EXHIBIT
2.2

{*} =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN
THIS DOCUMENT, MARKED BY BRACKETS, HAS BEENOMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2
OFTHE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.



CONFIDENTIAL

****

ASSET PURCHASE
AGREEMENT

BY AND
AMONG

AVIGEN,
INC.,

BAXTER HEALTHCARE
CORPORATION,

BAXTER INTERNATIONAL
INC.,

AND

BAXTER HEALTHCARE
S.A.

DECEMBER 17,
2008



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ASSET PURCHASE
AGREEMENT

This ASSET PURCHASE
AGREEMENT (this Agreement) is made and
entered into as of this 17th day of December, 2008 (the Effective
Date), by and among Avigen, Inc., a Delaware corporation (Seller),
and Baxter Healthcare Corporation, a Delaware corporation (BHC), Baxter
International Inc., a Delaware corporation (BII), and Baxter Healthcare
S.A., a Swiss Corporation (BHSA). BHC, BII and BHSA are individually
and collectively referred to herein as Buyer.

RECITALS

A.
Seller desires to sell to Buyer, and Buyer desires to acquire from Seller, all
of the assets of Sellers current program for the treatment of bleeding
disorders, including, but not limited to, all assets related to the use of
non-anticoagulant sulfated polysaccharides (NASPs) that are within the scope of Sellers current Patent
portfolio on NASPs to treat bleeding disorders and thrombotic disorders,
particularly AV513 to treat these disorders and all Patents with respect to
AV513 to treat these disorders (collectively, the Business). For the avoidance of doubt, the Business
excludes (i) the {*} and (ii) subject to terms and conditions of Section 6.2 and any remedies related thereto, any
assets acquired or created by Seller after the Effective Date or owned
independently as of the Effective Date by any entity with which Seller may merge
in future.

B.
Capitalized terms used in this Agreement shall have the meaning set forth in the
Table of Definitions attached hereto as Schedule 1.0 or where parenthetically defined in this
Agreement; derivative forms shall be interpreted accordingly; and the words
includes, including, and all other forms of the verb to include shall be
deemed followed by the phrase without limitation regardless of whether it is
written there (and drawing no implication from the inconsistent inclusion or
non-inclusion of such phrase).

AGREEMENT

NOW, THEREFORE, in consideration of
the foregoing premises and the covenants, agreements, representations and
warranties contained herein, the parties hereto, intending to be legally bound,
agree as follows:

ARTICLE IASSETS AND
LIABILITIES

1.1. Acquired Assets. Subject to the terms and the
conditions set forth in this Agreement, Seller agrees to sell, convey, transfer,
assign and deliver to Buyer, and Buyer agrees to purchase, receive, and accept
from Seller all right, title, and interest in and to all of the assets,
properties, and rights of every kind, character and description set forth in
Schedule 1.1 hereto, whether tangible, intangible, personal or mixed,
wherever located, and whether such assets, properties and rights have any value
for accounting purposes or are carried or reflected on or specifically referred
to in Sellers (or its Affiliates) books or financial statements (collectively
referred to hereinafter as theAcquired Assets). The Acquired
Assets, however, explicitly exclude the Excluded Assets as defined in Section
1.2 of this Agreement.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

1.2.
Excluded Assets. Notwithstanding anything contained in Section 1.1, Buyer is not purchasing any assets or
properties expressly set forth on Schedule 1.2
(such assets being referred to as the Excluded
Assets and such Schedule 1.2 being
referred to herein as the Excluded Assets Schedule).

1.3.
Liabilities of the Business.

(a)
Excluded Liabilities. SELLER ACKNOWLEDGES AND AGREES THAT SUBJECT TO
SECTION 1.3(b) BELOW, BUYER DOES NOT ASSUME AND
SHALL NOT BE LIABLE FOR {*} AND SELLER SHALL BE SOLELY LIABLE FOR {*}
(collectively, but subject to the clarification provided in Section 1.3(b), {*} (as each term is defined in Section 1.3(b)). FOR THE AVOIDANCE OF DOUBT, EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER DOES NOT ASSUME AND SHALL
NOT BE LIABLE FOR {*}, WHENEVER ARISING AND OF WHATEVER TYPE OR NATURE, EXCEPT
FOR {*} (as each term is defined in Section 1.3(b)).

(b)
Assumed Liabilities. Buyer shall be solely responsible for: (i){*} in
relation to the Assigned Contracts, except to the extent {*} arise out of the
failure by Seller or any Affiliate of Seller to perform any such Assigned
Contract in accordance with its terms prior to the Closing and (ii) all other
{*} in each case after the Closing (including {*} with respect to products sold
on or after the Closing Date claimed or covered by the Transferred Intellectual
Property (Products
Liability) and {*} performed by or on behalf of Buyer (or any Affiliate of
Buyer, or successor to the Acquired Assets) on or after the Closing Date with
respect to products claimed or covered by the Transferred Intellectual Property
{*} (collectively, all of the foregoing in this sentence, the Assumed Liabilities). For purposes of this Section 1.3(b) and anywhere else in this Agreement where
it refers to {*} regardless of whether the entity bringing the Third Party Claim
from which the Losses result alleges {*}; provided, however, that {*}.
Notwithstanding anything to the contrary express or implied in any Acquisition
Agreement, at law or in equity, the Losses described in the foregoing sentence
(except to the extent covered by the proviso of the foregoing sentence) are
Assumed Liabilities, and are not Excluded Liabilities.

1.4.
Instruments of Transfer. The sale of the Acquired Assets and the
assumption of the Assumed Liabilities as herein provided shall be effected at
Closing by the Assignment and Assumption and Bill of Sale in the form attached
hereto as Exhibit A, assignments in recordable
(as applicable) form with respect to the Transferred Intellectual Property
included in the Acquired Assets in the form(s) set forth in Exhibit B.

1.5.
Payment of Sales Taxes. {*}. The parties will prepare and deliver and, if
necessary, file at or before Closing all transfer tax returns and other filings
necessary to vest in Buyer full right, title and interest in the Acquired
Assets.

1.6.
{*}

1.7.
Non-Assignment of Certain Contracts. Seller shall use good faith
reasonable efforts to obtain the written consent of each counterparty to each
Assigned Contract that has not been obtained as of the Closing Date (each a
Lacking Third Party Consent) to the assignment
of such Assigned Contract; provided, however, that Seller shall not agree to any
amendment or waiver of any of the relevant rights or obligations of any party
under any of the relevant Contracts without the prior written approval of Buyer.
{*} Notwithstanding anything contained in this Agreement to the contrary, the
failure of Seller {*}. Notwithstanding anything to the contrary in this
Agreement, to the extent the assignment of {*} to Buyer would require the
consent of any Third Party (each, a Consent)
that has not been obtained by Seller prior to the Closing Date, neither this
Agreement, nor any action taken under any of the foregoing shall constitute an
assignment or agreement to assign such contract if this would constitute a
breach of the relevant Assigned Contract. If any such Consent shall not be
obtained or if any attempted assignment or transfer would be ineffective or
would impair Buyers rights under or in respect of any such Contract so that
Buyer would not, in effect, acquire the benefit of any such Contract, Seller
shall reasonably cooperate with Buyer to extend to Buyer the benefits of such
Contract in a contractually permissible way.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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ARTICLE IIPURCHASE
PRICE

2.1.
Purchase Price. The purchase price to be paid by Buyer to Seller for the
Acquired Assets and the other rights set forth herein shall be Seven Million
Dollars ($7,000,000.00) (the Purchase Price);
provided, however, that Seller acknowledges that in connection with the
execution of the Letter of Intent and performance by Seller of Sellers
obligations thereunder, Buyer has previously paid to Seller and Seller hereby
acknowledges receipt of an amount equal to {*} that was to be credited against
the Purchase Price if the Closing occurs, and Seller further acknowledges and
agrees that the amount that is due and payable by Buyer to Seller in immediately
available funds via wire transfer on the Closing Date shall be {*}.

2.2.
Allocation of Purchase Price. Buyer and Seller acknowledge and agree that
the Purchase Price shall be allocated to the Acquired Assets in accordance with
Schedule 2.2 hereto. Buyer and Seller agree to
report the transactions contemplated by this Agreement for federal and state
income tax purposes in accordance with such allocation. The parties shall
execute all forms required to be filed for tax purposes with any taxing
authority in a manner consistent with the allocation on Schedule 2.2 hereto.

2.3.
Negotiated Value. The parties agree that the Purchase Price and the
Purchase Price allocation set forth on Schedule
2.2 reflect the fair value of the Business and the fair values of the
Acquired Assets, respectively, agreed to by the parties hereto as a result of
arms length negotiations.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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ARTICLE
IIICLOSING

The closing of the sale and purchase
of the Acquired Assets (the Closing) shall take
place on the Effective Date (the Closing Date)
at the offices of Seller, or by facsimile transmission and United States or
overnight mail. The Closing shall be deemed to have occurred at 12:01 a.m. local
time at Sellers offices on the Closing Date.

