Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
          This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of
the 1st day of July, 2008 (the “Effective Date”) by and between MiddleBrook
Pharmaceuticals, Inc., a Delaware corporation, with its principal office at
20425 Seneca Meadows Parkway, Germantown, Maryland 20876 (the “Company”), and
EGI-MBRK, L.L.C., a Delaware limited liability company (the “Purchaser”).
          WHEREAS, the Company desires to issue and sell to the Purchaser, for
an aggregate purchase price of $99,999,999, (i) 30,303,030 shares (the “Shares”)
of the authorized but unissued shares of common stock, $0.01 par value per
share, of the Company (the “Common Stock”) and (ii) a warrant in the form
attached as Exhibit A to purchase an aggregate of 12,121,212 shares of Common
Stock (the “Warrant”); and
          WHEREAS, contemporaneously with and as a condition to the execution of
this Agreement, the parties hereto are entering into a Registration Rights
Agreement under which the Company has agreed to provide certain registration
rights under the Securities Act, the Rules and Regulations promulgated
thereunder and applicable state securities laws; and
          WHEREAS, contemporaneously with and as a condition to the execution of
this Agreement, the Company is entering into employment agreements with John
Thievon and David Becker (the “Employment Agreements”), which shall be effective
as of the Closing; and
          WHEREAS, contemporaneously with and as a condition to the execution of
this Agreement, the Purchaser and the Company are entering into voting
agreements with certain significant stockholders of the Company identified on
Schedule I relating to the Company Stockholder Approval and certain other
matters (the “Voting Agreements”); and
          WHEREAS, contemporaneously with and as a condition to the execution of
this Agreement, the Company is entering into the Deerfield Agreement with the
Deerfield Entities, Deerfield Management, L.P., Kef Pharmaceuticals, Inc. and
Lex Pharmaceuticals, Inc.; and
          WHEREAS, the Purchaser wishes to purchase the Shares and the Warrant
on the terms and subject to the conditions set forth in this Agreement.
          NOW, THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
     1. Definitions. As used in this Agreement, the following terms shall have
the following respective meanings:
          “Affiliate” of a party means any corporation or other business entity
controlled by, controlling or under common control with such party. For this
purpose “control” shall mean direct or indirect beneficial ownership of fifty
percent (50%) or more of the voting or income interest in such corporation or
other business entity.
          “Agreement” has the meaning set forth in the preamble above.

 

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          “Aggregate Purchase Price” has the meaning set forth in Section 2.1
below.
          “Alternative Proposal” has the meaning set forth in Section 8.6 below.
          “Antitrust Laws” has the meaning set forth in Section 8.5(a) below.
          “Business Day” means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by Law or other governmental action
to close.
          “Buy-In” has the meaning set forth in Section 6.2(b) below.
          “Bylaws” has the meaning set forth in Section 3.1 below.
          “Certificate of Incorporation” has the meaning set forth in
Section 3.1 below.
          “Change in Recommendation” means if the Company Board (A) withdraws,
modifies or qualifies, or proposes publicly to withdraw, modify or qualify, in
any manner adverse to the Purchaser, the Company Recommendation, (B) takes any
public action or make any public statement in connection with the Stockholders
Meeting inconsistent with such Company Recommendation or (C) approves or
recommends, publicly proposes to approve or recommend, or fails to recommend
against, any Alternative Proposal.
          “Closing” has the meaning set forth in Section 2.2 below.
          “Closing Date” means the date of the Closing.
          “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations published thereunder.
          “Common Stock” has the meaning set forth in the recitals above.
          “Company” has the meaning set forth in the preamble above.
          “Company Board” has the meaning set forth in section 3.5 below.
          “Company Intellectual Property” has the meaning set forth in
Section 3.9(b) below.
          “Company Recommendation” has the meaning set forth in Section 8.4(a)
below.
          “Company Stockholder Approval” means the approval by the affirmative
vote of the holders of a majority of shares of Common Stock present or
represented by proxy at the Stockholders Meeting of (a) the issuance of the
Shares and the Warrant as required by NASDAQ Rules and (b) the amendment to the
Amended and Restated Advancis Pharmaceutical Corporation Stock Incentive Plan to
increase the number of shares of Common Stock available for grant by 7,000,000
shares.
          “Contract” has the meaning set forth in Section 3.2 below.

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          “Covered Securities” has the meaning set forth in Section 3.26 below.
          “Deerfield Agreement” means that Agreement, dated July 1, 2008, by and
among the Company, the Deerfield Entities, Deerfield Management, L.P., Kef
Pharmaceuticals, Inc. and Lex Pharmaceuticals, Inc.
          “Deerfield Entities” means Deerfield Private Design Fund, L.P., a
Delaware limited partnership, Deerfield Private Design International, L.P., a
British Virgin Islands limited partnership, Deerfield Special Situations Fund,
L.P., a Delaware limited partnership, and Deerfield Special Situations Fund
International Limited, a British Virgin Islands limited company
          “Deerfield Warrant” means the warrants to purchase Common Stock held
by Deerfield Entities.
          “Disposition” has the meaning set forth in Section 4.9 below.
          “Effective Date” has the meaning set forth in the preamble above.
          “EMEA” has the meaning set forth in Section 3.25(b) below.
          “Employment Agreements” has the meaning set forth in the recitals
above.
          “Employee Benefit Plan” means each “employee benefit plan” as defined
in Section 3(3) of ERISA and all equity-based incentive, deferred compensation,
retiree medical, severance or other benefit plans, programs or arrangements, and
all employment, termination, severance or other contracts or agreements to which
the Company or any Subsidiary is a party, with respect to which the Company or
any Subsidiary has any obligation or which are maintained, contributed to or
sponsored by the Company or any Subsidiary for the benefit of any current or
former employee, officer or director of the Company or any Subsidiary.
          “Environmental Laws” has the meaning set forth in Section 3.23 below.
          “Equity Securities” means any class of capital stock of, or other
profit or voting interests in, the Company and all securities convertible into
or rights to purchase capital stock of or such interests in the Company, if any,
including any Equity Security Equivalent (as defined below) and any and all
other equity securities of the Company or securities convertible into or
exchangeable for such securities or issued as a distribution with respect to or
in exchange for such securities.
          “Equity Security Equivalent” means any option, warrant, right or
similar security or right exercisable into, exchangeable for, or convertible to
Equity Securities.
          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and interpretations published thereunder.
          “ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary and which,
together with the

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Company or any Subsidiary, is treated as a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
          “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and all of the rules and regulations promulgated thereunder.
          “Expenses” means the costs and expenses of a party in connection with
this Agreement and the transactions contemplated hereby, including all
out-of-pocket expenses (including, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its Affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby.
          “FDA” has the meaning set forth in Section 3.25(a) below.
          “Financial Statements” has the meaning set forth in Section 3.7 below.
          “FTC” has the meaning set forth in Section 5.1(g) below.
          “GAAP” has the meaning set forth in Section 3.7 below.
          “Government Entity” has the meaning set forth in Section 3.2 below.
          “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
          “Irreparable Breach” has the meaning set forth in Section 9.8(c)
below.
          “Issuance Closing” has the meaning set forth in Section 8.16(b) below.
          “Kef Stock Purchase Agreement” means that certain Stock Purchase
Agreement, dated November 7, 2007, by and among Deerfield Private Design
International Fund, L.P., Deerfield Special Situations Fund, L.P., Deerfield
Special Situation International Limited, Deerfield Private Design Fund, L.P.,
Deerfield Management, L.P., Kef Pharmaceuticals, Inc. and the Company.
          “Kef Stock Purchase Right” means the Company’s option to purchase all
of the outstanding capital stock of Kef Pharmaceuticals, Inc. pursuant to
Section 2.1 of the Kef Stock Purchase Agreement.
          “knowledge of the Company” or any other similar term or knowledge
qualifier means the knowledge of any of the senior executive officers of the
Company, in each case including facts of which such individual should be aware
in the reasonably prudent exercise of his duties.
          “Law” has the meaning set forth in Section 3.2 below.

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          “Lex Stock Purchase Agreement” means that certain Stock Purchase
Agreement, dated November 7, 2007, by and among Deerfield Private Design
International Fund, L.P., Deerfield Special Situations Fund, L.P., Deerfield
Special Situation International Limited, Deerfield Private Design Fund, L.P.,
Deerfield Management, L.P., Lex Pharmaceuticals, Inc. and the Company.
          “Lex Stock Purchase Right” means the Company’s option to purchase all
of the outstanding capital stock of Lex Pharmaceuticals, Inc. pursuant
Section 2.1 of the Lex Stock Purchase Agreement.
          “Lien” has the meaning set forth in Section 3.2 below.
          “Lock-up Agreements” has the meaning set forth in Section 3.26 below.
          “Lock-up Period” has the meaning set forth in Section 3.26 below.
          “Management Transition Committee” has the meaning set forth in
Section 8.2 below.
          “Material Adverse Effect” has the meaning set forth in Section 3.1
below.
          “NASDAQ” has the meaning set forth in Section 3.2 below.
          “NASDAQ Rules” has the meaning set forth in Section 3.13 below.
          “New Securities” has the meaning set forth in Section 8.14(b) below.
          “Operative Agreements” means the Registration Rights Agreement, the
Employment Agreements, the Warrant, the Voting Agreements and the Deerfield
Agreement together with this Agreement.
          “Permitted Lien” has the meaning set forth in Section 3.9(a) below.
          “person” or “Person” 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 Entity.
          “Placement Agent” has the meaning set forth in Section 4.8 below.
          “Proxy Statement” has the meaning set forth in Section 8.3(a) below.
          “Purchaser” has the meaning set forth in the preamble above.
          “Purchaser Party” has the meaning set forth in Section 8.13 below.
          “Registration Effective Date” has the meaning set forth in Section 8.7
below.
          “Registration Rights Agreement” means that certain Registration Rights
Agreement, dated as of the Effective Date, between the Company and the
Purchaser.

