exhibit_10-1.htm


    


      
        Exhibit 10.1

         

        
          
            EXECUTION
COPY

          

        

      


       

       

      ASSET
PURCHASE AGREEMENT

       

       

      Dated
as of February 12, 2009

       

       

      among

       

       

      PROTEIN
TRANSACTION, LLC,

       

       

      a
wholly-owned subsidiary of MERCK & CO., INC.,

       

       

      INSMED
INCORPORATED

       

      and

       

      MERCK
& CO., INC.,

       


      
        
           


        

        
           


          
            

          

        

        
          
            TABLE
OF CONTENTS

            Page
Number

          

        

      


      


       

      ARTICLE I PURCHASE
PRICE AND CLOSING                           
1

       

      Section 1.1Sale and
Purchase of the Purchased Assets                          
1

      Section 1.2First
Closing Assets and Second Closing Assets                          
3

      Section 1.3Excluded
Assets                          
3

      Section
1.4Assumption of Liabilities                          
4

      Section 1.5Retained
Liabilities.                          
5

      Section 1.6First
Closing; Second Closing.                          
6

      Section 1.7First
Closing Assets Purchase Price.                          
7

      Section 1.8Second
Closing Assets Purchase Price                          
9

      Section
1.9Obligations of Seller During Post-Closing Period.                          
9

      Section
1.10Withholding Taxes                          
9

      Section
1.11Assignment of Contracts; Rights and Obligations                          
10

       

      ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER                           
10

      Section
2.1Organization, Standing and Corporate Power.                          
10

      Section
2.2Purchased Assets.                          
11

      Section
2.3Authority; Noncontravention; Voting Requirements.                          11

      Section
2.4Governmental Approvals and Consents                          12

      Section 2.5Seller
SEC Documents; Undisclosed Liabilities.                          
12

      Section 2.6Absence
of Certain Changes                          
13

      Section 2.7Legal
Proceedings                          
13

      Section
2.8Compliance With Laws; Permits                          
14

      Section
2.9Taxes                          
14

      Section
2.10Personnel Matters.                          
15

      Section
2.11Employee Benefit Plans.                          
16

      Section 2.12Labor
Matters                          
16

      Section
2.13Environmental Matters.                          
17

      Section
2.14Material Contracts.                          
18

      Section
2.15Properties.                          
19

      Section
2.16Intellectual Property.                          
20

      Section
2.17Regulatory Matters.                          
22

      Section 2.18Opinion
of Financial Advisor                          
24

      Section 2.19Brokers
and Other Advisors                          
25

      Section 2.20State
Takeover Statutes                          
25

      Section 2.21Related
Party Transactions.                          
25

      Section
2.22Solvency; Fair Consideration; No Fraudulent Conveyance                          
25

      Section
2.23Termination of Representations and Warranties                          
25

       

      ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER                           
25

       

      Section
3.1Organization, Standing and Corporate Power                          
25

      Section
3.2Authority; Noncontravention.                          
26

      Section
3.3Governmental Approvals.                          
26

      Section
3.4Ownership and Operations of Purchaser                          
27

      Section
3.5Sufficient Funds                          
27

      Section 3.6Legal
Proceedings                          
27

       

      ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS                          
27

       

      Section 4.1Conduct
of Business.                          
27

      Section 4.2No
Solicitation.                          
31

      Section
4.3Reasonable Best Efforts.                          
34

      Section 4.4Certain
Filings and Notices; SEC Filings.                          
36

      Section 4.5Public
Announcements.                          
36

      Section 4.6Access
to Information; Confidentiality.                          
36

      Section
4.7Notification of Certain Matters.                          
38

      Section 4.8Fees and
Expenses                          
39

      Section
4.9Transferred Employees.                          
39

      Section 4.10Further
Assurances                          
41

      Section 4.11Seller
Non-Competition and Non-Solicitation.                          
41

      Section 4.12Certain
Tax Matters.                          
42

      Section 4.13Mail;
Payments.                          
43

      Section
4.14Excluded Products                          
44

      Section 4.15Notices
to Debt, Option and Warrant Holders                          
44

      Section 4.16Release
under Security for Boulder Leases                          
44

       

      ARTICLE V
CONDITIONS TO THE SECOND CLOSING                           
44

       

      Section
5.1Conditions to Each Party’s Obligation to Effect the Second Closing
Transactions                          
44

      Section
5.2Conditions to the Seller’s Obligation to Effect the Second Closing
Transactions                          
44

       

      Section
5.3Conditions to Parent’s and Purchaser’s Obligation to Effect the Second
Closing Transactions                          
45

      Section
5.4Deliveries by the Seller at Second Closing                          
46

      Section
5.5Deliveries by Purchaser at Second Closing                          
47

       

      ARTICLE VI
TERMINATION                           
47

       

      Section
6.1Termination.                          
47

      Section 6.2Effect
of Termination                          49

      Section
6.3Termination Fees.                          
49

      Section 6.4First
Closing Assets Repurchase Right.                          
50

       

      ARTICLE VII
MISCELLANEOUS                           
51

       

      Section
7.1Amendment or Supplement                          
51

      Section
7.2Extension of Time, Waiver, Etc                          
51

      Section
7.3Assignment                          
51

      Section
7.4Counterparts                          
51

      Section 7.5Entire
Agreement; No Third Party Beneficiaries                          
51

      Section
7.6Governing Law; Jurisdiction; Waiver of Jury Trial.                          
52

      Section 7.7Specific
Performance                          
52

      Section
7.8Notices                          
52

      Section
7.9Severability.                          
53

      Section
7.10Definitions                          
54

      Section
7.11Interpretation                          
58

       

      


       


      
         

        
           


          
            

          

        

         

      


      Table
of Defined Terms

       

      The
following terms are defined in the section of this Agreement set forth after
such term below:

       

      
        	 
      	 
      	 
      
	
                Acquisition
      Proposal

              	
                Section 4.2(e)

              	 
      	 
      
	
                Additional
      Payment Date

              	
                Section 1.7(b)

              	 
      	 
      
	
                Affiliate

              	
                Section 7.10(a)

              	 
      	 
      
	
                Agreement

              	
                Recitals

              	 
      	 
      
	
                Allocation

              	
                Section 4.12(d)

              	 
      	 
      
	
                Apportioned
      Obligations

              	
                Section 4.12(b)

              	 
      	 
      
	
                Assumed
      Boulder Leases

              	
                Section 1.1(a)

              	 
      	 
      
	
                Assumed
      Liabilities

              	
                Section 1.4

              	 
      	 
      
	
                Bankruptcy
      and Equity Exception

              	
                Section 2.3(a)

              	 
      	 
      
	
                Boulder
      Facilities

              	
                Section 7.10(b)

              	 
      	 
      
	
                Boulder
      Lease

              	
                Section 2.15(a)

              	 
      	 
      
	
                Business
      Day

              	
                Section 7.10(c)

              	 
      	 
      
	
                Code

              	
                Section 1.10

              	 
      	 
      
	
                Confidential
      Information

              	
                Section 7.10(d)

              	 
      	 
      
	
                Confidentiality
      Agreement

              	
                Section 4.2(b)

              	 
      	 
      
	
                Contracts

              	
                Section 7.10(e)

              	 
      	 
      
	
                End
      Date

              	
                Section 6.1(b)(i)

              	 
      	 
      
	
                Environmental
      Laws

              	
                Section 2.13(f)(i)

              	 
      	 
      
	
                ERISA

              	
                Section 2.11(a)

              	 
      	 
      
	
                ERISA
      Affiliate

              	
                Section 2.11(a)

              	 
      	 
      
	
                Event

              	
                Section 7.10(aa)

              	 
      	 
      
	
                Exchange
      Act

              	
                Section 2.4

              	 
      	 
      
	
                Excluded
      Assets

              	
                Section 1.3

              	 
      	 
      
	
                Excluded
      Products

              	
                Section 7.10(f)

              	 
      	 
      
	
                FDA

              	
                Section 7.10(g)

              	 
      	 
      
	
                Financial
      Advisor

              	
                Section 2.18

              	 
      	 
      
	
                First
      Closing Assets

              	
                Section 1.2

              	 
      	 
      
	
                First
      Closing

              	
                Section 1.6(a)

              	 
      	 
      
	
                First
      Closing Date

              	
                Section 1.6(a)

              	 
      	 
      
	
                First
      Closing Purchase Price

              	
                Section 1.7(a)

              	 
      	 
      
	
                First
      Closing Transactions

              	
                Section 1.6(a)

              	 
      	 
      
	
                GAAP

              	
                Section 7.10(h)

              	 
      	 
      
	
                Governmental
      Authority

              	
                Section 7.10(i)

              	 
      	 
      
	
                Hazardous
      Materials

              	
                Section 2.13(f)(ii)

              	 
      	 
      
	
                HSR
      Act

              	
                Section 7.10(j)

              	 
      	 
      
	
                Indebtedness

              	
                Section 7.10(k)

              	 
      	 
      
	
                Intellectual
      Property Rights

              	
                Section 7.10(l)

              	 
      	 
      
	
                IPLEXTM
      EAP

              	
                Section 7.10(m)

              	 
      	 
      
	
                Key
      Products

              	
                Section 7.10(n)

              	 
      	 
      
	
                Key
      Products Employees

              	
                Section 2.10(a)

              	 
      	 
      
	
                Key
      Products IP Contracts

              	
                Section 7.10(o)

              	 
      	 
      
	
                Key
      Products IP Rights

              	
                Section 1.1(d)

              	 
      	 
      
	
                Key
      Products Registered IP

              	
                Section 2.16(b)

              	 
      	 
      
	
                Knowledge

              	
                Section 7.10(p)

              	 
      	 
      
	
                Laws

              	
                Section 2.8

              	 
      	 
      
	
                Lease
      Security

              	
                Section 4.16

              	 
      	 
      
	
                Leased
      Real Property

              	
                Section 2.15(a)

              	 
      	 
      
	
                Liability

              	
                Section 7.10(q)

              	 
      	 
      
	
                Lien

              	
                Section 7.10(r)

              	 
      	 
      
	
                Loss

              	
                Section 1.4

              	 
      	 
      
	
                Material
      Contracts

              	
                Section 2.14(a)

              	 
      	 
      
	
                Nasdaq

              	
                Section 2.4

              	 
      	 
      
	
                Organizational
      Documents

              	
                Section 2.1(b)

              	 
      	 
      
	
                Parent

              	
                Recitals

              	 
      	 
      
	
                Parent
      Indemnified Parties

              	
                Section 1.5(b)

              	 
      	 
      
	
                Parent
      Plans

              	
                Section 4.9(d)

              	 
      	 
      
	
                Parent
      Severance Plan

              	
                Section 4.9(e)

              	 
      	 
      
	
                Permits

              	
                Section 2.8

              	 
      	 
      
	
                Permitted
      Liens

              	
                Section 7.10(s)

              	 
      	 
      
	
                Person

              	
                Section 7.10(t)

              	 
      	 
      
	
                Post
      Closing Period

              	
                Section 1.9(a)

              	 
      	 
      
	
                Primary
      Boulder Facilities

              	
                Section 7.10(u)

              	 
      	 
      
	
                Primary
      Boulder Leases

              	
                Section 2.15(a)

              	 
      	 
      
	
                Purchase
      Price

              	
                Section 1.8

              	 
      	 
      
	
                Purchased
      Assets

              	
                Section 1.1

              	 
      	 
      
	
                Purchased
      Assets Permits

              	
                Section 2.8

              	 
      	 
      
	
                Purchased
      Assets Regulatory Documentation

              	
                Section 1.1(f)

              	 
      	 
      
	
                Purchased
      Contracts

              	
                Section 1.1(l)

              	 
      	 
      
	
                Purchased
      Inventory

              	
                Section 1.1(j)

              	 
      	 
      
	
                Purchaser

              	
                Recitals

              	 
      	 
      
	
                Purchaser
      Material Adverse Effect

              	
                Section 3.1

              	 
      	 
      
	
                Regulatory
      Authority

              	
                Section 7.10(v)

              	 
      	 
      
	
                Release

              	
                Section 2.13(f)(iii)

              	 
      	 
      
	
                Representatives

              	
                Section 4.2(a)

              	 
      	 
      
	
                Repurchase
      Right

              	
                Section 6.4(a)

              	 
      	 
      
	
                Restraints

              	
                Section 5.1(a)

              	 
      	 
      
	
                Retained
      Liabilities

              	
                Section 1.5

              	 
      	 
      
	
                SEC

              	
                Section 7.10(w)

              	 
      	 
      
	
                Second
      Closing Assets

              	
                Section 1.2

              	 
      	 
      
	
                Second
      Closing

              	
                Section 1.6(b)

              	 
      	 
      
	
                Second
      Closing Date

              	
                Section 1.6(b)

              	 
      	 
      
	
                Second
      Closing Purchase Price

              	
                Section 1.8

              	 
      	 
      
	
                Second
      Closing Transactions

              	
                Section 1.6(b)

              	 
      	 
      
	
                Secondary
      Boulder Facilities

              	
                Section 7.10(x)

              	 
      	 
      
	
                Secondary
      Boulder Leases

              	
                Section 2.15(a)

              	 
      	 
      
	
                Securities
      Act

              	
                Section 2.4

              	 
      	 
      
	
                Seller

              	
                Recitals

              	 
      	 
      
	
                Seller
      Account

              	
                Section 1.7(a)

              	 
      	 
      
	
                Seller
      Common Stock

              	
                Section 2.4

              	 
      	 
      
	
                Seller
      Confidential Information

              	
                Section 7.10(y)

              	 
      	 
      
	
                Seller
      Convertible Notes

              	
                Section 7.10(z)

              	 
      	 
      
	
                Seller
      Disclosure Schedule

              	
                ARTICLE II

              	 
      	 
      
	
                Seller
      Material Adverse Effect

              	
                Section 7.10(aa)

              	 
      	 
      
	
                Seller
      Payment Event

              	
                Section 6.3(a)

              	 
      	 
      
	
                Seller
      Plans

              	
                Section 2.11(a)

              	 
      	 
      
	
                Seller
      SEC Documents

              	
                Section 2.5(a)

              	 
      	 
      
	
                Seller
      Securities

              	
                Section 4.1(b)(i)

              	 
      	 
      
	
                Seller
      Termination Fee

              	
                Section 6.3(a)

              	 
      	 
      
	
                Solvent

              	
                Section 7.10(bb)

              	 
      	 
      
	
                Subsidiary

              	
                Section 7.10(cc)

              	 
      	 
      
	
                Superior
      Proposal

              	
                Section 4.2(e)

              	 
      	 
      
	
                Taxes

              	
                Section 2.9

              	 
      	 
      
	
                Tax
      Return

              	
                Section 2.9

              	 
      	 
      
	
                Third
      Party Supplier

              	
                Section 2.17(d)

              	 
      	 
      
	
                Trademark

              	
                Section 7.10(dd)

              	 
      	 
      
	
                Trade
      Secret

              	
                Section 7.10(ee)

              	 
      	 
      
	
                Transactions

              	
                Section 7.10(ff)

              	 
      	 
      
	
                Transfer
      Taxes

              	
                Section 4.12(a)

              	 
      	 
      
	
                Transferred
      Employee

              	
                Section 4.9(a)

              	 
      	 
      
	
                VSCA

              	
                Section 2.3(b)

              	 
      	 
      
	
                Work
      Plan

              	
                Section 1.6(a)

              	 
      	 
      


      



      
        
           


        

        
          
            

          

        

         

      


      


       

      ASSET
PURCHASE AGREEMENT

       

      This
ASSET PURCHASE AGREEMENT, dated as of February 12, 2009 (this “Agreement”), is among
PROTEIN TRANSACTION, LLC, a Delaware limited liability company and a
wholly-owned subsidiary of Parent (“Purchaser”), INSMED
INCORPORATED, a Virginia corporation (the “Seller”), and MERCK & CO.,
INC., a New Jersey corporation (“Parent”).

       

      WHEREAS,
the Boards of Directors of the Seller and Parent and the Board of Managers of
Purchaser have approved the acquisition of the Purchased Assets by Purchaser on
the terms and subject to the conditions set forth in this
Agreement;

       

      WHEREAS,
Purchaser desires to purchase from the Seller, and the Seller desires to sell to
Purchaser, the Purchased Assets, upon the terms and subject to the conditions
hereinafter set forth; and

       

      WHEREAS,
as an inducement to and condition to Parent’s and Purchaser’s willingness to
enter into this Agreement, prior to the date of this Agreement, the Seller has
entered into amendments to the Primary Boulder Leases, in form and substance
satisfactory to Parent, which provide the Seller with assignable options to
renew the Primary Boulder Leases through the year 2035.

       

      NOW,
THEREFORE, in consideration of the representations, warranties, covenants and
agreements contained in this Agreement, and intending to be legally bound
hereby, Parent, Purchaser and the Seller hereby agree as follows:

       

      ARTICLE
I                                

       

      PURCHASE
PRICE AND CLOSING

       

      Section
1.1 Sale and Purchase of the Purchased
Assets.  Subject to the terms and conditions set forth in this
Agreement, at the times set forth in Section
1.6, the Seller shall sell, transfer, assign and deliver (or cause to be
sold, transferred, assigned and delivered) to Purchaser, and Purchaser shall
purchase and acquire, free and clear of any Liens, other than Permitted Liens,
all right, title and interest in and to the Purchased Assets.  For
purposes of this Agreement, the “Purchased Assets”
shall mean all of the following assets of the Seller or its
Subsidiaries:

       

      (a) (i) the
Primary Boulder Leases and (ii) the Secondary Boulder Leases with respect to
which a landlord consent to assignment is delivered to Purchaser on or before
the Second Closing Date (the leases referenced to in (i) and (ii), together the
“Assumed Boulder
Leases”);

       

      (b) all
equipment and other tangible assets located at the Boulder Facilities, which
shall include all equipment and tangible assets used in connection with the Key
Products, including those described in Section
1.1(b) of the Seller Disclosure Schedule;

       

      (c) the Key
Products, including all formulations thereof and all proprietary rights of the
Seller and its Subsidiaries embodied in or associated with the Key Products
which is not otherwise set forth in this Section
1.1;

       

      (d) all
Intellectual Property Rights embodied or disclosed in or otherwise related to
the Key Products, or the research, production, manufacture, or development of
any Key Product (the “Key Products IP
Rights”), together with all of the Seller’s or its Subsidiaries’ rights
to sue and obtain damages and equitable relief for past, present and future
infringement, misappropriation or violation of any of the
foregoing;

       

      (e) all
notebooks, records and other media embodying the Key Products (and to the extent
such is stored in any equipment, the Purchased Assets will include that
equipment);

       

      (f) all
filings and supporting documents submitted to and received from any Regulatory
Authority relating to the Key Products and the Boulder Facilities, and all data
contained therein or incorporated therein by reference, including any
Investigational New Drug application (IND), Clinical Trial Application (CTA),
investigator’s brochures, pharmacology/toxicology data and reports,
correspondence to and from a Regulatory Authority, written summaries of any oral
discussions with a Regulatory Authority, including minutes from teleconferences
and meetings with a Regulatory Authority, registrations and licenses, adverse
event files, complaint files and manufacturing and testing records, all
qualification and validation documents, and all documentation pertaining to any
Regulatory Authority inspections (the “Purchased Assets Regulatory
Documentation”);

       

      (g) all data,
information, publications and other materials of the Seller or its Subsidiaries
embodying or relating to (i) the clinical and non-clinical (including in vitro and animal) testing
of the Key Products performed by or on behalf of the Seller or its Subsidiaries
and (ii) clinical field experience with the Key Products that is necessary or
useful for making regulatory filings for, or marketing of, the Key
Products;

       

      (h) all
authorizations, registrations, filings, permits, licenses, franchises, orders,
approvals, concessions, consents and other regulatory approvals issued by any
Regulatory Authority which are required (i) to lease, own or operate the Boulder
Facilities, (ii) for clinical testing of any Key Product or (iii) for the
handling, possession, importation, marketing, promotion, pricing or sale of any
Key Product and all applications for any of the aforementioned
items;

       

      (i) all
environmental, health and safety records and Permits for the Boulder
Facilities;

       

      (j) all
inventory of finished Key Products and all materials, samples, assays, reagents,
chemicals generated or used by the Seller or its Subsidiaries (or Persons
working on their behalf) in the research, development, manufacture or use of any
Key Product, including the inventory set forth in Section 1.1(j) of the Seller Disclosure Schedule
(collectively, the “Purchased
Inventory”);

       

      (k) all
manufacturing product records relating to the Boulder Facilities or any Key
Products, including all of the reports, files, data and other documents and
information produced by or for the Seller or its Subsidiaries in connection with
the manufacture of any Key Product that are in the possession or control of the
Seller or its Subsidiaries, including those described in Section 1.1(k) of the Seller Disclosure
Schedule;

       

      (l) all
rights, benefits and interests under all (i) Key Products IP Contracts, (ii) all
Contracts relating to the Key Products, the Purchased Inventory or any of the
Purchased Assets and (iii) all other Contracts, purchase orders and other
similar arrangements (including all express or implied warranties from the
suppliers of goods or services) used or held for use by the Seller or its
Subsidiaries in connection with the Key Products, including, with respect to
(i), (ii) and (iii) above, those described in Section
1.1(l) of the Seller Disclosure Schedule (the “Purchased
Contracts”);

       

      (m) all
rights to receive mail (including e-mail) and other communications related to
the Purchased Assets and communications from suppliers, agents and others with
respect to the Purchased Assets;

       

      (n) all
claims, causes of action, defenses and rights of offset or counterclaim (at any
time or in any matter existing or arising, whether choate or inchoate, known or
unknown, contingent or noncontingent), including claims under warranties or
guarantees or indemnities to the extent related to the Purchased Assets or the
Assumed Liabilities;

       

      (o) all
insurance benefits, including all property and casualty proceeds received or
receivable in connection with the damage or destruction of any asset that would
have been included in the Purchased Assets but for such damage or complete
destruction;

       

      (p) all
written legal opinions that Seller or its Subsidiaries have received with
respect to any of the Key Products or the Boulder Facilities; and

       

      (q) all other
assets, properties, rights, records and documentation used or held for use in
connection with, or otherwise related to, the Key Products or the Boulder
Facilities, other than the Excluded Assets.

       

      To the
extent any of the Purchased Assets consist of records, files, notebooks or other
information, and such information is included in media that also contains
information relating to any of the Excluded Assets, then the Purchased Assets
shall include the original of such media, and the Seller shall be entitled to
retain a copy of the information relating to the Excluded Assets.