ARTICLE
IVREPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to
Buyer as follows:

4.1.
Organization, Good Standing, and Qualification. Seller is a corporation
duly organized, validly existing, and in good standing under the provisions of
the Laws of the State of Delaware, and is qualified and licensed to do business
in every other jurisdiction in which it conducts the Business or the nature of
the operations of the Business requires qualification as a foreign corporation.
Seller has all requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted. Seller has all power
and authority to enter into all of the Acquisition Agreements to which Seller is
a party and to carry out and perform its obligations under the Acquisition
Agreements.

4.2.
Authorization; Binding Obligation. Seller has full legal and corporate
right, power, and authority to execute and deliver the Acquisition Agreements to
which Seller is a party, and to carry out the transactions contemplated thereby.
The execution and delivery by Seller of the Acquisition Agreements and all of
the documents and instruments required thereby and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
action on the part of Seller. The Acquisition Agreements to which Seller is a
party and each of the other documents and instruments required thereby or
delivered in connection therewith have been duly executed and delivered by
Seller, and constitute the legal, valid, and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms.

4.3.
Consents and Approvals.

(a)
Governmental Consents and Approvals. Except as set forth on Schedule 4.3, no registration or filing with, or consent
or approval of, or other action by, any federal, state or other Governmental
Authority is or will be necessary for the valid execution, delivery and
performance of this Agreement by Seller, or the transfer of the Acquired Assets
to Buyer (each, a Governmental Approval and, collectively, the Governmental Approvals).

(b) Third
Party Consents. Except as set forth in Schedule
4.3 {*} no consent, approval or authorization of any non-governmental
third party is required in order to consummate the transactions or perform the
related covenants and agreements contemplated hereby or to vest full right,
title and interest in the Acquired Assets free and clear of any Lien upon Buyer,
all without any change in the Acquired Assets and all rights therein after the
Closing (each, a Third Party Consent and,
collectively, the Third Party Consents (to be
clear, the Third Party Consents exclude {*}.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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4.4.
No Violation. The execution, delivery, compliance with, and performance
by Seller of the Acquisition Agreements do not and will not: (a) violate or
contravene the organizational documents and agreements, as amended to date, of
Seller, (b) violate or contravene any Law to which Seller is subject, (c)
conflict with or result in a breach of or constitute a default by Seller under
any contract, agreement, instrument or other document to which Seller is a party
or by which Seller or any of its assets or properties are bound or subject or to
which any entity in which Seller has an interest, is a party, or by which any
such entity is bound, or (d) result in the creation of any Lien upon any of the
Acquired Assets or the Business, in the cases of (c) and (d), to Sellers
Knowledge.

4.5.
Licenses and Permits. Schedule 4.5 attached hereto contains a
true, correct and complete list and summary description of all Licenses which
have been issued to Seller with respect to any product candidate included in the
Business (including the Product) including, without limitation, all Regulatory
Approvals, Product Registrations and INDs on a country-by-country basis
(collectively, the Seller Licenses). Except as
set forth on Schedule 4.5, each Seller License is
valid and in full force and effect as of the date hereof, no Seller License is
subject to any Lien, limitation, restriction, probation, or other qualification
 other than, in the case of INDs, to the limitations set forth therein  and
there is no default under any Seller License. There is no investigation or
proceeding, threatened or to Sellers Knowledge pending, that could result in
the termination, revocation, limitation, suspension, restriction, or impairment
of any Seller License or the imposition of any fine, penalty or other sanctions
for violation of any legal or regulatory requirements relating to any Seller
License or, to the best of Sellers Knowledge, any basis therefor. Seller and
its Affiliates have, and have had at all relevant times, all Licenses that are
or were necessary in order to enable Seller and its Affiliates to own the
Acquired Assets and conduct the Business except to the extent the failure to do
so would not have a Seller Material Adverse Effect.

4.6.
Acquired Assets. Seller is the sole and exclusive legal and equitable
owner of all right, title, and interest in, and has good, clear and marketable
title to, all of the Acquired Assets free of all Liens (other than Liens for
Taxes that are not yet due and payable). Except for the Excluded Assets, the
Acquired Assets include all assets, properties, and rights of Seller primarily
used in or primarily held for the benefit of the Business that are necessary or
desirable in order for Buyer to continue the Business following Closing as
historically and currently conducted. Seller will convey to Buyer on the Closing
Date all of the Acquired Assets free and clear of any Liens.

4.7.
Legal Proceedings.

(a) There is no action, suit,
litigation, proceeding or investigation to Sellers Knowledge pending by or
against Seller relating to the Business, and Seller has not received any written
or oral: claim, complaint, incident, report, threat or notice of any such
proceeding or investigation. Seller has not received any opinion or memorandum
or advice from outside legal counsel to the effect that it is exposed, from a
legal standpoint, to any liability or claim relating to the Acquired Assets or
to the business, prospects, financial condition, operations, property or affairs
of the Business. There are no outstanding orders, writs, judgments, injunctions
or decrees of any court, Governmental Authority or arbitration tribunal against
or directly involving the Business or the Acquired Assets, and to Sellers
Knowledge there are no facts or circumstances which may result in the
institution of any action, suit, or claim or legal, administrative or
arbitration proceeding or investigation against, involving or affecting the
Business, the Acquired Assets or the transactions contemplated by the
Acquisition Agreements. Seller is not in default with respect to any order,
writ, injunction or decree known to or served upon it from any court or any
federal, foreign, state, municipal or other Governmental Authority relating to
the Business or the Acquired Assets.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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(b) With respect to the Product, to
Sellers Knowledge, Schedule 4.7(b) sets forth a
list of all recalls, all serious adverse events (together with a description
thereof and the date received), all warning letters or their foreign equivalents
and all notices of adverse findings or other correspondence suggesting a
violation of the Laws of the United States Food and Drug Administrations (the
FDA) or any other or similar Governmental
Authority. Seller has, prior to the Effective Date, made available to Buyer all
of Sellers files relating to all Medical and Regulatory Information possessed
by Seller relating to the Product. Except as set forth on Schedule 4.7(b), Seller has no
Knowledge of any other claims, complaints, regulatory letters, warning letters,
serious adverse events, product failures, recalls or regulatory actions with
respect to the use, manufacture, advertising, promotion, sale or distribution of
the Product, pending or threatened.

4.8.
Compliance with Laws. With respect to the Acquired Assets and the
Business, (a) to Sellers Knowledge, Seller has not violated and is in
compliance with all applicable Laws; and (b) Seller has not received any written
notice to the effect that, or to its Knowledge otherwise been advised that, it
is not in compliance with any Laws. To Sellers Knowledge there are no existing
circumstances which are likely to result in a violation of any Laws by the
conduct of the Business in the manner conducted by Seller prior to the Closing.
There is no action or proceeding by the FDA or any other Governmental Authority
pending, or to the Knowledge of Seller, threatened against Seller relating to
the safety or efficacy of Product.

4.9.
No Brokers. Neither Seller nor any Affiliate of Seller has employed,
either directly or indirectly, or incurred any liability to, any broker, finder
or other agent in connection with the transactions contemplated by this
Agreement. Seller and its Affiliates agree to indemnify and hold harmless Buyer
for any claims brought by any broker, finder or other agent claiming to have
acted on behalf of Seller or an Affiliate of Seller in connection with the
purchase and sale of the Acquired Assets or the Business.

4.10.
Taxes. There are no Liens for Taxes on any of the Acquired Assets to
Sellers Knowledge (other than Liens for Taxes that are not yet due and
payable), no reasonable basis exists for the imposition of any such Liens, and
to Sellers Knowledge the consummation of the transactions contemplated by this
Agreement will not give rise to any such Liens for Taxes on any Acquired Assets.
Notwithstanding anything to the contrary, Buyer shall have no liability for any
Taxes related to the ownership or operation of the Acquired Assets or the
Business for the periods prior to the Closing Date. For Taxes (other than
income, sales or use Taxes) related to the ownership or operation of the
Acquired Assets or the Business for a period that includes (but does not end on)
the Closing Date, the Buyers liability will be limited to its pro rata share of
such Taxes, determined by multiplying the amount of such Taxes by a fraction,
the denominator equal to the number of days in the applicable period and the
numerator equal to the number of days from (but not including) the Closing Date
to the end of such period. For income, sales or use Taxes related to the
ownership or operation of the Acquired Assets or the Business for a period that
includes (but does not end on) the Closing Date, liability will be allocated
between Seller and Buyer as if the relevant Tax period ended as of the
Closing.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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4.11.
Contracts.

