules.    For purposes of this Agreement, with
respect to any matter that is clearly disclosed on any Schedule of the Parent
Disclosure Schedule or the Company Disclosure Schedule, as the case may be, in
such a way as to make its relevance to the information called for by another
Section of this Agreement or another Schedule of Parent Disclosure Schedule or
the Company Disclosure Schedule, as the case may be, readily apparent, such
matter shall be deemed to have been disclosed in response to such other Section,
notwithstanding the omission of any appropriate cross-reference thereto;
provided, however, that each of Parent and the Company hereby covenants to make
a good faith diligent effort to make all appropriate cross-references within and
to any and all Schedules of Parent Disclosure Schedule and the Company
Disclosure Schedule, respectively.

        11.6    Counterparts.    This Agreement may be executed by the parties
in separate counterparts, each of which when so executed and delivered will be
an original, but all of which together will constitute one and the same
agreement. In pleading or proving this Agreement, it will not be necessary to
produce or account for more than one such counterpart.

        11.7    Captions.    The captions of sections or subsections of this
Agreement are for reference only and will not affect the interpretation or
construction of this Agreement.

        11.8    Equitable Relief.    Each of the parties hereby acknowledges
that any breach by it of its obligations under this Agreement would cause
substantial and irreparable damage to the parties, and that money damages would
be an inadequate remedy therefor, and accordingly, acknowledges and agrees that
each other party will be entitled to an injunction, specific performance, and/or
other equitable relief to prevent the breach of such obligations.

        11.9    Construction.    The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any party.

        11.10    Waivers.    No waiver of any breach or default hereunder will
be valid unless in a writing signed by the waiving party. No failure or other
delay by any party exercising any right, power, or privilege hereunder will be
or operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.

        11.11    Entire Agreement.    This Agreement, together with the exhibits
and schedules hereto and the other agreements, instruments, certificates, and
other documents referred to herein as having been or to be executed and
delivered in connection with the transactions contemplated hereby (including,
without limitation, the Confidentiality Agreement, the Escrow Agreement and
the LLC Agreement), contains the entire understanding and agreement among the
parties, and supersedes any prior understandings or agreements among them, or
between or among any of them, with respect to the subject matter hereof.

        11.12    Governing Law.    This Agreement will be governed by and
interpreted and construed in accordance with the internal laws of Commonwealth
of Massachusetts, as applied to contracts under seal made, and entirely to be
performed, within the Commonwealth of Massachusetts, and without reference to
principles of conflicts or choice of laws, except as to matters concerning the
internal affairs of any of the corporation or entity parties hereto which shall
be governed by the corporate laws of their respective jurisdictions of
incorporation or organization.

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        11.13    Mediation and Arbitration.    

        (a)   In the event of any dispute, controversy, or claim arising out of,
relating to, or in connection with this Agreement, or the breach, termination,
or validity thereof, other than a dispute subject to appraisal under
Section 2.7(k) or litigation under 11.14 hereof, a party wishing to commence
arbitration shall first serve notice on the proposed respondent that a dispute
has arisen and demand that mediation commence. The mediation shall last no
longer than sixty (60) days and shall be conducted pursuant to the CPR Mediation
Procedure then in effect. Each party shall pay its own expenses incurred in
connection with such mediation, and the fees and expenses of the mediator shall
be divided evenly between the parties. Notwithstanding anything else contained
herein, any party to such mediation shall have the right to commence arbitration
at any time after the expiration of sixty (60) days after service of such demand
for mediation under this subsection. Any disputes concerning compliance with or
a party's right to commence arbitration under this Section 11.13(a) shall be
finally settled by arbitration pursuant to Section 11.13(b) below.

        (b)   Any dispute, controversy, or claim arising out of, relating to, or
in connection with this Agreement, or the breach, termination, or validity
thereof, other than a dispute subject to appraisal under Section 2.7(k) or
litigation under Section 11.14 hereof, if not settled by mediation pursuant to
Section 11.13(a) above, shall be finally settled by arbitration conducted in
accordance with the CPR Rules for Non-Administered Arbitration in effect at the
time of the arbitration, except as they may be modified herein or by mutual
agreement of the parties. The arbitration shall be conducted by three
arbitrators, and the seat shall be Boston, Massachusetts.

        (c)   In such arbitration, the arbitration tribunal shall have the
authority to order such production of documents as may reasonably be requested
by either party or by the tribunal itself, taking into account the needs of the
parties and the desirability of making discovery efficient and cost-effective.

        (d)   During such arbitration, a party may request a reasonable number
of depositions of party witnesses, not exceeding three depositions per side.
Each deposition shall be limited to one day of seven hours unless otherwise
agreed by the parties or ordered by the tribunal for good cause.