       

      Section
1.2 First Closing Assets and Second
Closing Assets.  The Purchased Assets that are being sold,
assigned and transferred to Purchaser at the First Closing shall include all of
the Purchased Assets set forth in Section 1.1(c),
Section 1.1(d), Section
1.1(e), Section 1.1(f), Section 1.1(g) and Section
1.1(k) to the extent constituting, associated with, or relating to, product
candidates INS-19 Granulocyte Colony Stimulating Factor and INS-20 Pegylated
Granulocyte Colony Stimulating Factor (the “First Closing
Assets”).  All of the remaining Purchased Assets (the “Second Closing
Assets”) shall be sold, assigned and transferred to Purchaser at the
Second Closing.

       

      Section
1.3 Excluded
Assets.  Other than the Purchased Assets, neither the Seller
nor its Subsidiaries shall sell, transfer, assign or deliver to Purchaser any of
its rights, titles to or interests in any of its other assets (the “Excluded Assets”)
which are not part of the sale and purchase contemplated hereunder, are excluded
from the Purchased Assets, and shall remain the property of the Seller after the
First Closing and the Second Closing.  The Excluded Assets include the
following assets of the Seller or its Subsidiaries:

       

      (a) the
Excluded Products;

       

      (b) the
Intellectual Property Rights and other proprietary rights of the Seller embodied
solely in or associated solely with the Excluded Products and/or the IPLEXTM
EAP;

       

      (c) each
Contract, and any verbal or written agreement to enter into a Contract, that any
of the Seller or its Subsidiaries is a party to or bound by with respect to the
Excluded Products, including any Contract that would obligate the Seller or its
Subsidiaries to (i) research, develop, manufacture, supply or commercialize any
Excluded Product, or any derivative product, for any indication, (ii) seek
approval from the FDA or any other Regulatory Authority with respect to any
Excluded Product or (iii) conduct clinical trials with respect to any Excluded
Product or provide patients with access to any Excluded Product, including the
IPLEXTM EAP;

       

      (d) all cash,
cash equivalents and short term investments;

       

      (e) assets
located at the Seller’s corporate headquarters in Richmond, Virginia, including
all minute books, stock records and corporate seals, to the extent that such
Richmond assets are not otherwise included in clauses (a) – (p) of the
definition of the Purchased Assets;

       

      (f) all
personnel records and other records that the Seller is required by Law to retain
in its possession (provided copies of any such records shall be provided to the
Purchaser at the Second Closing, to the extent permitted by Law);

       

      (g) all
claims for refund of Seller's Taxes;

       

      (h) all
rights of the Seller under this Agreement or any other agreement, instrument,
certificate or document required to be delivered to the Seller at the Second
Closing pursuant to Section 5.5; and

       

      (i) the
property and assets expressly designated in Section
1.3(i) of the Seller Disclosure Schedule.

       

      Section
1.4 Assumption of
Liabilities.  Effective as of the Second Closing, the Seller
shall not have any liability or obligation with respect to, and Purchaser shall
assume and thereafter pay, perform and discharge when due, without recourse to
the Seller, the Liabilities arising under the Purchased Contracts and the
Assumed Boulder Leases (including the replacement of any security deposit, line
of credit or other surety held by the landlord(s) under the Assumed Boulder
Leases to ensure performance of the Assumed Boulder Leases) solely to the extent
such obligations require performance after the Second Closing (which, for the
avoidance of doubt, shall not include any obligations and Liabilities arising
out of or relating to a breach by the Seller or its Subsidiaries that occurred
prior to the Second Closing Date and any Liabilities which are Retained
Liabilities, collectively, the “Assumed
Liabilities”).  Parent shall cause Purchaser to, and Purchaser
shall, pay, perform and discharge when due, without recourse to the Seller, all
Assumed Liabilities related to the Purchased Assets which arise after the Second
Closing Date.  Parent and Purchaser shall indemnify, defend and hold
harmless the Seller, its Affiliates, and their respective officers, directors,
employees, successors and assigns from and against all claims, losses,
liabilities, damages, deficiencies, interest and penalties, Taxes, costs and
expenses, including losses resulting from the defense, settlement and/or
compromise of a claim and/or demand and/or assessment, reasonable attorneys’,
accountants’ and expert witnesses’ fees, costs and expenses of investigation
hereafter (individually a “Loss” and
collectively “Losses”), arising in
connection with or relating to the Assumed Liabilities.

       

      Section
1.5 Retained
Liabilities.

       

      (a) Notwithstanding
anything to the contrary contained in this Agreement, Purchaser and its
Affiliates shall not have any liability or obligation with respect to, shall not
assume or agree to pay, perform or discharge, and shall not be deemed by virtue
of the execution and delivery of this Agreement or any document delivered at the
First Closing or the Second Closing pursuant to this Agreement, or as a result
of the consummation of the Transactions, to have assumed, or to have agreed to
pay, perform or discharge, any liability or obligation of the Seller, its
Subsidiaries or any of their Affiliates, whether primary or secondary, direct or
indirect, known or unknown, asserted or unasserted, due or to become due,
accrued, absolute, contingent or otherwise, and whether arising prior to, on or
after the First Closing Date, with respect to the First Closing Assets, or the
Second Closing Date, with respect to the Second Closing Assets, other than the
Assumed Liabilities (such Liabilities not assumed by Purchaser, collectively,
the “Retained
Liabilities”).  “Retained Liabilities” shall include the
following:

       

      
        	
                (i)  

              	
                all
      Liabilities of Seller or its Subsidiaries, or any member of any
      consolidated, affiliated, combined or unitary group of which Seller or any
      of its Subsidiaries is or has been a member, for Taxes (including any
      Liability for Taxes relating to any of the Purchased Assets or the
      ownership, control, lease or license of any of the Purchased
      Assets);

              


      

       

      
        	
                (ii)  

              	
                all
      Liabilities of the Seller or its Subsidiaries arising pursuant to this
      Agreement;

              


      

       

      
        	
                (iii)  

              	
                all
      Liabilities and obligations of the Seller or its Subsidiaries arising
      under the Seller Plans or relating to payroll, vacation, sick leave,
      workers’ compensation and unemployment benefits of any
    kind;

              


      

       

      
        	
                (iv)  

              	
                all
      Liabilities of the Seller or its Subsidiaries in connection with any
      claims, actions, suits, audits, inquiries, proceedings by any Governmental
      Authority or third party (including any shareholders of the Seller,
      whether brought directly, derivatively or otherwise), including any
      claims, actions, suits, audits, inquiries, proceedings arising as a result
      of or relating to the entry into the Agreement or the consummation of the
      Transactions;

              


      

       

      
        	
                (v)  

              	
                all
      Liabilities of the Seller and its Subsidiaries relating to, arising out of
      or incurred in connection with any of the Excluded Assets (including under
      any Contracts related thereto);

              


      

       

      
        	
                (vi)  

              	
                all
      Liabilities arising under any Environmental Law; provided that
      such Liabilities shall be Retained Liabilities only to the extent that any
      such Liability of the Seller, its Subsidiaries or any of their Affiliates
      arises during the two-year period beginning on the Second Closing
      Date;

              


      

       

      
        	
                (vii)  

              	
                all
      Liabilities of the Seller or its Subsidiaries arising as a result of
      violations of any Laws (other than Environmental
  Laws);

              


      

       

      
        	
                (viii)  

              	
                all
      Liabilities of the Seller or its Subsidiaries for
      Indebtedness;

              


      

       

      
        	
                (ix)  

              	
                all
      Liabilities arising out of or resulting from any breach by the Seller or
      its Subsidiaries under any Purchased Contract or Boulder Lease prior to
      the date on which any such Purchased Contract or Boulder Lease is
      transferred by the Seller to Purchaser in accordance with the terms of
      this Agreement;

              


      

       

      
        	
                (x)  

              	
                all
      Liabilities arising out of or related to any broker’s, finder’s, advisory
      or other similar fee or commission, or the reimbursement of expenses, in
      connection with the Transactions based upon arrangements made by or on
      behalf of the Seller or any of its Subsidiaries;
  and

              


      

       

      
        	
                (xi)  

              	
                with
      respect to the First Closing Assets, all other Liabilities of the Seller
      or its Subsidiaries arising out of or relating to periods prior to the
      First Closing and with respect to the Second Closing Assets, all other
      Liabilities of the Seller or its Subsidiaries arising out of or relating
      to periods prior to the Second
Closing.

              


      

       

      (b) The
Seller shall pay, discharge and perform all of the Retained Liabilities when
due.  The Seller shall indemnify, defend and hold harmless Parent,
Purchaser, their Affiliates, and their respective officers, directors,
employees, successors and assigns (the “Parent Indemnified
Parties”) from and against all Losses, arising in connection with or
relating to the Retained Liabilities.  For purposes of this Section 1.5, the “Seller” shall be deemed to include
all Affiliates of the Seller and any predecessors and successors to the Seller
(including by operation of law, merger, liquidation, consolidation, assignment,
assumption or otherwise).

       

      Section
1.6 First Closing; Second
Closing.

       

      (a) The
closing (the “First
Closing”) of the purchase and sale of the First Closing Assets (the
“First Closing
Transactions”) shall take place at 10:00 a.m. (New York City time)
simultaneously with the execution and delivery of this Agreement (the “First Closing
Date”).  At the First Closing, the Seller and Purchaser shall
execute and deliver such documents (including a legal opinion, addressed to
Parent and Purchaser, dated the First Closing Date, from outside counsel to
Seller, in form and substance satisfactory to Purchaser, to the effect set forth
in Section 5.3(h) of the Seller Disclosure
Schedule) as are reasonably necessary and typical for similar transactions in
order to complete the transfer of the First Closing Assets from the Seller to
Purchaser.  Without limiting the foregoing, promptly following the
First Closing, the Seller shall promptly take, or cause to be taken, the actions
set forth in Section 1.6(a) of the Seller Disclosure
Schedule with respect to the First Closing Assets.  Neither Parent nor
Purchaser shall assume any of the Assumed Liabilities at the First
Closing.  Effective as of the First Closing Date, Purchaser hereby
grants to the Seller and its Subsidiaries a non-exclusive, non-transferable
license to use the First Closing Assets solely to the extent necessary for the
Seller and its Subsidiaries to perform those activities specified in the Work
Plan attached as Section 4.1(c) of the Seller
Disclosure Schedule (the “Work
Plan”).

       

      (b) The
closing (the “Second
Closing”) of the purchase and sale of the Second Closing Assets and the
assumption of the Assumed Liabilities (the “Second Closing
Transactions”) will take place at 10:00 a.m. (New York City time) on
March 31, 2009, or such earlier date as is agreed to in writing by the parties
hereto, assuming that all of the conditions set forth in ARTICLE V have been satisfied (other than those
conditions that by their nature are to be satisfied at the Second Closing, but
subject to the satisfaction of those conditions at the Second Closing) or waived
prior to such date; provided that if the Second Closing does not occur on March
31, 2009, the Second Closing will take place thereafter at 10:00 a.m. (New York
City time) on the second Business Day after all of the conditions set forth in
ARTICLE V have been satisfied (other than those
conditions that by their nature are to be satisfied at the Second Closing, but
subject to the satisfaction of those conditions at the Second Closing) or
waived, unless another time or date is agreed to in writing by the parties
hereto.  The date on which the Second Closing actually occurs is
hereinafter referred to as the “Second Closing Date.”

       

      (c) The First
Closing and the Second Closing shall place at the offices of Fried, Frank,
Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York
10004, unless another place is agreed to in writing by the parties
hereto.

       

      Section
1.7 First
Closing Assets Purchase Price.

       

      (a) Purchase
Price.  On the terms and subject to the conditions set forth in
this Agreement, at the First Closing, as consideration for the sale, transfer,
assignment and delivery of the First Closing Assets to Purchaser, Purchaser
shall purchase and acquire all right, title and interest in and to the First
Closing Assets for an aggregate purchase price equal to $10,000,000 with
$2,500,000 paid within one Business Day after the First Closing Date and,
subject to Section 6.4(a), the remaining $7,500,00
to be paid pursuant to, and subject to the conditions set forth in, Section 1.7(b) (the “First Closing Purchase
Price”).  At the First Closing, Purchaser shall pay the
$2,500,000 in cash by wire transfer of immediately available funds to the
account designated in writing by the Seller prior to the First Closing Date (the
“Seller
Account”).

       

      (b) Additional
Payments.  On the terms, and subject to the conditions, set
forth in this Section 1.7(b), on March
12, 2009, April 13, 2009 and May 12, 2009 (each, an “Additional Payment
Date”), Purchaser shall make the following additional payments to the
Seller in consideration for the sale, transfer, assignment and delivery of the
First Closing Assets to Purchaser (provided that no payments shall be made to
the Seller pursuant to this Section 1.7(b) after
the earlier of the Second Closing and the termination of this Agreement pursuant
to ARTICLE VI):

       

      
        	
                (i)  

              	
                If
      the conditions set forth in Section 1.7(c)
      have been satisfied or waived by Purchaser (provided that any such waiver
      shall be in Purchaser’s sole discretion), on March 12, 2009 Purchaser
      shall pay $2,500,000, in cash by wire transfer of immediately available
      funds to the Seller Account.

              


      

       

      
        	
                (ii)  

              	
                If
      the Second Closing has not occurred prior to April 13, 2009, and if the
      conditions set forth in Section 1.7(c) have
      been satisfied or waived by Purchaser (provided that any such waiver shall
      be in Purchaser’s sole discretion), on April 13, 2009 Purchaser shall
      pay $2,500,000, in cash by wire transfer of immediately available funds to
      the Seller Account.

              


      

       

      
        	
                (iii)  

              	
                If
      the Second Closing has not occurred prior to May 12, 2009, and if the
      conditions set forth in Section 1.7(c) have
      been satisfied or waived by Purchaser (provided that any such waiver shall
      be in Purchaser’s sole discretion), on May 12, 2009 Purchaser shall
      pay $2,500,000, in cash by wire transfer of immediately available funds to
      the Seller Account.

              


      

       

      (c) The
obligations of Purchaser to make each payment set forth in Section 1.7(b) shall be subject to the satisfaction
(or waiver by Purchaser, in its sole discretion) on or prior to the applicable
Additional Payment Date of the following conditions:

       

      
        	
                (i)  

              	
                Each
      of the conditions set forth in Section 5.1,
      Section 5.3(a), Section 5.3(b), Section
      5.3(d), Section 5.3(e) and Section 5.3(f) shall be satisfied provided that
      (A) references to the “Second Closing” or “Second Closing Date” therein
      shall be deemed to refer to the applicable Additional Payment Date, and
      (B) in the case of Section 5.3(d) any such
      action, suit, proceeding, inquiry or investigation shall not have been
      settled, dismissed or terminated within 10 Business Days, in each case
      without any of the Parent Indemnified Parties having any Liability or
      obligation with respect thereto.

              


      

       

      
        	
                (ii)  

              	
                None
      of the landlords of any of the Primary Boulder Facilities shall have
      notified the Seller, any of Seller’s Subsidiaries, Parent or Purchaser in
      writing on or prior to the applicable Additional Payment Date that such
      landlord does not intend to consent or will not consent to the assignment
      of any of the Primary Boulder Leases in connection with the
      Transactions.

              


      

       

      
        	
                (iii)  

              	
                Purchaser
      being satisfied that, after taking into account the payment to be made on
      the applicable Additional Payment Date, the value of the Seller’s assets
      would be less than $10,000,000, as would be shown on a balance sheet of
      the Seller, prepared in a manner that is consistent with the methodology
      used to prepare the financial statements of the Seller that have been
      included in the Seller SEC
Documents.

              


      

       

      (d) If Parent
or Purchaser is not obligated to make a payment on any applicable Additional
Payment Date as a result of the failure of the conditions set forth in Section 1.7(c) to be satisfied on such applicable
Additional Payment Date, Purchaser and Parent shall either (i) make such payment
within 10 Business Days after the applicable Additional Payment Date or (ii)
after such ten-Business Day period, promptly notify the Seller of their
intention to terminate this Agreement pursuant to ARTICLE VI.

       

      Section
1.8 Second Closing Assets Purchase
Price.  On the terms and subject to the conditions set forth in
this Agreement, at the Second Closing, as consideration for the sale, transfer,
assignment and delivery of all right, title and interest in and to the Second
Closing Assets to Purchaser, Parent shall pay, or cause Purchaser to pay, an
aggregate purchase price equal to (x) $120,000,000, plus (y) an amount (if any)
equal to (i) $10,000,000 less (ii) any amounts previously paid pursuant to Section 1.7(a) and Section
1.7(b) (the “Second Closing Purchase
Price” and with the First Closing Purchase Price, the “Purchase
Price”).  At the Second Closing, Parent or Purchaser shall pay
the Second Closing Purchase Price in cash by wire transfer of immediately
available funds to the Seller Account.

       

      Section
1.9 Obligations of Seller During
Post-Closing Period.

       

      (a) The
Seller shall not, and shall cause its Subsidiaries not to, liquidate or
dissolve, or enter into any proceeding relating to bankruptcy, insolvency,
liquidation or dissolution until the expiration of the 12 month period following
the Second Closing (the “Post Closing
Period”).  At all times during the Post Closing Period, the
Seller shall (i) promptly satisfy and discharge all Liabilities of the Seller or
its Subsidiaries existing on and after the Second Closing Date, (ii) maintain
sufficient capital with which to continue its proposed operations and (iii)
remain Solvent.  During the three month period following the Second
Closing, Purchaser shall not take any action set forth in Section 4.1(b)(i)(B) or Section 4.1(b)(i)(C); provided that, if any
action, suit, proceeding, inquiry or investigation by any Governmental Authority
or third party (including any shareholders of the Seller, whether brought
directly, derivatively or otherwise), shall be instituted, pending or threatened
that seeks, or could reasonably be expected to seek to rescind, invalidate, void
or undue any of the Transactions after the Second Closing Date, such three-month
period shall automatically be extended until such action, suit, proceeding,
inquiry or investigation is settled, terminated or dismissed or shall have
become final and nonappealable, in each case without any of the Parent
Indemnified Parties having any Liability or obligation with respect
thereto.

       

      (b) In
furtherance of the Seller’s obligations pursuant to Section 1.9(a), promptly following the Second Closing,
and before taking any actions during the three month period following the Second
Closing that if taken prior to the Second Closing would have required the
consent of Purchaser pursuant to Section
4.1(b)(i)(B) or Section 4.1(b)(i)(C), the
Seller shall establish and set aside a cash reserve which is sufficient to pay
all of the Retained Liabilities.  The amount of this reserve shall be
as reasonably determined by the Seller’s Board of Directors and shall include an
amount that is sufficient to pay all current Liabilities of the Seller or any of
its Subsidiaries and all reasonably anticipated future Liabilities of the Seller
or any of its Subsidiaries, including all Liabilities (i) under outstanding
options, warrants, Indebtedness and convertible debt, (ii) under the lease for
the Seller’s Virginia facility, (iii) under the Seller Plans and (iv) for Taxes
(including Taxes resulting from or related to the Transactions).

       

      Section
1.10 Withholding
Taxes.  Purchaser shall be entitled to deduct and withhold
(without duplication) from any amount otherwise payable pursuant to this
Agreement such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder (the “Code”), or under any
provision of state, local or foreign Tax Law.  To the extent amounts
are so withheld and paid over to the appropriate Governmental Authority, the
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Person in respect of which such deduction and withholding was
made.

       

      Section
1.11 Assignment of Contracts; Rights and
Obligations.  Except as set forth in Section 5.3(g), nothing contained herein shall require
the Seller to assign (or cause to be assigned) any Purchased Contract to
Purchaser in connection with the Transactions if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
or default thereof, cause or permit the acceleration or termination thereof or
in any way materially and adversely affect the rights of the Seller, its
Subsidiaries or Purchaser thereunder or the rights of Purchaser to the Key
Products or other Purchased Assets.  In the event that any Purchased
Contract cannot be so assigned or a third party to any such Purchased Contract
shall not consent to such assignment, the Seller shall provide to Purchaser all
of the Seller’s rights and interests in and to such Purchased Contracts and,
where necessary or appropriate, the Seller shall be deemed to be Purchaser’s
duly appointed agent for the purpose of completing, fulfilling and discharging
all of Purchaser’s rights and liabilities arising after the Second Closing Date
with respect to such Purchased Contracts.  The Seller shall use its
commercially reasonable efforts to provide Purchaser with the benefit of such
Purchased Contracts including (i) enforcing any rights under such Purchased
Contracts (including the right to terminate in accordance with the terms thereof
upon the request of Purchaser) or (ii) permitting Purchaser to enforce any
rights as if such Purchased Contracts had been sold, conveyed, assigned and
transferred to Purchaser.

       

      ARTICLE
II                                

       

      REPRESENTATIONS
AND WARRANTIES OF THE SELLER

       

      Except as
set forth in the disclosure schedule delivered by the Seller to Purchaser and
Parent (the “Seller
Disclosure Schedule”) prior to the execution of this Agreement, the
Seller represents and warrants to Purchaser and Parent that:

       

      Section
2.1 Organization,
Standing and Corporate Power.

       

      (a) Each of
the Seller and its Subsidiaries is duly organized, validly existing and in good
corporate standing (or equivalent status) under the Laws of the state of its
incorporation or organization and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted, except where the failure to comply
with any of the foregoing has not had and would not reasonably be expected to
have, individually or in the aggregate, a Seller Material Adverse
Effect.  Each of the Seller and its Subsidiaries is duly licensed or
qualified to do business and is in good standing (or equivalent status) as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned, leased or operated by it requires such license or qualification,
except where the failure to be so licensed, qualified or in corporate good
standing (or equivalent status) has not had and would not reasonably be expected
to have, individually or in the aggregate, a Seller Material Adverse
Effect.

       

      (b) The
Seller has made available to Purchaser true, correct and complete copies of the
articles of incorporation and bylaws of the Seller and the organizational
documents of each of its Subsidiaries, as amended to the date of this Agreement
(collectively, the “Organizational
Documents”).  The Organizational Documents are in full force
and effect, and neither the Seller nor any of its Subsidiaries is in material
violation of its respective Organizational Documents.

       

      Section
2.2 Purchased Assets.

       

      (a) Seller or
its Subsidiaries have good, valid and marketable title to all of the Purchased
Assets free and clear of any Liens, except for Permitted Liens.  The
Purchased Assets, include all of the assets, rights and properties (including
Intellectual Property Rights) of the Seller and its Subsidiaries related to the
operation of the Boulder Facilities and that are used or held for use for the
manufacture or development of Key Products.

       

      (b) All of
the Purchased Assets used by the Seller or its Subsidiaries at the Leased Real
Property are in all material respects free from defects (patent or latent) or
adverse physical conditions, have been maintained in all material respects in
accordance with normal industry practice and are in all material respects in
good operating condition and repair, subject to normal wear and tear occurring
in the ordinary course of business.