(a)
Schedule 4.11 hereto contains a complete and correct list of all
Contracts, including a complete description of any legally binding oral
Contracts. Each Contract is separately designated on Schedule 4.11 as either a Contract that Seller has agreed
to assign and that Buyer has agreed to assume (each, an Assigned Contract) or as a Contract that shall be
retained or terminated by Seller, in its discretion and at its own expense
(each, a Retained Contract).

(b) Seller
is not in material default under the terms of {*}. No event has occurred that
would constitute a material default by Seller under {*}, nor has Seller received
any notice of any default under {*}. To Sellers Knowledge, the counterparties
to {*} are not in default under the terms thereof, nor to Sellers Knowledge has
any event occurred that would constitute a material default by any such
counterparty under {*}, nor has Seller received any written notice of any such
counterpartys default under {*}.

(c) {*} are
valid and binding in accordance with their respective terms and are in full
force and effect, except for Contracts (i) that have been terminated or (ii)
that have expired according to their terms, each as indicated in Schedule 4.11. Seller has not received any notice from any
other party to {*} of the termination or threatened termination thereof, nor any
claim, dispute or controversy thereon, and has no Knowledge of the occurrence of
any event which would allow any other party to terminate {*}. Seller has not
received written notice of any asserted claim of default, breach or violation
of, {*} by Seller and to Sellers Knowledge there is no basis
therefor.

(d)
Consummation of the transactions contemplated by this Agreement will not
constitute a default under {*} nor will it trigger any other provision in {*}
that would result in a change in such {*}, including without limitation the
requirement for a transfer fee, new deposit or termination of such
{*}.

4.12.
Financing Statements. With respect to the Acquired Assets and the
Business and except as set forth on Schedule
4.12, to Sellers Knowledge there are no financing statements under
the Uniform Commercial Code which name Seller or any of its Affiliates as debtor
or lessee filed in any state. Except as set forth on Schedule 4.12, neither Seller nor any of its Affiliates
has signed any financing statement or any security agreement under which a
secured party thereunder may file any such financing statement with respect to
the Acquired Assets or the Business.

4.13.
Intellectual Property. Schedule 4.13 sets
forth a list of all Intellectual Property owned or controlled by Seller or its
Affiliates that any of them uses primarily in or that relates primarily to the
Business, other than unregistered copyrights and Know-How (collectively, the
Transferred Intellectual
Property). All Seller or Seller Affiliate owned Patents and Trademarks
listed in Schedule 4.13 as issued or registered
are in full force and effect. All patent applications listed in Schedule 4.13 as pending have been prosecuted in good
faith as required by Law and to Sellers Knowledge are in good standing. Seller
owns, or possesses adequate licenses or other rights to use (and to transfer
such rights to use), all the Transferred Intellectual Property and Transferred
Know-How, none of which rights will be impaired by the consummation of the
transactions contemplated by this Agreement, and all of the rights of Seller
thereunder will be enforceable by Buyer immediately after Closing without the
consent or agreement of any other party. None of the Transferred Intellectual
Property is to Sellers Knowledge involved in any interference or opposition
proceeding. There has been no written notice received by Seller or to Sellers
Knowledge any other indication that any such proceeding will hereafter be
commenced with respect to the Transferred Intellectual Property. Neither Seller
nor its Affiliates has granted any person or entity any right to use any of the
Transferred Intellectual Property or Transferred Know-How for NASPs within the
Field, but excluding academic institutions rights to use any of the Transferred
Intellectual Property or Transferred Know-How for non-commercial research or
academic purposes pursuant to the Contracts listed in Schedule 4.11.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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4.14. Disclosure. To Sellers Knowledge Seller has not
made any untrue statement of a material fact and has not omitted to state a
material fact necessary in order to make the statements contained in this
Agreement not misleading in light of the circumstances under which they were
made or necessary to provide a prospective purchaser of the Acquired Assets or
the Business with all information material thereto. There is no fact within the
Knowledge of Seller that has not been disclosed herein to Buyer and which would
have a Seller Material Adverse Effect.

ARTICLE
VREPRESENTATIONS AND WARRANTIES OF BUYER

Each of the
corporate entities that together constitute the Buyer represents and warrants to
Seller as follows:

5.1. Organization, Good Standing, and Qualification.
Buyer is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its organization. Buyer has all requisite
corporate power and authority to own and operate its properties and to carry on
its business as now conducted, to enter into all of the Acquisition Agreements
to which it is party and to carry out and perform its obligations under the
Acquisition Agreements to which Buyer is a party.

5.2. Authorization; Binding Agreement. Buyer has the
full legal and corporate right, power and authority to execute and deliver the
Acquisition Agreements to which it is party, and to carry out the transactions
contemplated by the Acquisition Agreements to which it is a party. The execution
and delivery by Buyer of the Acquisition Agreements to which Buyer is a party
and all of the documents and instruments required thereby and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action on the part of Buyer. The Acquisition Agreements
to which Buyer is a party and each of the other documents and instruments
required hereby have been duly executed and delivered by Buyer and constitute
the legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms.

5.3. Legal Proceedings. There are no actions, suits,
litigation or proceedings pending or threatened against Buyer which could
materially adversely affect Buyers ability to perform its obligations under
this Agreement or the consummation of the transactions contemplated by this
Agreement.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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5.4. No Brokers. Buyer has not employed, either
directly or indirectly, or incurred any liability to, any broker, finder or
other agent in connection with the transactions contemplated by this Agreement.
Buyer agrees to indemnify Seller for any claims brought by any broker, finder or
other agent claiming to have acted on behalf of Buyer in connection with this
sale.

5.5. No Violation. The execution, delivery, compliance
with and performance by Buyer of the Acquisition Agreements to which Buyer is a
party and each of the other documents and instruments delivered in connection
therewith do not and will not: (a) violate or contravene the organizational
certificates, documents and agreements, as amended to date, of Buyer, (b)
violate or contravene any Law to which Buyer is subject, or (c) conflict with or
result in a breach of or constitute a default by any party under any contract,
agreement, instrument or other document or contract to which Buyer is a party or
by which Buyer or any of its assets or properties are bound or to which Buyer or
any of its assets or properties are subject.

ARTICLE
VICOVENANTSCONFIDENTIALITY; NON-COMPETITION

6.1. Confidentiality.

(a) The parties agree that: (i) all information not disclosed to
the public by Seller regarding the Business, which information regarding the
Business is compiled by, obtained by or furnished to Buyer or any of its agents
or employees in the course of its due diligence review of the Business is
acknowledged to be confidential information, trade secrets and/or the exclusive
property of Seller until the Closing Date, and of Buyer thereafter, (ii) all
information not disclosed to the public by Buyer regarding Buyers business or
operations is acknowledged to be confidential information, trade secrets and the
exclusive property of Buyer; and (iii) all information not disclosed to the
public by Seller regarding Sellers business or operations other than the
Business is acknowledged to be confidential information, trade secrets and the
exclusive property of Seller (all of the foregoing being hereinafter referred to
collectively as Confidential Information with
the Confidential Information described in subparagraphs (i) and (ii) after the
Closing being the Confidential Information of Buyer, and the Confidential
Information described in subparagraph (iii) being the Confidential Information
of Seller).

(b) Each of the parties hereto agrees not to divulge, directly or
indirectly, any Confidential Information of the other party in any manner
contrary to the interests of such party. Each of the parties acknowledges that
the breach or threatened breach of the provisions of this Section may cause
irreparable injury to the other party that could not be adequately compensated
by money damages. Accordingly, a party may obtain a restraining order and/or
injunction prohibiting a breach or threatened breach of the provisions of this
Section 6.1, in addition to any other legal or
equitable remedies that may be available. If requested by any Governmental
Authority or required pursuant to any Law to disclose any Confidential
Information of another party, the party so requested or required shall promptly
give notice thereof to the other party so that such other party may, at its own
cost and expense, seek an appropriate protective order, if available. If a
protective order or waiver is granted, the party subject to such legal process
may disclose the Confidential Information to the extent required by such
Governmental Authority or Law or as may be permitted by a waiver by the other
party. If no protective order is obtained or available to apply for, then the
party shall be entitled to make the legally required disclosure. Notwithstanding
any part of the foregoing, Buyer and Seller shall each be permitted to disclose
Confidential Information, including without limitation a copy of this Agreement,
the Assignment and Assumption and Bill of Sale, and any other Acquisition
Agreements for the purpose of complying with government or securities exchange
filing requirements and for the purpose of issuing a press release about the
transactions contemplated by this Agreement following the Closing
Date.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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(c) The term
Confidential Information shall include the terms of the Acquisition Agreements
(excluding those that are intended for recordation to the public record), which
shall be considered the Confidential Information of both Parties (apart from
such recordation documents). The term Confidential Information does not
include information that: (i) at the time of disclosure or later becomes
generally known to the public or within the industry or segment of the industry
to which such information relates without violation by a party of any of its
obligations hereunder and not through any action by any of its directors,
officers, employees and agents which, if committed by such party, would have
constituted a violation by it of any of its obligations hereunder; (ii) at the
time of disclosure to the other party was already known by such other party; or
(iii) after the time of the disclosure to the other party, is received by such
party from a third party which, to such partys best knowledge, is under no
confidentiality obligation with respect thereto.