        (e)   This agreement to arbitrate and any proceedings hereunder shall be
governed by Title 9, United States Code. Any proceeding to confirm, enforce,
vacate or modify the award may be brought only in a federal or state court
located in Suffolk County, Massachusetts; each party submits to the jurisdiction
of any such court in such proceeding and irrevocably waives any objection to
venue in such court and any objection that such court is an inconvenient forum;
and judgment on the award may be entered by such court. In any such proceeding
brought in such court, each party irrevocably consents to service of process by
the mailing of copies thereof by certified mail, postage prepaid, to such
party's addresses for notices pursuant to Section 11.4 hereof. The judgment of
such court may be enforced by any court of competent jurisdiction.

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        (f)    A request by a party to a court of competent jurisdiction for
interim measures necessary to preserve the party's rights, including attachments
or injunctions, shall not be deemed incompatible with, or a waiver of, the
agreement to mediate or arbitrate contained in this Section 11.13.

        (g)   If the arbitration relates to Damages the amount of which is in
pending litigation with a third party, the arbitration shall be stayed until
(i) such amount is ascertained in the litigation with the third party or
(ii) both of the parties to the arbitration agree to proceed with the
arbitration notwithstanding the pendency of the litigation with the third party.

        11.14    Jurisdiction and Venue of Suits Arising From Section 6.9 or
6.10 or Breach Thereof.    Notwithstanding any other provision of this
Agreement, any dispute, controversy or claim arising from or under Section 6.9
or 6.10 of this Agreement or from the breach of either of those sections shall
not be subject to arbitration under this Agreement. The parties hereto agree
that any action or proceeding arising from Section 6.9 or 6.10 of this Agreement
or from the breach of either of those sections shall be instituted only in a
state or federal court located in Suffolk County, Massachusetts. Each party
hereby irrevocably submits to the jurisdiction of such court and irrevocably
waives any objection to venue in such court and any objection that such court is
an inconvenient forum.

        11.15    Publicity.    Upon the execution and delivery of this Agreement
by all parties hereto, Parent and Company shall each issue a press release in
the form of the joint press release attached hereto as Exhibit K (the "Initial
Press Release"). From the date of this Agreement through the Effective Time, no
public release or announcement following the Initial Press Release concerning
the transactions contemplated by this Agreement shall be issued by a party
without the prior consent of the other party (which consent shall not be
unreasonably withheld or delayed), except as such release or announcement as may
be required by law or the rules or regulations of any applicable securities
exchange, in which case the party required to make the release or announcement
shall allow the other party reasonable time to comment on such release or
announcement in advance of such issuance; provided, however, that each of the
parties may make internal announcements to their respective employees that are
consistent with the parties' prior public disclosures regarding the transactions
contemplated by this Agreement; provided, further, that the Company may
communicate with the holders of Company Common Stock, Company Preferred Stock,
Company Options and Common Warrants, as well as certain third parties, to the
extent necessary to obtain the consents and approvals contemplated by this
Agreement.

        11.16    Use of Illumigen Name.    Parent agrees that the Holders
Representative shall be permitted to use of the word "Illumigen" in its legal
name immediately after the Effective Time.

        11.17    Amendment.    This Agreement may not be amended, modified,
changed, waived or supplemented except by a writing duly executed by Parent,
Merger Sub and the Company; provided however, that any amendment, modification,
change, waiver or supplement to any provision or provisions of this Agreement at
any time subsequent to the time the Company Shareholders approve this Agreement
may be effected and implemented if, but only if, such amendment, modification,
change, waiver or supplement is set forth in a written instrument or agreement
duly executed by Parent and the Holders Representative.

[Signature Page Follows]

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        IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement and Plan of Merger under seal as of the date first above written.

PARENT:   CUBIST PHARMACEUTICALS, INC.
 
 
By:
 
/s/ Michael W. Bonney

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        Name: Michael W. Bonney         Title: President and Chief Executive
Officer
MERGER SUB:
 
EDISON MERGER CORP.
 
 
By:
 
/s/ Michael W. Bonney

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        Name: Michael W. Bonney         Title: President
COMPANY:
 
ILLUMIGEN BIOSCIENCES, INC.
 
 
By:
 
/s/ Donald J. Elmer

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        Name: Donald J. Elmer         Title: Chief Executive Officer
HOLDERS REPRESENTATIVE:
 
IB SECURITYHOLDERS, LLC
 
 
By:
 
/s/ Donald J. Elmer

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        Name: Donald J. Elmer         Title: Manager
 
 
By:
 
/s/ Charles L. Magness

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        Name: Charles L. Magness         Title: Manager

[Signature Page to Merger Agreement]

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*Confidential Treatment Requested. Omitted portions filed with the Commission.

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Exhibit 10.37