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          “Registration Statement” has the meaning set forth in Section 6.1(c)
below.
          “Reserved Shares” has the meaning set forth in Section 3.4 below.
          “Rules and Regulations” means the rules and regulations of the SEC.
          “SEC” means the Securities and Exchange Commission.
          “SEC Documents” has the meaning set forth in Section 3.26 below.
          “Section 16” has the meaning set forth in Section 8.9 below.
          “Securities” means the Shares, the Warrant and the Underlying Shares.
          “Securities Act” means the Securities Act of 1933, as amended, and all
of the rules and regulations promulgated thereunder.
          “Shares” has the meaning set forth in the recitals above.
          “Significant Subsidiary” has the meaning set forth in Section 3.1
below.
          “Stockholders Meeting” has the meaning set forth in Section 8.4(a)
below.
          “Subsidiary” of any entity means another entity, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
entity.
          “Trading Day” means(a) if the Common Stock is listed or quoted on the
Nasdaq Global Market, then any day during which securities are generally
eligible for trading on the Nasdaq Global Market, or (b) if the Common Stock is
not then listed or quoted and traded on the Nasdaq Global Market, then any
Business Day.
          “Transfer” has the meaning set forth in Section 3.26 below.
          “Transfer Agent” has the meaning set forth in Section 6.2(b) below.
          “Underlying Shares” means the shares of Common Stock issuable upon
exercise of the Warrant.
          “Voting Agreements” has the meaning set forth in the recitals above.
          “Warrant” has the meaning set forth in the recitals above.
     2. Purchase and Sale of Securities.
          2.1 Purchase and Sale. Subject to and upon the terms and conditions
set forth in this Agreement, the Company agrees to issue and sell to the
Purchaser, and the Purchaser

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hereby agrees to purchase from the Company, on the Closing Date, (a) 30,303,030
Shares and (b) a Warrant to purchase 12,121,212 Underlying Shares (which number
of Underlying Shares equals 0.40 share of Common Stock for every one Share
purchased by the Purchaser) having an exercise price of $3.90 per Underlying
Share. The total purchase price payable by Purchaser for the Shares and the
Warrant that Purchaser is hereby agreeing to purchase is $99,999,999 (the
“Aggregate Purchase Price”).
          2.2 Closing. The closing of the transactions contemplated under this
Agreement (the “Closing”) shall take place at the offices of Dewey & LeBoeuf
LLP, 1301 Avenue of the Americas, New York, New York 10019, counsel to the
Company, on the second business day after the satisfaction or waiver of the
conditions precedent set forth in Section 5.1 or at such other location, date
and time as may be agreed upon between the Purchaser and the Company. At the
Closing, the Company shall deliver to the Purchaser a single stock certificate
representing the number of Shares purchased by the Purchaser and a single
Warrant, each to be registered in the name of the Purchaser, or in such
nominee’s or nominees’ name(s) as designated by the Purchaser in writing in the
form of the Investor Questionnaire attached hereto as Appendix I, against
payment of the Aggregate Purchase Price (less any amounts payable directly to
the Deerfield Entities pursuant to the terms of the Deerfield Agreement) by wire
transfer of immediately available funds to such account or accounts as the
Company shall designate in writing.
     3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
          3.1 Incorporation. The Company has been duly incorporated and is a
validly existing corporation in good standing under the laws of Delaware with
full power and authority (corporate and other) to own, lease and operate, as the
case may be, its properties and conduct its business as now conducted; and the
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the nature of the business conducted by it, or its
ownership or leasing of property, or its employment of employees or consultants
therein, makes such qualification necessary, except where the failure to be so
qualified or be in good standing would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on or change in the
condition (financial or otherwise), business, properties or results of
operations of the Company (a “Material Adverse Effect”). The Company has not
received notification, written or otherwise, that any proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification,
and to the Company’s knowledge, no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification. The Company is in possession
of and operating in material compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities that are material to the conduct of its business, all of
which are valid and in full force and effect. The Company is not in violation of
its charter or bylaws. Except as disclosed in the SEC Documents the Company does
not own or control, directly or indirectly, any corporation, association or
other entity. Complete and correct copies of the certificate of incorporation
(the “Certificate of Incorporation”) and bylaws (the “Bylaws”) of the Company as
in effect on the Effective Date have been filed by the Company with the SEC. The
business described in the SEC Documents is carried on primarily by the Company
and the

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Company does not have any Subsidiary that constitutes a “Significant Subsidiary”
as such term is defined in Item 1-02(w) of Regulation S-X.
          3.2 Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and the other Operative Agreements and to
perform the transactions contemplated hereby and thereby. When executed and
delivered, each of the Operative Agreements will constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the other Operative
Agreements and the consummation of the transactions herein and therein
contemplated will not result in (a) any violation of the Certificate of
Incorporation or Bylaws of the Company or (b) the creation of any pledge, lien,
encumbrance, mortgage, hypothecation, charge, security interest, easement, title
defect, conditional sale or other title retention agreement, judgment, interest,
equitable interest, setoff or claim of any kind or nature, whether arising by
agreement, Law or otherwise (“Lien”), other than a Permitted Lien, upon any
assets or property of the Company pursuant to the terms or provisions of, or
will not, in any material respect, conflict with, result in the breach or
violation of, or constitute a breach or violation of any of the terms and
provisions of, or constitute a default under any contract, agreement, license,
understanding, indenture, mortgage, deed of trust, loan agreement, joint
venture, lease (including without limitation any sale and leaseback
arrangement), franchise, permit or other instrument or bond, debenture, note or
other evidence of indebtedness, to which the Company is a party or by or to
which it or its properties (including without limitation all Company
Intellectual Property) or assets are or may be bound or subject (each, a
“Contract”) or any law, order, ruling, rule, regulation, writ, assessment,
injunction, judgment or decree of any government or governmental court, agency
or body, domestic or foreign, having jurisdiction over the Company or over any
of its respective properties (including without limitation all Company
Intellectual Property) or Contracts (“Government Entity”) or by or to which they
or such of its properties or Contracts are or may be bound or subject (each, a
“Law”). No consent, approval, authorization or order of or qualification with
any Government Entity is required for the execution, delivery and performance of
this Agreement or the other Operative Agreements and the consummation by the
Company of the transactions herein and therein contemplated, except such
consents as may be required by NASDAQ Rules or under the HSR Act
          3.3 Litigation; Contracts. Except as disclosed in the SEC Documents,
there are no actions, suits, claims, investigations or proceedings pending or,
to the Company’s knowledge, threatened to which the Company or, to the Company’s
knowledge, to which any of its directors or officers is a party, or to which any
of its properties (including without limitation all Company Intellectual
Property) or any Contract may be subject, at law or in equity, before or by any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency which, individually or in the aggregate, would
reasonably be expected to prevent or to materially impede or delay the
consummation of the transactions contemplated by this Agreement or which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. There are no Contracts of a character required to be described
or referred to in the SEC Documents, and/or filed as an exhibit to, by the
Securities Act, the Exchange Act or the Rules and Regulations which have not
been accurately described in all

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material respects in the SEC Documents, and/or filed as an exhibit to such SEC
Documents. Except to the extent disclosed in the SEC Documents, the Contracts
described in the SEC Documents are in full force and effect and are valid
agreements, enforceable by the Company, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors’ rights generally and by general equitable
principles, and except where the enforceability and validity thereof would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. No event has occurred, and no circumstances or condition exists,
that (with or without notice or lapse of time) (a) has resulted or is reasonably
likely to result in a breach, default, violation or waiver of any Contract or
any provision thereof; (b) gives or is reasonably likely to give any party to
any Contract the right to declare a breach, default or violation of or exercise
any remedy under such Contract; (c) gives or is reasonably likely to give any
party to any Contract the right to cancel, terminate, modify or be excused from
performance of any obligations under such Contract; or (d) has resulted or is
reasonably likely to result in a violation of any Law or in imposition of any
fines, penalties, damages, injunctions, prohibitions or other sanctions, except
in the cases of clauses (a), (b) and (c) where such breaches, defaults,
violations, waivers, remedies, cancellations, terminations, modifications
excuses or impositions would not reasonably by expected to have, individually or
in the aggregate, a Material Adverse Effect.
          3.4 Capitalization. All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and have not been issued in violation of any preemptive rights
or other rights to subscribe for or purchase securities. The authorized capital
stock of the Company consists of (a) 225,000,000 shares of Common Stock, of
which approximately 56,080,324 shares are outstanding on the date hereof and
(b) 25,000,000 shares of preferred stock, of which no shares are outstanding on
the date hereof. Except for options to purchase Common Stock issued under the
Amended and Restated Advancis Pharmaceutical Corporation Stock Incentive Plan
and the warrants disclosed in the SEC Documents, there are no existing options,
warrants, calls, preemptive (or similar) rights, subscriptions or other rights,
agreements, arrangements or commitments of any character obligating the Company
to issue, transfer or sell, or cause to be issued, transferred or sold, any
shares of the capital stock of the Company or other equity interests in the
Company or any securities convertible into or exchangeable for such shares of
capital stock or other equity interests, and there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of its capital stock or other equity interests. Set forth on
Schedule II is the number of shares of Common Stock reserved as of the date
hereof for issuance pursuant to the Amended and Restated Advancis Pharmaceutical
Corporation Stock Incentive Plan and the warrants disclosed in the SEC Documents
(the “Reserved Shares”). There are no voting agreements or other similar
arrangements with respect to the Common Stock to which the Company is a party.
The description of the Company’s stock option plans, employee stock purchase
plans or similar arrangements, and the options or other rights granted and
exercised thereunder, set forth in the SEC Documents accurately and fairly
presents, in all material respects, the information required to be shown with
respect to such plans, arrangements, options and rights . Except as described in
the SEC Documents or as have been waived, no person or entity has the right to
require the Company to register any securities of the Company under the
Securities Act, whether on a demand basis or in connection with the registration
of securities of the Company for its own account or for the account of any other
person or entity. The issuance

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and sale of the Shares and the Warrant hereunder will not obligate the Company
to issue shares of Common Stock or other securities to any other person or
entity (other than the Purchaser) and, other than with respect to the Deerfield
Warrant, will not result in the adjustment of the exercise, conversion, exchange
or reset price of any outstanding security.
          3.5 Authorization. The Shares and the Warrant have been duly and
validly authorized for issuance and sale to the Purchaser pursuant to this
Agreement and, when issued and delivered by the Company against payment therefor
in accordance with the terms of this Agreement, will be duly and validly issued
and fully paid and nonassessable, and will be sold free and clear of any Lien.
The Underlying Shares have been duly and validly authorized and reserved for
issuance and, upon exercise of the Warrant in accordance with their terms,
including payment of the exercise price therefore, the Underlying Shares will be
validly issued, fully paid and nonassessable and will be sold free and clear of
any Lien. No preemptive right, co-sale right, registration right, right of first
refusal or other similar right of stockholders exists with respect to any of the
Securities or the issuance and sale thereof, other than those that have been
expressly waived prior to the date hereof, those that will have been expressly
waived prior to the Closing Dates, and those that will automatically expire upon
or will not apply to the consummation of the transactions contemplated on the
Closing Dates. No further approval or authorization of any stockholder, the
board of directors of the Company (the “Company Board”) or others is required
for the issuance and sale or transfer of the Securities, except for the Company
Stockholder Approval and as may be required under the HSR Act. The Company and
the Company Board have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the laws of the state of its
incorporation, the Company’s organizational documents and any other agreement to
which the Company is bound, which is or could become applicable to the Purchaser
as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and the Purchaser’s
ownership of the Securities. The Company does not have a stockholder rights plan
or other “poison pill” arrangement.
          3.6 Accountants. PricewaterhouseCoopers LLP, whose report on the
financial statements of the Company is filed with the SEC in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2007, are independent
registered public accountants as required by the Securities Act and the Rules
and Regulations. Except as described in the SEC Documents and as preapproved in
accordance with the requirements set forth in Section 10A of the Exchange Act,
to the Company’s knowledge, PricewaterhouseCoopers LLP has not engaged in any
“prohibited activities” (as defined in Section 10A of the Exchange Act) on
behalf of the Company.
          3.7 Financial Statements. The financial statements of the Company
contained in the SEC Documents, together with the related schedules and notes
(the “Financial Statements”): (a) present fairly, in all material respects, the
financial position of the Company as of the dates indicated and the results of
operations and cash flows of the Company for the periods specified; (b) have
been prepared in compliance with requirements of the Securities Act and the
Rules and Regulations and in conformity with generally accepted accounting
principles in the United States (“GAAP”) applied on a consistent basis during
the periods presented and present fairly, in all material respects, the
information required to be stated therein (provided, however, that the
statements that are unaudited are subject to normal year-end adjustments and