(d)
Notwithstanding the foregoing in this Section
6.1, each party shall be entitled to disclose the terms of this
Agreement, to the extent at the time not already publicly disclosed as required
by applicable law pursuant to Section 6.1(b)
above, to its legal and financial advisors, and to actual and potential
investors, acquirors or licensees conducting due diligence.

6.2.
Non-Competition.

(a) As a
material inducement to Buyer to enter into this Agreement, in consideration of
the compensation payable hereunder, and for such other good and valid
consideration, the receipt and sufficiency of which are hereby acknowledged, as
well as in recognition of the fact that the value of the Business, including the
goodwill, would be diminished substantially if Seller or any Affiliate of Seller
were to engage in certain business or activities in competition with Buyer,
Seller covenants and agrees that, except as required in the performance of the
duties set forth in this Agreement or another written agreement with Buyer,
neither Seller nor any of its Affiliates will, during the Period, directly or
indirectly, become a Competitor anywhere within the Territory; provided,
however, that an investment, whether direct or indirect, by Seller of {*} in an
entity that is a Competitor shall not be considered a violation of this
provision.

(b) The
parties specifically acknowledge and agree that the remedy at law for any breach
of this Section 6.2 may be inadequate and that
Buyer, in addition to any other relief available to them, may be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damage. If any restriction contained in this Section
6.2 is held by any court to be unenforceable, or unreasonable, as to
time, geographic area or business limitation, Seller agrees that such provisions
shall be and are hereby reformed to the maximum time, geographic area, or
business limitation permitted by applicable Laws. The parties further agree that
the remaining restrictions contained in this Section
6.2 shall be severable and shall remain in effect and shall be
enforceable independently of each other.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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(c) Seller
specifically acknowledges that the covenants set forth in this Section are
reasonable and necessary to protect the legitimate interests of Buyer, and Buyer
would not have entered into this Agreement in the absence of such
covenants.

6.3.
Technology Transfer.

(a) Seller
shall reasonably cooperate with and shall make its personnel available at all
reasonable times to ensure the prompt and complete transfer to Buyer of all
Transferred Know-How, up to a maximum combined resource commitment of {*} until
a maximum of {*} from Closing Date (the Tech Transfer
Period). In connection with the foregoing, Seller shall, at its sole
cost and expense (except for the payment required pursuant to Section 6.3(b)) during the Tech Transfer Period: (i) {*},
(ii) make introductions to, arrange for site visits with and, as appropriate,
audits of any of Sellers vendors and/or suppliers vending to and supplying the
Business, and (iii) undertake such other activities as are necessary to effect
the transfer of the Transferred Know-How (collectively, the activities referred
to in the first two (2) sentences of this Section 6.3(a) are hereinafter
referred to as the Tech Transfer Process).
Buyer acknowledges that Seller has publicly announced a lay-off, and that Seller
has informed Buyer that the layoff includes scientific personnel familiar with
the Acquired Assets, who will not be employed by Seller beyond January 2009.
While Seller will {*} assist Seller in the completion of any remaining
technology transfer {*} and only during an additional {*}, the parties intend
that barring unforeseen circumstances the technology transfer should be
completed within Tech Transfer Period.

During the Tech Transfer Period,
Buyer shall compile a reasonably detailed written list (the Transferred Know-How List) of the Know-How that falls
within the definition of Transferred Know-How Category and is either (a)
reflected in the documentation Seller is required to provide to Buyer under this
Agreement (or has been provided to Buyer as part of the due diligence process
prior to the Closing Date) or (b) provided to Buyer through the Tech Transfer
Process. Buyer shall provide such Transferred Know-How List to Seller {*}. {*}.
The Transferred Know-How List shall not be deemed final until agreed to in
writing by Buyer and Seller.

(b) In
connection with the foregoing, Buyer shall pay to Seller an amount equal to {*}
of which {*} shall be paid at the Closing and {*} shall be paid on the earlier
of: (i) the {*} anniversary of the Closing or (ii) the date that Buyer provides
written notice to Seller that it no longer requires the technology transfer
services of Seller as set forth in Section
6.3(a).

ARTICLE
VIICONDITIONS
PRECEDENT TO BUYERS PERFORMANCE AND TO
SELLERSPERFORMANCE

7.1.
Conditions to Buyers Obligations. The obligations of Buyer under this
Agreement are subject to the satisfaction of the following conditions on or
prior to the Closing Date, all or any of which may be waived in writing by
Buyer:

(a) Seller
shall have delivered to Buyer all documents required to be delivered by Seller,
and all such documents shall have been properly executed by Seller, if
applicable. Such documents (forms of which have been attached hereto) shall
include, without limitation, assignments in recordable form necessary or
desirable to convey the Transferred Intellectual Property included in the
Acquired Assets and such other documents and instruments, each in a form
reasonably satisfactory to Buyer, as may be reasonably requested by Buyer in
order to carry out the transaction contemplated by this Agreement and to vest
good and marketable title in the Acquired Assets in Buyer, free and clear of all
Liens.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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(b) Seller
shall have executed and delivered to Buyer the Assignment and Assumption and
Bill of Sale in the form attached hereto as Exhibit
A (Assignment and Assumption and Bill
of Sale), dated and effective as of the
Closing Date.

(c) Buyer
shall have received all Third Party Consents in form and substance satisfactory
to Buyer, effective as of the Closing Date.

(d) Buyer
shall have received all approvals, consents and clearances from Governmental
Authorities and others in connection with the transactions contemplated by this
Agreement deemed necessary by Buyer, including receipt by Buyer of all licenses,
permits, consents and approvals for Buyer to own and operate the Business after
the Closing Date.

7.2.
Conditions to Sellers Obligations. The obligations of Seller under this
Agreement are subject to the satisfaction of the following conditions, on or
prior to the Closing Date, all or any of which may be waived in writing by
Seller:

(a) Buyer
shall have delivered to Seller all documents required to be delivered by Buyer,
and all such documents shall have been properly executed by Buyer, if
applicable.

(b) Buyer
shall have executed and delivered to Seller the Assignment and Assumption and
Bill of Sale.

(c) Buyer
shall have made payment as required by Section
2.1.

7.3.
No Injunction or Action. The obligations of both Buyer and Seller under
this Agreement are conditioned upon there being, as of the Closing Date, no
preliminary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a Governmental Authority concerning this
Agreement which would make illegal or otherwise prevent consummation of this
Agreement in accordance with its terms, and no proceeding or action brought by
any Governmental Authority seeking the foregoing shall be pending.

7.4.
Termination for Failure to Close. Seller shall be entitled to terminate
this Agreement {*} upon written notice to Buyer if Buyer fails to satisfy the
condition set forth in Section 7.2(c) within {*} after the Effective
Date.

ARTICLE
VIIISURVIVAL
OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

8.1.
Survival of Representations and Warranties.

(a) All
Buyer and Seller representations and warranties contained in Articles IV and V of this
Agreement or any other agreement, schedule, certificate, instrument or other
writing delivered by Buyer or Seller in connection with the transactions
contemplated by this Agreement shall survive for {*} after the Closing Date (the
Survival Period). If a party hereto determines
that there has been a breach by any other party hereto of any such
representation or warranty and notifies the breaching party in writing (such
notice an Indemnity Notice) reasonably promptly
after learning of such breach but in any case within {*} following the
expiration of the Survival Period, such representation or warranty and liability
therefor shall survive with respect to the breach specified in the Indemnity
Notice until such breach has been resolved. If no Indemnity Notice for a
particular breach is received by the Indemnifying Party (as hereinafter defined)
{*} following the expiration of the Survival Period, then no remedy shall be
available to the Indemnified Party (as hereinafter defined) for such breach of
representation and warranty. Notwithstanding the foregoing, the representations
and warranties of Section 4.10 (Taxes) shall
survive until the expiration of the applicable statute of limitations of the
underlying Tax liability.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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(b) The
indemnification provided for in this Article 8 shall be the exclusive remedy for
breach of each partys representations and warranties (but not with respect to
the covenants contained in Article VI). Further,
the parties agree that: (a) Sellers total liability under the Acquisition
Agreements (including pursuant to Section 8.2 of
this Agreement) shall be limited to {*}, and (b) Buyers total liability for
breach of a representation and warranty in any Acquisition Agreement (including
pursuant to Section 8.3 of this agreement) shall
be limited to {*}, provided that nothing contained in this Agreement shall
preclude the assertion within {*} following the expiration of the Survival
Period by Buyer or any of its Affiliates of any cause of action that may exist,
not based upon breach of contract, for fraud. {*}.