       

      Section
2.3 Authority; Noncontravention; Voting
Requirements.

       

      (a) The
Seller has all requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
Transactions.  The execution, delivery and performance by the Seller
of this Agreement and the consummation by it of the Transactions, have been duly
and validly authorized by all necessary corporate action on the part of the
Seller and no other corporate action on the part of the Seller is necessary to
authorize the execution, delivery and performance by the Seller of this
Agreement or the consummation by it of the Transactions.  This
Agreement has been duly and validly executed and delivered by the Seller and,
assuming due authorization, execution and delivery by the other parties hereto,
constitutes legal, valid and binding obligations of the Seller, enforceable
against the Seller in accordance with its terms, except that such enforceability
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar Laws affecting creditors’ rights generally and by
general principles of equity (the “Bankruptcy and Equity
Exception”).

       

      (b) The
Seller’s Board of Directors, at a meeting duly called and held at which all of
the directors of the Seller’s Board of Directors were present in person or by
telephone in compliance with the applicable provisions of the Virginia Stock
Corporation Act of the Commonwealth of Virginia (the “VSCA”), has duly and
unanimously adopted resolutions (i) adopting and approving this Agreement
and approving the Transactions, (ii) declaring that this Agreement and the
Transactions are advisable and in the best interests of the Seller and its
shareholders and (iii)  electing, to the extent permitted by applicable
Laws, to make inapplicable all state takeover laws or similar Laws of the VSCA,
to the extent they might otherwise apply to the execution, delivery, performance
or consummation of this Agreement or the Transactions, and none of the aforesaid
actions by the Seller’s Board of Directors has been amended, rescinded or
modified as of the date hereof.  No further corporate action is
required by the Seller’s Board of Directors in order for the Seller to approve
this Agreement or the Transactions.

       

      (c) None of
the execution and delivery of this Agreement by the Seller, the consummation by
the Seller of the Transactions or compliance by the Seller with any of the terms
or provisions hereof will (i) conflict with, or result in a violation or
breach of, any provision of any Organizational Document of the Seller or any of
its Subsidiaries, (ii) assuming that the authorizations, consents and
approvals referred to in Section 2.4 are obtained
and the filings referred to in Section 2.4 are
timely made, violate any Law applicable to the Seller or any of its Subsidiaries
or their respective properties or assets, (iii) assuming that the
authorizations, consents and approvals referred to in Section 2.4 and the filings referred to in Section 2.4 are timely made, conflict with, or result
in any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligations or loss of any material benefit) under,
require a consent or waiver under, require the payment of a penalty under, any
terms, conditions or provisions of any loan or credit agreement, debenture,
note, bond, mortgage, indenture, deed of trust or Contract to which the Seller
or any of its Subsidiaries is a party or by which any of the Purchased Assets
may be bound or any Purchased Assets Permit or (iv) result in the creation
or imposition of any Lien on any Purchased Asset, except, in the case of clause
(iii) , for such conflicts, violations, breaches, Liens or defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Seller Material Adverse Effect.

       

      (d) The VSCA
does not require that this Agreement or the Transactions be approved by holders
of any class or series of capital stock of the Seller or any of its
Subsidiaries.

       

      Section
2.4 Governmental Approvals and
Consents.  Except for filings
required under, and compliance with other applicable requirements of, the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
the Securities Act of 1933, as amended (the “Securities Act”), the
rules and regulations promulgated under the Exchange Act and the Securities Act,
the rules and regulations of the Nasdaq Stock Market (“Nasdaq”), the HSR Act
(if applicable), and the third party consents set forth in Section 2.4 of the Seller Disclosure Schedule, no
consents or approvals of, or filings, declarations or registrations with, any
Governmental Authority, any stock market or stock exchange on which shares of
common stock, par value $0.01 per share, of the Seller (the “Seller Common Stock”)
are listed for trading, or any third party are necessary (a) for the execution
and delivery of this Agreement by the Seller or the consummation by the Seller
of the Transactions, (b) to avoid the loss of the Purchased Assets Permits or
the breach of any Purchased Contract or the creation of a Lien (other than a
Permitted Lien) on any of the Purchased Assets or (c) to enable Purchaser to own
the First Closing Assets following the First Closing Date and the Second Closing
Assets following the Second Closing Date.

       

      Section
2.5 Seller
SEC Documents; Undisclosed Liabilities.

       

      (a) Since
December 31, 2007, the Seller has timely filed or furnished, as applicable, all
reports, forms, schedules, statements, prospectuses, registration statements and
other document required to be filed or furnished by the Seller under the
Securities Act or the Exchange Act, as the case may be (such documents,
collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the “Seller SEC
Documents”).  Each Seller SEC Document, as of its filing date
or, if amended or supplemented prior to the date of this Agreement, as of the
date of its last such amendment or supplement, complied as to form, and each
such Seller SEC Document filed subsequent to the date hereof will comply as to
form, in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder, applicable to such Seller SEC Documents.  Each Seller SEC
Document, as of its filing date or, if amended or supplemented prior to the date
of this Agreement, as of the date of its last such amendment or supplement, did
not, and each such Seller SEC Document filed subsequent to the date hereof will
not, contain any untrue statement of a material fact or omit to state any
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
made, not misleading.

       

      (b) The
consolidated financial statements (including the consolidated balance sheets and
the related consolidated statements of income, consolidated statements of income
and shareholders’ equity and consolidated statements of cash flows) of the
Seller and its Subsidiaries included in the Seller SEC Documents (i) have been
prepared from, are in accordance with, and accurately reflect the books and
records of the Seller and its Subsidiaries in all material respects, (ii) have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except (A) as may be indicated in the notes thereto or, (B) in
the case of interim financial statements, for normal year-end adjustments that
did not and would not, individually or in the aggregate, reasonably be expected
to have a Seller Material Adverse Effect and as may be permitted by the SEC on
Form 10-Q under the Exchange Act) and (iii) fairly present in all material
respects the consolidated financial position of the Seller and its Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows and changes in stockholders’ equity of the Seller and its
Subsidiaries as of the dates and for the periods referred to therein (except, in
the case of interim financial statement, to normal year-end adjustments that did
not and would not, individually or in the aggregate, reasonably be expected to
have a Seller Material Adverse Effect).

       

      (c) Neither
the Seller nor any of its Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) other than
liabilities or obligations that (i) have been discharged or paid in full
prior to the date of this Agreement in the ordinary course of business,
(ii) are accrued or reserved against in the most recent financial
statements included in the Seller SEC Documents filed prior to the date hereof
or are reflected in the notes thereto or (iii) were incurred in the
ordinary course of business consistent with past practice and that have not had
and would not reasonably be expected to have, individually or in the aggregate,
a Seller Material Adverse Effect.

       

      Section
2.6 Absence of Certain
Changes.  Since
December 31, 2007, the business of the Seller and its Subsidiaries has been
conducted in the ordinary course and there has not been any Event that has had
or would reasonably be expected to have, individually or in the aggregate, a
Seller Material Adverse Effect.

       

      Section
2.7 Legal
Proceedings.  There is no legal or administrative proceeding,
claim, suit or action pending or, to the Knowledge of the Seller, threatened,
against or affecting, the Seller, any of its Subsidiaries, any of their
respective assets or rights, any Seller Plan, any present or former officer,
director or employee of the Seller or any of its Subsidiaries in their
respective capacities as such before (or, in the case of threatened actions,
suits, investigations or proceedings, would be before) any arbitrator or
Governmental Authority, nor is there any injunction, order, judgment, ruling or
decree of any arbitrator or Governmental Authority imposed upon or outstanding
against the Seller or any of its Subsidiaries, or any of their respective assets
or rights, or, to the Knowledge of the Seller, investigation by any Governmental
Authority involving the Seller or any of its Subsidiaries.

       

      Section
2.8 Compliance With Laws;
Permits.  Each of the Seller and
its Subsidiaries has been and is currently in compliance in all material
respects with all laws, injunctions, judgments, decrees, rulings, statutes,
ordinances, codes, rules, regulations, decrees and orders of Governmental
Authorities, including the Occupational Safety and Health Act of 1970 (29 U.S.C.
§ 651 et seq.) (collectively, “Laws”) applicable to
the Purchased Assets or the Key Products Employees, including Laws relating to
occupational safety and health, manufacturing practice, labeling, handling and
use of compounds and products and employee exposure monitoring and
control.  None of the Seller or any of its Subsidiaries has received
any written notice or other written communication alleging or relating to a
possible violation by the Seller or any of its Subsidiaries of any Laws
applicable to the Purchased Assets.  The Seller and each of its
Subsidiaries hold all licenses, registrations, variances, exemptions, operating
certificates, franchises, orders, permits, certificates, approvals,
authorizations, concessions, certificates of occupancy and similar rights from
Governmental Authorities (collectively, “Permits”) necessary
for the lawful operation of the Purchased Assets as currently conducted
(collectively, the “Purchased Assets
Permits”), and there has occurred no violation of, default (with or
without notice or lapse of time or both) under, or event giving to others any
right of termination, amendment or cancellation of, with or without notice or
lapse of time or both, any of the Purchased Assets Permits except that have not
had and would not reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect.  There is not pending or,
to the Knowledge of the Seller, threatened before any Governmental Authority any
proceeding, notice of violation, order of forfeiture or complaint or
investigation against the Seller or any of its Subsidiaries relating to any of
the Purchased Assets Permits.  The Seller and its Subsidiaries are in
compliance in all material respects with the terms of all of the Purchased
Assets Permits, and no event has occurred that, to the Knowledge of the Seller,
would reasonably be expected to result in the revocation, cancellation,
non-renewal or adverse modification of any of the Purchased Assets
Permits.

       

      Section
2.9 Taxes.  As used in
this Agreement, the term “Tax” or “Taxes” shall mean all
taxes, charges, fees, duties, levies, imposts, or other assessments or
governmental charges of any kind imposed by a federal, state, local or foreign
Governmental Authority, including income, gross receipts, employment, excise,
severance, stamp, occupation, premium, windfall profits, customs, duties,
property, sales, use, license, profits, estimated, capital stock, transfer,
franchise, registration, payroll, withholding, social security (or similar),
unemployment, disability, value added, alternative or add-on minimum or other
taxes, and including any interest, penalties or additions attributable thereto,
whether disputed or not, and including any liability arising under any tax
sharing agreement or indemnity obligation or any liability for taxes of another
person by contract, as a transferee or successor, or under Treas. Reg. §
1.1502-6 or an analogous provision of state, local, or foreign law. As used in
this Agreement, the term “Tax Return” shall
mean any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.

       

      (a) The
Seller and its Subsidiaries have timely filed or caused to be filed (taking into
account any valid extensions) all material Tax Returns required to be filed by
them with the appropriate Governmental Authority, and all such Tax Returns were
true, complete and correct in all material respects.

       

      (b) All
material Taxes due and payable by the Seller or any of its Subsidiaries have
been duly and timely paid, whether or not shown on any Tax Return.

       

      (c) There are
no Liens for Taxes upon the assets of the Seller or any of its Subsidiaries
other than Permitted Liens.

       

      (d) All
material Tax withholding and deposit obligations imposed on or with respect to
the Seller and its Subsidiaries (including any withholding with respect to wages
or other amounts paid to employees, independent contractors, creditors,
shareholders or other third parties) have been satisfied in full.

       

      (e) Neither
the Seller nor any of its Subsidiaries has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.

       

      (f) There is
no claim, action, suit, investigation, audit or proceeding, including any appeal
or application for review, now pending or, to the Knowledge of the Seller,
threatened against or with respect to the Seller or any of its Subsidiaries in
respect of any material Tax or Tax asset of the Seller or any of its
Subsidiaries.

       

      (g) Neither
the Seller nor any of its Subsidiaries is a party to any understanding or
arrangement described in Section 6662(d)(2)(C)(ii) of the Code, or any
“reportable transaction” within the meaning of Treasury Regulation
Section 1.6011-4.

       

      (h) Neither
the Seller nor any of its Subsidiaries has any material Liability for the Taxes
of any Person (other than the Seller and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any comparable provision of state, local or
foreign Law), as a transferee or successor, by Contract or
otherwise.

       

      (i) Each Tax
election made by the Seller or any of its Subsidiaries has been timely and
properly made.

       

      (j) Neither
the Seller nor any of its Subsidiaries is the beneficiary of any extension of
time within which to file any Tax Return.

       

      (k) To the
Knowledge of the Seller, no claim has ever been made by an authority in a
jurisdiction where the Seller or any of its Subsidiaries does not file Tax
Returns that the Seller or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction.

       

      Section
2.10 Personnel
Matters.

       

      (a) Section 2.10(a)(i) and Section 2.10(a)(ii) of the Seller Disclosure Schedule
contain a true, accurate and complete list, as of date hereof, of all employees
of the Seller employed primarily in the development or manufacture of Key
Products (the “Key
Products Employees”), including their respective positions, salaries,
wages, bonuses and other compensation paid or payable by the Seller during 2009
and 2008 as well as dates of employment, and the date and amount of last salary
increase, of such Key Products Employees.  Section 2.10(a) of the Seller Disclosure Schedule
identifies any Key Products Employees who are on short-term disability or other
approved leave of absence (other than vacation), their anticipated return to
work date and the Seller Plans in which they participate in or may be entitled
to benefits.

       

      (b) There are
no claims (other than ordinary claims under the Seller Plans) or legal
proceedings pending or, to the Knowledge of the Seller, threatened, by or
between the Seller and any Key Products Employees.

       

      Section
2.11 Employee
Benefit Plans.

       

      (a) Section 2.11(a) of the Seller Disclosure Schedule
contains a true, correct and complete list as of the date hereof of (i) each
material deferred compensation, incentive compensation, equity compensation
plan, vacation and “welfare” plan, fund or program (within the meaning of § 3(1)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), (ii) each
“pension” plan, fund or program (within the meaning of § 3(2) of ERISA), (iii)
each material employment, consulting, termination, change in control or
severance agreement to which a Key Products Employee is a party and (iv) each
other material employee benefit plan, fund, program, policy, agreement, contract
or arrangement, in each of clauses (i) through (iv), that is sponsored,
maintained or contributed to or required to be contributed to by the Seller or
its Subsidiaries or by any trade or business, whether or not incorporated (an
“ERISA
Affiliate”), that together with the Seller would be deemed a “single
employer” within the meaning of § 4001(b) of ERISA, or to which the Seller or an
ERISA Affiliate is a party for the benefit of any current or former officer,
employee, independent contractor or director of the Seller or any of its
Subsidiaries (collectively, and solely for purposes of Section 4.9(f), whether or not material, the “Seller
Plans”).

       

      (b) Neither
the Seller nor any of its ERISA Affiliates nor any predecessor thereof sponsors,
maintains or contributes to, has in the past six years sponsored, maintained or
contributed to or is or has in the past been required to sponsor, maintain or
contribute to, any plan subject to Title IV or § 302 of
ERISA.  Neither the Seller nor any of its ERISA Affiliates nor any
predecessor thereof contributes to, has in the past contributed to or is or has
in the past six years been required to contribute to, any “multiemployer plan,”
as defined in Section 3(37) of ERISA.

       

      (c) Each
Seller Plan has been operated and administered in all material respects in
accordance with its terms and in accordance with applicable Law, including ERISA
and the Code and the operation or terms of any Seller Plan will not result in
liability to Parent, Purchaser or any of Parent’s other Affiliates.

       

      Section
2.12 Labor Matters.  Section 2.12 of the Seller Disclosure Schedule sets
forth all of the collective bargaining agreements to which the Seller or any of
its Subsidiaries is bound as of the date hereof with respect to any Key Products
Employees.  Except for instances that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect (a) there is no unfair labor practice charge, labor
strike, dispute, slowdown, stoppage or representation petition brought before
the National Labor Relations Board pending, or, to the Knowledge of the Seller,
threatened, against the Seller or any of its Subsidiaries and (b) there are
currently no charges or complaints against the Seller or any of its Subsidiaries
concerning any Key Products Employees alleging employment discrimination,
harassment or retaliation, whistleblower violations, violations of occupational
safety and health requirements, employee misclassification, violations of
employment termination-related Laws and other employment related matters,
whether pending or, to the Knowledge of the Seller, threatened before a court of
competent jurisdiction, the U.S. Equal Employment Opportunity Commission or any
other Governmental Authority.  All Key Products Employees are employed
within the United States.

       

      Section
2.13 Environmental
Matters.

       

      (a) Except as
would not reasonably be expected to have, individually or in the aggregate, a
Seller Material Adverse Effect, the Seller and each of its Subsidiaries are in
compliance with all applicable Environmental Laws and have all Permits required
by Environmental Laws to conduct their respective businesses, as currently
conducted, and are in compliance with all such Permits.

       

      (b) (i) There
is no pending, or to the Knowledge of the Seller, threatened claim, lawsuit,
action, investigation or proceeding that is based upon or related to the
operation of the Boulder Facilities or any of the other Purchased Assets against
the Seller or any of its Subsidiaries under or pursuant to any Environmental
Law, (ii) neither the Seller nor any of its Subsidiaries is a subject of
any administrative or judicial consent, order, penalty, request for information,
demand, citations, summons, complaint or decree in connection with any
Environmental Laws that is based upon or related to the operation of the Boulder
Facilities or any of the other Purchased Assets and (iii) neither the
Seller nor any of its Subsidiaries has received notice from any Person,
including any Governmental Authority, alleging that the Seller or any of its
Subsidiaries is in violation of, or liable under, or potentially in violation of
or liable under, any applicable Environmental Law, that is based upon or related
to the operation of the Boulder Facilities or any of the other Purchased Assets
and which violation or liability is unresolved.

       

      (c) Seller
has not caused or permitted a Release, and to the Knowledge of the Seller,
neither the owner of the Boulder Facilities nor a third party has caused or
permitted a Release of any Hazardous Material on, at, to, from or underneath the
Boulder Facilities that have had or would reasonably be expected to have,
individually or in the aggregate, a Seller Material Adverse Effect.

       

      (d) There has
been no written environmental investigation, study, audit, test, review or other
analysis conducted with respect to the Boulder Facilities in the possession or
control of the Seller or any of its Subsidiaries which has not been delivered or
made available to Purchaser at least five days prior to the date
hereof.

       

      (e) Notwithstanding
anything to the contrary in this Agreement, this Section 2.13 is the sole representation and warranty
in this Agreement relating to Hazardous Materials, Environmental Laws or other
environmental matters.

       

      (f) As used
in this Agreement:

       

      
        	
                (i)  

              	
                “Environmental
      Laws” shall mean all federal, state, foreign and local Laws
      (including common law), treaties, rules and regulations, judgments or
      orders, governmental requirements or agreements with any Governmental
      Authority relating to the environment, pollution, contaminants or other
      hazardous substances, or protection of human health, including laws
      relating to Releases or threatened Releases of Hazardous Materials or
      otherwise relating to the manufacture, processing, distribution, use,
      treatment, storage, disposal, transport or handling of Hazardous
      Materials, and all laws and regulations with regard to record keeping,
      notification, disclosure and reporting requirements regarding Hazardous
      Materials.

              


      

       

      
        	
                (ii)  

              	
                “Hazardous
      Materials” shall mean any chemicals, materials or substances
      defined as or included in the definition of “hazardous substances,”
      “hazardous wastes,” “hazardous materials,” “hazardous constituents,”
      “restricted hazardous materials,” “extremely hazardous substances,” “toxic
      substances,” “contaminants,” “pollutants,” “toxic pollutants,” or words of
      similar meaning and regulatory effect under any Environmental Law
      including petroleum and its derivatives, byproducts and other
      hydrocarbons, toxic mold, asbestos, asbestos-containing and radioactive
      materials.

              


      

       

      
        	
                (iii)  

              	
                “Release” means
      any release, spill, emission, leaking, pumping, dumping, injection,
      deposit, disposal, discharge, dispersal, leaching or migration into the
      atmosphere, soil, surface water, groundwater or property.

              


      

       

      Section
2.14 Material
Contracts.

       

      (a) Section 2.14 of the Seller Disclosure Schedule
contains a true, correct and complete list of all of the following Contracts to
which the Seller or any of its Subsidies are a party, or any of their assets may
be bound:

       

      
        	
                (i)  

              	
                Contracts
      relating to the Boulder Facilities, including the Boulder
      Leases;

              


      

       

      
        	
                (ii)  

              	
                all
      Contracts relating to the Key Products, the Purchased Inventory or any of
      the Purchased Assets;

              


      

       

      
        	
                (iii)  

              	
                all
      Key Products IP Contracts;

              


      

       

      
        	
                (iv)  

              	
                all
      other Contracts which could impose obligations on or bind Purchaser or any
      of its Affiliates upon or following consummation of the
      Transactions;

              


      

       

      
        	
                (v)  

              	
                employment,
      severance, change in control, restricted stock, termination, personal
      services, consulting, or non-competition Contracts that bind any of the
      Key Products Employees; and

              


      

       

      
        	
                (vi)  

              	
                and
      commitments and agreements to enter into any of the foregoing (such
      Contracts, the “Material
      Contracts”).

              


      

       

      (b) The Seller has heretofore made available to Purchaser
true, correct and complete copies of the Material Contracts.  Each of
the Material Contracts constitutes the valid and legally binding obligation of
the Seller or its Subsidiaries, enforceable in accordance with its terms
(subject to the Bankruptcy and Equity Exception), and is in full force and
effect.  The Seller and each of its Subsidiaries are not (and with the
giving of notice or lapse of time would not be) in breach of, or default under,
any Material Contract and, to the Knowledge of the Seller, no other party
thereto is in breach of, or default under, in any respect, any Material
Contract.

       

      Section
2.15 Properties.

       

      (a) Section 2.15(a) of the
Seller Disclosure Schedule contains a true, correct and complete list of all
real property leased, subleased, or otherwise occupied (whether as a tenant,
subtenant or pursuant to other occupancy arrangements) by the Seller or any of
its Subsidiaries in Boulder, Colorado, including the real property underlying
the Boulder Facilities (collectively, including the improvements thereon, the
“Leased Real
Property”).  With respect to each Leased Real Property, Section 2.15(a) of the Seller Disclosure Schedule also
contains a true, correct and complete list of all Contracts under which the
Seller or any of its Subsidiaries is the landlord, sublandlord, tenant,
subtenant or occupant (each a “Boulder
Lease”).  Except as set forth in Section 2.15(a) of the Seller Disclosure Schedule, the
Seller has heretofore made available to Purchaser true, correct and complete
copies of the Boulder Leases (including all amendments and modifications
thereto), including the Boulder Leases that relate to the Primary Boulder
Facilities (the “Primary Boulder
Leases”) and the Boulder Leases that relate to the Secondary Boulder
Facilities (the “Secondary Boulder
Leases”).