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do not contain certain footnotes required by generally accepted accounting
principles); (c) comply with the antifraud provisions of the federal securities
laws; and (d) describe accurately, in all material respects, the controlling
principles used to form the basis for their presentation. There are no financial
statements (historical or pro forma) and/or related schedules and notes that are
required to be included in the SEC Documents that are not included as required
by the Securities Act, the Exchange Act and/or the Rules and Regulations. Except
as set forth in the Financial Statements, to the Company’s knowledge the Company
has no material liabilities, contingent or otherwise, other than liabilities
incurred in the ordinary course of business subsequent to December 31, 2007, and
liabilities of the type not required under GAAP to be reflected in the Financial
Statements.
          3.8 No Changes. Subsequent to December 31, 2007, except as otherwise
described in the SEC Documents, there has not been (a) any change, development
or event that would reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, (b) any transaction that is material to
the Company, (c) any obligation, direct or contingent, that is material to the
Company, incurred by the Company, (d) any change in the capital stock or
outstanding indebtedness of the Company that is material to the Company, (e) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the Company, (f) any loss or damage (whether or not insured) that has been
sustained or will have been sustained that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (g) any waiver by
the Company of a material right or of a material debt owed to it, (h) any sale,
assignment or transfer of any Company Intellectual Property or (i) any
arrangement or commitment by the Company to do any of the acts described in
subjections (a) through (h) above.
          3.9 Property.
               (a) Except as set forth in the SEC Documents: (i) the Company has
good and marketable title to all properties and assets required for the
continued conduct of its business as described in the SEC Documents as owned by
it free and clear of any Lien, whether imposed by agreement, contract,
understanding, Law, equity or otherwise, except for Permitted Liens (as defined
below) or where any failure to have good and marketable title to such properties
and assets, individually or in the aggregate, would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; and
(ii) the Company has valid and enforceable leases, including without limitation
any leases that are the subject of any sale and leaseback arrangement, for all
properties required for the continued conduct of its business as described in
the SEC Documents as leased by it, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and by general equitable principles.
Except as set forth in the SEC Documents, the Company owns or leases all such
properties as are necessary to its operations as now conducted or as proposed to
be conducted. A “Permitted Lien” shall mean (i) Liens for taxes not yet due,
(ii) mechanics Liens and similar Liens for labor, materials or supplies incurred
in the ordinary course of business for amounts that are not delinquent and
(iii) any Liens that individually or in the aggregate are not material.
               (b) Except as described in the SEC Documents, to the Company’s
knowledge the Company owns or has valid, binding and enforceable licenses or
other rights to

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use the patents and patent applications, inventions, copyrights, trademarks,
service marks, trade names, service names, technology or know-how (including
trade secrets and other unpatented and/or unpatentable proprietary rights and
excluding generally commercially available “off the shelf” software programs
licensed pursuant to shrink wrap or “click and accept” licenses) necessary to
conduct its business in the manner described in the SEC Documents (collectively,
the “Company Intellectual Property”), except for any Company Intellectual
Property the absence of which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Company
Intellectual Property is free and clear of any Lien, whether imposed by
agreement, contract, understanding, law, equity or otherwise, except for
Permitted Liens or except as described in the SEC Documents. The Company is not
obligated to pay a royalty, grant a license or provide other consideration to
any third party in connection with the Company Intellectual Property other than
as disclosed in the SEC Documents. Except as disclosed in the SEC Documents (i)
the Company has not received any notice claiming infringement, misappropriation,
or other conflict with asserted intellectual property rights of others resulting
from the conduct of the business of the Company, (ii) the conduct of the
business of the Company in the manner described in the SEC Documents does not
and will not infringe, misappropriate, interfere or otherwise conflict with any
valid issued patent claim or other intellectual property right of any third
party known to the Company and (iii) no third party, including any academic or
governmental organization, possesses rights to the Company Intellectual Property
which, if exercised, would enable such party to develop products competitive to
those of the Company. Except as disclosed in the SEC Documents, the Company has
not received any notice and has no knowledge of (i) any actual or potential
infringement, misappropriation or other violation by others of the Company
Intellectual Property or (ii) any intellectual property of others that
potentially conflicts or interferes with the Company Intellectual Property that
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. To the Company’s knowledge, no claim of any patent or
patent application (assuming the claims of patent applications issue as
currently pending) included in the Company Intellectual Property is
unenforceable or invalid except as described in the SEC Documents. Each former
and current employee and independent contractor of the Company has signed and
delivered one or more written contracts with the Company pursuant to which such
employee or independent contractor assigns to the Company all of his, her or its
rights in and to any inventions, discoveries, improvements, works of authorship,
know-how or information made, conceived, reduced to practice, authored or
discovered in the course of employment by or performance of services for the
Company and any and all patent rights, copyrights, trademark and other
intellectual property rights therein or thereto. Except as would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect, the Company takes reasonable measures to protect the confidentiality of
trade secrets and other confidential and proprietary information, including
requiring all persons having access thereto to execute written non-disclosure
agreements. Except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect (i) the Company has at all times
complied with all applicable Laws, as well as its own rules, policies, and
procedures, relating to privacy, data protection, and the collection and use of
personal information collected, used, or held for use by the Company, (ii) no
claims have been asserted or, to the Company’s knowledge, threatened against the
Company alleging a violation of any privacy or personal information or data
rights, and (iii) the Company takes reasonable measures to ensure that such
information is protected against unauthorized access, use, modification, or
other misuse.

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          3.10 Tax Returns. The Company has timely filed all federal, state,
local and foreign income and franchise tax returns required to be filed by the
Company on or prior to the date hereof, and has paid all taxes shown thereon as
due, and there is no tax deficiency that has been or, to the Company’s
knowledge, might be asserted against the Company that could reasonably be
expected to have a Material Adverse Effect. All tax liabilities are adequately
provided for on the books of the Company.
          3.11 Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares to the Purchaser will be, or will have been,
fully paid or provided for by the Company and all Laws imposing such taxes will
be or will have been fully complied with.
          3.12 Internal Controls. The Company has established and maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that: (a) transactions are executed in accordance with management’s
general or specific authorization; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted
accounting principles in the United States and to maintain accountability for
assets; (c) access to assets is permitted only in accordance with management’s
general or specific authorization; (d) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences; and (e) financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP are reliable.
          3.13 Audit Committee. The Company Board has validly appointed an audit
committee whose composition satisfies the requirements of Rule 4350(d)(2) of the
Rules of the NASDAQ (the “NASDAQ Rules”) and the Company Board and/or such audit
committee has adopted a charter that satisfies the requirements of
Rule 4350(d)(1) of the NASDAQ Rules. Such audit committee has reviewed the
adequacy of its charter within the past 12 months.
          3.14 Disclosure Controls. The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rules 13a-15 and
15d-15 under the Exchange Act). Since the date of the most recent evaluation by
the Company’s certifying officers of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses. The
Company is in compliance in all material respects with all provisions currently
in effect and applicable to the Company of the Sarbanes-Oxley Act of 2002, and
all rules and regulations promulgated thereunder or implementing the provisions
thereof.
          3.15 Insurance. The Company maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts it
reasonably believes to be adequate for its business and consistent with
insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering the acts and omissions of
directors and officers, real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect; and the Company has no reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain

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similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not reasonably be expected to have a Material
Adverse Effect.
          3.16 Losses. The Company has not sustained since December 31, 2007 any
losses or interferences with its business from fire, explosion, flood or other
calamity or natural disaster, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, other than any
losses or interferences which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
          3.17 Labor Disputes. No material labor dispute with employees of the
Company exists or, to the Company’s knowledge, is imminent. No collective
bargaining agreement exists with any of the Company’s employees and, to the
Company’s knowledge, no such agreement is imminent.
          3.18 Nasdaq Global Market. The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act and is listed on the Nasdaq Global Market, and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq Global Market. Except as disclosed in
the Company’s Form 8-K filed on May 10, 2005, the Company has not received any
notification that the SEC or the Nasdaq Stock Market LLC is contemplating
terminating such registration or listing. The Company has taken all actions
necessary to list the Shares and the Underlying Shares for quotation on the
Nasdaq Global Market. The Company is in compliance with all corporate governance
requirements of the Nasdaq Global Market except for such non-compliance as would
not, individually or in the aggregate, have a Material Adverse Effect. The
Company shall comply with all requirements of the NASDAQ with respect to the
issuance of the Shares and the Underlying Shares and the listing of the Shares
and the Underlying Shares on the Nasdaq Global Market and such other securities
exchange or automated quotation system, as applicable. The Company Stockholder
Approval is the only stockholder approval required in connection with the
transactions contemplated by this Agreement.
          3.19 Investment Company. The Company is not and, after giving effect
to the offering and sale of the Securities, will not be an “investment company”
as such term is defined in the Investment Company Act of 1940, as amended.
          3.20 Offering Materials. Other than the SEC Documents and the
Operative Agreements, the Company has not distributed and, prior to the Closing
Date, will not distribute, any offering materials in connection with the
offering and sale of the Securities. The Company has not in the past nor will it
hereafter take any action to sell, offer for sale or solicit offers to buy any
securities of the Company which would bring the offer, issuance or sale of the
Securities, as contemplated by this Agreement, within the provisions of
Section 5 of the Securities Act (other than pursuant to the Registration Rights
Agreement).
          3.21 No Manipulation of Stock. Neither the Company nor, to its
knowledge, any of its Affiliates has taken, directly or indirectly, any action
designed to or which has constituted or which would reasonably be expected to
cause or result, under the Exchange Act or