8.2.
Indemnification by Seller. Subject to the provisions of Section 8.4 below, Seller agrees unconditionally to
indemnify, defend, and hold Buyer and its Affiliates, and its and their
officers, directors and employees, harmless from and against any and all of the
following:

(a) Any and
all Losses (but, to avoid doubt, subject to Section
8.1) of every kind, nature or description which arise out of or
result from or occur as a consequence of: (i) any false, incorrect or misleading
representation or warranty or breach thereof made by or on behalf of Seller in
this Agreement (including the Exhibits and Schedules hereto) or in any of the
Acquisition Agreements; or (ii) any failure by Seller to perform, comply with,
or observe any one or more of their covenants, agreements, or obligations
contained in any of the Acquisition Agreements other than the Agreement, but
excluding in all cases all Assumed Liabilities.

(b) Any and
all Losses other than Assumed Liabilities which may at any time or from time to
time arise out of or result from or occur as a consequence of any Third Party
Claims which arise out of or result from or are a consequence of: (i) Sellers
ownership and use of the Acquired Assets, or the conduct of the Business and the
production, provision, or sale by Seller or its Affiliates of the Product, in
each case at any time prior to the Closing Date; (ii) any Excluded Liability;
(iii) any failure by Seller to comply with the provisions of this Agreement
(except to the extent covered by Section 8.2(a)(i)); and (iv) the failure by
Seller to discharge any obligations of Seller which were incurred by Seller or
its Affiliates or the Business during the period prior to the Closing Date
(except for the Assumed Liabilities), including without limitation the
following: (A) any audit or investigation or civil, administrative, or criminal
proceedings arising as a result of the operation of the Business prior to the
Closing Date whether or not Seller or its Affiliates had knowledge thereof as of
the Closing Date, (B) any assessments, adjustments or offsets made against Buyer
as a result of such an audit or investigation or in connection with the recovery
by any Governmental Authority with respect to Sellers ownership and use of the
Acquired Assets or conduct of the Business prior to the Closing Date, or (C)
Sellers failure to obtain any Third Party Consent that it is required to obtain
pursuant to the terms of this Agreement, which is not actually waived in writing
by Buyer (to avoid doubt, Third Party Consents exclude consents under {*}
and

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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Without limiting the
generality of the foregoing provisions of this Section
8.2 with respect to the measurement of damages, Buyer shall have the
right, subject to Section 8.1, to be put in the
same financial position as it would have been in had the representations and
warranties of Seller been true and correct, had each of the covenants of Seller
been performed in full, and had Seller paid, discharged, and performed all of
its liabilities and obligations. Further, to avoid doubt, nothing in this
Section 8.2 is intended to alter in any way, nor
shall it be used to interpret, the definitions of Assumed Liability and Excluded
Liability.

8.3. Indemnification by Buyer. Subject to the
provisions of Section 8.4 below, Buyer agrees
unconditionally to indemnify, defend and hold Seller and its Affiliates, and its
and their officers, directors and employees, harmless from and against any and
all of the following:

(a) Any and all Losses (but, to avoid doubt, subject to Section 8.1) of every kind, nature or description which
arise out of or result from or occur as a consequence of: (i) any false,
incorrect or misleading representation or warranty or breach thereof made by or
on behalf of Buyer in this Agreement (including the Exhibits and Schedules
hereto) or in any of the Acquisition Agreements, but excluding all Excluded
Liabilities; (ii) any failure by Buyer to perform, comply with, or observe any
one or more of its covenants, agreements, or obligations contained in any of the
Acquisition Agreements, but excluding all Excluded Liabilities; or (iii) any
counterclaim against Seller resulting from the enforcement or attempted
enforcement by Buyer of any of the rights included within the scope of the
Patents included in the Transferred Intellectual Property.

(b) Any and all Losses which may at any time or from time to time
arise out of or result from or occur as a consequence of any Third Party Claims
which arise out of or result from or are a consequence of: (i) Buyers ownership and use of the Acquired Assets, or
the conduct of the Business at any time on or after the Closing Date; (ii) any
Assumed Liability; (iii) any failure by Buyer to comply with the provisions of
this Agreement; and (iv) the failure by Buyer to discharge any obligations of
Buyer which were incurred by Buyer on or after the Closing Date (except for the
Excluded Liabilities), including without limitation the following: (A) any audit
or investigation or civil, administrative or criminal proceedings arising as a
result of Buyers conduct of the Business on or after the Closing Date, and (B)
any assessments, adjustments or offsets made against Seller as a result of such
an audit or investigation or in connection with the recovery by any Governmental
Authority or administrative agency with respect to Buyers conduct of the
Business on or after the Closing Date.

Without limiting the
generality of the foregoing provisions of this Section
8.2 with respect to the measurement of damages, Seller shall have the
right, subject to Section 8.1, to be put in the
same financial position as it would have been in had the representations and
warranties of Buyer been true and correct, had each of the covenants of Buyer
been performed in full, and had Buyer paid, discharged, and performed all of its
liabilities and obligations. Further, to avoid doubt, nothing in this Section 8.3 is intended to alter in any way, nor shall it
be used to interpret, the definitions of Assumed Liability and Excluded
Liability.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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8.4. Indemnification Process. Any party seeking
indemnification under this Article VIII (each, an
Indemnified Party) shall give each party from
whom indemnification is being sought (each, an Indemnifying
Party) notice of any matter which such Indemnified Party has
determined has given rise to or could give rise to a right of indemnification
under this Agreement, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and liabilities of an Indemnifying Party under this
Article VIII with respect to Losses arising from
any Third Party Claims which are subject to the indemnification provided for in
this Article VIII shall be governed by and
contingent upon the following additional terms and conditions:

(a) If any Indemnified Party shall receive notice of any Third
Party Claim, the Indemnified Party shall give the Indemnifying Party notice of
such Third Party Claim within thirty (30) days of the receipt by the Indemnified
Party of such notice; provided, however, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations under this Article VIII except to the extent the Indemnifying Party
is materially prejudiced by such failure.

(b) If the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party hereunder against any Losses that
may result from such Third Party Claim, then the Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the Indemnified Party within thirty (30) days of the receipt of such
notice from the Indemnified Party; provided,
further, however,
that if it would be detrimental to the defense of the Indemnified Party for the
same counsel to represent both the Indemnified Party and the Indemnifying Party,
then the Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the Indemnified Party determines counsel is required, at
the expense of the Indemnified Party.

(c) In the event the Indemnifying Party exercises the right to
undertake any such defense against any such Third Party Claim as provided above,
the Indemnified Party shall cooperate with the Indemnifying Party in such
defense and make available to the Indemnifying Party, at the Indemnifying
Partys expense, all witnesses, pertinent records, materials and information in
the Indemnified Partys possession or under the Indemnified Partys control
relating thereto as is reasonably required by the Indemnifying Party. Similarly,
in the event the Indemnifying Party declines to take such defense and the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Partys expense, all such witnesses, records, materials, and
information in the Indemnifying Partys possession or under the Indemnifying
Partys control relating thereto as is reasonably required by the Indemnified
Party.

(d) If the Indemnifying Party shall have failed to assume the
defense of any claim in accordance with the provisions of this Article, then the
Indemnified Party shall have the absolute right to control the defense of such
claim and, if and when it is finally determined that the Indemnified Party is
entitled to indemnification from the Indemnifying Party hereunder, the fees and
expenses of the Indemnified Partys counsel shall be borne by the Indemnifying
Party and paid by the Indemnifying Party to the Indemnified Party within five
(5) business days of written demand therefor, but
the Indemnifying Party shall be entitled, at its own expense, to participate in
(but not control) such defense.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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(e) So long
as the Indemnifying Party has assumed and is conducting the defense of the Third
Party Claim in accordance with Section 8.4(b)
above, (i) the Indemnifying Party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be withheld unreasonably
withheld, conditioned or delayed and not to be withheld at all if the
Indemnified Party is completely released from all claims and not required to
make any admission of fault or wrongdoing or take any action pursuant to the
terms of the settlement), and (ii) the Indemnified Party shall not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (not to
be withheld unreasonably).

ARTICLE
IXMISCELLANEOUS

9.1.
Expenses. Each of the parties hereto shall pay its own fees, costs, and
expenses incurred in connection with the negotiation, preparation, execution,
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.