       

      (b) Except as
set forth in Section 2.15(b) of the Seller
Disclosure Schedule, the Transactions will not require notice to, or the
approval or consent of, any third party to any of the Boulder
Leases.

       

      (c) The
Seller and/or its Subsidiaries have valid leasehold estates in all Leased Real
Property free and clear of all Liens, except Permitted Liens.

       

      (d) Other
than the Boulder Leases, none of the Boulder Facilities is subject to any lease,
sublease, license or other agreement pursuant to which the Seller or any of its
Subsidiaries has granted to any other Person any right to the use, occupancy or
enjoyment of the Boulder Facilities or any part thereof.

       

      (e) The
Boulder Leases are in full force and effect and constitutes the valid and
legally binding obligation of the Seller or its Subsidiaries, enforceable in
accordance with its terms (subject to the Bankruptcy and Equity Exception), and
there is no material default under the Boulder Leases either by the Seller or
its Subsidiaries party thereto or, to the Knowledge of the Seller, by any other
party thereto.

       

      (f) There
does not exist any pending or, to the Knowledge of the Seller, threatened
condemnation or eminent domain proceedings that affect the Boulder
Facilities.  Neither the Seller nor any of its Subsidiaries has
received any notice of the intention of any Governmental Authority or other
Person to take or use any Leased Real Property.

       

      (g) There are
no defects (patent or latent) or adverse physical conditions affecting the
Boulder Facilities in any material respect.  All facilities, plants,
warehouses, structures and other buildings that make up the Boulder Facilities
are adequately maintained and are in good operating condition and repair in all
material respects.

       

      Section
2.16 Intellectual
Property.

       

      (a) The Seller or its Subsidiaries exclusively own, have
a valid license or otherwise have the valid right to use or access, all Key
Products IP Rights free and clear of all Liens of any kind
whatsoever.  Except as set forth in Section 2.16(a) of the Seller Disclosure Schedule,
there are no Intellectual Property Rights owned by any third party that the
Seller needs to develop, manufacture or sell any Key Product.

       

      (b) Section 2.16(b) of the Seller Disclosure Schedule sets
forth a true, correct and complete list of (i) each patent, patent application,
trademark registration, trademark application, copyright registration and domain
name registration in which the Seller has or purports to have an ownership
interest of any nature relating to the Key Products (whether exclusively,
jointly with another Person, or otherwise) (collectively, “Key Products Registered
IP”), (ii) the jurisdiction in which such item of the Key Products
Registered IP has been registered or filed and the applicable registration or
serial number, (iii) any other Person that has an ownership interest in such
item of the Key Products Registered IP and the nature of such ownership interest
and (iv) each Seller product that embodies, utilizes, is made under or is based
upon or derived from (or, with respect to each Seller product currently under
development, that is expected to embody, utilize, be made under or be based upon
or derived from) such item of the Key Products Registered IP.  Each of
the Key Products Registered IP identified in Section
2.16(b) of the Seller Disclosure Schedule is subsisting, valid and
enforceable, and has not been adjudged invalid or unenforceable in whole or
part.  The Seller has taken commercially reasonable steps to maintain
and protect each item of such Key Products Registered IP, including by using
commercially reasonable efforts to comply with any and all formal legal and/or
administrative requirements related to the filing, prosecution and maintenance
registrations and application (including the payment of all maintenance fees
related thereto, and the timely post-registration filing of affidavits of use
and incontestability and renewal applications).  Except as set forth
in Section 2.16(b) of the Seller Disclosure
Schedule, no Key Products IP Rights is subject to any outstanding decree, order,
injunction, judgment or ruling restricting the use of such Intellectual Property
Right or that would impair the validity or enforceability of such Intellectual
Property Right.  Except as set forth in Section 2.16(b) of the Seller Disclosure Schedule, no
Person has asserted by way of declaratory action, invalidation action, nullity
action, revocation action, opposition, reexamination or otherwise that the Key
Products IP Rights is invalid and/or unenforceable.

       

      (c) The
manufacture, practice, use, offering for sale, importation and sale of the Key
Products as previously manufactured, practiced, used, offered for sale, imported
and sold, and as currently manufactured, used, offered for sale, imported and
sold did not and does not infringe, misappropriate, or otherwise violate
(including with respect to the development, clinical testing, manufacture,
distribution, marketing, use or sale by the Seller or any of its Subsidiaries of
any products to which they relate), the rights of any Person with regard to any
Intellectual Property Right in a manner which, individually or in the aggregate,
has resulted or would reasonably be expected to result in a Seller Material
Adverse Effect.  To the Knowledge of the Seller, no Person or Persons
has infringed, misappropriated or otherwise violated or is or are infringing,
misappropriating or otherwise violating any Key Products IP Rights.

       

      (d) There are
no pending or, to the Knowledge of the Seller, threatened claims (i) that, with
respect to the Purchased Assets, the Seller or any of its Subsidiaries has
infringed, misappropriated or otherwise violated or is infringing,
misappropriating or otherwise violating (including with respect to the
manufacture, use, distribution, marketing, or sale by the Seller or its
Subsidiaries of any Key Products) any Intellectual Property Rights of any
Person, (ii) based upon or challenging or seeking to deny or restrict the use by
or ownership of the Seller of any of the Key Products IP Rights or (iii)
alleging that any Key Products IP Right is being licensed or sublicensed in
conflict with the terms of any license or other Contract.  No Person
has asserted by way of allegation, cease and desist demands, unsolicited offers
of license or otherwise or, to the Seller’s Knowledge, has the right to assert
any claim regarding the use of, or challenging or questioning the Seller’s right
or title in, any of the Key Products IP Rights.

       

      (e) All
obligations for payment of monies currently due and payable by the Seller or any
of its Subsidiaries have been satisfied in a timely manner in connection with
options, rights, licenses or interests of any kind relating to any Intellectual
Property Rights granted (i) to the Seller or any of its Subsidiaries, with
respect to the Key Products IP Rights (other than software licenses for
generally available software and except pursuant to employee proprietary
inventions agreements (or similar employee agreements), non-disclosure
agreements and consulting agreements entered into by the Seller or any of its
Subsidiaries in the ordinary course of business), (ii) by the Seller or any of
its Subsidiaries to any other Person, with respect to the Key Products IP Rights
(including any obligations of such other Person to make any fixed or contingent
payments, including royalty payments) or (iii) under any other Key Products IP
Contract.

       

      (f) The
Seller has taken reasonable security measures, including measures against
unauthorized disclosure, to protect the secrecy, confidentiality, and value of
its Trade Secrets and other Confidential Information, as such Trade Secrets or
other Confidential Information relate to the Key Products.  To the
Seller’s Knowledge, with respect to the Key Products, none of the Seller’s
employees is obligated under any Contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of such employee’s best efforts to promote the interests of the
Seller.  To the Seller’s Knowledge, with respect to the Key Products,
none of its employees (i) is obligated (or was obligated at any time while
employed by the Seller) under any Contract to assign any invention made,
conceived, or reduced to practice during the period of such employee’s
employment by the Seller to any Person other than the Seller or (ii) has
assigned any inventions made, conceived, or reduced to practice during the
period of such employee’s employment by the Seller.  To the Knowledge
of the Seller, neither the execution nor delivery of this Agreement will
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any Contract, covenant or instrument under which
any of its employees are now obligated.  The Seller does not believe
it is or will be necessary to utilize in connection with the Key Products any
inventions of any of its employees made prior to their employment by the Seller
that have not been licensed or acquired by the Seller.

       

      (g) The
execution and delivery of this Agreement by the Seller do not, and the
consummation by the Seller of the Transactions and compliance by the Seller with
the provisions of this Agreement will not, (i) alter, impair, diminish or result
in the loss of any rights or interests of the Seller or any of its Subsidiaries
in respect of any Key Products IP Rights or under any Key Products IP Contract,
(ii) grant or require the Seller or any of its Subsidiaries to grant to any
Person any rights in respect of any Key Products IP Rights or (iii) subject the
Seller or any of its Subsidiaries to any increase in or acceleration of
royalties or other payments in respect of any Key Products IP Rights or under
any Key Products IP Contract.

       

      Section
2.17 Regulatory
Matters.  With respect to the Key Products and the Boulder
Facilities:

       

      (a) The Seller and its Subsidiaries are in compliance in
all material respects with all applicable statutes, rules and regulations of the
FDA, and, to the extent applicable, other Regulatory Authorities, with respect
to the clinical testing, manufacture, labeling, storing, testing, or
distribution of their compounds and products, including current “Good
Manufacturing Practice,” or cGMP regulations, “Good Clinical Practice” or GCP
regulations to the extent the clinical data from any of their clinical studies
is used to support regulatory approval of the Seller’s products, “Good
Laboratory Practice” (as such terms are defined in applicable Laws) or GLP
regulations to the extent the non-clinical data from Seller non-clinical studies
is used to support regulatory approval of any products of the Seller and its
Subsidiaries.

       

      (b) The
Seller and its Subsidiaries are in compliance with all applicable registration
and listing requirements set forth at 21 U.S.C. § 360 and all similar applicable
laws and regulations, except for noncompliance which would not have, and would
not reasonably be expected to have, either individually or in the aggregate, a
Seller Material Adverse Effect.

       

      (c) Neither
the Seller nor its Subsidiaries, nor, to the Knowledge of the Seller, any Person
providing services to the Seller or its Subsidiaries (including Third Party
Suppliers), is in receipt of notice of, or is subject to, any adverse
inspection, finding of non-compliance, compelled or voluntary recall,
investigation, penalty for corrective or remedial action or other compliance or
enforcement action, by the FDA or any other applicable Regulatory
Authority.  There are no pending or, to the Knowledge of the Seller,
threatened actions, proceedings or complaints by the FDA or any other applicable
Regulatory Authority against the Seller or its Subsidiaries, or any Person
providing services to the Seller or its Subsidiaries (including Third Party
Suppliers).  Without limiting the generality of the foregoing, Section 2.17(c) of the Seller Disclosure Schedule sets
forth each FDA Form 483 or similar inspection report and any warning letter or
other similar notice that the Seller or its Subsidiaries or, to the Knowledge of
the Seller, any Person providing services to the Seller or its Subsidiaries
(including Third Party Suppliers) has received from the FDA or any other
applicable Regulatory Authority.  True, correct and complete copies of
any item set forth in Section 2.17(c) of the Seller
Disclosure Schedule and all responses and other correspondence submitted by, or
on behalf of, the Seller or its Subsidiaries to or from the FDA or any
applicable Regulatory Authority (and any similar correspondence to or from any
Person providing services to the Seller or its Subsidiaries (including Third
Party Suppliers)) with respect to such items have been made available to
Purchaser.  The Seller and its Subsidiaries have promptly responded
to, or caused any Person providing services to the Seller or its Subsidiaries
(including Third Party Suppliers) to respond to, each of the items set forth in
Section 2.17(c) of the Seller Disclosure Schedule
and have taken, or caused any Person providing services to the Seller (including
Third Party Suppliers) to take, all steps required to remedy any material
deficiencies or material deviations noted in any such items.

       

      (d) Section 2.17(d) of the Seller Disclosure Schedule sets
forth all of the third party manufacturers and suppliers of materials, reagents,
active pharmaceutical ingredients, compounds and products used by the Seller or
its Subsidiaries (each a “Third Party
Supplier”).  To the Seller’s Knowledge, each Third Party
Supplier (i) has complied and is complying with all applicable statutes, rules
and regulations of the FDA, and, to the extent applicable, other Regulatory
Authorities, (ii) has all Permits necessary to conduct its business and perform
its obligations as Third Party Supplier and all such Permits are in full force
and effect and (iii) has not been debarred under any country’s debarment
provisions including subsections 306(a) or 306(b) of the Generic Drug
Enforcement Act of 1992, disqualified as a testing facility under CFR Part 58,
subpart K, or disqualified as a clinical investigator under 21 CFR
312.70.

       

      (e) The
inventory of the Seller, including the Purchased Inventory, and to the Seller’s
Knowledge, all Third Party Suppliers, of key materials, reagents, active
pharmaceutical ingredients, compounds and products, has been manufactured,
handled, stored and distributed in accordance with applicable Laws, including
current “Good Manufacturing Practice,” or cGMP regulations.

       

      (f) Neither
the Seller nor its Subsidiaries has received any notification from the FDA or
any other applicable Regulatory Authority indicating that any of their products
are misbranded or adulterated as defined in 21 U.S.C. § 321, et seq., as
amended, and the rules and regulations promulgated thereunder.

       

      (g) Section 2.17(g) of the Seller Disclosure Schedule
lists all serious as well as non-serious adverse experiences.  The
Seller has reported all serious and unexpected adverse events to the FDA and any
other applicable Regulatory Authority and clinical sites in accordance with
applicable reporting obligations, and has provided Purchaser with copies of all
such reports.  There have been no product recalls conducted by or
issued to the Seller and no requests from the FDA or any other applicable
Regulatory Authority requesting the Seller to cease to investigate, test,
manufacture or distribute any products, compounds or study drugs of the Seller
or its Subsidiaries.

       

      (h) All
studies and trials conducted by or on behalf of the Seller and its Subsidiaries
are listed in Section 2.17(h) of the Seller
Disclosure Schedule and have been provided for review to Purchaser and the
Seller has otherwise provided for review all preclinical and clinical studies
and trials regarding the efficacy and safety of all products, compounds or study
drugs of the Seller or its Subsidiaries.  The Seller has heretofore
provided to Purchaser all material written correspondence between the Seller and
its Subsidiaries with the FDA and any other applicable Regulatory
Authority.

       

      (i) Neither
the Seller and its Subsidiaries nor, to the Seller’s Knowledge, any officer,
employee or agent of the Seller, has made an untrue statement of a material fact
or fraudulent statement to the FDA or any other Regulatory Authority, failed to
disclose a material fact required to be disclosed to the FDA or any other
Regulatory Authority, or committed an act, made a statement or failed to make a
statement that, at the time such disclosure was made, would reasonably be
expected to provide a basis for any investigation by, and, to the Knowledge of
the Seller, no such investigation has been instituted or threatened by, (i) the
FDA pursuant to its “Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991), (ii)
Department of Health and Human Services Officer of Inspector General or
Department of Justice pursuant to the Federal Anti-Kickback Statute (42 U.S.C. §
1320a-7(b)) or the Federal False Claims Act (31 U.S.C. § 3729 et seq.) or (iii)
any equivalent statute of any country in the European Union.

       

      (j) No
clinical trial of a Key Product has been suspended, put on hold or terminated
prior to completion.

       

      (k) The
Seller and its Subsidiaries have not used in any capacity the services of any
Persons debarred under any country’s debarment provisions including subsections
306(a) or 306(b) of the Generic Drug Enforcement Act of 1992, disqualified as a
testing facility under CFR Part 58, subpart K, or disqualified as a clinical
investigator under 21 CFR 312.70, in connection with any of the services
performed by the Seller or its contractors.  To the Seller’s
Knowledge, there are no pending or threatened actions, suits, claims,
investigations or legal or administrative proceedings relating to the debarment
or disqualification of any Person performing any services for the Seller or its
Subsidiaries.

       

      (l) The
Seller and its Subsidiaries have complied in all material respects with all
applicable Laws, guidelines and regulations relating to the collection and/or
use of the human cell lines, tissue, human clinical isolates or similar
human-derived materials and the Seller or its Subsidiaries have obtained any
approvals, consents, and/or authorization required by Law (including the Health
Insurance Portability and Accountability Act and regulations promulgated
thereunder) for the collection, use, and/or transfer of such human cell lines,
tissue, human clinical isolates or similar human-derived
materials.  Such human cell lines, tissue, human clinical isolates or
similar human-derived materials may be used without any obligations to the
individuals or entities who contributed the materials, including any obligations
of compensation to such individuals or entities who contributed the materials
for any purposes, including any obligations of compensation to such individuals
or entities who contributed the materials or any other third party for the
intellectual property associated with, or commercial use of, such materials for
any purposes.

       

      Section
2.18 Opinion of Financial
Advisor.  The Seller has received the opinion of RBC Capital
Markets Corporation (the “Financial Advisor”),
dated the date of this Agreement, to the effect that, as of such date, and
subject to the various assumptions and qualifications set forth in such opinion,
the consideration to be received by the Seller in the Transactions is fair, from
a financial point of view.  The Seller will provided a true, correct
and complete copy of such opinion to Purchaser promptly upon receipt
thereof.

       

      Section
2.19 Brokers and Other
Advisors.  Except for the Financial Advisor, the fees and
expenses of which are disclosed in Section 2.19
of the Seller Disclosure Schedule, no agent, broker, investment banker,
financial advisor or other Person is entitled to any broker’s, finder’s,
advisory or other similar fee or commission, or the reimbursement of expenses,
in connection with the Transactions based upon arrangements made by or on behalf
of the Seller or any of its Subsidiaries.

       

      Section
2.20 State Takeover
Statutes.  Article 14 (Affiliated Transactions) of the VSCA and
Article 14.1 (Control Share Acquisitions) of the VSCA are both inapplicable to
this Agreement and the Transactions.

       

      Section
2.21 Related Party Transactions.  As of the date hereof, no, director,
officer or other Affiliate of the Seller or any of its Subsidiaries or any of
such Person’s Affiliates, or any entity in which any such Person has a direct or
indirect material interest, (a) has any right, title, or interest in any
Key Products IP Rights or (b) is party to or bound by any Purchased
Contract.

       

      Section
2.22 Solvency; Fair Consideration; No
Fraudulent Conveyance.  Upon the consummation of the
Transactions, the Seller will be Solvent.  The Seller is not entering
into this Agreement and consummating the Transactions with the intent to
defraud, delay or hinder the Seller’s creditors and the consummation of the
Transactions will not have any such effect.  The Transactions do not
constitute a fraudulent conveyance, or otherwise give rise to any right of any
creditor of the Seller whatsoever to any of the First Closing Assets after the
First Closing or the Second Closing Assets after the Second
Closing.

       

      Section
2.23 Termination of Representations and
Warranties.  The representations and warranties of the Seller
contained in this Agreement (including the Seller Disclosure Schedule and any
certificates delivered by the parties pursuant to this Agreement) shall
terminate upon the earlier of the Second Closing or the termination of this
Agreement pursuant to ARTICLE VI.

       

      ARTICLE
III                                

       

      REPRESENTATIONS
AND WARRANTIES OF PURCHASER

       

      Parent
and Purchaser, jointly and severally, represent and warrant to the Seller
that:

       

      Section
3.1 Organization, Standing and Corporate
Power.  Each of Parent and
Purchaser is duly organized and validly existing under the Laws of the state of
its incorporation or organization and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted.  Each of Parent and
Purchaser is duly licensed or qualified to do business and is in good corporate
standing (or equivalent status) as a foreign corporation or other entity in each
jurisdiction in which the nature of the business or activities conducted by it
or the character or location of the properties and assets owned, leased or
operated by it requires such license or qualification, except where the failure
to be so licensed, qualified or in good standing (or equivalent status) has not
had and would not reasonably be expected to have a material adverse effect on
the ability of (i) Parent or Purchaser to perform its obligations, or (ii) for
Purchaser to consummate the Transactions, in accordance with the terms of this
Agreement (each a “Purchaser Material Adverse
Effect”).

       

      Section
3.2 Authority;
Noncontravention.

       

      (a) Each of
Parent and Purchaser has all requisite corporate or other power and authority to
execute and deliver this Agreement, and to perform its obligations hereunder and
to consummate the Transactions.  The execution, delivery and
performance by each of Parent and Purchaser of this Agreement, and the
consummation by Purchaser of the Transactions, have been duly authorized by all
necessary corporate or other action on the part of Parent and Purchaser, and no
other corporate or other action on the part of either Parent or Purchaser is
necessary to authorize the execution, delivery and performance by Parent and
Purchaser of this Agreement or the consummation by it of the
Transactions.  This Agreement has been duly executed and delivered by
Parent and Purchaser and, assuming due authorization, execution and delivery
hereof by the Seller, constitutes a legal, valid and binding obligation of
Parent and Purchaser, enforceable against each of them in accordance with its
terms, subject to the Bankruptcy and Equity Exception.

       

      (b) None of
the execution and delivery of this Agreement by Parent or Purchaser, the
consummation by Parent and Purchaser of the Transactions or compliance by Parent
and Purchaser with any of the terms or provisions hereof will (i) conflict with,
or result in a violation or breach of, any provision of the organizational
documents of Purchaser or the articles of incorporation or bylaws of Parent,
(ii) assuming that the authorizations, consents and approvals referred to in Section 3.3 and the filings referred to in Section 3.3 are timely made, violate any Law
applicable to Parent and Purchaser or its properties or assets or (iii) assuming
that the authorizations, consents and approvals referred to in Section 2.4 and the filings referred to in Section 2.4 are timely made, conflict with, or result
in any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligations or loss of any material benefit) under,
require a consent or waiver under, require the payment of a penalty under, any
terms, conditions or provisions of any loan or credit agreement, debenture,
note, bond, mortgage, indenture, deed of trust or Contract to which Parent or
Purchaser is a party, except for such conflicts, violations, breaches or
defaults that, individually or in the aggregate, have not had, and would not
reasonably be expected to have a Purchaser Material Adverse Effect.

       

      Section
3.3 Governmental
Approvals.  Except for
filings required under, and compliance with other applicable requirements of the
Exchange Act, the Securities Act, the rules and regulations promulgated under
the Exchange Act and the Securities Act, the rules and regulations of Nasdaq,
the HSR Act (if applicable), and filings under state securities or “blue sky”
laws, no consents or approvals of, or filings, declarations or registrations
with, any Governmental Authority or any stock market or stock exchange on which
Parent’s or Purchaser’s capital stock is listed for trading are necessary for
the execution and delivery of this Agreement by Parent or Purchaser or the
consummation by Parent or Purchaser of the Transactions, other than such other
consents, approvals, filings, declarations or registrations that, if not
obtained, made or given, would not reasonably be expected to have, individually
or in the aggregate, a Purchaser Material Adverse Effect.

       

      Section
3.4 Ownership and Operations of
Purchaser.  Parent owns beneficially all of the outstanding
capital stock of Purchaser.  Purchaser was formed solely for the
purpose of engaging in the Transactions, has engaged in no other business
activities and has conducted its operations only as contemplated hereby.

       

      Section
3.5 Sufficient
Funds.  Parent and Purchaser will
have available, as and when needed, the funds that are necessary to consummate
the Transactions and to perform its obligations under this Agreement.