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otherwise, in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
          3.22 Employment Matters. The Company is in compliance in all material
respects with the terms of each Employee Benefit Plan, and with ERISA, the Code
and all applicable Laws; to the Company’s knowledge, no unwaivable “reportable
event” (as defined in ERISA) has occurred with respect to any “pension plan” (as
defined in ERISA) for which the Company would have any liability; no Employee
Benefit Plan is subject to Title IV of ERISA; neither the Company nor any ERISA
Affiliate made, or was required to make, contributions to any plan subject to
Title IV of ERISA during the five (5) year period ending on the last day of the
most recent plan year ended prior to the Closing Dates; no Employee Benefit Plan
is a “multiemployer plan” (as such term is defined in Section 3(37) of ERISA);
and each Employee Benefit Plan that is intended to be qualified under Section
401(a) of the Code is so qualified, the trust thereunder is exempt from
taxation, and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification or tax exempt status.
          3.23 Environmental. Except as set forth in the SEC Documents: (a) the
Company is in compliance in all material respects with all rules, Laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment (“Environmental Laws”)
which are applicable to its business; (b) the Company has not received any
notice from any governmental authority or third party of an asserted claim under
Environmental Laws; (c), to the Company’s knowledge, the Company is not
currently required to make future material capital expenditures to comply with
Environmental Laws; and (d) to the Company’s knowledge, no property that is
owned, leased or occupied by the Company has been designated a Superfund site
pursuant to the Comprehensive Response, Compensation and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.
          3.24 Outstanding Loans to Officers or Directors; Related Party
Transactions. There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them.
No transaction has occurred between or among the Company and its Affiliates,
officers or directors or any Affiliate or Affiliates of any such officer or
director that is required to be described in the SEC Documents that is not so
described.
          3.25 Compliance.
               (a) The Company possess all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct its business as currently conducted, including
without limitation all such certificates, authorizations and permits required by
the United States Food and Drug Administration (the “FDA”) or any other federal,
state or foreign agencies or bodies engaged in the regulation of pharmaceuticals
or biohazardous materials, except where the failure to so possess such
certificates, authorizations and permits, individually or in the aggregate,
would not result in a Material Adverse Effect or except as disclosed in the SEC
Documents. The Company has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or

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permit which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
               (b) Except to the extent disclosed in the SEC Documents, the
Company has not received any written notices or statements from the FDA, the
European Medicines Agency (the “EMEA”) or any other governmental agency, and
otherwise has no knowledge or reason to believe, that (i) any new drug
application or marketing authorization application for any product or potential
product of the Company is or has been rejected or determined to be
non-approvable or conditionally approvable; and (ii) any license, approval,
permit or authorization to conduct any clinical trial of or market any product
or potential product of the Company has been, will be or may be suspended or
revoked, except in the cases of clauses (i) and (ii) where such rejections,
determinations, delays, requests, suspensions, revocations, modifications or
limitations would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
               (c) To the Company’s knowledge, the preclinical and clinical
testing, application for marketing approval of, manufacture, distribution,
promotion and sale of the products and potential products of the Company is in
compliance, in all material respects, with all Laws applicable to such
activities, including without limitation applicable good laboratory practices,
good clinical practices and good manufacturing practices, except for such
non-compliance as would not reasonably be expected to have, individually or in
the aggregate, have a Material Adverse Effect. The descriptions of the results
of such tests and trials contained in the SEC Documents are accurate in all
material respects. Except to the extent disclosed in the SEC Documents, the
Company has not received any rapid alert notice or notification of failure to
comply from the Medicines and Healthcare products Regulatory Agency, EMEA or any
associated regulatory agencies, any notice of adverse finding, warning letter or
clinical hold notice from the FDA or any non-U.S. counterpart of any of the
foregoing, or any untitled letter or other correspondence or notice from the FDA
or any other governmental authority or agency or any institutional or ethical
review board alleging or asserting noncompliance with any Law applicable in any
jurisdiction, except notices, letters and correspondence and non-U.S.
counterparts thereof alleging or asserting such noncompliance as would not
reasonably be expected to have, individually or in the aggregate, have a
Material Adverse Effect. The Company has not, either voluntarily or
involuntarily, initiated, conducted or issued, or caused to be initiated,
conducted or issued, any recall, field correction, market withdrawal or
replacement, safety alert, warning, “dear doctor” letter, investigator notice,
or other notice or action relating to an alleged or potential lack of safety or
efficacy of any product or potential product of the Company, or any violation of
any material applicable Law or any clinical trial or marketing license,
approval, permit or authorization for any product or potential product of the
Company, except such notices or actions as would not reasonably be expected to
have, individually or in the aggregate, have a Material Adverse Effect.
               (d) The Company is conducting its business in compliance with all
other Laws, except where the failure to so comply would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
          3.26 SEC Documents. The Company has made available to Purchaser a true
and complete copy of the Company’s Annual Report on Form 10-K for the year ended
December

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31, 2007, its Quarterly Report on Form 10-Q for the quarter ended March 31, 2008
and each current report on Form 8-K (except for the information deemed to be
furnished and not filed therewith) and the definitive proxy statement filed by
the Company with the SEC during the period commencing on January 1, 2008 and
ending on the date hereof. The Company will, promptly upon the filing thereof,
also make available to the Purchaser all Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K and definitive proxy statements filed by the Company
with the SEC during the period commencing on the date hereof and ending on the
Closing Date (all such materials required to be furnished to the Purchaser
pursuant to this sentence or pursuant to the immediately preceding sentence of
this Section 3.26 being called, collectively, the “SEC Documents”). The Company
has filed in a timely manner all documents that the Company was required to file
under the Exchange Act during the 12 months preceding the date of this
Agreement. As of their respective filing dates, the SEC Documents complied or,
when filed, will comply in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable, and none of the SEC Documents
contained or, when filed, will contain any untrue statement of a material fact
or omitted or, when filed, will omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were or will be made, not
misleading.
          3.27 Brokers, Finders, and Placement Agents. Except for Morgan Stanley
& Co. Incorporated, the Company has not dealt with any broker, finder or
placement agent in connection with the transactions contemplated by this
Agreement, and, except for certain fees and expenses payable by the Company to
Morgan Stanley & Co. Incorporated, the Company has not incurred, and shall not
incur, directly or indirectly, any liability for any brokerage or finders’ fees
or agents’ commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
          3.28 No Integrated Offering. Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances within the prior six months that would
require registration under the Securities Act of the issuance of the Securities
to the Purchaser.
          3.29 No General Solicitation. Neither the Company nor, to the
knowledge of the Company, any person acting for the Company, has conducted any
“general solicitation” (as such term is defined in Regulation D) with respect to
any of the Securities being offered hereby. The Company will not distribute any
offering material in connection with the sale of the Securities prior to the
Closing Dates, other than the Operative Agreements and the SEC Documents.
          3.30 Private Placement. The offer, sale and issuance of the Securities
to the Purchaser as contemplated hereby is exempt from the registration
requirements of the Securities Act.
          3.31 S-3 Eligibility. The Company is eligible to use Form S-3 to
register the Registrable Securities (as such term is defined in the Registration
Rights Agreement) for sale by the Purchaser as contemplated by the Registration
Rights Agreement.

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          3.32 Disclosures. Neither the Company nor any person or entity acting
on its behalf has provided the Purchaser or their agents or counsel with any
information that constitutes or might constitute material, non-public
information, other than the terms of the transactions contemplated hereby,
except as has been provided pursuant to that certain confidentiality agreement
dated April 21, 2008 between the Purchaser and the Company.
          3.33 Amendments to Certificate of Incorporation and Bylaws. The
Company Board has resolved to solicit the requisite stockholder approval at the
first annual meeting of the Company’s stockholders following Closing for the
adoption of amendments to the Certificate of Incorporation and the Bylaws
providing for the declassification of the Company Board and the annual election
of all directors.
     4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
          4.1 Authorization. The Purchaser has all requisite limited liability
company power and authority to enter into this Agreement and the other Operative
Agreements and to perform the transactions contemplated hereby and thereby. When
executed and delivered, each of the Operative Agreements will constitute the
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors’ rights generally and by general equitable
principles.
          4.2 Purchase Entirely for Own Account. The Purchaser is acquiring the
Securities being purchased by it hereunder for its own account, and not for
resale or with a view to distribution thereof in violation of the Securities
Act. The Purchaser has not entered into an agreement or understanding with any
other party to resell or distribute such Securities without prejudice, however,
to the Purchaser’s right, subject to the provisions of this Agreement, at all
times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by the Purchaser to hold Securities for any period of
time.
          4.3 Investor Status; Etc. The Purchaser certifies and represents to
the Company that it is now, and at the time the Purchaser acquires any of the
Securities, the Purchaser will be, an “Accredited Investor” as defined in
Rule 501 of Regulation D promulgated under the Securities Act. The Purchaser’s
financial condition is such that it is able to bear the risk of holding the
Securities for an indefinite period of time and the risk of loss of its entire
investment. The Purchaser has received, reviewed and considered all information
it deems necessary in making an informed decision to make an investment in the
Securities and has been afforded the opportunity to ask questions of and receive
answers from the management of the Company concerning this investment and has
sufficient knowledge and experience in investing in companies similar to the
Company in terms of the Company’s stage of development so as to be able to
evaluate the risks and merits of its investment in the Company. Such due
diligence investigation conducted by the Purchaser or any of its advisors or
representatives does not modify, amend or affect the Purchaser’s right to rely
on the Company’s representations and warranties contained in Section 3 of this
Agreement.