9.2.
Entire Subject Matter; Amendment. This Agreement, together with its
Schedules and Exhibits and all ancillary agreements and exhibits and schedules
thereto to be delivered at Closing, contains the entire understanding of the
parties with respect to the subject matter hereof and supersedes all prior
agreements, either oral or written. The Agreement may not be amended and no term
or condition may be waived unless signed by both parties to this Agreement. Each
party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by other
party(ies), or by anyone acting on behalf of any party, that are not embodied
herein, and that no other agreement, statement, or promise not contained in this
Agreement shall be valid or binding.

9.3.
Assignment. No party hereto shall assign or otherwise transfer this
Agreement or any of its rights hereunder, or delegate any of its obligations
hereunder, without the prior written consent of the other party; provided, however, that
Buyer shall be permitted, without the consent of Seller, to assign or otherwise
transfer this Agreement or any of its rights hereunder: (a) upon the purchase or
sale of all or substantially all of the assets or stock of Buyer or the transfer
(by operation of law or otherwise) of the ownership or control of Buyer, to the
purchaser of such assets or stock or the transferee of such interests; (b) upon
the purchase, transfer or sale of all or substantially all of the Acquired
Assets or the Business to the purchaser or transferee of such Acquired Assets,
business or operations; or (c) to any Affiliate of Buyer. Seller shall be
permitted, without the consent of Buyer, to assign or otherwise transfer this
Agreement or any of its rights hereunder: (y) upon the purchase or sale of all
or substantially all of the assets or stock of Seller; or (z) to any Affiliate
of Seller. Subject to the foregoing, this Agreement and the rights and
obligations set forth herein, including, without limitation, the obligations of
Seller set forth in Section 6.2, shall inure to
the benefit of, and be binding upon the parties hereto, and each of their
respective successors, heirs, and assigns.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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9.4. Counterparts. This Agreement may be executed in
two or more counterparts, any one of which need not contain the signatures of
all parties, but all of which counterparts when taken together shall constitute
one and the same agreement. One or more counterparts may be executed by
facsimile or other electronic means with the intent that execution by such means
shall have the same effect as execution of an original hereof.

9.5. Governing Law. This Agreement shall be governed
by and construed in accordance with the Laws of the State of New York applicable
to contracts made and to be performed in that State without regard to principles
of conflicts of laws.

9.6. Schedules and Exhibits. The Schedules and
Exhibits attached hereto are an integral part of this Agreement. All exhibits
and schedules attached to this Agreement are incorporated herein by this
reference and all references herein to this Agreement shall mean this Asset
Purchase Agreement together with all such exhibits and schedules, and all
ancillary agreements and exhibits and schedules thereto to be delivered at
Closing.

9.7. Severability. Subject to the last two sentences
of Section 6.2(b), any provision hereof which is held to be prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be adjusted
rather than avoided, if possible, in order to achieve the intent of the parties
to this Agreement to the extent possible without in any manner invalidating the
remaining provisions hereof.

9.8. Notices. All notices or other communications
required or permitted hereunder shall be in writing and shall be deemed properly
given {*} after being sent by registered or certified mail, postage prepaid, to
the parties at the address listed below:

If to Seller:
    Avigen, Inc.1301
      Harbor Bay ParkwayAlameda, California 94502Attention: Michael D. Coffee,Chief
      Business OfficerWith a required copy to:
    Avigen, Inc.1301
      Harbor Bay ParkwayAlameda, California 94502Attention: Christina Thomson, Esq.,VP
      and Corporate CounselIf to Buyer:
    Baxter Healthcare CorporationOne
      Baxter ParkwayDeerfield, Illinois 60015Attention: General Counseland
    Baxter International
  IncorporatedOne
      Baxter ParkwayDeerfield, Illinois 60015Attention: General CounselWith a required copy to:
    Baxter Healthcare S.A.Hertistrasse 2,8304
      Wallisellen,SwitzerlandAttention: Corporate Counsel


{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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9.9. Representation by Counsel. Each party hereto
acknowledges that it has been advised by legal and any other counsel retained by
such party in its sole discretion. Each party acknowledges that such party has
had a full opportunity to review this Agreement and all related exhibits,
schedules and ancillary agreements and to negotiate any and all such documents
in its sole discretion, without any undue influence by any other party hereto or
any third party.

9.10. Construction. The parties have participated
jointly in the negotiations and drafting of this Agreement and in the event of
any ambiguity or question of intent or interpretation, no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.

9.11. Headings. The article and section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.

9.12. Further Assurances.

(a) On and after the Closing Date, each party shall, and shall
cause its respective Affiliates to, execute such other documents and instruments
of conveyance and transfer as may be reasonably requested by the other party
from time to time to fully effectuate the transfer of the Acquired Assets to
Buyer in accordance with the terms of this Agreement (including the execution of
Intellectual Property Acquisition Agreements in recordable form with respect to
the Transferred Intellectual Property).

(b) If Seller identifies after the Closing Date any additional
Contracts used primarily in or held primarily for the Business, then Seller
shall use good-faith reasonable efforts to assign (to the extent permitted by
the Contract) such Contract to Buyer, and if Buyer agrees in writing that it
accepts such assignment, such Contract shall be deemed listed in Schedule
4.11 ({*}) and deemed listed in the Assignment and Assumption Agreement (or
a new version of the Assignment and Assumption Agreement will be executed
between the Parties to reflect when the new Contract was identified and the date
of its assignment) and if successfully assigned to Buyer (or the benefits of the
Contract otherwise successfully extended to Buyer) the remedy provided in this
sentence will be the sole remedy for the prior omission of the Contract,
provided that it was not material to the Business.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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9.13. No Public Announcement. Other than the press
release set forth in Exhibit C, which Seller
shall be entitled to release upon signing of this Agreement and on the Closing
Date, no party to this Agreement shall, without the approval of the other
parties hereto, make any press release or other public announcement concerning
the transactions contemplated by this Agreement, except as and to the extent
that any such party shall be so obligated by applicable requirements of Law, inwhich case the other
parties shall be advised and the parties shall use their reasonable efforts to
cause a mutually agreeable release or announcement to be issued; provided, however, that the
foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with the accounting and
U.S. Securities and Exchange Commission disclosure obligations or the rules of
any stock exchange.

9.14. Waivers. No waiver by any party, whether express
or implied, of its rights under any provision of this Agreement shall constitute
a waiver of the partys rights under such provisions at any other time or a
waiver of the partys rights under any other provision of this Agreement. No
failure by any party to take any action against any breach of this Agreement or
default by another party shall constitute a waiver of the former partys right
to enforce any provision of this Agreement or to take action against such breach
or default or any subsequent breach or default by the other party. To be
effective any waiver must be in writing and signed by the waiving
party.

[Signature Page
Follows]



{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

[Signature Page
to Asset Purchase Agreement]

THEREFORE, the parties hereto
have executed, or caused this Asset Purchase Agreement to be executed by their
duly authorized representatives, as of the date first written above.

|BUYER:                         |  | SELLER:                           
|------------------------------ |  | ----------------------------------
|                               |  |                                   
|BAXTER HEALTHCARE              |  |                                   
|CORPORARTION                   |  |                                   
|                               |  |                                   
|                               |  |                                   
|/s/ Joy A. Amundson            |  |                                   
|By: Joy A. Amundson            |  | By: Kenneth G. Chahine            
|Its: CVP, President BioScience |  | Its: President and Chief Executive
|                               |  | Officer                           
|                               |  |                                   
|                               |  |                                   
|BAXTER INTERNATIONAL, INC.     |  |                                   
|                               |  |                                   
|                               |  |                                   
|/s/ Joy A. Amundson            |  |                                   
|By: Joy A. Amundson            |  |                                   
|Its: CVP, President BioScience |  |                                   
|                               |  |                                   
|BAXTER HEALTHCARE S.A.         |  |                                   
|                               |  |                                   
|                               |  |                                   
|/s/ Ignacio Martinez           |  |                                   
|By: Ignacio Martinez           |  |                                   
|Its: Corporate Counsel         |  |                                   
|                               |  |                                   
|/s/ Rebecca Binggeli           |  |                                   
|By: Rebecca Binggeli           |  |                                   
|Its: Director of Tax, Europe   |  |                                   