       

      Section
3.6 Legal
Proceedings.  There is no legal or administrative proceeding,
claim, suit or action pending or, threatened, against or affecting, or that may
have the effect of preventing, delaying, making illegal or otherwise interfering
with, the ability of Parent or Purchaser to consummate the Transactions, before
(or, in the case of threatened actions, suits, investigations or proceedings,
would be before) any arbitrator or Governmental Authority, except as have not
had and would not reasonably be expected to have a Purchaser Material Adverse
Effect.

       

      ARTICLE
IV

       

      ADDITIONAL
COVENANTS AND AGREEMENTS

       

      Section
4.1 Conduct of Business.

       

      (a) Except
(i) as contemplated or expressly permitted by this Agreement, (ii) as required
by applicable Law or (iii) as contemplated by Section
4.1 of the Seller Disclosure Schedule, during the period from the date of
this Agreement until the Second Closing, unless Purchaser otherwise consents in
writing, which consent shall not be unreasonably withheld, delayed or
conditioned, the Seller shall, and shall cause its Subsidiaries to, conduct
their businesses, as such businesses relate to the operation of the Boulder
Facilities or any of the other Purchased Assets in the ordinary course and
comply with all applicable Laws in all material respects, and, to the extent
consistent therewith, use their commercially reasonable efforts to preserve
intact their present business organizations and all of the Purchased Assets,
keep available the services of their present executive officers, key employees
and consultants and preserve their relationships with customers, suppliers,
licensors, licensees, distributors and other Persons having business dealings
with them with respect to, or in connection with the operation of the Boulder
Facilities or any of the other Purchased Assets and to take no action that would
adversely affect or delay in any material respect the ability of either
Purchaser or the Seller to obtain any necessary approvals of any Governmental
Authority required for the Transactions.

       

      (b) Without
limiting the generality of the foregoing, except (1) as contemplated or
permitted by this Agreement, (2) as required by applicable Law, (3) as
contemplated by Section 4.1 of the Seller
Disclosure Schedule or (4) as contemplated by the Work Plan, during the period
from the date of this Agreement until the Second Closing, unless Purchaser
otherwise consents in writing, which consent shall not be unreasonably withheld,
delayed or conditioned, neither the Seller nor its Subsidiaries
shall:

       

      
        	
                (i)  

              	
                (A)
      issue, deliver, sell, grant, pledge or otherwise encumber or subject to
      any Lien any shares of its capital stock, or any securities or rights
      convertible into, exchangeable or exercisable for, or evidencing the right
      to subscribe for any shares of its capital stock, or any rights, warrants
      or options to purchase any shares of its capital stock, or any securities
      or rights convertible into, exchangeable or exercisable for, or evidencing
      the right to subscribe for, any shares of its capital stock, or any
      “phantom” stock, “phantom” stock rights, stock appreciation rights or
      stock based performance units (collectively, the “Seller
      Securities”), provided that the Seller may issue shares of Seller
      Common Stock upon the exercise of warrants or options to purchase any
      shares of its capital stock which are outstanding on the date hereof,
      pursuant to the Seller’s employee stock purchase plan, and upon the
      conversion of Seller’s outstanding Seller Convertible Notes, (B) redeem,
      purchase or otherwise acquire any of its outstanding shares of capital
      stock, any Seller Security, or any rights or options to acquire any shares
      of its capital stock, except upon exercise by the holders of the Seller
      Convertible Notes, (C) declare, set aside for payment or pay any dividend
      on, or make any other distribution (whether in cash, stock or property) in
      respect of, any shares of its capital stock or (D) split, combine,
      subdivide or reclassify any of its capital stock or issue or authorize the
      issuance of any other securities in respect of, in lieu of or in
      substitution for shares of its capital
stock;

              


      

       

      
        	
                (ii)  

              	
                amend
      the term of any Seller Security or capital stock of any of its
      Subsidiaries (in each case, whether by merger, consolidation or otherwise)
      or the Seller Convertible Notes;

              


      

       

      
        	
                (iii)  

              	
                (A)
      except for indebtedness in an amount not to exceed $3,000,000, (1) incur
      any additional Indebtedness for borrowed money, or guarantee any such
      additional Indebtedness, (2) guarantee any such Indebtedness of
      another Person or issue or sell any debt securities or options, warrants,
      calls or other rights to acquire any debt securities of the Seller or any
      of its Subsidiaries, guarantee any debt securities of another Person,
      enter into any “keep well” or other agreement to maintain any financial
      statement condition of another Person or enter into any arrangement having
      the economic effect of any of the foregoing or (3) repurchase or
      prepay any Indebtedness for borrowed money except as required by the terms
      of such Indebtedness or (B) make any loans, advances or capital
      contributions to, or investments in, any Person, other than in the Seller
      or in or to any direct or indirect wholly-owned Subsidiary of the
      Seller;

              


      

       

      
        	
                (iv)  

              	
                create
      or incur any Lien other than Permitted Liens upon any of the Purchased
      Assets;

              


      

       

      
        	
                (v)  

              	
                sell,
      rent, lease, license, mortgage, transfer, leaseback or otherwise dispose
      of any of the Purchased Assets;

              


      

       

      
        	
                (vi)  

              	
                with
      respect to any of the Purchased Assets or the Boulder Facilities,
      authorize or make any capital expenditures not provided for in the Work
      Plan;

              


      

       

      
        	
                (vii)  

              	
                (A)
      enter into, renew, modify or amend or fail to perform any material
      obligation under any Contract relating to the research, development,
      manufacture, supply or commercialization of any Key Product, (B) initiate
      any new clinical trial or study on any Key Product or (C) discontinue or
      fail to complete any clinical trial or study on any Key
      Product;

              


      

       

      
        	
                (viii)  

              	
                unless
      required by Law, submit an amendment to the Seller’s protocols to any
      Regulatory Authority, or schedule any meetings with any Regulatory
      Authority (or submit any background package to any Regulatory Authority),
      in each case in connection with any Key Products; provided, that,
      no prior consent shall be necessary in connection with any actions taken
      in connection with the Seller’s reporting obligations to any Regulatory
      Authority;

              


      

       

      
        	
                (ix)  

              	
                make
      any acquisition of, or investment in, the capital stock or assets of any
      other Person (including by merger, consolidation, tender offer, share
      exchange or other activity), except for the purchases of components, raw
      materials or other inventory, or supplies in the ordinary course of
      business;

              


      

       

      
        	
                (x)  

              	
                except
      to the extent required by the Seller Plans, existing written agreements or
      by applicable Law, (A) increase the wages, salaries, compensation,
      pension, other retirement, severance or termination benefits, fringe
      benefits or perquisites of any of the Key Products Employees, (B) except
      as required by a Seller Plan or applicable Laws, grant or pay any
      severance or termination pay to, or enter into (or amend) any Contract or
      other arrangement to make or grant any severance or termination pay to, or
      grant or pay any bonus to, any of the Key Products Employees,
      (C) establish, adopt or amend (except as required by applicable Laws)
      any collective bargaining, bonus, pension, other retirement, deferred
      compensation or equity compensation plan or arrangement covering any of
      the Key Products Employees, (D) except in the ordinary course of
      business, hire or terminate the employment or engagement, as applicable,
      of any Key Products Employees or (E) hire or, other than for cause,
      terminate the employment or engagement, as applicable, of any Key Products
      Employees;

              


      

       

      
        	
                (xi)  

              	
                make
      or change any material election concerning Taxes or Tax Returns, file any
      material amended Tax Return, settle or compromise any material Tax
      controversy, or agree to an extension of a statute of limitations with
      respect to material Taxes;

              


      

       

      
        	
                (xii)  

              	
                change
      its fiscal year, revalue for financial or Tax reporting purposes any of
      its material assets, or make any material changes in financial or Tax
      accounting methods, principles or practices (or change an annual
      accounting period), except insofar as may be required by GAAP as advised
      by the Seller’s regular independent
accountants;

              


      

       

      
        	
                (xiii)  

              	
                amend
      its articles of incorporation, bylaws or other comparable charter or
      Organizational Documents;

              


      

       

      
        	
                (xiv)  

              	
                modify,
      amend or terminate any of the Boulder
Leases;

              


      

       

      
        	
                (xv)  

              	
                renew,
      modify or amend any of the Material Contracts or enter into any Contract
      that if in effect on or prior to the date hereof would be a Material
      Contract;

              


      

       

      
        	
                (xvi)  

              	
                with
      respect to any of the Purchased Assets:  (A) sell, assign,
      license, sublicense, encumber, impair, abandon or fail to maintain or
      allow to lapse any Seller Intellectual Property Rights or Seller
      Confidential Information, (B) grant, extend, amend, waive or modify
      any rights in or to the Seller Intellectual Property Rights or Seller
      Confidential Information, (C) fail to diligently prosecute the Seller
      Intellectual Property Rights, (D) divulge, furnish to or make
      accessible any Seller Trade Secrets or Seller Confidential Information to
      any third party, (E) grant any license, enter into any Contract, or
      obligate the Seller to any third party with respect to any rights to any
      Seller Intellectual Property Rights, (F) take any action or omit to
      take any action that would reasonably be expected to cause any rights to
      any Seller Intellectual Property Rights to become invalidated,
      unenforceable, or abandoned or to enter the public domain, (G) amend,
      assign, terminate or fail to exercise a right of renewal or extension
      under any Contract concerning the Seller Intellectual Property Rights or
      (H) fail to fulfill any obligation of the Seller or any of its
      Subsidiaries to maintain in full force and effect any Contract concerning
      the Seller Intellectual Property Rights which confers any benefit on the
      Seller or any of its Subsidiaries;

              


      

       

      
        	
                (xvii)  

              	
                adopt
      or enter into any collective bargaining agreement or other labor union
      contract applicable to the Key Products
  Employees;

              


      

       

      
        	
                (xviii)  

              	
                fail
      to use commercially reasonable efforts to maintain existing insurance
      policies or comparable replacement policies to the extent available for a
      reasonable cost;

              


      

       

      
        	
                (xix)  

              	
                (A)
      pay, discharge, settle or satisfy any material claims (including claims of
      shareholders, whether brought directly, derivatively or otherwise),
      (B) waive or release any material right of the Seller or any of its
      Subsidiaries or (C) commence or initiate any litigation, arbitration,
      proceeding or dispute, in each case, other than for the routine collection
      of bills;

              


      

       

      
        	
                (xx)  

              	
                take
      any action that would reasonably be expected to result in any of the
      conditions set forth in ARTICLE V not being
      satisfied or that would reasonably be expected to materially delay the
      consummation of, or materially impair the ability of the Seller to
      consummate, the Transactions in accordance with the terms
      hereof;

              


      

       

      
        	
                (xxi)  

              	
                adopt
      a plan or agreement of complete or partial liquidation or dissolution,
      merger, consolidation, recapitalization or other similar reorganization;
      or

              


      

       

      
        	
                (xxii)  

              	
                agree
      in writing to take or commit to any of the foregoing actions.

              


      

       

      (c) During
the period from the date of this Agreement until the Second Closing, the Seller
and its Subsidiaries shall use reasonable best efforts to facilitate and shall
cooperate with Purchaser and its representatives regarding, the Work
Plan.  In addition, the Seller will promptly provide Parent and
Purchaser with electronic copies of all INS-19 Granulocyte Colony Stimulating
Factor and INS-20 Pegylated Granulocyte Colony Stimulating Factor study datasets
(including any that the Seller receives before the Second Closing), along with
(i) the results of any analyses performed on such datasets by or on behalf of
the Seller and (ii) all statistical programs used by the Seller to analyze the
same.  In furtherance of the Seller’s obligations in Section 4.6(b) and subject to the provisions of Section 4.6(b), the Seller shall, and shall cause its
Subsidiaries to, (x) maintain the secrecy of all information or materials
disclosed by Parent or Purchaser to the Seller or its Subsidiaries in connection
with the Work Plan and (y) not disclose such information or materials to any
third party or use such information or materials for any other purpose except as
provided in the Work Plan without the prior written consent of
Parent.

       

      Section
4.2 No
Solicitation.

       

      (a) General
Prohibitions.  Subject to Section
4.2(b), the Seller shall not, nor shall it authorize or permit any of its
Subsidiaries or any of its or their respective directors, officers or employees,
or any investment bankers, financial advisors, attorneys, accountants or other
advisors, agents or representatives retained by the Seller or any of its
Subsidiaries (collectively, “Representatives”) to,
directly or indirectly, (i) solicit, initiate, knowingly encourage or
knowingly facilitate, any inquiries or the making of any proposal that
constitutes or is reasonably likely to lead to an Acquisition Proposal,
(ii) enter into or participate in any discussions or negotiations regarding
any Acquisition Proposal, furnish to any third party any information (whether
orally or in writing) in connection with, or in furtherance, of any Acquisition
Proposal, or afford access to the business, properties, assets, books or records
of the Seller or any of its Subsidiaries, otherwise knowingly cooperate in any
way with, or knowingly assist, participate in, facilitate or encourage any
effort by, any third party that has made, is seeking to make or has informed the
Seller of any intention to make, or has publicly announced an intention to make,
an Acquisition Proposal, (iii)  take any action not already taken to make
the provisions of any “fair price,” “moratorium,” “control share acquisition,”
“business combination” or other similar anti-takeover statute or regulation
(including approving any transaction under, or a third party becoming an
“interested shareholder” under, Article 14 (Affiliated Transactions) of the
VSCA), or any restrictive provision of any applicable anti-takeover provision in
the Seller’s articles of incorporation or bylaws, inapplicable to any
transactions contemplated by an Acquisition Proposal, (iv) enter into any
agreement in principle, letter of intent, term sheet, merger agreement,
acquisition agreement, asset purchase agreement, option agreement, joint venture
agreement, partnership agreement or other similar instrument constituting or
relating to an Acquisition Proposal (other than a confidentiality agreement of
the type referred to in Section 4.2(b)) or
(v) grant any third party any waiver or release under any standstill or
similar agreement with respect to any class of equity securities of the Seller
or any of its Subsidiaries.  Without limiting the foregoing, it is
agreed that any violation of the restrictions on the Seller set forth in the
preceding sentence by any Representative of the Seller or any of its
Subsidiaries shall be a breach of this Section by the Seller.

       

      (b) Exceptions after Receipt of
Certain Proposals.  Notwithstanding anything that may be to the
contrary herein, at any time prior to the Second Closing, the Board of Directors
of the Seller, directly or indirectly through its Representatives, may, subject
to compliance with Section 4.2(c), (i) if
there has been no breach or failure to comply with Section 4.2(a), engage in negotiations or discussions
with any third party that has made after the date of this Agreement a Superior
Proposal or a bona fide Acquisition Proposal that the Board of Directors of the
Seller determines in good faith (after considering the advice of a financial
advisor of nationally recognized reputation and outside legal counsel) is
reasonably likely to lead to the receipt of a Superior Proposal,
(ii) thereafter, furnish to such third party information relating to the
Seller or any of its Subsidiaries pursuant to a confidentiality agreement with
terms no less favorable to the Seller than those contained in the Bilateral
Confidentiality Agreement, dated as of August 11, 2008, between Parent and the
Seller (as it may be amended from time to time, the “Confidentiality
Agreement”) (a copy of which shall, subject to Section 4.2(c), be provided, promptly after its
execution, for informational purposes only to Purchaser, and which copy and the
terms and existence thereof shall be subject to the confidentiality obligations
imposed on Parent pursuant to the Confidentiality Agreement), provided, that,
subject to Section 4.2(c), all such information (to
the extent that such information has not been previously provided or made or had
been previously made available to Purchaser) is provided or made or had been
previously made available to Purchaser, as the case may be, prior to or
substantially concurrently with the time it is provided or made available to
such third party), and provided, further, that if such
Superior Proposal or Acquisition Proposal is made by a third party who or which,
on the date hereof, is party to a confidentiality agreement with the Seller
which would prohibit the Seller from complying with any of the terms of this Section 4.2(b) or Section
4.2(c) requiring the provision by the Seller of information, agreements or
the documents to Purchaser, then the Seller may take the actions described in
clauses (i) and (ii) of this Section
4.2(b) only if such confidentiality agreement with such third party has been
amended (and the Seller shall be permitted to amend such confidentiality
agreement) to allow the Seller to fully comply with such terms of this Section 4.2(b) and Section
4.2(c) without violating such confidentiality agreement and
(iii) following receipt of a Superior Proposal after the date of this
Agreement and subject to compliance with Section
4.2(d), enter into a definitive agreement with respect to a Superior
Proposal if, and only if, concurrently therewith the Seller (x) terminates this
Agreement and (y) pays to Parent the Seller Termination Fee, but in each case
referred to in the foregoing clauses (i) through (iii) only if the
Board of Directors of the Seller determines in good faith by a majority vote,
after considering advice from outside legal counsel to the Seller, that its
failure to take such action would result in a breach of its fiduciary duties
under applicable Law.

       

      (c) Required
Notices.  The Seller shall not take any of the actions referred
to in clauses (i) and (ii) of Section
4.2(b) unless the Seller shall have delivered to Purchaser a prior written
notice advising Purchaser that it intends to take such action, and the Seller
shall continue to advise Purchaser after taking such action of the status and
terms of any discussions and negotiations with the third party.  In
addition, the Seller shall notify Purchaser promptly (but in no event later than
24 hours) after receipt by the Seller (or any of its Representatives) of any
Acquisition Proposal or of any request for information relating to the Seller or
any of its Subsidiaries or for access to the business, properties, assets, books
or records of the Seller or any of its Subsidiaries by any third party that may
be considering making, or has made, an Acquisition Proposal, which notice shall
be provided orally and in writing and shall identify the third party making, and
the terms and conditions of, any such Acquisition Proposal, indication or
request (including any changes thereto).  The Seller shall keep
Purchaser reasonably informed, on a current basis, of the status and details of
any such Acquisition Proposal, indication or request (including any material
changes thereto) and shall promptly (but in no event later than 24 hours after
receipt) provide to Purchaser copies of all correspondence and written materials
sent or provided to the Seller or any of its Subsidiaries that describe the
material terms and conditions of any Acquisition Proposal.

       

      (d) Limitations on the Seller’s
Ability to Terminate this Agreement.  Notwithstanding the last
sentence of Section 4.2(b), the Board of Directors
of the Seller shall not take an action described in clause (iii) of Section 4.2(b) unless (i) the Seller promptly notifies
Purchaser, in writing, at least five Business Days before taking that action, of
its intention to do so in response to an Acquisition Proposal that constitutes a
Superior Proposal, attaching the most current version of any proposed agreement
or a detailed summary of the material terms of any such proposal and the
identity of the offeror and (ii) Purchaser does not make, within such
five-Business-Day period, an offer that is at least as favorable to the Seller,
as determined by the Board of Directors of the Seller in good faith (after
considering the advice of a financial advisor of nationally recognized
reputation), as such Superior Proposal (it being understood that the Seller
shall not take any action described in clause (iii) of Section 4.2(b) during such five-Business-Day period,
and that any material amendment to the financial terms or other material terms
of such Superior Proposal shall require a new written notification from the
Seller and an additional five-Business-Day period).

       

      (e) Definitions
of Acquisition Proposal and Superior Proposal.  For purposes of this
Agreement:

       

      “Acquisition Proposal”
means any inquiry, proposal or offer from any third party relating to any
(i) acquisition of any of the Purchased Assets, (ii) acquisition of
15% or more of the outstanding shares of capital stock or any other voting
securities of the Seller, (iii) tender offer (including a self-tender
offer) or exchange offer that if consummated would result in any third party
beneficially owning 15% or more of the outstanding shares of capital stock or
any other voting securities of the Seller or (iv) merger, consolidation,
share exchange, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Seller or any of its Subsidiaries whose
assets, individually or in the aggregate, constitute more than 15% of the
consolidated assets of the Seller, in each case other than the
Transactions.

       

      “Superior Proposal”
means any bona fide written proposal (on its most recently amended or modified
terms, if amended or modified) made by a third party to enter into an
Acquisition Proposal (with all of the percentages included in the definition of
Acquisition Proposal increased to 100% and the reference to “any of the
Purchased Assets” in clause (i) of the definition of the term “Acquisition
Proposal” shall be deemed a reference to 100% of the assets of the Seller other
than the First Closing Assets), and which is otherwise on terms and conditions
which the Board of Directors of the Seller determines by a majority vote, in its
good faith (after consultation with a financial advisor of nationally recognized
reputation and outside legal counsel) and in light of all relevant circumstances
and all the terms and conditions of such proposal and this Agreement, including
any break-up fees, expense reimbursement provisions and conditions to
consummation, to be more favorable to the Seller’s shareholders than the
Transactions and for which financing, if a cash transaction (in whole or in
part), is then committed and which is not subject to any financing
conditions.

       

      (f) Obligation to Terminate
Existing Discussions.  The Seller shall, and shall cause its
Subsidiaries and its and their respective Representatives to, cease immediately
and cause to be terminated any and all existing soliciting activities,
discussions or negotiations and non-public information access, if any, with or
to any third party conducted prior to the date hereof with respect to any
Acquisition Proposal.  The Seller shall promptly request that each
third party, if any, in possession of Confidential Information about the Seller
or any of its Subsidiaries that was furnished by or on behalf of the Seller or
any of its Subsidiaries in connection with its consideration of any potential
Acquisition Proposal to return or destroy all Confidential Information
heretofore furnished to such third party.

       

      (g) Certain Limited
Exceptions.  Nothing in this Section
4.2 shall prohibit the Board of Directors of the Seller from taking and
disclosing to the Seller’s shareholders a position contemplated by Rule
14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under
the Exchange Act, or other applicable Law, if such Board determines, after
consultation with outside counsel, that failure to so disclose such position
could constitute a violation of applicable Law.

       

      Section
4.3 Reasonable
Best Efforts.