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          4.4 Shares Not Registered. The Purchaser understands that the
Securities have not been registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that the Securities must continue to be
held by the Purchaser unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration.
          4.5 No Conflict. The execution, delivery and performance of this
Agreement and the other Operative Agreements by the Purchaser and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in any violation of or default by the Purchaser (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under (a) any provision of the organizational documents of the
Purchaser, (b) any material agreement or instrument, permit, franchise, or
license or (c) any Law applicable to the Purchaser or its respective properties
or assets except, in the case of the foregoing clauses (b) and (c), such
conflicts, violations or defaults which would not materially impede or delay or
would not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Purchaser’s ability to consummate the
transactions contemplated by this Agreement.
          4.6 Brokers. The Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
          4.7 Consents. All consents, approvals, orders and authorizations
required on the part of the Purchaser in connection with the execution, delivery
or performance of this Agreement and the consummation of the transactions
contemplated herein have been obtained and are effective as of the Closing,
except where the failure to obtain such consents, approvals, orders or
authorizations would not materially impede or delay or would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the Purchaser’s ability to consummate the transactions contemplated by this
Agreement.
          4.8 No Public Offering. The Purchaser has not received any information
relating to the Securities or the Company, and is not purchasing the Securities
as a result of, any form of general solicitation or general advertising,
including but not limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or pursuant to any seminar or meeting whose attendees
were invited by any general solicitation or general advertising.
          4.9 Short Positions; Certain Trading Limitations. The Purchaser will
not, at any time, use any of the Securities acquired pursuant to this Agreement
to cover any short position in the Common Stock if doing so would be in
violation of applicable securities laws. The Purchaser (a) represents that on
and from the time the Purchaser first became aware of the offering of the Shares
until the date and time hereof neither it nor anyone acting on its behalf has
engaged in and (b) covenants that for the period commencing on the date and time
hereof and ending on the earlier to occur of (i) the Company’s issuance of a
press release disclosing the transactions contemplated hereby and (ii) the
Company’s filing of a Current Report on Form 8-K disclosing the transactions
contemplated hereby, neither it nor anyone acting on its behalf will, engage in
any hedging or other transaction which is designed to or could reasonably be
expected to lead to or result in, or be characterized as, a sale, an offer to
sell, a solicitation of offers to buy,

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disposition of, loan, pledge or grant of any right with respect to
(collectively, a “Disposition”) the Common Stock of the Company by the Purchaser
or any person or entity. Such prohibited hedging or other transaction would
include without limitation effecting any short sale (whether or not such sale or
position is “against the box”) or any purchase, sale or grant of any right
(including without limitation any put or call option) with respect to the Common
Stock of the Company or with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any significant
part of its value from the Common Stock of the Company. Notwithstanding the
foregoing, nothing set forth above would prohibit the location and/or
reservation of borrowable shares of Common Stock.
          4.10 Broker-dealer. The Purchaser is not a broker-dealer.
          4.11 Affiliates. To the knowledge of the Purchaser, the Purchaser is
not an Affiliate of the Company.
     5. Conditions Precedent.
          5.1 Conditions to the Obligation of the Purchaser to Consummate the
Closing. The obligation of the Purchaser to consummate the Closing and to
purchase and pay for the Securities being purchased by it pursuant to this
Agreement is subject to the satisfaction or waiver of the following conditions
precedent:
               (a) The Company shall have obtained the Company Stockholder
Approval.
               (b) The representations and warranties of the Company contained
herein shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
               (c) The Registration Rights Agreement shall be in full force and
effect.
               (d) The Employment Agreements shall not have been breached in any
material respect by the Company.
               (e) The Voting Agreements shall be in full force and effect.
               (f) The Deerfield Agreement shall be in full force and effect and
shall not have been amended or breached by any party thereto.
               (g) The Company shall have performed in all material respects all
covenants herein required to be performed or observed by the Company on or prior
to the Closing Date.
               (h) The Company shall have filed with NASDAQ a true and complete
Notification Form: Listing of Additional Shares covering the Shares and the
Underlying Shares.

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               (i) No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted before any Government Entity and shall
be pending.
               (j) The purchase of and payment for the Securities by the
Purchaser shall not be prohibited by any Law. The waiting period (and any
extension thereof) applicable to the transactions contemplated hereby under the
HSR Act shall have been terminated or shall have expired, any investigation
opened by means of a request for additional information or otherwise shall have
been terminated or closed and no action shall have been instituted by the United
States Department of Justice or the United States Federal Trade Commission (the
“FTC”) challenging or seeking to enjoin the consummation of this transaction,
which action shall not have been withdrawn, terminated or finally resolved. All
other necessary consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
Government Entity or of any other person with respect to any of the transactions
contemplated hereby shall have been duly obtained or made and shall be in full
force and effect.
               (k) The Company shall have exercised the Kef Stock Purchase Right
and the Lex Stock Purchase Right in accordance with the terms of the Kef Stock
Purchase Agreement and the Lex Stock Purchase Agreement.
               (l) All instruments and corporate proceedings in connection with
the transactions contemplated by this Agreement to be consummated at the Closing
shall be reasonably satisfactory in form and substance to the Purchaser, the
Purchaser shall have received an opinion of legal counsel to the Company
substantially in the form of Exhibit B attached hereto, and the Purchaser shall
have received such certificates of the Company’s officers as the Purchaser may
have reasonably requested in connection with such transactions.
               (m) No stop order or suspension of trading shall have been
imposed by NASDAQ, the SEC or any other Government Entity with respect to public
trading in the Common Stock.
          5.2 Conditions to the Obligation of the Company to Consummate the
Closing. The obligation of the Company to consummate the Closing and to issue
and sell to the Purchaser the Securities to be purchased by it at the Closing is
subject to the satisfaction or waiver of the following conditions precedent:
               (a) The Company shall have obtained the Company Stockholder
Approval.
               (b) The representations and warranties contained herein of the
Purchaser shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
               (c) The Registration Rights Agreement shall be in full force and
effect.
               (d) The Purchaser shall have performed in all material respects
all covenants herein required to be performed or observed by the Purchaser on or
prior to the Closing Date.

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               (e) No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted before any Government Entity and shall
be pending.
               (f) The sale of the Securities by the Company shall not be
prohibited by any Law. The waiting period (and any extension thereof) applicable
to the transactions contemplated hereby under the HSR Act shall have been
terminated or shall have expired, any investigation opened by means of a request
for additional information or otherwise shall have been terminated or closed and
no action shall have been instituted by the United States Department of Justice
or the FTC challenging or seeking to enjoin the consummation of this
transaction, which action shall not have been withdrawn, terminated or finally
resolved. All necessary consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
Government Entity or of any other person with respect to any of the transactions
contemplated hereby shall have been duly obtained or made and shall be in full
force and effect.
               (g) The Purchaser shall have executed and delivered to the
Company an Investor Questionnaire, in the form attached hereto as Appendix I,
pursuant to which the Purchaser shall provide information necessary to confirm
the Purchaser’s status as an “accredited investor” (as such term is defined in
Rule 501 promulgated under the Securities Act) and to enable the Company to
comply with the Registration Rights Agreement.
     6. Transfer, Legends.
          6.1 Securities Law Transfer Restrictions.
               (a) The Purchaser understands that the Securities have not been
registered under the Securities Act or any state securities laws, and the
Purchaser agrees that it will not dispose of the Securities unless (a) the
resale of the Securities is registered under the Securities Act, or (b) such
registration is not required under the Securities Act or any applicable state
securities law due to the applicability of an exemption therefrom. In that
connection, the Purchaser is aware of Rule 144 under the Securities Act and the
restrictions imposed thereby.
               (b) The Purchaser acknowledges that no action has been or will be
taken in any jurisdiction outside the United States by the Company or the
Placement Agent that would permit an offering of the Securities, or possession
or distribution of offering materials in connection with the issue of
Securities, in any jurisdiction outside of the United States where action for
that purpose is required. The Placement Agent is not authorized to make any
representation or use any information in connection with the issue, placement,
purchase and sale of the Securities.
               (c) The Purchaser hereby covenants with the Company not to make
any sale of the Securities without complying with the provisions of the
Operative Agreements and the Purchaser acknowledges that the certificates
evidencing the Shares and each Warrant will be imprinted with a legend that
prohibits their transference except in accordance therewith. The Purchaser
acknowledges that there may occasionally be times when the Company, based on the
advice of its counsel, determines that it must suspend a registration statement
(a “Registration

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Statement”) registering the Shares and Underlying Shares, until such time as an
amendment to a Registration Statement has been filed by the Company and declared
effective by the SEC or until the Company has amended or supplemented such
Prospectus.
          6.2 Legends.
               (a) Each certificate representing any of the Shares or the
Underlying Shares shall be endorsed with the legends set forth below, and the
Purchaser covenants that, except to the extent such restrictions are waived by
the Company, it shall not transfer the shares represented by any such
certificate without complying with the restrictions on transfer described in
this Agreement and the legends endorsed on such certificate:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY IN CONNECTION WITH
SUCH A DISPOSITION PURSUANT TO AN EXEMPTION, UPON DELIVERY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT. THE SECURITIES REPRESENTED HEREBY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY SUCH SECURITIES.”
               (b) Upon the earlier of (i) registration for resale pursuant to
the Registration Rights Agreement or (ii) the date that the Purchaser may resell
a Security pursuant to Rule 144 without volume or manner restrictions, the
Company shall (A) deliver to the transfer agent for the Common Stock (the
“Transfer Agent”) irrevocable instructions that the Transfer Agent shall reissue
a certificate representing shares of Common Stock without legends upon receipt
by such Transfer Agent of the legended certificates for such shares, together
with, if the sale is being made pursuant to Rule 144, a customary representation
by the Purchaser that Rule 144 applies to the shares of Common Stock represented
thereby, and (B) cause its counsel to deliver to the Transfer Agent one or more
blanket opinions to the effect that the removal of such legends in such
circumstances may be effected under the Securities Act. From and after the
earlier of such dates, upon the Purchaser’s written request, the Company shall
promptly, and in any event within 3 business days of receipt of such
certificates, cause certificates evidencing the Purchaser’s Securities to be
replaced with certificates which do not bear such restrictive legends, and
Underlying Shares subsequently issued upon due exercise of the Warrant shall not
bear such restrictive legends provided, if applicable, the Rule 144 certificate
is provided. When the Company is required to cause an unlegended certificate to
replace a previously issued legended certificate, if: (1) the unlegended
certificate is not delivered to the Purchaser within three (3)

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Business Days of submission by the Purchaser of a legended certificate and
supporting documentation to the Transfer Agent as provided above and (2) prior
to the time such unlegended certificate is received by the Purchaser, the
Purchaser, or any third party on behalf of the Purchaser or for the Purchaser’s
account, purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Purchaser of shares
represented by such certificate (a “Buy-In”), then the Company shall pay in cash
to the Purchaser (for costs incurred either directly by the Purchaser or on
behalf of a third party) the amount by which the total purchase price paid for
Common Stock as a result of the Buy-In (including brokerage commissions, if any)
exceeds the proceeds received by the Purchaser as a result of the sale to which
such Buy-In relates. The Purchaser shall provide the Company written notice
indicating the amounts payable to the Purchaser in respect of the Buy-In. The
Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the
Purchaser.
               (c) The Company acknowledges and agrees that the Purchaser may
from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the
Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and who agrees to be bound by
the provisions of this Agreement and the Registration Rights Agreement and, if
required under the terms of such arrangement, the Purchaser may transfer pledged
or secured Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no legal opinion of
legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At
the Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities, including, if the
Securities are subject to registration pursuant to the Registration Rights
Agreement, the preparation and filing of any required prospectus supplement
under Rule 424(b)(3) under the Securities Act or other applicable provision of
the Securities Act to appropriately amend the list of Selling Stockholders
thereunder.
     7. Termination.
          7.1 Termination. This Agreement may be terminated and the transactions
contemplated hereunder abandoned at any time prior to the Closing only as
follows:
               (a) by the Purchaser or the Company if the Closing shall not have
been consummated by November 30, 2008, whether such date is before or after the
date of the Company Stockholder Approval; provided, that the right to terminate
the Agreement pursuant to this Section 7.1(a) shall not be available to any
party whose failure to perform any of its obligations under this Agreement is
the primary cause of the failure of the Closing to be consummated by such time;
or
               (b) by the Purchaser or the Company if the Company Stockholder
Approval shall not have been obtained at the Stockholders Meeting or any
adjournment or postponement thereof; or