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

|**TABLE OF EXHIBITS AND SCHEDULES**                                      
|-------------------------------------------------------------------------
|                                                                         
|Exhibit A
       Form of Assignment and Assumption and Bill of Sale     
|Exhibit B
       Form of Assignments in Recordable Form                 
|Exhibit C
       Press Releases                                         
|Exhibit D
       Letter of Transfer                                     
|                                                                         
|Schedule 1.0  Table of Definitions                                      
|Schedule 1.1  Acquired Assets                                           
|Schedule 1.2  Excluded Assets                                           
|Schedule 2.2  Allocation of Purchase Price                              
|Schedule 4.3  Third Party Consents                                      
|Schedule 4.5  Licenses and Permits                                      
|Schedule 4.7(b)  Recalls; Adverse
      Events; Governmental Authorities
|Schedule 4.11 
      Contracts                                          
|Schedule 4.12  Financing
      Statements                               
|Schedule 4.13  Intellectual
      Property                              

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

EXHIBIT
A

FORM OF ASSIGNMENT
AND ASSUMPTIONAND BILL OF SALE

BILL OF
SALEANDASSIGNMENT AND ASSUMPTION AGREEMENT

THIS BILL OF SALE AND
ASSIGNMENT AND ASSUMPTION AGREEMENT (this Agreement) is made and entered into as of this ___ day of
December, 2008 (the Effective Date), by and
among Avigen, Inc., a Delaware corporation (Seller), and Baxter Healthcare Corporation, a Delaware
corporation (BHC), Baxter International Inc., a
Delaware corporation (BII), and Baxter
Healthcare S.A., a Swiss Corporation (BHSA).
BHC, BII and BHSA are individually and collectively referred to herein as
Buyer.

WHEREAS, Seller and
Buyer are parties to that certain Asset Purchase Agreement of even date herewith
(the Purchase Agreement), pursuant to which
Buyer has purchased certain assets of Seller;

WHEREAS, the Asset
Purchase Agreement provides for, among other things, the transfer and sale to
Buyer of certain assets of Seller, all as more fully described in the Purchase
Agreement, for consideration in the amount and upon the terms provided in the
Purchase Agreement;

WHEREAS, by this
instrument Seller is vesting in Buyer all of the properties, assets and rights
of Seller hereinafter described; and

WHEREAS, pursuant to
the Purchase Agreement, Seller has further agreed to assign certain rights and
agreements to Buyer, and Buyer has agreed to assume certain obligations of
Seller, as set forth herein.

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein, and for
other good and valuable consideration, the receipt, adequacy and legal
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:

1. Capitalized Terms. Capitalized terms used but not
defined herein shall have the meanings for such terms that are set forth in the
Purchase Agreement.

2. Bill of Sale. Seller does hereby convey, grant,
bargain, sell, transfer, set over, assign, remise, release, and confirm,
effective as of 12:01 a.m. Sellers local time on December __, 2008 (the
Effective Time), all of Sellers right, title
and interest, of every nature and description, in and to the Acquired Assets,
wherever located. To have and to hold all of the Acquired Assets unto Buyer, its
successors and permitted assigns forever, to its and their own use
forever.

3. Assignment and Assumption. Seller does hereby assign,
sell, transfer and set over (collectively, the Assignment) to Buyer, as of the Effective Time, all of
Sellers right, title, benefit, privileges and interest in and to, and all of
Sellers burdens, obligations and liabilities in connection with, each of the
Assumed Liabilities. Buyer does hereby accept the Assignment and assumes and
agrees to observe and perform all of the duties, obligations, terms, provisions
and covenants, and to pay and discharge all of the liabilities of Seller to be
observed, performed, paid or discharged from and after the Closing, in
connection with the Assumed Liabilities. Buyer hereby assumes the Assumed
Liabilities. Buyer assumes no Excluded Liabilities, and the parties hereto agree
that all such Excluded Liabilities shall remain the sole responsibility of
Seller.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

4. Successors and Assigns; No Third Party Beneficiaries.
This Agreement is executed by Seller and shall be binding upon it and its
successors and assigns, for the uses and purposes set forth above and referred
to herein, effective immediately upon its delivery to Buyer. Nothing in this
instrument, express or implied, is intended or shall be construed to confer
upon, or give to, any person or entity other than Buyer and its successors and
permitted assigns any remedy or claim under or by reason of this Agreement or
any terms, covenants or conditions, promises or agreements hereof, and all the
terms, covenants and conditions, promises and agreements contained in this
Agreement shall be for the sole and exclusive benefit of Buyer and its
successors and permitted assigns.

5. Purchase Agreement Conflict. In the event of any
conflict or inconsistency between the terms of the Purchase Agreement and the
terms hereof, the terms of the Purchase Agreement shall govern. Without limiting
the generality of the foregoing, the assignment of any contract within the
Acquired Assets is subject to Section 1.7 of the Purchase Agreement and nothing
in this Agreement alters such Section 1.7.

6. Further Actions. Each of the parties hereto covenants
and agrees, at its own expense, to execute and deliver, at the request of the
other party hereto, such further instruments of transfer and assignment as such
other party may reasonably request to more effectively consummate the
assignments and assumptions contemplated by this Agreement.

7. Counterparts; Facsimile. This Agreement may be
executed in one or more original counterparts, each of which shall be deemed an
original, but both of which together shall constitute one and the same
instrument. One or more counterparts of this Agreement may be delivered by
facsimile, with the intention that delivery by such means shall have the same
effect as delivery of an original counterpart hereof.

8. Governing Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of New York
without regard to the conflicts of laws provisions thereof.

[Signature Page
Follows]

******

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

[Signature Page
to Bill of Sale and Assignment and Assumption
Agreement]

THEREFORE, the parties hereto
have executed, or caused this Bill of Sale and Assignment and Assumption
Agreement to be executed by their duly authorized representatives, as of the
date first written above.

|BAXTER HEALTHCARE CORPORARTION |  | AVIGEN, INC.
|------------------------------ |  | ------------
|                               |  |             
|                               |  |             
|By:                            |  |             
|Its:                           |  |             
|                               |  |             
|                               |  |             
|**BAXTER INTERNATIONAL INC.**  |  |             
|                               |  |             
|                               |  |             
|By:                            |  |             
|Its:                           |  |             
|                               |  |             
|                               |  |             
|BAXTER HEALTHCARE S.A.        
|                               |  |             
|                               |  |             
|By:                            |  |             
|Its:                           |  |             
|                               |  |             
|                               |  |             
|By:                            |  |             
|Its:                           |  |             



{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

EXHIBIT B

FORM OF ASSIGNMENTS IN RECORDABLE
FORM

PATENT
ASSIGNMENT

THIS PATENT ASSIGNMENT
(Assignment) is made and entered into as of
this __ day of December, 2008 (Effective
Date), by and among Baxter International Inc., a Delaware
corporation (BII), Baxter Healthcare
S.A., a Swiss corporation (BHSA and, together
with BII, Assignee) and Avigen, Inc., a
Delaware corporation (Assignor).

**WHEREAS****,**Assignee and Baxter Healthcare Corporation
(collectively Buyer) and Assignor have entered into that certain
Asset Purchase Agreement of even date herewith (the Purchase Agreement), pursuant to which Assignor agreed,
inter alia, to assign to Buyer certain
assets relating to the Business (as such term is defined in the Purchase
Agreement, including those [United States and foreign patents and patent
applications] identified and set forth on Schedule
A (collectively, the Patents); and

**WHEREAS,** pursuant to the Purchase Agreement, Assignee wishes to acquire
and Assignor wishes to assign to Assignee all of Assignors right, title and
interest in and to the Patents and the inventions covered
thereby.

**NOW, THEREFORE****,** for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor hereby sells,
assigns, transfers and sets over to Assignee: (i) its rights, title and
interests in and to the Patents, including any ownership interests Assignor may
have or claim to have in the Patents, and any other rights or interests Assignor
may have or claim to have in the Patents, including any continuations,
divisions, continuations-in-part, reissues, reexaminations, extensions or
foreign equivalents thereof, and including the subject matter of all claims
which may be obtained therefrom for Assignees own use and enjoyment and for the
use and enjoyment of Assignees successors, assigns or other legal
representatives, as fully and entirely as the same would have been held and
enjoyed by Assignor if this Assignment and sale had not been made; together with
(ii) all income, royalties, damages or payments due or payable from and after
the Effective Date, including, without limitation, all claims for damages by
reason of past, present or future infringement or other unauthorized use of the
Patents, with the right to sue for, and collect the same for Assignees own use
and enjoyment, and for the use and enjoyment of its successors, assigns, or
other legal representatives.

This Assignment may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

To the extent any provision herein
is inconsistent with the Purchase Agreement, the provisions of the Purchase
Agreement shall control.