       

      (a) Subject
to the terms and conditions of this Agreement, each of the parties hereto shall
cooperate with the other parties and use (and shall cause their respective
Subsidiaries to use) their respective reasonable best efforts to (i) take,
or cause to be taken, all actions, and do, or cause to be done, all things,
necessary, proper or advisable to cause the conditions set forth in ARTICLE V to be satisfied as promptly as practicable
and to consummate and make effective, in the most expeditious manner
practicable, the Transactions, including preparing and filing promptly and fully
all documentation to effect all necessary filings, notices, petitions,
statements, registrations, submissions of information, applications and other
documents and (ii) obtain all approvals, consents, registrations, permits,
authorizations and other confirmations from any Governmental Authority
necessary, proper or advisable to consummate the Transactions; provided that in no
event shall Parent or Purchaser be required by this Section 4.3(a) or any other provision of this
Agreement to (A) license, divest, dispose of or hold separate any material
portion of the Purchased Assets or the assets or businesses of Parent, Purchaser
or any other Subsidiary of Purchaser or otherwise take or commit to take any
action that limits in any respect its freedom of action with respect to, or its
ability to retain, any material portion of the Purchased Assets or the assets or
businesses of Parent, Purchaser or any other Subsidiary of Purchaser, or that
would have an adverse effect on Parent, Purchaser or any other Subsidiary of
Purchaser after giving effect to the Transactions, (B) agree to or effect
any license, divestiture, disposition or hold separate any business, (C)
initiate any action or proceeding against any Governmental Authority or third
party or defend any action that shall have been initiated by any Governmental
Authority or third party (including any shareholders of the Seller, whether
brought directly, derivatively or otherwise) or (D) pay any material
amounts in connection with seeking or obtaining such consents, approvals or
authorizations as are required to complete the Transactions.

       

      (b) In
furtherance and not in limitation of the foregoing, each of the parties
hereto shall each use its reasonable best efforts to (i) take all action
necessary to ensure that no state takeover statute or similar Law is or becomes
applicable to any of the Transactions and (ii) if any state takeover
statute or similar Law becomes applicable to any of the Transactions, take all
action necessary to ensure that the Transactions may be consummated as promptly
as practicable on the terms contemplated by this Agreement, and use their
reasonable best efforts to otherwise minimize the effect of such Law on the
Transactions.

       

      (c) Subject
to the terms and conditions of this Agreement, each of the parties hereto shall
use its reasonable best efforts to (i) cooperate in all respects with each
other in connection with any filing or submission with a Governmental Authority
in connection with the Transactions and in connection with any investigation or
other inquiry by or before a Governmental Authority relating to the
Transactions, including any proceeding initiated by a private party and
(ii) keep the other party informed in all material respects and on a
reasonably timely basis of any material communication received by such party
from, or given by such party to, the Federal Trade Commission, the Antitrust
Division of the Department of Justice, or any other Governmental Authority and
of any material communication received or given in connection with any
proceeding by a private party, in each case regarding any of the
Transactions.  Subject to applicable Laws relating to the exchange of
information, each of the parties hereto shall have the right to review in
advance, and to the extent practicable each will consult the other on, all the
information relating to the other parties and their respective Subsidiaries, as
the case may be, that appears in any filing made with, or written materials
submitted to, any third party and/or any Governmental Authority in connection
with the Transactions; provided, however, that the
parties may designate certain of such filings, or certain information contained
therein, as being provided on an outside counsel basis only.  No party
hereto shall independently participate in any meeting or discussion with any
Governmental Authority in respect of any such filings, applications,
investigation, or other inquiry without giving the other parties hereto prior
notice of the meeting and, to the extent permitted by the relevant Governmental
Authority, the opportunity to attend and participate (which, at the request of
any of the parties, shall be limited to outside antitrust counsel
only).

       

      (d) The
Seller shall use its reasonable best efforts, and shall cause its Affiliates to
use reasonable best efforts, to (i) facilitate the transfer to Purchaser at
Closing of all:  (A) regulatory files and permits related to the
Boulder Facilities (including all environmental permits/waste water discharge
permits) and (B) the Purchased Assets Regulatory Documentation (and Purchaser’s
ability to reference all Purchased Assets Regulatory Documentation) and (ii)
file or transmit, as applicable, such notices, letters, instruments and the like
with or to the FDA and any other applicable Regulatory Authority to the
Transactions as may required to comply with all applicable Laws, and to
effectuate such transfers and vest all right, title, and interest in (x) the
First Closing Assets in Purchaser promptly following the First Closing and (y) the Second Closing Assets effective as of
the Second Closing.

       

      (e) The
Seller shall cooperate with Parent or Purchaser in obtaining the written consent
of the licensor identified in Section 2.16(a) of
the Seller Disclosure Schedules to an assignment of the license agreement set
forth in Section 2.16(a) of the Seller Disclosure
Schedules to Parent or Purchaser in connection with the manufacture, practice,
use, offer for sale, import and sale of the Key Products, such assignment to be
effective as of the Second Closing or as promptly as practicable thereafter, and
on substantially similar terms as the license agreement set forth in Section 2.16(a) of the Seller Disclosure
Schedules.

       

      Section
4.4 Certain Filings and Notices; SEC
Filings.

       

      (a) The
parties hereto shall cooperate with one another (a) in determining whether
any action by or in respect of, or filing with, any Governmental Authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material Contracts, in connection with the
consummation of the Transactions and (b) in taking such actions or making
any such filings, furnishing information required in connection therewith and
seeking timely to obtain any such actions, consents, approvals or
waivers.

       

      (b) Before
the Seller shall make any filing required by the Exchange Act or the Securities
Act with respect to this Agreement or the Transactions, the Seller shall consult
in good faith with Parent before making any such filing by providing the Parent
with a copy of the proposed filing reasonably in advance of such filing and
making any changes, additions or redactions relating to this Agreement or the
Transactions which may be reasonably requested by Parent.

       

      Section
4.5 Public
Announcements.  Purchaser and the Seller have agreed upon the
form and substance of each of the press releases to be issued by Purchaser and
the Seller, respectively, announcing the execution of this Agreement and the
Transactions, which shall be issued promptly following the execution and
delivery hereof.  Until the earlier of
the Second Closing or the termination of this Agreement pursuant to ARTICLE VI, neither the Seller nor Parent (nor any of
their respective Affiliates) shall issue any other press release or make any
other public announcement with respect to this Agreement or the Transactions
without the prior consent of the other party (which consent shall not be
unreasonably withheld, delayed or conditioned), except as may be required by Law
or by any listing agreement with a national securities exchange, in which case
the party proposing to issue such press release or make such public announcement
shall use its commercially reasonable efforts to consult in good faith with the
other party before making any such public announcements by providing the other
party with a copy of the proposed press release or public announcement
reasonably in advance of such release or announcement and making any changes
reasonably requested by the other party.

       

      Section
4.6 Access
to Information; Confidentiality.

       

      (a) Subject
to applicable Laws relating to the exchange of information, the Seller shall
afford to Parent’s and Purchaser’s Representatives reasonable access during
normal business hours during the period prior to the Second Closing or the
termination of this Agreement to all of its and its Subsidiaries’ properties,
books, Contracts, personnel and records and the Seller shall (i) furnish
promptly to Parent and Purchaser (1) a copy of each report, schedule,
registration statement and other document filed by it pursuant to the
requirements of federal or state securities Laws and (2) other information
concerning its and its Subsidiaries’ business, properties and personnel as
Parent, Purchaser or any of their Representatives may reasonably request and
(ii) instruct its employees, counsel, financial advisors, auditors and
other authorized Representatives to cooperate with Parent and Purchaser in their
investigation of the Seller and its Subsidiaries.  The information
provided will be subject to the terms of the Confidentiality
Agreement.  Neither the Seller nor its Subsidiaries shall be required
to provide access to or to disclose information where such access or disclosure
would materially interfere with the conduct of its business, contravene any Law,
rule, regulation, order, judgment, decree, or would reasonably be expected to
violate or result in a loss or impairment of any attorney-client or work product
privilege.  The parties hereto will use commercially reasonable
efforts to make appropriate substitute disclosure arrangement under
circumstances in which the restrictions of the preceding sentence
apply.  No investigation pursuant to this Section 4.6 or information provided, made available or
delivered to Purchaser pursuant to this Agreement (other than information
contained in the Seller Disclosure Schedule) will affect any of the
representations or warranties of the Seller contained in this Agreement or the
conditions hereunder to the obligations of the parties hereto.

       

      (b) The
Seller recognizes that by reason of its ownership of the Purchased Assets,
including its use and ownership of the Key Products, the Seller and its
Affiliates have acquired Confidential Information and Trade Secrets concerning
the Key Products and the other Purchased Assets, the use or disclosure of which
could cause Parent, Purchaser or their Affiliates substantial loss and
damages.  Accordingly, the Seller covenants to Parent and Purchaser
that the Seller and its Affiliates will not, except in performance of its
obligations to Parent and Purchaser or with the prior written consent of Parent,
directly or indirectly, disclose Confidential Information relating to the Key
Products or other Purchased Assets that it may learn or has learned by reason of
its ownership of the Key Products or other Purchased Assets, unless (i) it is or
becomes generally available to the public other than as a result of disclosure
by the Seller or any of its Affiliates, (ii) it is generally made available to
third parties without any limitations on its use or disclosure or (iii)
disclosure is required by applicable Law.  Nothing in this Section 4.6(b) shall be deemed to permit the
disclosure by the Seller or any of its Affiliates of any Trade Secrets
concerning the Key Products or the other Purchased Assets.

       

      (c) The
Seller shall preserve until the sixth anniversary of the First Closing Date all
properties, books, Contracts and records possessed by the Seller and its
Subsidiaries which are not included in the First Closing Assets which may
contain information relating to any of the First Closing Assets.  From
and after the First Closing, the Seller shall provide Parent, Purchaser and
their Representatives with reasonable access during normal business hours to
such properties, books, Contracts and records as well as
personnel.  Parent and Purchaser and their Representatives shall have
the right to make copies of such books, Contracts and records.  If the
Seller intends to liquidate or dissolve during such six-year period, the Seller
shall first offer in writing at least ninety (90) days prior to such liquidation
or dissolution to transfer such properties, books, Contracts and records to
Parent.

       

      (d) The
Seller shall preserve until the sixth anniversary of the Second Closing Date all
properties, books, Contracts and records possessed by the Seller and its
Subsidiaries which are not included in the Second Closing Assets which may
contain information relating to any of the Second Closing Assets, Assumed
Liabilities or Key Products Employees.  From and after the Second
Closing, the Seller shall provide Parent, Purchaser and their Representatives
with reasonable access during normal business hours to such properties, books,
Contracts and records as well as personnel.  Parent and Purchaser and
their Representatives shall have the right to make copies of such books,
Contracts and records.  If the Seller intends to liquidate or dissolve
during such six-year period, the Seller shall first offer in writing at least
ninety (90) days prior to such liquidation or dissolution to transfer such
properties, books, Contracts and records to Parent.

       

      (e) Subject
to applicable Laws relating to the exchange of information, and with respect to
the Purchased Assets and the Boulder Facilities, until the second anniversary of
the Second Closing Date, Parent and Purchaser shall afford to the Seller and its
Representatives reasonable access to records contained in the Purchased Assets
and the Key Products Employees during normal business hours after the Second
Closing Date and on at least three Business Days’ prior written notice, for any
reasonable business purpose specified by the Seller in such notice.

       

      Section
4.7 Notification
of Certain Matters.

       

      (a) The
Seller shall give prompt notice to Parent and Purchaser, and Parent and
Purchaser shall give prompt notice to the Seller, of (i) any written notice
or other written communication received by such party from any Governmental
Authority in connection with the Transactions or from any Person alleging that
the consent of such Person is or may be required in connection with the
Transactions and (ii) any actions, suits, claims, investigations or
proceedings commenced or, to such party’s Knowledge, threatened against, such
party or any of its Subsidiaries and relating to the Transactions.  In
addition, prior to the Second Closing, the Seller shall give prompt notice to
Parent and Purchaser of any inaccuracy of any representation or warranty of the
Seller contained in this Agreement, or any failure of the Seller to materially
comply with any covenant or agreement of the Seller set forth herein, at any
time during the term of this Agreement that would reasonably be expected to give
rise to a termination right pursuant to Section
6.1(c)(i); provided, however, that the
delivery of any notice pursuant to this Section 4.7
shall not limit or otherwise affect the remedies available hereunder to the
party receiving that notice.

       

      (b) Without
limiting any other provision hereof, the Seller shall promptly provide Parent
and Purchaser with a copy of all written communication received by the Seller
from, or given by the Seller to, the FDA and any other Regulatory Authority,
with respect to the Purchased Assets and the Boulder Facilities.  The
Seller shall give prompt notice to Parent and Purchaser of any formal or
informal meetings that may take place between the date of this Agreement and the
Second Closing with the FDA and any other Regulatory Authority with respect to
the Purchased Assets or the Boulder Facilities.  Parent and Purchaser
shall have the right to attend and participate in all such meetings with the FDA
and other Regulatory Authority.  If such attendance is prohibited by
applicable Law, Parent and Purchaser shall have the right to send an independent
third party consultant to attend such meetings in its place.

       

      Section
4.8 Fees and
Expenses.  Except as provided in Section 6.3, all fees
and expenses incurred in connection with the Transactions shall be paid by the
party incurring such expenses, whether or not the Transactions are
consummated.  For the avoidance of doubt, all fees and expenses
incurred in connection with the Transactions by the Seller shall be borne by the
Seller and none shall be borne by, or be the responsibility of, Parent or
Purchaser or included in the Assumed Liabilities.

       

      Section
4.9 Transferred
Employees.

       

      (a) Prior to
the Second Closing Date, but effective as of, and conditioned upon, the Second
Closing, Parent or Purchaser shall offer employment on an at-will basis to the
Key Products Employees set forth in Section
2.10(a)(i) of the Seller Disclosure Schedule, which will be effective
immediately following the Second Closing (each such employee, upon accepting an
offer of employment from Parent or Purchaser, a “Transferred
Employee”); provided, that,
Parent and Purchaser shall not be obligated to make offers of employment to
those Key Products Employees who are not actively at work on the Second Closing
Date other than due to vacation.  In Parent’s sole discretion, Parent
or Purchaser may elect to make offers of employment to those Key Products
Employees who are not actively at work on the Second Closing Date due to sick
leave, leave covered by the Family and Medical Leave Act, or other similar
short-term absence.  Neither Parent nor Purchaser shall be obligated
to offer employment to the Key Products Employees set forth in Section 2.10(a)(ii) of the Seller Disclosure
Schedule.

       

      (b) For the
period commencing on the Second Closing and ending on December 31, 2009, Parent
or Purchaser shall maintain the base salary for the Transferred Employees at the
same levels that are in effect on the date hereof, except that Parent or
Purchaser may reduce such base salary levels consistent with a company-wide base
salary reduction implemented by Parent.

       

      (c) Effective
as of the Second Closing, the Transferred Employees shall participate in
Parent’s annual bonus incentive program on the same terms and conditions,
including bonus target levels as similarly situated newly hired employees of
Parent, provided that if
Seller does not pay Transferred Employees any annual bonus at or prior to
Closing for 2009, then Parent shall count service to Seller (including any
Subsidiary thereof) as if such service was provided to Parent (or any Subsidiary
of Parent) for purposes of determining annual bonus incentive compensation for
2009 under Parent’s annual bonus incentive program.

       

      (d) Effective
as of the Second Closing, the Transferred Employees shall participate in the
employee benefit plans and programs of Parent (the “Parent Plans”) on the
same terms and conditions as those that apply to similarly situated newly hired
employees of Parent, except (i) subject to Section
4.9(e), for purposes of vesting and eligibility to participate, Parent or
Purchaser shall treat, and cause the applicable Parent Plan to treat, the
service of the Transferred Employees with the Seller (including any predecessor
or Subsidiary thereof) attributable to any period before the Second Closing as
service rendered to Parent or any Subsidiary of Parent; provided, that the
foregoing shall not apply with respect to benefit accrual or eligibility for
subsidized early retirement benefits under any defined benefit pension plan, for
purposes of eligibility for retiree medical, dental or life benefits or
calculating retiree healthcare premiums or to the extent that its application
would result in a duplication of benefits with respect to the same period of
service, (ii) Parent shall waive any pre-existing condition limitations and
eligibility waiting periods for the Transferred Employees and their eligible
dependents under Parent Plans that are self-insured by Parent and that provide
medical and dental benefits and (iii) under Parent Plans that are self-insured
by Parent and that provide medical and dental benefits, Parent shall give credit
to Transferred Employees and their eligible dependents for payments made during
2009 for co-payments and deductibles under Seller Plans that provide medical and
dental benefit.

       

      (e) Effective
as of the Second Closing, the Transferred Employees shall be entitled to
participate in Parent’s severance benefits plan applicable to its U.S. based
non-union employees (the “Parent Severance
Plan”) on the same terms and conditions as apply to similarly situated
employees of Parent and Parent shall treat the service of the Transferred
Employees with the Seller (including any predecessor or Subsidiary thereof)
before the Second Closing as service rendered to Parent for purposes of
calculating severance pay and benefits under the Parent Severance Plan; provided, that such
service will not apply for purposes of qualifying for treatment as a retiree or
a bridged retiree (as that term is defined in the Parent Severance Plan) under
the Parent Severance Plan.

       

      (f) Notwithstanding
anything in this Section 4.9 to the contrary, the
Seller shall be solely responsible for (i) any and all Liabilities, including,
without limitation, any severance and/or change in control arrangements, under
the Seller Plans for all periods ending before, on or after the Closing Date for
all of Seller’s employees (including former employees, retirees and independent
contractors), including the Transferred Employees, (ii) for any and all
Liabilities for compensation and employee benefits, including, without
limitation, any severance and/or change in control arrangements, for all of
Seller’s employees (including former employees, retirees and independent
contractors), including the Transferred Employees, for any periods ending on or
prior to the Closing Date and (iii) for any and all Liabilities for compensation
and employee benefits, including, without limitation severance and/or change in
control arrangements for all of Seller’s employees (including former employees,
retirees and independent contractors), excluding the Transferred Employees, for
any periods ending after the Closing Date.  Parent and Purchaser shall
be responsible only for Liabilities for compensation and employee benefits with
respect to the Transferred Employees for any periods beginning after the Closing
Date.

       

      (g) Beginning
on the Second Closing, the Transferred Employees will receive vacation time for
service after the Second Closing on the same terms and conditions as those that
apply to similarly situated newly hired employees of Parent, provided that
Parent shall count service to the Seller (including any predecessor or
Subsidiary thereof) as if such service was provided to Parent solely for
purposes of determining amount of vacation time available to the Transferred
Employees.  On or prior to the Second Closing, all of the Transferred
Employees shall have utilized their accrued vacation time or been compensated by
the Seller for accrued vacation time through the Second Closing in accordance
with the terms of the Seller’s paid time off policy.

       

      (h) Notwithstanding
anything in this Section 4.9 to the contrary,
nothing in this Agreement shall prevent the amendment or termination of any
Parent Plan or interfere with Parent’s right or obligation to make any changes
that are necessary to conform with applicable Law.  Nothing contained
in this Agreement shall restrict the ability of Purchaser and/or Parent to
terminate the employment of any Transferred Employee for any reason at any time
following the Second Closing.  No provision of this Section 4.9 shall create any third party beneficiary
rights in any current or former employee, director or consultant of the Seller
or any of its Subsidiaries in respect of continued employment (or resumed
employment) or any other matter.

       

      (i) At least
five Business Days prior to its distribution, the Seller shall provide Purchaser
with a copy of any communication intended to be made to any Key Products
Employee relating to the Transactions and shall provide Purchaser with an
opportunity to make reasonable revisions thereto within four Business Days of
receipt of a copy of such communication.

       

      (j) The
Seller and its Subsidiaries hereby, effective at the Second Closing, (A) release
each Transferred Employee from any non-competition and/or confidentiality
covenant or similar restriction that would prohibit or otherwise restrict or
limit such Transferred Employee’s employment with Parent, Purchaser or any other
Subsidiary of Parent and (B) waive any and all right that the Seller or its
Subsidiaries may have to seek any damages, equitable remedies or other relief as
a result of such Transferred Employee’s employment with Parent, Purchaser or any
other Subsidiary of Parent.

       

      Section
4.10 Further
Assurances.  In the event that (a) at any time after the First
Closing Date any further action is necessary or desirable to fully effect the
First Closing Transactions or (b) at any time after the Second Closing Date any
further action is necessary or desirable to fully effect the Second Closing
Transactions, each of the parties hereto shall take, or cause to be taken, such
further action (including (i) transferring back to the Seller or its designated
Affiliate any asset or liability not contemplated by this Agreement to be a
Purchased Asset or an Assumed Liability, respectively, which asset or liability
was transferred to Purchaser at or before the Second Closing, (ii) transferring
to Purchaser any asset or liability contemplated by this Agreement to be a
Purchased Asset or an Assumed Liability, respectively, which was not transferred
to Purchaser at or before the First Closing or the Second Closing, as
applicable, and (iii) the execution and delivery of such further instruments and
documents) as the other Party may reasonably request, at the sole cost and
expense of the requesting party (unless otherwise specified
herein).

       

      Section
4.11 Seller
Non-Competition and Non-Solicitation.

       

      (a) For a
period of five years from and after the First Closing Date, except as provided
in the Work Plan, neither the Seller nor any of its Affiliates shall, directly
or indirectly, engage in, own, have any financial interest in (other than a
financial interest in a publicly held corporation whose stock is traded on a
national securities exchange or in the over-the counter market which financial
interest (held directly or indirectly) does not exceed five percent (5%) of such
company’s outstanding securities), manage or operate anywhere in the United
States, a business the same as, substantially similar to, or which materially
competes with, the business of developing, marketing or manufacturing product
candidates INS-19 Granulocyte Colony Stimulating Factor and INS-20 Pegylated
Granulocyte Colony Stimulating Factor.

       

      (b) For a
period of five years from and after the Second Closing Date, neither the Seller
nor any of its Affiliates shall, directly or indirectly, engage in, own, have
any financial interest in (other than a financial interest in a publicly held
corporation whose stock is traded on a national securities exchange or in the
over-the counter market which financial interest (held directly or indirectly)
does not exceed five percent (5%) of such company’s outstanding securities),
manage or operate anywhere in the United States, a business the same as,
substantially similar to, or which materially competes with, the business of
developing, marketing or manufacturing the Key Products.

       

      (c) For a
period of five years following the Second Closing Date, the Seller shall not,
and the Seller shall cause its Subsidiaries and their Affiliates, not to, for
its or their own account or for the account of any other Person (i) encourage
any supplier of any materials related to the manufacture of Key Products to
terminate or alter such relationship to the disadvantage of Purchaser or any of
its Affiliates, (ii) encourage any Person not to enter into a business
relationship with Purchaser or any of its Affiliates or (iii) impair or attempt
to impair any relationships between Purchaser or any of its Affiliates and any
of their respective customers, clients, suppliers or other Persons with whom
they have business relationships.

       

      (d) Commencing
on the date hereof and continuing for a period of two (2) years from and after
the Second Closing Date, neither the Seller nor any of its Affiliates shall,
directly or indirectly, solicit for employment or employ any Key Products
Employee, or request, induce or advise any Key Products Employee to leave the
employ of Purchaser or any of its Affiliates, without the prior written consent
of Purchaser; provided, that a
general offer of employment to the public shall not be deemed prohibited
hereunder as long as not specifically directed at Key Products
Employees.