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               (c) by the Purchaser if the Company Board shall (A) fail to
authorize, approve or recommend the transactions contemplated by this Agreement
or (B) effect a Change in Recommendation; or
               (d) by the Purchaser if the Company shall breach its covenant in
Section 8.6 hereof (no solicitation); or
               (e) at any time by mutual agreement of the Company and the
Purchaser; or
               (f) by the Purchaser, if there has been any breach of any
representation or warranty or any material breach of any covenant of the Company
contained herein and the same has not been cured within 15 days after notice
thereof (it being understood and agreed by the Purchaser that, in the case of
any representation or warranty of the Company contained herein which is not
hereinabove qualified by application thereto of a materiality standard, such
representation or warranty will be deemed to have been breached for purposes of
this Section 7(f) only if such representation or warranty was not true and
correct in all material respects at the time such representation or warranty was
made by the Company); or
               (g) by the Company, if there has been any breach of any
representation, warranty or any material breach of any covenant of any Purchaser
contained herein and the same has not been cured within 15 days after notice
thereof (it being understood and agreed by the Company that, in the case of any
representation and warranty of the Purchaser contained herein which is not
hereinabove qualified by application thereto of a materiality standard, such
representation or warranty will be deemed to have been breached for purposes of
this Section 7(g) only if such representation or warranty was not true and
correct in all material respects at the time such representation or warranty was
made by the Purchaser).
          7.2 Effect of Termination; Termination Fee.
               (a) Except as set forth in Section 7.2(b), any termination
pursuant to this Section 7 shall be without liability on the part of any party,
unless such termination is the result of a material breach of this Agreement by
a party to this Agreement in which case such breaching party shall remain liable
for such breach notwithstanding any termination of this Agreement.
               (b) In the event this Agreement is terminated pursuant to
Section 7.1(c) above (failure of Company Board to recommend or Change in
Recommendation) or Section 7.1(d) above (breach of no solicitation covenant),
the Company shall pay to the Purchaser, by wire transfer of immediately
available funds, the sum of (i) the Purchaser’s Expenses and (ii) $4,000,000. In
the event this Agreement is terminated pursuant to Section 7.1(b) above (failure
to obtain Company Stockholder Approval) and the Company enters into an agreement
with respect to any Alternative Proposal within six (6) months following the
termination of this Agreement, the Company shall, within three (3) Business Days
after the consummation of the transactions contemplated by such an agreement,
pay to the Purchaser, by wire transfer of immediately available funds, the sum
of the Purchaser’s Expenses and $4,000,000.

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     8. Covenants.
          8.1 Conduct of Business. The Company agrees that, except as expressly
approved by the Purchaser in writing (which approval shall not be unreasonably
withheld or delayed), between the Effective Date and the Closing Date, the
Company (i) shall operate its business only in the ordinary course of business,
shall not introduce any new method of management or operation and shall use
reasonable best efforts to preserve its business intact, (ii) shall use its best
efforts to keep available the services of its current officers, employees and
consultants (other than Edward M. Rudnic and Robert C. Low) and (iii) shall use
its best efforts to preserve the goodwill and present relationships with
customers, vendors, distributors, licensors, licensees, creditors, business
partners and others with which the Company has business relations. Without
limiting the generality of the first sentence of this Section 8.1, between the
Effective Date through the Closing Date, the Company shall not, except as
expressly required or permitted by the terms of this Agreement, do or propose or
agree to do any of the following without the prior written consent or direction
of the Purchaser:
               (a) amend the Company’s Bylaws or Certificate of Incorporation,
except as contemplated by this Agreement;
               (b) merge with or into or consolidate with any other Person;
               (c) issue or sell equity interests in the Company or any
securities, option, warrants, calls or other rights to acquire such equity
interests other than (i) the issuance of Reserved Shares and (ii) the grant of
options or other rights in the ordinary course of business pursuant to the
Amended and Restated Advancis Pharmaceutical Corporation Stock Incentive Plan,
provided that such grants shall not exceed 500,000 shares of Common Stock (on an
as exercised basis) except as contemplated by the Employment Agreements;
               (d) enter into any material Contract;
               (e) abandon any rights under any material Contract, terminate,
amend, modify or supplement the terms of any material Contract, or fail to honor
or perform under any material Contract;
               (f) other than sales of inventory in the ordinary course of
business or the disposition of obsolete or unutilized equipment, sell, lease,
license, surrender, relinquish, transfer, convey, assign or otherwise dispose of
any Company Intellectual Property or any other assets or property of the Company
with an aggregate value in excess of $25,000;
               (g) create, permit, allow or suffer to exist any Lien, other than
Permitted Liens, on any Company Intellectual Property or any other asset or
property of the Company with an aggregate value in excess of $25,000;
               (h) borrow funds from any Person or make an advance to any
Person, except for granting or obtaining trade credit terms in the ordinary
course of business;
               (i) fail to maintain the properties and assets owned or leased by
the Company in good repair and condition, reasonable wear and tear excepted;

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               (j) institute, settle or agree to settle any litigation, action
or proceeding before any court or Government Entity relating to the Company’s
assets or properties, or modify in any manner that is adverse to the Company’s
business, assets or property, rescind or terminate a material permit, allowance,
or credit (or application therefor) relating to the Company’s business, assets
or property;
               (k) permit any registration of any Company Intellectual Property
to lapse or disclose to any person any trade secret included in the Company
Intellectual Property unless the person to whom such disclosure is made has
executed a written non-disclosure agreement that protects and prohibits further
disclosure of the trade secret;
               (l) delay paying any account payable of the Company beyond the
date on which it is due and payable except to the extent being contested in good
faith;
               (m) increase the compensation payable or to become payable to any
employee or consultant of the Company or, except as presently bound to do, grant
or pay any bonus, severance or termination pay to, or enter into any bonus,
employment, change of control or severance agreement with, any employee of the
Company, or establish, adopt, enter into or amend or take any action to
accelerate any rights or benefits with respect to any bonus, profit sharing
trust, compensation, profit sharing, stock option, restricted stock pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
employee of the Company;
               (n) hire any new employee other than new hires who are taken on
in the ordinary course of business, consistent with past practice;
               (o) conduct any operations or adopt any policies other than in
the ordinary course of business consistent with past practice; or
               (p) agree, in writing or otherwise, to take or authorize any of
the foregoing actions or any action which would make any representation or
warranty in Section 3 hereof untrue or incorrect in any respect.
          8.2 Management Transition Committee. The parties shall establish, as
soon as practicable after the execution of this Agreement, a committee (the
“Management Transition Committee”) comprised of four (4) persons, two (2) of
whom shall be designated by the Purchaser and two (2) of whom shall be
designated by the Company. The Management Transition Committee shall remain in
existence until the earlier of the Closing Date and the Termination Date and
shall oversee and manage the transition process through the earlier of the
Closing Date and the Termination Date. The Management Transition Committee will
be kept apprised of all developments relating to the operation and management of
the Company and the transition process. The Company will, and will cause its
management to, (i) cooperate fully with the Management Transition Committee and
consult with the Management Transition Committee on all matters affecting the
transition process, (ii) arrange for the Purchaser’s representatives on the
Management Transition Committee to have reasonable access to the management of
the Company in the presence of one or more individuals designated by the
Company, (iii) consider in good faith all advice offered by the Management
Transition Committee with respect to such

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matters and (iv) provide to the Purchaser’s designees to the Management
Transition Committee interim furnished office space at the Company’s
headquarters reasonably necessary to allow the Management Transition Committee
to conduct its transition efforts until the earlier of the Closing Date and the
Termination Date. Notwithstanding the foregoing, the Management Transition
Committee shall have no authority to bind or make agreements on behalf of the
Company or the Purchaser or to issue instructions to or direct or exercise
authority over the Company or the Purchaser or any of their respective officers,
employees, advisors or agents or to waive or modify any provision of this
Agreement.
          8.3 Preparation and Mailing of Proxy Statement.
               (a) As promptly as reasonably practicable following the Effective
Date but in no event later than ten (10) business days thereafter, the Company
shall prepare and file with the SEC proxy materials that shall constitute the
proxy statement relating to the Company Stockholder Approval to be sought at the
Stockholders Meeting (such proxy statement, and any amendments or supplements
thereto, the “Proxy Statement”); provided, that prior to filing the Proxy
Statement, the Company will provide drafts thereof to the Purchaser, will give
the Purchaser a reasonable time to review and comment thereon and will consider
in good faith any comments made by the Purchaser. The Proxy Statement shall
comply as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder.
The parties shall cooperate with each other and provide to each other all
information necessary in order to prepare the Proxy Statement, and shall provide
promptly to the other party any information such party may obtain that could
necessitate amending such document.
               (b) The Company shall, as promptly as practicable after receipt
thereof, provide the Purchaser copies of any written comments and advise the
Purchaser of any oral comments with respect to the Proxy Statement received from
the SEC.
               (c) The Company shall cause the Proxy Statement to be mailed to
its stockholders at the earliest practicable time after the SEC informs the
Company that it will not review, or completes its review, thereof. The Company
shall take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the transactions contemplated hereby and the Company shall
furnish all information concerning it and the holders of its capital stock as
may be reasonably requested in connection with any such action.
               (d) If at any time prior to the Closing Date, (i) any event or
change occurs with respect to the parties or any of their respective Affiliates,
officers or directors, which is required, in either party’s reasonable judgment,
to be set forth in an amendment of, or supplement to, the Proxy Statement or
(ii) any information relating to the parties, or any of their respective
Affiliates, officers or directors, should be discovered by the parties which
should be set forth in an amendment of, or supplement to, the Proxy Statement so
that such document would not include any misstatement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the Company shall
file as promptly as practicable with the SEC an amendment of or