       

      (e) The
nature and scope of the foregoing protection has been carefully considered by
the parties hereto.  The parties hereto agree and acknowledge that the
duration, scope and geographic areas applicable to such provisions are fair,
reasonable and necessary and that adequate compensation has been received by the
Seller for such obligations.  If, however, for any reason any court
determines that any such restrictions are not reasonable or that consideration
is inadequate, such restrictions shall be interpreted, modified or rewritten to
include as much of the duration, scope and geographic area identified in this Section 4.11 as will render such restrictions valid
and enforceable.

       

      (f) In the
event of a breach or threatened breach of this Section
4.11, Purchaser shall be entitled, without the posting of a bond, to an
injunction restraining such breach.  Nothing herein contained shall be
construed as prohibiting any party from pursuing any other remedy available to
it for such breach or threatened breach.

       

      Section
4.12 Certain
Tax Matters.

       

      (a) Transfer
Taxes.  Notwithstanding anything herein to the contrary, the
Seller and its Affiliates shall be solely liable for, and shall pay when due,
any transfer, gains, documentary, sales, use, registration, stamp, value-added
or other similar Taxes (“Transfer Taxes”)
payable by reason of the Transactions, and the Seller or its Affiliates shall
file, at their expense, all necessary Tax Returns and other documentation with
respect to all Transfer Taxes, provided, however, that if required by applicable
Law, Parent and Purchaser will, and will cause their Affiliates to, join in the
execution of any such Tax Returns and other documentation.  The
Seller, Parent and Purchaser agree to reasonably cooperate with each other to
claim any applicable exemption from, or reduction of, any applicable Transfer
Taxes

       

      (b) Certain
Apportionments.  For purposes of determining the Liability of
the Seller for Taxes with respect to the Purchased Assets under Section 1.5(a)(i), all real, personal property and
other Taxes not based on or measured by income or receipts of Seller, in each
case, with respect to the Purchased Assets (the “Apportioned
Obligations”), shall be prorated between the Seller and Purchaser, with
such Taxes being borne by the Seller based on the ratio of the number of days in
the relevant period prior to and including the First Closing Date, with respect
to the First Closing Assets, or the Second Closing Date, with respect to the
Second Closing Assets, to the total number of days in the actual taxable period
with respect to which such Taxes are assessed, irrespective of when such Taxes
are due, become a Lien or are assessed, and such Taxes being borne by Purchaser
based on the ratio of the number of days in the relevant period after the First
Closing Date, with respect to the First Closing Assets, or the Second Closing
Date, with respect to the Second Closing Assets, to the total number of days in
the actual taxable period with respect to which such Taxes are assessed,
irrespective of when such Taxes are due, become a Lien or are
assessed.

       

      (c) Apportioned
Obligations.  Apportioned Obligations shall be timely paid, and
all applicable filings, reports and Tax Returns shall be filed, as provided by
Law. The paying party shall be entitled to reimbursement from the non-paying
party in accordance with Section 4.12(b). Upon
payment of any such Apportioned Obligation, the paying party shall present a
statement to the non-paying party setting forth the amount of reimbursement to
which the paying party is entitled under Section
4.12(b), together with such supporting evidence as is reasonably necessary
to calculate the amount to be reimbursed. The non-paying party shall make such
reimbursement promptly but in no event later than ten days after the
presentation of such statement.

       

      (d) Allocation of Purchase
Price.  At least 15 days prior to the Second Closing Date,
Seller shall prepare and deliver to Parent for Parent's review, comment and
approval, which shall not be unreasonably withheld, a statement setting forth
the allocation, of the Purchase Price (including the Assumed Liabilities) among
the Purchased Assets in accordance with Section 1060 of the
Code.  Seller and Purchaser shall resolve any differences with respect
to such allocation.  Both the Seller and Purchaser agree to report,
act and file all Tax Returns (including, but not limited to, Internal Revenue
Service Form 8594) in all respects and for all purposes consistent with the
agreed upon allocation (the “Allocation”), and
neither the Seller nor Purchaser shall take any position for Tax purposes
(whether in audits, Tax Returns or otherwise) that is inconsistent with such
Allocation unless, and then only to the extent, required by a final
“determination” as defined in Section 1313(a) of the Code.

       

      Section
4.13 Mail;
Payments.

       

      (a) The
Seller authorizes and empowers Purchaser on and after the Second Closing Date to
receive and open all mail and other communications received by Purchaser
relating to the Purchased Assets and to deal with the contents of such
communications in good faith and in a proper manner.  The Seller shall
promptly deliver to Purchaser any mail or other communication received by the
Seller after the Second Closing Date pertaining to the Purchased
Assets.  Parent and Purchaser shall promptly deliver to the Seller any
mail or other communication received by Parent or Purchaser after the Second
Closing Date pertaining to the Excluded Assets or the Retained
Liabilities.

       

      (b) The
Seller shall promptly pay or deliver to Purchaser any monies or checks relating
to the Purchased Assets which have been mistakenly sent after the Second Closing
Date to the Seller and which should have been sent to
Purchaser.  Parent and Purchaser shall promptly pay or deliver to
Seller any monies or checks relating to the Excluded Assets and the Retained
Liabilities which have been mistakenly sent after the Second Closing Date to
Parent or Purchaser and which should have been sent to the Seller.

       

      Section
4.14 Excluded
Products.  Prior to the Second Closing, Seller shall, at its
own cost and expense, remove all inventory of Excluded Assets from the Boulder
Facilities.

       

      Section
4.15 Notices to Debt, Option and Warrant
Holders.  The Seller shall take all actions and provide all
notices which may be required pursuant to the terms of any outstanding options,
warrants and convertible debt instruments of the Seller, including the terms of
the Seller Convertible Notes, which may be required as a result of the execution
of this Agreement and the consummation of the Transactions.

       

      Section
4.16 Release under Security for Assumed
Boulder Leases.  The parties shall cooperate in seeking the
release, effective as of the Second Closing, of any security deposit, cash
collateral, letter of credit, line of credit or other surety posted by the
Seller and held by the landlord(s) or financial institution(s) issuing letter(s)
of credit as security under the Assumed Boulder Leases (each a “Lease
Security:”).  In furtherance of the obligations set forth in
this Section 4.16, Purchaser or Parent may, if
required, provide the applicable landlord or financial institution with a Lease
Security to replace the Lease Security that has been posted by the Seller, in an
amount which is not in excess of such Lease Security posted by the
Seller.

       

      ARTICLE
V                                

       

      CONDITIONS
TO THE SECOND CLOSING

       

      Section
5.1 Conditions to Each Party’s Obligation
to Effect the Second Closing Transactions.  The respective
obligations of each party hereto to consummate the Second Closing Transactions
shall be subject to the satisfaction (or waiver by the parties, if permissible
under applicable Law) on or prior to the Second Closing of the following
conditions:

       

      (a) No
Injunction.  No Law, injunction, judgment or ruling enacted,
promulgated, issued, entered, amended or enforced by any Governmental Authority
of competent jurisdiction (collectively, “Restraints”) shall be
in effect enjoining, restraining, preventing or prohibiting consummation of the
Second Closing Transactions or making the consummation of the Second Closing
Transactions illegal.

       

      (b) HSR
Act.  Any waiting period (and any extension thereof) under the
HSR Act (to the extent applicable to the Second Closing Transactions) shall have
expired or been terminated.

       

      Section
5.2 Conditions to the Seller’s Obligation
to Effect the Second Closing Transactions.  The obligations of
the Seller to consummate the Second Closing Transactions are subject to the
satisfaction (or waiver by the Seller, if permissible under applicable Law) on
or prior to the Second Closing of each of the following conditions:

       

      (a) Representations and
Warranties.  The representations and warranties of Parent and
Purchaser in this Agreement shall be true and correct (without regard to any
qualifications as to materiality or material adverse effect (or any correlative
term) contained in such representations and warranties) as of the date when made
and as of the Second Closing Date, except (i) for representations and warranties
made as of a specified date, which shall be measured only as of such specified
date, and (ii) where the failure to be true and correct, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a
Purchaser Material Adverse Effect.

       

      (b) Performance.  Parent
and Purchaser shall have performed and complied in all material respects with
all agreements and covenants required by this Agreement to be so performed or
complied with by Purchaser at or prior to the Second Closing.

       

      (c) Deliveries.  The
Seller shall have received the deliveries contemplated by Section 5.5.

       

      Section
5.3 Conditions to Parent’s and
Purchaser’s Obligation to Effect the Second Closing
Transactions.  The obligations of Parent and Purchaser to
consummate the Second Closing Transactions are subject to the satisfaction (or
waiver by Parent, if permissible under applicable Law) on or prior to the Second
Closing of each of the following conditions:

       

      (a) Representations and
Warranties.  Each of the representations and warranties of the
Seller in Section 2.1, Section 2.2(a), Section
2.3, Section 2.18, Section 2.20 and/or Section
2.22 shall be true and correct in all respects as of the date when made and
as of the Second Closing Date (except for representations and warranties in such
Sections made as of a specified date, which shall be measured only as of such
specified date); and each of the other representations and warranties of the
Seller in this Agreement shall be true and correct (without regard to
materiality or Seller Material Adverse Effect qualifiers contained therein) as
of the date when made and as of the Second Closing Date, except (i) for
representations and warranties made as of a specified date, which shall be
measured only as of such specified date and (ii) where the failure to be true
and correct, individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Seller Material Adverse Effect.

       

      (b) Performance.  The
Seller shall have performed and complied in all material respects with all
agreements and covenants required by this Agreement to be so performed or
complied with by the Seller at or prior to the Second Closing.

       

      (c) Deliveries.  Parent
and Purchaser shall have received the deliveries contemplated by Section 5.4.

       

      (d) Governmental and Third Party
Actions;  No action, suit, proceeding, inquiry or investigation
by any Governmental Authority or third party (including any shareholders of the
Seller, whether brought directly, derivatively or otherwise), shall be
instituted, pending or threatened that seeks, or could reasonably be expected to
seek, (i) to impose or confirm limitations on the ability of Parent, Purchaser
or any of Parent’s other Affiliates to effectively exercise full rights of
ownership of the Purchased Assets, (ii) to require or compel Parent, Purchaser
or any of Parent’s other Affiliates to divest, license, dispose of or hold
separate any portion of its businesses, operations or assets, (iii) to prohibit
Parent, Purchaser or any of Parent’s other Affiliates from effectively
controlling or operating any portion of the Purchased Assets or (iv) to enjoin,
restrain, prevent, prohibit, rescind, invalidate, void or undue any of the
Transactions.

       

      (e) No Material Adverse
Effect.  Since the date hereof, there shall have been no Event
that has had, or would reasonably be expected to have, either individually or in
the aggregate, a Seller Material Adverse Effect.

       

      (f) Bankruptcy.  (i)
Neither a voluntary petition shall have been filed by the Seller or any of its
Subsidiaries nor an involuntary petition shall have been filed against the
Seller or any of its Subsidiaries and not dismissed, under title 11 of the
United States Code and (ii), either within the United States or in any other
country, a proceeding shall not have been threatened or instituted and not
dismissed by or against the Seller or any of its Subsidiaries seeking to
adjudicate any of them bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, protection or other relief of any of them or any of their
debts or any similar relief under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a custodian, receiver, trustee, administrative receiver,
liquidator, provisional liquidator, administrator or other similar official for
the Seller or any of its Subsidiaries or for any substantial part of their
assets.

       

      (g) Consents and
Approvals.  All of the consents or notifications set forth in
Section 5.3(g) of the Seller Disclosure Schedule
shall have been obtained or made at or prior to the Second Closing.

       

      (h) Legal
Opinion.  Purchaser shall have received a legal opinion,
addressed to it and to Parent, dated the Second Closing Date, from outside
counsel to Seller, in form and substance satisfactory to Purchaser, to the
effect set forth in Section 5.3(h) of the Seller
Disclosure Schedule.

       

      Section
5.4 Deliveries by the Seller at Second
Closing.  On the Second Closing Date, the Seller shall deliver
or cause to be delivered to Purchaser:

       

      (a) Officer’s
Certificate.  An officer’s certificate signed by a senior
officer of the Seller, dated the Second Closing Date, certifying (i) that the
conditions specified in Section 5.3(a) and Section 5.3(b) have been fulfilled and (ii) as to the
matter set forth in Section 5.4(a) of the Seller
Disclosure Schedule.

       

      (b) Instruments of
Assignment.  To the extent that any of the Assumed Boulder
Leases have been recorded, duly executed recordable instruments of assignment
for each such Assumed Boulder Lease, in form and substance reasonably acceptable
to Parent.  To the extent that any of the Assumed Boulder Leases have
not been recorded, duly executed instruments of assignment for each such Assumed
Boulder Lease, in form and substance reasonably acceptable to
Parent.

       

      (c) Bill of
Sale.  A duly executed bill of sale for all other Purchased
Assets.

       

      (d) Receipt.  The
Seller shall deliver to Parent and Purchaser a receipt for the Purchase
Price.

       

      (e) Withholding
Certificate.  A certificate signed by a senior officer of the
Seller, dated the Second Closing Date and in form and substance satisfactory to
Parent, conforming to the requirements of Treasury Regulation Section
1.1445-2(b)(2).

       

      (f) Further
Instruments.  Such documents of further assurance reasonably
necessary and typical for transactions similar to the Second Closing
Transactions in order to complete the Second Closing Transactions.

       

      Section
5.5 Deliveries by Purchaser at Second
Closing.  On the Second Closing Date, Parent and Purchaser
shall deliver or cause to be delivered to the Seller:

       

      (a) Officer’s
Certificate.  A certificate signed by an authorized signatory
of Parent and Purchaser, dated the Second Closing Date, certifying that the
conditions specified in Section 5.2(a) and Section 5.2(b) have been fulfilled.

       

      (b) Closing Consideration
Amount.  The Second Closing Purchase Price by wire transfer of
immediately available funds, to the accounts designated by the
Seller.

       

      (c) Assumption
Agreement.  A duly executed assumption agreement evidencing the
assumption by Purchaser of the Assumed Liabilities in accordance with the terms
herein.

       

      (d) Further
Instruments.  Such documents of further assurance reasonably
necessary and typical for transactions similar to the Second Closing
Transactions in order to complete the Second Closing Transactions.

       

      ARTICLE
VI                                

       

      TERMINATION

       

      Section
6.1 Termination.  This
Agreement may be terminated and the Second Closing Transactions abandoned at any
time prior to the Second Closing:

       

      (a) by the
mutual written consent of the Seller and Parent duly authorized by each of their
respective Boards of Directors; or

       

      (b) by either
the Seller or Parent:

       

      
        	
                (i)  

              	
                if
      the Second Closing shall not have been consummated on or before the close
      of business on July 9, 2009 (the “End Date”),
      provided,
      that the right to terminate this Agreement under this Section 6.1(b)(i) shall not be available to a
      party whose failure to fulfill any obligation under this Agreement was the
      primary cause of, or resulted in, the failure of the Second Closing to be
      consummated on or before the End Date;
or

              


      

       

      
        	
                (ii)  

              	
                if
      any Restraint enjoining, restraining, preventing or prohibiting the Second
      Closing Transactions shall have become final and nonappealable; provided, that
      the right to terminate this Agreement under this Section 6.1(b)(ii) shall not be available to a
      party if the issuance of such final, non-appealable Restraint was
      primarily due to the failure of such party to perform any of its
      obligations under this Agreement;
or

              


      

       

      (c) by Parent
or Purchaser:

       

      
        	
                (i)  

              	
                if
      prior to the Second Closing, the Seller shall have breached or failed to
      perform any of its representations, warranties, covenants or agreements
      set forth in this Agreement, which breach or failure to perform
      (A) would give rise to the failure of a condition set forth in Section 5.1 or Section
      5.3 and (B) is either incurable or, if curable, is not cured by
      the Seller by the earlier of (x) 30 days following receipt by the
      Seller of written notice of such breach or failure and (y) the End
      Date; provided, at
      the time of the delivery of such written notice, neither Parent nor
      Purchaser shall be in material breach of its obligations under this
      Agreement; or

              


      

       

      
        	
                (ii)  

              	
                if
      prior to the Second Closing (A) the Seller enters into a Contract relating
      to an Acquisition Proposal or (B) the Seller or the Seller Board publicly
      announces its intention to do so;
or

              


      

       

      
        	
                (iii)  

              	
                if
      prior to the Second Closing, the Seller shall have breached in any
      material respect any of its obligations pursuant to Section 4.2;
or

              


      

       

      
        	
                (iv)  

              	
                upon
      at least five Business Days prior written notice if prior to the Second
      Closing, any action, suit or proceeding by any Governmental Authority or
      third party (including any shareholders of the Seller, whether brought
      directly, derivatively or otherwise), shall be instituted or pending (and
      not dismissed with prejudice within 10 Business Days) that seeks, or could
      reasonably be expected to seek to enjoin, restrain, prevent, prohibit,
      rescind, invalidate, void or undue any of the Transactions;
    or

              


      

       

      (d) by the
Seller:

       

      
        	
                (i)  

              	
                if
      prior to the Second Closing, either Parent or Purchaser shall have
      (A) failed to perform in any material respect any of its obligations
      required to be performed by it under this Agreement or (B) breached
      any of Parent’s or Purchaser’s representations and warranties (without
      regard to materiality or Purchaser Material Adverse Effect qualifiers
      contained therein), which breach or failure to perform, in the case of
      clause (B), would reasonably be expected to have, individually or in the
      aggregate, a Purchaser Material Adverse Effect and, in the case of either
      clause (A) or (B) is either incurable, or if curable, is not
      cured by Parent or Purchaser by the earlier of (x) 30 days following
      receipt by Parent of written notice of such breach or failure and
      (y) the End Date, provided, at
      the time of the delivery of such written notice, the Seller shall not be
      in material breach of its obligations under this Agreement;
    or

              


      

       

      
        	
                (ii)  

              	
                the
      Seller enters into a definitive agreement with respect to a Superior
      Proposal in compliance with Section
      4.2.

              


      

       

      Section
6.2 Effect of
Termination.  In the event of a termination of this Agreement
as provided in Section 6.1 (other than pursuant to
Section 6.1(a)), written notice thereof shall be
given to the other party or parties, specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void and of no further force or effect, except that (i) Section 1.5(b), Section
4.8, this Section 6.2, Section 6.3, Section 6.4,
ARTICLE VII and the Confidentiality Agreement in
accordance with its terms shall survive termination of this Agreement and remain
in full force and effect and (ii) nothing shall relieve any party from
liability or damages for fraud or any willful breach of any of its
representations or warranties or the willful breach of any of its covenants or
agreements set forth in this Agreement.  Notwithstanding the foregoing, Section 4.6(b), Section
4.6(c) and Section 4.11(a) shall also survive
termination of this Agreement and remain in full force and effect with respect
to the First Closing Assets unless the Seller has the right to exercise the
Repurchase Right and the Seller actually exercises the Repurchase Right pursuant
to Section 6.4, in which case Section 4.6(b), Section
4.6(c) and Section 4.11(a) shall not survive
the termination of this Agreement.

       

      Section
6.3 Termination
Fees.

       

      (a) If a
Seller Payment Event occurs, the Seller shall pay Parent (by wire transfer of
immediately available funds), a fee of $5,200,000 (the “Seller Termination
Fee”).  A “Seller Payment Event”
means the termination of this Agreement pursuant to:

       

      
        	
                (i)  

              	
                Section 6.1(c)(ii), Section 6.1(c)(iii) or Section
6.1(d)(ii);

              


      

       

      
        	
                (ii)  

              	
                Section 6.1(b)(i), but only if, both
      (A) prior to the End Date, an Acquisition Proposal shall have been
      publicly announced or publicly known or otherwise communicated to the
      Seller’s Board of Directors and not withdrawn, revoked or rejected prior
      to the date of termination of this Agreement pursuant to Section 6.1(b)(i) and (B) the Seller,
      within twelve months of such termination, enters into a definitive
      agreement with respect to an Acquisition Proposal or consummates an
      Acquisition Proposal (provided that for purposes of this clause (ii), each
      reference to “15%” in the definition of Acquisition Proposal shall be
      deemed a reference to “75%” and the reference to “any of the Purchased
      Assets” in clause (i) of the definition of the term “Acquisition Proposal”
      shall be deemed a reference to substantially all of the Purchased
      Assets).

              


      

       

      If this
Agreement is terminated by Parent pursuant to Section
6.1(c)(ii) or Section 6.1(c)(iii), the Seller
shall make the payment required by Section 6.3(a)
to Parent on the second Business Day after the date of such
termination.  If this Agreement is terminated by Seller pursuant to Section 6.1(d)(ii), the Seller shall make the payment
required by Section 6.3(a) to Parent
contemporaneously with the termination of this Agreement.  If this
Agreement is terminated by pursuant to Section
6.1(b)(i), the Seller shall make any payment required by Section 6.3(a) to Parent on the date of its entry into
a definitive agreement with respect to an Acquisition Proposal or the
consummation of an Acquisition Proposal, whichever is earlier.

       

      (b) If a
Seller Payment Event occurs, the Seller shall, in addition to the payment
required by Section 6.3(a), reimburse Parent and
Purchaser (by wire transfer of immediately available funds), no later than two
Business Days after such Seller Payment Event, for 100% of their documented
out-of-pocket fees and expenses (including reasonable fees and expenses of their
counsel) incurred by them in connection with this Agreement and the
Transactions, not to exceed $500,000.

       

      (c) The
Seller acknowledges that the agreements contained in this Section 6.3 are an integral part of the Transactions
and that, without these agreements, Parent and Purchaser would not enter into
this Agreement.  In the event that the Seller fails to pay any amount
due pursuant to this Section 6.3 to Purchaser in
the timeframe set forth herein, the Seller shall reimburse Parent and Purchaser
for all reasonable costs and expenses actually incurred or accrued by Parent and
Purchaser (including reasonable fees and expenses of counsel) in connection with
Parent’s and Purchaser’s enforcement of this Section
6.3.

       

      Section
6.4 First Closing Assets Repurchase
Right.

       

      (a) In the
event of a termination of this Agreement (i) by the Seller pursuant to Section 6.1(d)(i), (ii) by Parent or Purchaser
pursuant to Section 6.1(b)(i) if the Second Closing
shall not have been consummated on or before the End Date solely due to the
failure of the condition set forth in Section
5.3(e) to be satisfied or (iii) by Parent or Purchaser pursuant to Section 6.1(c)(iv), the Seller shall have the right to
repurchase the First Closing Assets from Purchaser pursuant to the terms and
conditions of this Section 6.4 (the “Repurchase
Right”).  In the event of a termination of this Agreement for
any other reason, Purchaser shall retain the First Closing Assets and from and
after the time of termination no further payments shall be required to be made
by Parent, Purchaser or any of their Affiliates to the Seller with respect to
the First Closing Assets pursuant to this Agreement, including Section 1.7, or any other agreement.

       

      (b) If the
Repurchase Right arises as a result of a termination by the Seller pursuant to
Section 6.1(d)(i), the purchase price to be paid by
the Seller to Purchaser for the First Closing Assets will be equal to $1.00 and
the assumption of the obligations set forth in this Section 6.4.  If the Repurchase Right arises
as a result of a termination by Parent or Purchaser pursuant to Section 6.1(b)(i) (in the circumstances described in
Section 6.4(a) with respect to such termination) or
Section 6.1(c)(iv), the purchase price to be paid
by the Seller to Purchaser for the First Closing Assets will be equal to
$2,500,000 plus an amount equal to the aggregate payments which have been paid
on or prior to the date of the termination of this Agreement by Parent or
Purchaser to the Seller pursuant to Section
1.7(b).

       

      (c) The
Seller may exercise the Repurchase Right by providing written notice to Parent
and Purchaser, within 30 days of the termination date giving rise to the
Repurchase Right, of the Seller’s intention to exercise the Repurchase
Right.  The closing of the Repurchase Right shall be held promptly
following receipt by Parent of such written notice and in no event later than
10:00 a.m. on the fifth Business Day after the date of Seller’s written notice
of its exercise of the Repurchase Right at the offices of McGuireWoods LLP, One
James Center, 901 East Cary Street, Richmond, Virginia 23219, or such other
time, date and place as may be agreed upon in writing by the parties
hereto.  At this closing, the Seller shall pay the amount required by
Section 6.4(b) in cash by wire transfer of
immediately available funds to the account designated in writing by Parent or
Purchaser.  At this closing, the parties shall execute and deliver
such documents as are reasonably necessary and typical for similar transactions
in order to complete the transfer of the First Closing Assets from Purchaser
back to the Seller and the Seller shall enter into an agreement to indemnify,
defend and hold harmless the Parent Indemnified Parties from and against all
Losses arising in connection with or relating to the First Closing Assets from
after such closing date.

       

      ARTICLE
VII                                           

       

      MISCELLANEOUS

       

      Section
7.1 Amendment or
Supplement.  At any time prior to the Second Closing, this
Agreement may be amended or supplemented in any and all respects by written
agreement of the parties hereto, by action taken by the Boards of Directors of
the Seller and Parent and the Board of Managers of Purchaser.

       

      Section
7.2 Extension of Time, Waiver,
Etc.  At any time prior to the Second Closing, any party may,
subject to applicable Law, (a) waive any inaccuracies in the
representations and warranties of any other party hereto, (b) extend the
time for the performance of any of the obligations or acts of any other party
hereto or (c) waive compliance by the other party with any of the
agreements contained herein or, except as otherwise provided herein, waive any
of such party’s conditions.  Notwithstanding the foregoing, no failure
or delay by the Seller, Parent or Purchaser in exercising any right hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right hereunder.  Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.  The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by applicable Law.

       

      Section
7.3 Assignment.  Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned or delegated, in whole or in part, by operation of Law or otherwise,
by any of the parties without the prior written consent of the other parties;
provided, that
Purchaser may assign any of its rights and obligations hereunder, in whole or in
part, to Parent or any wholly-owned Subsidiary of Parent without obtaining the
consent of the Seller and any such assignment shall not relieve Purchaser or
Parent of their obligations hereunder.  Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns.  Any purported assignment not permitted under this Section 7.3 shall be null and void.

       

      Section
7.4 Counterparts.  This
Agreement may be executed in counterparts (each of which shall be deemed to be
an original but all of which taken together shall constitute one and the same
agreement) and shall become effective when each party hereto shall have received
a counterpart hereof signed by all of the other parties hereto

       

      Section
7.5 Entire Agreement; No Third Party
Beneficiaries.  This Agreement, including the Seller Disclosure
Schedule, the exhibits hereto, the documents and instruments relating to the
Transactions referred to herein, and the Confidentiality Agreement constitute
the entire agreement, and supersede all prior agreements and understandings,
both written and oral among the parties with respect to the subject matter of
this Agreement and the Confidentiality Agreement.  Nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
(other than the parties hereto) any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

       

      Section
7.6 Governing
Law; Jurisdiction; Waiver of Jury Trial.

       

      (a) This
Agreement shall in all respects be governed by, and construed in accordance
with, the Laws (excluding conflict of laws rules and principles) of the State of
New York applicable to agreements made and to be performed entirely within such
State, including all matters of construction, validity and
performance.

       

      (b) Any
claim, action or dispute against any party to this Agreement arising out of or
in any way relating to this Agreement shall be brought in any federal or state
court located in the Commonwealth of Virginia in the City of Richmond and each
of the parties hereby submits to the exclusive jurisdiction of such courts for
the purpose of any such claim, action or dispute; provided, that a final
judgment in any such claim, action or dispute shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law.  Each party irrevocably and unconditionally agrees
not to assert (i) any objection which it may ever have to the laying of venue of
any such claim, action or dispute in any federal or state court located in the
Commonwealth of Virginia in the City of Richmond, (ii) any claim that any such
claim, action or dispute brought in any such court has been brought in an
inconvenient forum and (iii) any claim that such court does not have
jurisdiction with respect to such claim, action or dispute.  To the
extent that service of process by mail is permitted by applicable Law, each
party irrevocably consents to the service of process in any such claim, action
or dispute in such courts by the mailing of such process by registered or
certified mail, postage prepaid, at its address for notices provided for
herein.

       

      (c) EACH
PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY AND
AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS
WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE
PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY CLAIM, ACTION OR
DISPUTE.

       

      Section
7.7 Specific
Performance.  The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court
specified in Section 7.6(b), without bond or
other security being required, this being in addition to any other remedy to
which they are entitled at Law or in equity.

       

      Section
7.8 Notices.  All
notices, requests and other communications to any party hereunder shall be in
writing and shall be deemed given if delivered personally, sent via facsimile
(receipt confirmed) or sent by nationally recognized overnight courier
(providing proof of delivery) to the parties at the following
addresses:

       

      If to
Parent or Purchaser, to:

       

      Merck
& Co., Inc.

       

      One Merck
Drive

       

      PO Box
100 WS3B-65

       

      Whitehouse
Station, New Jersey  08889-0100

       

      Attention:
Office of the Secretary

       

      Facsimile:(908)
735-1246

       

       

      with a
copy, which will not constitute notice, to:

       

      Fried,
Frank, Harris, Shriver & Jacobson LLP

       

      One New
York Plaza

       

      New York,
New York  10004

       

      Attention:
David N. Shine

       

      Facsimile:
(212) 859-4000

       

      If to the
Seller, to:

       

      Insmed
Incorporated

       

      8720
Stony Point Parkway

       

      Suite
200

       

      Richmond,
Virginia  23235

       

      Attention:
Kevin P. Tully

       

      Facsimile:
(804) 565-3512

       

      with a
copy, which will not constitute notice, to:

       

      McGuireWoods
LLP

       

      One James
Center, 901 E. Cary Street

       

      Richmond,
Virginia  23219

       

      Attention:
Joseph C. Carter, III

       

      Facsimile:
(804) 698-2028

       

      or such
other address or facsimile number as such party may hereafter specify by like
notice to the other parties hereto.  All such notices, requests and
other communications shall be deemed received on the date of receipt by the
recipient thereof if received prior to 5:00 p.m. (New York City time) on a
Business Day in the place of receipt.  Otherwise, any such notice,
request or communication shall be deemed to have been received on the next
succeeding Business Day in the place of receipt.

       

      Section
7.9 Severability.  If
any term or other provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced by
any rule of Law or public policy, all other terms, provisions and conditions of
this Agreement shall nevertheless remain in full force and
effect.  Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable Law in an acceptable manner to the end that the Transactions are
fulfilled to the extent possible.

       

      Section
7.10 Definitions.  As
used in this Agreement, the following terms have the meanings ascribed thereto
below:

       

      (a) “Affiliate” shall
mean, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such
Person.

       

      (b) “Boulder Facilities”
shall mean the Primary Boulder Facilities and the Secondary Boulder
Facilities.

       

      (c) “Business Day” shall
mean a day except a Saturday, a Sunday or other day on which the SEC or banks in
New York, New York are authorized or required by Law to be closed.

       

      (d) “Confidential
Information” shall mean all confidential or proprietary information,
whether written or oral.  Notwithstanding the foregoing, Confidential
Information shall not include information (i) which was publicly known
prior to initial disclosure of such information by a disclosing Person,
(ii) that has become publicly known, in print or other tangible form,
without any act or omission of any Person other than the disclosing Person,
(iii) received by a receiving party without restriction at any time from a
third party, other than the disclosing party, rightfully
having possession of and the right to disclose such information, (iv) shown
to have been otherwise known by the receiving party prior to disclosure of such
information by the disclosing party to the receiving party or (v) shown to
have been independently developed by employees or agents of the receiving party
without access to or use of such information of the disclosing
party.

       

      (e) “Contracts” shall mean
all contracts, agreements, arrangements, leases, licenses, obligations, sales
and purchase orders, commitments, and other written arrangements or undertakings
that are binding, or purport to be binding by their terms, on the parties
thereto, and any outstanding bids or proposals (which bids or proposals if
accepted by the recipient thereof would result in a binding
contract).

       

      (f) “Excluded Products”
shall mean each of the following products or product candidates: (i)
Insulin-like Growth Factor-1 (IGF-1), (ii) rhIGFBP-3, (iii) IPLEXTM (mescaserim
rinfibrate, a binary protein complex of human insulin-like growth factor-1
(rhIGF-1) and human insulin-like growth factor-binding protein-3), (iv) INSM-18
(also known as masoprocal or nordihydroguairetic acid), (v) 3C Protease, (vi)
IFN-Tau and (vii) d-chiro-Inositol.

       

      (g) “FDA” shall mean the
United States Food and Drug Administration or any successor federal agency
thereto.

       

      (h) “GAAP” shall mean
generally accepted accounting principles in the United States.

       

      (i) “Governmental
Authority” shall mean any government, court, regulatory or administrative
agency, commission, authority, department, court, or official, including any
political subdivision thereof, any governmental self-regulatory agency or any
other governmental instrumentality, whether federal, state, local, domestic,
foreign or multinational.

       

      (j) “HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

       

      (k) “Indebtedness” shall
mean all obligations and indebtedness of the Seller or its Subsidiaries
(i) for borrowed money (other than trade debt and other similar liabilities
incurred in the ordinary course of business), (ii) evidenced by a note,
bond, debenture or similar instrument, (iii) created or arising under any
capital lease, conditional sale, earn out or other arrangement for the deferral
of purchase price of any property, (iv) under letters of credit, banker’s
acceptances or similar credit transactions, (v) for any other Person’s
obligation or indebtedness of the same type as any of the foregoing, whether as
obligor, guarantor or otherwise, (vi) for interest on any of the foregoing
and/or (vii) for any premiums, prepayment or termination fees, expenses or
breakage costs due upon prepayment of any of the foregoing.

       

      (l) “Intellectual Property
Rights” shall mean, collectively, all United States and non-United States
(i) Trademarks, (ii) copyrights, including computer software and Internet web
sites, (iii) patents, inventions and discoveries, whether patentable or not,
(iv) Trade Secrets, (v) all other intellectual and industrial property not
enumerated or described above and (vi) all registrations and applications
therefor, and all reissues, reexaminations, provisionals, divisions,
continuations, supplemental protections, renewals, extensions, restorations and
reversions thereof.

       

      (m) “IPLEXTM EAP” shall
mean the expanded access program pursuant to which the Seller makes IPLEXTM
available to physicians anywhere in the world to treat patients.

       

      (n) “Key Products” shall
mean all follow-on biologics of the Seller or its Subsidiaries, including all of
the following product or product candidates: (i) INS-19 Granulocyte Colony
Stimulating Factor, (ii) INS-20 Pegylated Granulocyte Colony Stimulating Factor
and (iii) each of following biosimilar product candidates: (1) interferon beta
1b (IFN β 1b), (2)
epoetin alfa, (3) Pegylated alpha interferon, (4) r FVIIa, (5) Fc-sTNF-R2, (6)
anti-TNF-alpha
monoclonal
antibody and (7) anti-Her2 monoclonal antibody.

       

      (o) “Key Products IP
Contracts” shall mean all Contracts that relate to the research,
development, distribution, supply, license, co-promotion or manufacturing of any
Key Product, or any Intellectual Property Rights relating to the
foregoing.

       

      (p) “Knowledge” of the
Seller shall mean the knowledge of any of the individuals set forth in Section 7.10(p) of the Seller Disclosure Schedule
after reasonable review and due inquiry.

       

      (q) “Liability” shall
mean, with respect to any Person, any liability or obligation of such Person of
any kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or unvested,
executory, determined, determinable or otherwise and whether or not the same is
required to be accrued on the financial statements of such Person.

       

      (r) “Lien” shall mean,
with respect to any property or asset (including any security), any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset.  For purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any property or
asset that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.

       

      (s) “Permitted Liens”
shall mean (i) any Liens for Taxes not yet due, (ii) carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens,
(iii) pledges or deposits in connection with workers’ compensation,
unemployment insurance and other social security legislation,
(iv) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business that, in the aggregate, are not
material in amount and that do not, in any case, materially detract from the
value of the property subject thereto, (v) statutory landlords’ liens and
liens granted to landlords under any lease, (vi) any purchase money
security interests and (vii) any other Lien not material in amount and that does
not, in any case, materially detract from the value of the property subject
thereto.

       

      (t) “Person” shall mean an
individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity, including a Governmental
Authority.

       

      (u) “Primary Boulder
Facilities” shall mean the Seller’s facilities located at 2590 Central
Avenue and 5797 Central Avenue in Boulder, Colorado.

       

      (v) “Regulatory Authority”
shall mean any applicable Governmental Authority, domestic or foreign (including
the United Kingdom Medicines and Healthcare Products Regulatory Agency),
involved in granting approvals for the testing, manufacturing, marketing,
reimbursement and/or pricing of a compound or product, and any successor
Governmental Authority having substantially the same function.

       

      (w) “SEC” shall mean the
Securities and Exchange Commission.

       

      (x) “Secondary Boulder
Facilities” shall mean the Seller’s facilities located at 2500 Central
Avenue, Suite A, and 2500 Central Avenue, Suite H-1, in Boulder,
Colorado.

       

      (y) “Seller Confidential
Information” shall mean all Confidential Information in which the Seller
or any of its Subsidiaries have any right, title, interest, license to use, or
otherwise possesses the legal right to use and that is necessary or useful in
conducting the present business of the Seller or any of its
Subsidiaries.

       

      (z) “Seller Convertible
Notes” shall mean the Seller’s outstanding 5.5% Senior Convertible Notes
due 2008-2010.

       

      (aa) “Seller Material Adverse
Effect” shall mean (i) a material adverse effect on the Purchased Assets,
taken as a whole; provided, that any
effect resulting from any of the following shall not be considered when
determining whether a Seller Material Adverse Effect shall have occurred: (A)
changes in the general market, capital markets, economic or political conditions
in the United States or any other region outside of the United States (including
the commencement, continuation or escalation of a war or material armed
hostilities), (B), the announcement of this Agreement or the pendency or
consummation of the Transactions, (C) the identity of Parent, Purchaser or any
of their Affiliates as the acquirer or the Purchased Assets, (D) compliance with
the terms of, or the taking of any action required by, this Agreement or
consented to by Parent, (E) the termination by customers, suppliers, licensors
and distributors of their relationship with the Seller or any of its
Subsidiaries, or (F) the termination by employees of their employment with the
Seller or any of its Subsidiaries, or (ii) any event, change, development,
effect, condition circumstance, matter, occurrence or state of facts (each an
“Event”) that
prevents or materially delays, or would be reasonably expected to prevent or
materially delay, consummation of the Transactions or the performance by the
Seller of any of its material obligations under this
Agreement.  Without limiting the generality of the foregoing, any of
the following Events shall be deemed to constitute a Seller Material Adverse
Effect:  (1) the FDA or any other Regulatory Authority takes any
action, or threatens to take any action, which has impaired or delayed, or would
reasonably be expected to impair or delay, the Seller’s ability to develop,
manufacture, test or market any Key Product, (2) the landlords of any of the
Primary Boulder Facilities terminates, or threatens to terminate, any of the
Primary Boulder Leases for any reason, (3) any of the Primary Boulder
Facilities, or any material portion thereof (or any equipment therein), is
damaged, destroyed or unusable for any reason, whether due to fire, natural
disaster, acts of terrorism, equipment malfunction or any other reason, (4) any
clinical trial of a Key Product is suspended, put on hold or terminated for any
reason prior to completion, or if the results of any of the foregoing indicate
that a Key Product is or may be unsafe or not bioequivalent to the original drug
formulation, (5) any unexpected drug related, serious adverse event in patients
who received Key Products in a clinical trial or (6) any action or proceeding is
pending or threatened regarding the violation or infringement of any Key Product
in any material respect with any Intellectual Property Rights of any third
party.

       

      (bb) “Solvent” shall mean
with respect to any Person that, as of any date of determination, (i) the amount
of the Fair Value and Present Fair Saleable Value of the assets of such Person
exceeds as of such date its respective Stated Liabilities and other Contingent
Liabilities, (ii) such Person will not have, as of such date, an unreasonably
small amount of capital for the operation of the business in which such Person
is engaged as a going concern following such date (iii) such Person will have
sufficient assets and cash flow to pay its respective Stated Liabilities and
other Contingent Liabilities as they mature or otherwise become due and (iv)
such Person does not intend to, and does not believe that it will, incur debts
beyond such Person’s ability to pay as such debts mature.  For
purposes of this definition (A) the term, “Fair Value” means the amount at which
the assets, in their entirety, of such Person would change hands between a
willing buyer and a willing seller, within a commercially reasonable period of
time, each having reasonable knowledge of the relevant facts, with neither being
under any compulsion to act, (B) the term “Present Fair Saleable Value” means
the amount that could be obtained by an independent willing seller from an
independent willing buyer if the assets of such Person are sold with reasonable
promptness under normal selling conditions in a current market, (C) the term
“Stated Liabilities” means all known liabilities and recorded liabilities
(including Contingent Liabilities that would be recorded in accordance with GAAP
consistently applied) of such Person and (D) the term “Contingent Liabilities”
means the maximum estimated amount of liability reasonably likely to result from
pending litigation, asserted claims and assessments, guaranties, uninsured risks
and other contingent liabilities of such Person.

       

      (cc) “Subsidiary” shall
mean, with respect to any specified Person, any other Person of which (or in
which) such specified Person will, at the time, directly or indirectly through
one or more subsidiaries, (a) own at least 50% of the outstanding capital
stock (or other shares of beneficial interest) having ordinary voting power to
elect a majority of the board of directors or other similar governing body
(irrespective of whether at the time capital stock (or other shares of
beneficial interest) of any other class or classes of such Person shall or might
have voting power upon the occurrence of any contingency), (b) hold at
least 50% of the interests in the capital or profits, (c) hold at least 50%
of the beneficial interest (in the case of any such Person that is a trust or
estate) or (d) be a general partner (in the case of a partnership) or a
managing member (in the case of a limited liability company).

       

      (dd) “Trademark” shall mean
trademarks, service marks, trade dress, trade names, brand names, domain names
and any other indicia of origin or goodwill, together with all registrations and
applications for registration thereof and all good will associated
therewith.

       

      (ee) “Trade Secret” shall
mean trade secrets, know-how, inventions (whether patented or patentable),
technology, data, data bases, preclinical and clinical study reports, protocols,
data and analyses, and all other confidential or proprietary information,
including formulae, patterns, compilations, programs, devices, methods,
techniques, processes, business methods, drawings, prototypes, models, designs,
customer lists, supplier lists, ideas, practices, test results, assays,
techniques, specifications, formulations, knowledge, skill, experience,
materials and compositions of matter, including pharmaceutical, chemical and
biological materials, products, research tools, software programs, algorithms,
computational combinatorial medicinal chemistry technologies, scientific,
technical, or test data, including pharmacological, biological, chemical,
biochemical, toxicological and clinical test data, analytical and quality
control data, and stability data, safety data, studies, procedures, plans,
diagrams, sketches, documentation, and patent-related and other legal
information or descriptions.

       

      (ff) “Transactions” shall
mean the transactions contemplated by this Agreement.

       

      Section
7.11 Interpretation.  When
a reference is made in this Agreement to an Article, a Section, Exhibit, Annex
or Schedule, such reference shall be to an Article of, a Section of, or an
Exhibit, Annex or Schedule to, this Agreement unless otherwise
indicated.  All Exhibits, Annexes and Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein.  The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.  Whenever
the words “include,” “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without
limitation.”  The words “hereof,” “herein” and “hereunder” and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.  The word
“extent” in the
phrase “to the extent” means the degree to which a subject or other thing
extends, and such phrase does not mean simply “if”.  All reference to
dollars or to “$” shall be references to United States dollars.  All
terms defined in this Agreement shall have the defined meanings when used in any
document made or delivered pursuant hereto unless otherwise defined
therein.  The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such term.  The
parties hereto have participated jointly in the negotiation and drafting of this
Agreement and, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as jointly drafted by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provision of this
Agreement.

       

       

      [signature page
follows]


      
        
          
            


            7176997

          

           


        

        
           


          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.

       

      
        	 
      	 
      	 
      	 
      	 
      
	 
      
	 
      	
                INSMED
      INCORPORATED

              
	 
      	 
      
	 
      	 
      
	 
      	
                By:

              
	 
      	 
      	
                Name:

              	
                Kevin
      P. Tully

              
	 
      	 
      	
                Title:

              	
                Executive
      Vice President and Chief Financial Officer

              
	 
      
	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                PROTEIN
      TRANSACTION LLC

              
	 
      	 
      
	 
      	 
      
	 
      	
                By:

              
	 
      	 
      	
                Name:

              	
                Richard
      N. Kender

              
	 
      	 
      	
                Title:

              	
                President

              
	 
      
	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                MERCK
      & CO., INC.

              
	 
      	 
      
	 
      	 
      
	 
      	
                By:

              
	 
      	 
      	
                Name:

              	
                Richard
      N. Kender

              
	 
      	 
      	
                Title:

              	
                Senior
      Vice President, Business Development & Corporate
    Licensing

              


      

      



      
        
          
            Signature
Page to Asset Purchase Agreement