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supplement to the Proxy Statement and, as required by Law, disseminate the
information contained in such amendment or supplement to the stockholders of the
Company; provided, that prior to filing any such amendment or supplement, the
Company will provide drafts thereof to the Purchaser, will give the Purchaser a
reasonable time to review and comment thereon and will consider in good faith
any comments made by the Purchaser.
          8.4 Stockholder Meeting; Recommendation. The Company shall duly take
all lawful action to call, give notice of, convene and hold a meeting of the
stockholders of the Company (the “Stockholders Meeting”) on a date as promptly
as practicable after the SEC informs the Company that it will not review, or
completes its review, of the Proxy Statement for the purpose of obtaining the
Company Stockholder Approval and shall take all lawful action to solicit the
Company Stockholder Approval. The Company shall use all reasonable efforts to
satisfy its obligations in the preceding sentence within forty-five (45) days
after the SEC informs the Company that it will not review, or completes its
review, of the Proxy Statement. The Company Board shall recommend the issuance
of Shares and the Warrant as contemplated by this Agreement to the effect as set
forth in Section 3.5 (the “Company Recommendation”).
          8.5 Consents and Approvals.
               (a) Subject to the terms and conditions of this Agreement, each
of the parties will use all reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Law to consummate the transactions contemplated by
this Agreement, including preparing and filing as promptly as practicable all
documentation to effect all necessary filings, notices, petitions, statements,
registrations, submissions of information, applications and other documents
necessary to consummate the transactions contemplated by this Agreement,
including, without limitation, (i) filings with the FTC and the Antitrust
Division of the United States Department of Justice as required by the HSR Act,
(ii) filings, if any, required under any other comparable antitrust Laws of any
applicable jurisdiction, as agreed by the parties hereto, and (iii) any filings
required under the Securities Act, the Exchange Act, any applicable state or
securities or “blue sky” laws and the securities laws of any foreign country, or
under any other Law relating to the transactions contemplated by this Agreement.
Each party will cause all documents that it is responsible for filing with any
Government Entity under this Section 8.5 to comply in all material respects with
all applicable Laws. Each party shall promptly supply the other with any
information which may be required in order to effectuate any filings or
application pursuant to this Section 8.5.
               (b) Upon the terms and subject to the conditions set forth
herein, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including using
all reasonable efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the conditions precedent set forth in
Section 5 to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, approvals, orders and authorizations from
Government Entities and the making of all necessary registrations, declarations
and filings (including registrations, declarations and filings with Government
Entities, if any) and the taking of all reasonable steps as may be necessary to
avoid any suit, claim, action, investigation or

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proceeding by any Government Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties, and (iv) the execution or
delivery of any additional instruments necessary to consummate the transactions
and to fully carry out the purposes of, this Agreement. In connection with and
without limiting the foregoing, the Company and the Company Board shall, if any
takeover statute or similar Law is or becomes applicable to this Agreement or
any of the transactions contemplated by this Agreement, use all reasonable
efforts to ensure that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Law on this Agreement and
the transactions contemplated hereby.
          8.6 No Solicitation. At all times during the period commencing with
the execution and delivery of this Agreement and continuing until the earlier to
occur of the termination of this Agreement and the Closing Date, without the
express written consent of the Purchaser, the Company shall not, and the Company
shall use its commercially reasonable efforts to cause its officers, directors,
employees, accountants, counsel, financial advisors, consultants, financing
sources and other advisors or representatives not to, directly or indirectly,
(a) initiate or solicit or knowingly facilitate or encourage any inquiry or the
making of any proposal that constitutes an Alternative Proposal, (b) enter into
any letter of intent, memorandum of understanding or other agreement,
arrangement or understanding relating to any Alternative Proposal, (c) continue
or otherwise participate in any discussions or negotiations regarding, furnish
to any Person any information or data with respect to, or otherwise cooperate
with or take any other action to facilitate any proposal that (i) constitutes
any Alternative Proposal or (ii) requires the Company to abandon, terminate or
fail to consummate the transactions contemplated by this Agreement or (d) submit
to the stockholders of the Company for their approval or adoption any
Alternative Proposal or any amendment to the Certificate of Incorporation or
Bylaws, or agree or publicly announce an intention to take any of the foregoing
actions. For purposes of this Agreement, “Alternative Proposal” means any
proposal or offer relating to any (A) direct or indirect acquisition of the
Company, (B) merger or consolidation with or involving the Company,
(C) acquisition of any portion of the stock or assets of the Company outside the
ordinary course of business, (D) direct or indirect acquisition by the Company
of any business, (E) joint venture involving the Company, (F) business or
strategic investment by the Company in any business or (G) financing to be
provided to or by the Company, which, in the case of clauses (D)-(G) of this
sentence, would reasonably be expected to prevent or to materially impede or
delay the consummation of the transactions contemplated by this Agreement.
          8.7 Lock-Up. The Company agrees that it will not, until 90 days after
the effective date of the Registration Statement (the “Registration Effective
Date”), offer to sell, solicit offers to purchase or sell any of its capital
stock or securities convertible into or exchangeable or exercisable for its
capital stock, including without limitation any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for its capital
stock, without the prior written consent of the Purchaser; provided, however,
that the foregoing shall not preclude the Company from issuing (i) Reserved
Shares or (ii) stock options or Common Stock pursuant to the Amended and
Restated Advancis Pharmaceutical Corporation Stock Incentive Plan, provided that
issuances under such plan shall not exceed 500,000 shares of Common Stock (on an
as exercised basis) except as contemplated by the Employment Agreements. The
Company has not offered to sell, solicited offers to purchase or sold any
securities during the six months

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preceding the Effective Date, and the Company will not offer to sell, solicit
offers to purchase or sell, any securities during the six months following the
Effective Date, that would be required to be integrated with the offer and sale
of the Securities so as to require registration of the offer and sale of the
Securities under the Securities Act of 1933, as amended.
          8.8 Board Representation. Promptly after the date of this Agreement,
the Company shall take all necessary corporate action, effective as of the
Closing Date, to increase the size of the Company Board by two directors, which
directorships shall be added to the class of directors with terms that expire
the furthest from the Effective Date, and to fill such newly created
directorships, effective as of the Closing Date, with directors designated by
the Purchaser as set forth on Schedule III. For so long as the Purchaser and its
Affiliates do not sell or otherwise dispose of fifty percent (50%) of the Shares
and the Underlying Shares (on an as exercised basis) other than to Affiliates of
the Purchaser, (i) the Purchaser shall be entitled to designate two directors to
the Company Board and (ii) the Company shall take all necessary or appropriate
action to assist in the nomination and election of the Purchaser’s designees as
directors of the Company.
          8.9 Mergers. The Company agrees that it will not, prior to the date
that is six (6) months from the Closing Date, consummate a merger or other
consolidation that could result in short swing liability under Section 16 of the
Securities Exchange Act of 1934 (“Section 16”) for the Purchaser; provided,
however, that the foregoing shall not preclude the Company from entering into a
definitive agreement with respect to such merger or other business combination.
          8.10 Corporate Existence. The Company shall, so long as the Purchaser
beneficially owns any Securities, maintain its corporate existence in good
standing and shall pay all its material taxes when due except for taxes which
the Company reasonably disputes.
          8.11 Reservation of Common Stock. As of the Effective Date, the
Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue Shares pursuant
to this Agreement and Underlying Shares pursuant to any exercise of the Warrant.
          8.12 Reporting Status; Listing of Common Stock. The Company’s Common
Stock is registered under Section 12 of the Exchange Act. Throughout the period
during which the Registration Statement (as defined in the Registration Rights
Agreement) is effective, the Company will use its best efforts to timely file
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC under the reporting requirements of the Exchange Act,
and the Company will not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination. The Company hereby agrees
to use best efforts to maintain the listing of the Common Stock on the Nasdaq
Global Market, and as soon as reasonably practicable following the Closing (but
not later than the earlier of the Effective Date and the first anniversary of
the Closing Date) to list all of the Shares and Underlying Shares on the Nasdaq
Global Market. The Company further agrees, if the Company applies to have the
Common Stock traded on any national securities exchange other than the Nasdaq
Global Market it will include in such application all of the Shares and
Underlying Shares, and will take such other action as is

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necessary to cause all of the Shares and Underlying Shares to be listed on such
other national securities exchange as promptly as possible. The Company will use
best efforts to continue the listing and trading of its Common Stock on the
Nasdaq Global Market and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Nasdaq
Global Market.
          8.13 Indemnification of Purchaser. Subject to the provisions of this
Section 8.13, the Company will indemnify and hold the Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other persons with a functionally equivalent role of a person holding such
titles notwithstanding a lack of such title or any other title), each person who
controls the Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other persons with a
functionally equivalent role of a person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Operative Documents. If any action shall be brought against any Purchaser Party
in respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party, in which case
the Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel. The Company will not be liable to any Purchaser
Party under this Agreement (i) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (ii) to the extent, but only to the extent, that a loss,
claim, damage or liability is attributable to any Purchaser Party’s breach of
any of the representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Operative Documents.
          8.14 Participation Rights.
               (a) For so long as the Purchaser and its Affiliates do not sell
or otherwise dispose of fifty percent (50%) of the Shares and the Underlying
Shares (on an as exercised basis) other than to Affiliates of the Purchaser, the
Company grants the Purchaser a participation right to purchase the Purchaser’s
pro rata share of New Securities that the Company may, from time to time,
propose to sell and issue after the Closing Date. The Purchaser’s pro rata
share, for purposes of this participation right, is the ratio of the number of
shares of fully-diluted Common Stock owned by the Purchaser immediately before
the issuance of New Securities,

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assuming full exercise of the Warrant held by the Purchaser, to the total number
of fully diluted shares of Common Stock outstanding immediately before the
issuance of New Securities, assuming full conversion, exchange and/or exercise
of all outstanding Equity Security Equivalents.
               (b) As used in this Agreement, the term “New Securities” means
any of the Company’s capital stock, whether or not now authorized, and rights,
options, or warrants to purchase such capital stock, and securities of any type
whatsoever that are, or may become, convertible into capital stock; provided
that the term “New Securities” expressly does not include:
                    (i) shares of capital stock issuable or issued to the
Company’s officers, directors, employees, consultants, or advisors pursuant to
the Amended and Restated Advancis Pharmaceutical Corporation Stock Incentive
Plan, or other employee stock incentive programs, or other arrangements approved
by the Company Board for the primary purpose of soliciting or retaining such
parties’ services, or upon exercise or conversion of options, warrants, or
convertible securities granted to such parties pursuant to any such plan or
arrangement;
                    (ii) shares of capital stock issuable or issued upon the
exercise, exchange, adjustment, or conversion of any outstanding Equity Security
Equivalents that are disclosed in the SEC Documents;
                    (iii) shares of capital stock issuable or issued as a
dividend or distribution on capital stock or otherwise issuable or issued
pursuant to any other event for which proportional adjustment is made under the
Company’s then effective Certificate of Incorporation;
                    (iv) shares of capital stock issuable or issued pursuant to
the acquisition of another corporation or other business entity by the Company
by merger, stock purchase, purchase of all or substantially all of such entity’s
assets, or other reorganization, or pursuant to a joint venture agreement or
strategic partnership;
                    (v) shares of capital stock issuable or issued in connection
with any public offering;
                    (vi) shares of capital stock issuable or issued pursuant to
any stock dividend, stock split, share combination, reverse stock split,
reorganization, recapitalization, or other reclassification affecting the
Company’s equity securities for which a proportional adjustment has been made
under the Company’s then-effective Certificate of Incorporation; or
                    (vii) any right, option, or warrant to acquire any security
exercisable for or convertible into the securities excluded from the definition
of New Securities pursuant to Section 8.14(b)(i) through Section 8.14(b)(vi).

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               (c) If the Company proposes to issue New Securities, then the
Company will give the Purchaser written notice of the Company’s intention,
describing the type of New Securities, their price, and the general terms upon
which the Company proposes to issue the New Securities. The Purchaser will have
seven (7) business days after any such notice is mailed or delivered to agree to
purchase its pro rata share of such New Securities for the price and upon the
terms specified in the notice by giving written notice to the Company and
stating in such notice the quantity of New Securities to be purchased.
               (d) If the Purchaser fails to exercise fully the participation
right within seven (7) business days, then the Company will have 150 days
thereafter to sell or enter into an agreement (pursuant to which the sale of New
Securities covered thereby will be closed, if at all, within 150 days from the
date of such agreement) to sell the New Securities with respect to which the
Purchaser’s participation right specified in this Section 8.14 was not
exercised, at a price and upon terms no more favorable to the purchasers thereof
than specified in the Company’s notice to the Purchaser pursuant to
Section 8.14(c). If the Company has not sold such New Securities within such
150-day period or if the Company has not entered into an agreement to sell the
New Securities in accordance with the foregoing within 150 days from the date of
such agreement, then the Company will not thereafter issue or sell any New
Securities, without first again offering such securities to the Purchaser in the
manner provided in this Section 8.14.
          8.15 Exercise of Kef and Lex Stock Purchase Rights. The Company shall,
prior to Closing, exercise the Kef Stock Purchase Right and the Lex Stock
Purchase Right pursuant to the terms and conditions of the Kef Stock Purchase
Agreement and the Lex Stock Purchase Agreement, respectively.
          8.16 Amendments to Certificate of Incorporation and Bylaws. At the
first annual meeting of the Company’s stockholders following Closing, the
Company shall duly take all lawful action to solicit the requisite stockholder
approval to adopt amendments to the Certificate of Incorporation and Bylaws
providing for the declassification of the Company Board and the annual election
of all directors.
     9. Miscellaneous Provisions.
          9.1 Public Statements or Releases. The Company shall, by 8:30 a.m.
Eastern time on the business day following the date hereof, issue a press
release and file a Current Report on Form 8-K, copies of each of which shall be
provided to the Purchaser for review, disclosing the transactions contemplated
hereby and shall make such other filings and notices in the manner and time
required by the SEC. The Company and the Purchaser shall consult with each other
in issuing any press releases and/or filing any Current Reports on Form 8-K or
other such SEC Documents with respect to the transactions contemplated hereby,
and none of the parties to this Agreement shall make, issue, or release any
announcement, whether to the public generally, or to any of its suppliers or
customers, with respect to this Agreement or the transactions provided for
herein, or make any statement or acknowledgment of the existence of, or reveal
the status of, this Agreement or the transactions provided for herein, without
the prior consent of the other parties, which shall not be unreasonably withheld
or delayed, provided, that nothing in this Section 9.1 shall prevent any of the
parties hereto from making such public announcements as may be required by
applicable Law or NASDAQ Rule or listing standard, but to the extent not

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inconsistent with such requirements, it shall provide the other parties with an
opportunity to review and comment on any proposed public announcement before it
is made.
          9.2 Further Assurances. Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
the other party to better evidence and reflect the transactions described herein
and contemplated hereby, and to carry into effect the intents and purposes of
this Agreement.
          9.3 Rights Cumulative. Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
          9.4 Pronouns. All pronouns or any variation thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person, persons, entity or entities may require.
          9.5 Notices. Any notices, reports or other correspondence (hereinafter
collectively referred to as “correspondence”) required or permitted to be given
hereunder shall be in writing and shall be sent by postage prepaid first class
mail, courier or telecopy or delivered by hand to the party to whom such
correspondence is required or permitted to be given hereunder, and shall be
deemed sufficient upon receipt when delivered personally or by courier,
overnight delivery service or confirmed facsimile, or three (3) business days
after being deposited in the regular mail as certified or registered mail
(airmail if sent internationally) with postage prepaid, if such notice is
addressed to the party to be notified at such party’s address or facsimile
number as set forth below:

  (a)   All correspondence to the Company shall be addressed as follows:

20425 Seneca Meadows Parkway
Germantown, Maryland 20876
Attention:      Edward M. Rudnic, Ph.D.
                      President and Chief Executive Officer
Facsimile:      (301) 944-6700
with a copy to
Dewey & LeBoeuf LLP
1301 Avenue of the Americas
New York, New York
Attention:       Frederick W. Kanner, Esq.
Facsimile:       (212) 259-6333

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  (b)   All correspondence to the Purchaser shall be addressed as follows:

c/o Equity Group Investments, L.L.C.
Two North Riverside Plaza
Chicago, IL 60606
Attention: General Counsel and William Pate
Telephone: (312) 454-0100
Facsimile: (312) 454-0335
with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP
333 West Wacker Drive
Suite 2100
Chicago, IL 60606
Attention:      Peter C. Krupp
                      Susan S. Hassan
Facsimile:      312-407-0411
               (c) Either party may change the address to which correspondence
to it is to be addressed by written notification as provided for herein.
          9.6 Captions. The captions and paragraph headings of this Agreement
are solely for the convenience of reference and shall not affect its
interpretation.
          9.7 Severability. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable Laws of any jurisdiction,
the invalid or unenforceable part or provisions shall be replaced with a
provision which accomplishes, to the extent possible, the original business
purpose of such part or provision in a valid and enforceable manner, and the
remainder of this Agreement shall remain binding upon the parties hereto.
          9.8 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial;
Injunctive Relief.
               (a) This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of Delaware
without regard to any conflicts of laws concepts which would apply the
substantive law of some other jurisdiction.
               (b) Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware and the
Federal courts of the United States of America located in the State of Delaware
for the purpose of any suit, action, proceeding or judgment relating to or
arising out of this Agreement and the transactions contemplated hereby. Service
of process in connection with any such suit, action or proceeding may be served
on each party hereto anywhere in the world by the same methods as are specified
for the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an

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inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A
TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS
THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
               (c) Each of the parties hereto acknowledges and agrees that
damages will not be an adequate remedy for any material breach or violation of
this Agreement if such material breach or violation would cause immediate and
irreparable harm (an “Irreparable Breach”). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled to
seek equitable relief of a kind appropriate in light of the nature of the
ongoing or threatened Irreparable Breach, which relief may include, without
limitation, specific performance or injunctive relief; provided, however, that
if the party bringing such action is unsuccessful in obtaining the relief
sought, the moving party shall pay the non-moving party’s reasonable costs,
including attorney’s fees, incurred in connection with defending such action.
Such remedies shall not be the parties’ exclusive remedies, but shall be in
addition to all other remedies provided in this Agreement.
          9.9 Amendments. This Agreement may not be amended or modified except
pursuant to an instrument in writing signed by the Company the Purchaser.
          9.10 Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
          9.11 Expenses. Except as otherwise provided in Section 7.2(b), each
party will bear its own Expenses in connection with this Agreement; provided,
that the Company will reimburse the Purchaser at Closing for all of the
Purchaser’s Expenses in connection with this Agreement.
          9.12 Assignment. The rights and obligations of the parties hereto
shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of each party. No party may assign its rights
or obligations under this Agreement or designate another person (i) to perform
all or part of its obligations under this Agreement or (ii) to have all or part
of its rights and benefits under this Agreement, in each case without the prior
written consent of the other party, provided, however, that the Purchaser may
assign its rights and delegate its duties hereunder in whole or in part to an
Affiliate or to a third party acquiring some or all of its Securities in a
transaction complying with applicable securities laws without the prior written
consent of the Company; provided, that no such assignment shall affect the
obligations of the Purchaser hereunder. In the event of any assignment in
accordance with the terms of this Agreement, the assignee shall specifically
assume and be bound by the provisions of the Agreement by executing and agreeing
to an assumption agreement reasonably acceptable to the other party.
          9.13 Survival. The respective representations and warranties given by
the parties hereto shall survive the Closing Date and the consummation of the
transactions contemplated herein.

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          9.14 Counterpart. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
          9.15 Entire Agreement. This Agreement and the other Operative
Agreements constitute the entire agreement between the parties hereto respecting
the subject matter hereof and supersede all prior agreements, negotiations,
understandings, representations and statements respecting the subject matter
hereof, whether written or oral. No modification, alteration, waiver or change
in any of the terms of this Agreement shall be valid or binding upon the parties
hereto unless made in writing and duly executed by the Company and the
Purchaser.
          9.16 Costs of Enforcement. In the event that legal proceedings are
commenced by any party to this Agreement against another party to this Agreement
in connection with this Agreement or the other Operative Agreements, the
non-prevailing party in such proceedings shall pay the reasonable attorneys’
fees and other reasonable out-of-pocket costs and expenses incurred by the
prevailing party in such proceedings.
[Signature Page to Follow]

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          IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the day and year first above written.

              MIDDLEBROOK PHARMACEUTICALS, INC.
 
       
 
  By:
Name:   /s/ Edward M. Rudnic
 
 Edward M. Rudnic, Ph.D.
 
  Title:   President and Chief Executive Officer
 
            EGI-MBRK, L.L.C.
 
       
 
  By:
Name:   /s/ Philip G. Tinkler
 
 Philip G. Tinkler
 
  Title:   Vice President
 
            Solely for purposes of guarantying the obligations of EGI-MBRK,
L.L.C. under Section 2 of this Securities Purchase Agreement:
 
            EGI-FUND (08-10) INVESTORS, L.L.C.
a Delaware limited liability company
 
       
 
  By:
Name:   /s/ William C. Pate
 
 William C. Pate
 
  Title:   Vice President

[Signature Page to Securities Purchase Agreement]

 

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Exhibit A
FORM OF WARRANT
Attached.
Exhibit A-1

 

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Exhibit B
LEGAL OPINION
Exhibit B-1

 

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Schedule I
STOCKHOLDERS ENTERING INTO VOTING AGREEMENTS
Schedule I-1

 

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Schedule II
RESERVED SHARES
Schedule II-1

 

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Schedule III
DIRECTORS DESIGNATED BY THE PURCHASER
Schedule III-1

 

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Appendix I
FORM OF INVESTOR QUESTIONNAIRE
Appendix I-1