[Signature Page
Follows]

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

[Signature Page
to Patent Assignment]

**IN TESTIMONY
WHEREOF,**the Assignor and Assignee have caused this Assignment to be
signed and executed by the undersigned officers thereunto duly authorized this
__ day of December, 2008.

|BAXTER
      INTERNATIONAL INC. |  | AVIGEN, INC.
|------------------------------- |  | ------------
|                                |  |             
|By:                             |  |             
|                                |  |             
|Name:                           |  |             
|                                |  |             
|Title:                          |  |             
|                                |  |             
|BAXTER
      HEALTHCARE S.A.    |  |             
|                                |  |             
|By:                             |  |             
|                                |  |             
|Name:                           |  |             
|                                |  |             
|Title:                          |  |             
|                               
|                               
|By:                             |  |             
|                                |  |             
|Name:                           |  |             
|                                |  |             
|Title:                          |  |             

Remainder of Signature Page Left
Blank Intentionally

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

|STATE OF  | ) |    
|--------- | - | ---
|COUNTY OF | ) | ss.

On this __________day of ________________, 2008, there appeared
before me _______________________, personally known to me, who acknowledged that __he signed
the foregoing Assignment and his/her voluntary act and deed on behalf and with
full authority of _____________________________.

| |              
| | -------------
| | Notary Public

|STATE OF  | ) |    
|--------- | - | ---
|COUNTY OF | ) | ss.

On this __________day of ________________, 2008, there appeared
before me _______________________, personally known to me, who acknowledged that __he signed
the foregoing Assignment and his/her voluntary act and deed on behalf and with
full authority of _____________________________.

| |              
| | -------------
| | Notary Public

|STATE OF  | ) |    
|--------- | - | ---
|COUNTY OF | ) | ss.

On this __________day of ________________, 2008, there appeared
before me _______________________, personally known to me, who acknowledged that __he signed
the foregoing Assignment and his/her voluntary act and deed on behalf and with
full authority of _____________________________.

| |              
| | -------------
| | Notary Public

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

EXHIBIT
C

PRESS
RELEASE



Avigen Sells Early
Stage Research Program in Hemophilia to Baxter

Alameda, CA, December 17,
2008  Avigen, Inc. (Nasdaq: AVGN), a
biopharmaceutical company, announced today that the company has sold the rights
to its early stage blood coagulation compound, AV513, to Baxter Healthcare
Corporation, a global leader in hemophilia therapy, for $7 million. Baxter
acquired all rights to AV513, a compound poised for clinical research that has
been shown to improve blood coagulation in preclinical models for hemophilia.
Avigen has been developing AV513 as an oral therapy to treat patients with
bleeding disorders, including hemophilia A.

The sale of AV513 is an example of
building value in a product that is differentiated from current therapies, and
bringing it to a valuation point that generated a positive return on
investment, said Kenneth Chahine, Ph.D., J.D., Avigen's president and chief
executive officer. Our team identified AV513 as a drug candidate with a novel
approach for treating hemophilia and other bleeding disorders, and which offered
strong IP potential in a target patient population with an unmet need. Because
it was outside our neurology focus, it was our goal to follow a reasonable
budget to establish AV513s value, and then move it to a better-resourced
company with the expertise to develop a safe and effective therapy.

This technology acquisition supports
Baxters efforts to research the application of novel technologies that will
pioneer the next generation of hemophilia therapies, said Hartmut Ehrlich,
M.D., vice president of global BioScience research and development for
Baxter.

Looking ahead, our objective is to
identify opportunities that represent significant potential value for patients,
while balancing our investment of resources and development risk in order to
provide a significant and timely return to shareholders. Along these lines, we
are also in the process of partnering AV411, our non-opioid glial-attenuator
product for neuropathic pain and drug addiction, continued Chahine.

AV513 was first identified in 2004 by
Avigens vice president of Research and Development, Kirk Johnson, Ph.D., and
colleagues, seeking an existing molecule with strategic characteristics for
providing an alternative delivery approach for hemophilia therapies.
Pre-clinical efficacy data in hemophilic mice was first published in 2006 in the
medical journal Thrombosis & Haemostasis. Efficacy data from the
study of an oral form of AV513 in other hemophilia A preclinical models was
published in the journal Blood in 2007. Most recently, an in vitro
study on AV513 pro-coagulant efficacy in the donated blood of human hemophilia
patients was presented at the American Society of Hemophilia meeting in San
Francisco on December 9th.

About AV513

AV513 is a drug candidate derived from
a specific seaweed enriched for a particular type of non-anticoagulant sulfated
polysaccharide denoted fucoidan, which has been shown to boost blood
coagulation. Laboratory and preclinical studies indicated AV513s novel
mechanism of action might improve the physiological spark for normal blood
clot initiation by reducing natural anti-coagulation at local sites of bleeding
and thereby allows more normal hemostasis, or clotting. Preclinical in
vitro and in vivo studies indicate that AV513 has potential
stand-alone utility and might act as an adjunctive or supplementary agent to
boost clotting efficiency in combination with Factor VIII or Factor IX, the
standard treatments for hemophilia A and B, respectively.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

About Avigen

Avigen is a biopharmaceutical company
focused on identifying and developing differentiated products to treat patients
with serious neurological disorders. Avigen's strategy is to identify, acquire
and develop opportunities that represent a positive return to Avigens
shareholders. Avigen is currently developing AV411 for neuropathic pain, and, in
collaboration with the National Institute on Drug Abuse, for opioid withdrawal
and methamphetamine addiction. For more information about Avigen, consult the
company's website atwww.avigen.com.

Statement under the Private
Securities Litigation Reform Act

The statements in this press release
relating to Avigens strategy, objectives and plans to identify, acquire and
develop opportunities that represent a positive return to Avigens shareholders
are forward-looking statements. These statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
projected in these forward-looking statements, including the risk that Avigen
will not be able to acquire or develop such opportunities due to monetary,
intellectual property, technological or other constraints. In addition, there
are many other risks and uncertainties inherent in the development of drug
products. Other risks and uncertainties relating to Avigen are detailed in
reports filed by Avigen with the Securities and Exchange Commission, including
Avigen's Annual Report on Form 10-K for the year ended December 31, 2007, under
the caption "Risk Factors" in Item 1A of Part I of that report which was filed
with the SEC on March 17, 2008 and Avigens quarterly report on Form 10-Q for
the period ended September 30, 2008, under the caption "Risks Related to Our
Business" in Item 2 of Part I of that report, which was filed with the SEC on
November 10, 2008.

|                                                              
|--------------------------------------------------------------
|CONTACT:                                                      
|Michael Coffee,
      Chief Business Officer                  
|Avigen, Inc.,
      1301 Harbor Bay Parkway, Alameda, CA 94502
|510-748-7376                                                  
|ir@avigen.com                                                 
|www.avigen.com                                                

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

Schedule
1.0

TABLE OF DEFINITIONS

Acquired Assets has the meaning set
forth inSection 1.1.

Acquisition Agreements means this
Agreement, the Assignment and Assumption and Bill of Sale and all other
agreements executed in connection with this Agreement and in connection with
Closing in the forms attached to this Agreement as Exhibits as of the Effective
Date.

Affiliate and Affiliates has the meaning
set forth in Rule 501 of Regulation D under the Securities Act of 1933, as
amended.

Agreement has the meaning set forth
in the preamble to this Agreement.

Assigned Contract has the meaning set
forth inSection 4.11.

Assignment and Assumption and Bill of Sale has the meaning set forth inSection
7.1(b).

Assumed Liabilities has the meaning
set forth inSection 1.3.

AV513 means that certain botanical
drug comprising a particular type of non-anticoagulant sulfated polysaccharides,
fucoidan (which is extracted from brown seaweed), that is under development by
Seller.

BHC has the meaning set forth in the
preamble to this Agreement.

BHSA has the meaning set forth in the
preamble to this Agreement.

BII has the meaning set forth in the
preamble to this Agreement.

Books and Records means

(a) all Medical and Regulatory
Information;

(b) all
other books, records, files, drawings, bills of material, product
specifications, and advertising materials (but excluding correspondence not
referred to in (c));

(c)
material correspondence with consultants (including any reports from such
consultants), customers, suppliers, patient advocacy groups, clinical advisory
boards and regulators, formal legal opinions with respect to Transferred
Intellectual Property from outside counsel, and formal legal memoranda from
outside counsel with respect to Transferred Intellectual Property;

(d)
laboratory notes, Invention Records, adverse experience reports and files,
supplier lists, business plans and

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

(e) manufacturing standard operating
procedures and quality assurance and control records;

including
each of the foregoing (a)-(e) whether in hard copy, magnetic or electronic form
and solely to the extent with respect to the Business. In connection with such
limitation to the extent with respect to the Business, if there is
documentation (whether in hard copy, magnetic, or electronic form) that also
contains content that is not with respect to the Business, then Seller shall be
entitled to provide redacted copies of such documentation as needed to remove or
blacken the content that is not with respect to the Business.

Business has the meaning set forth in
the recitals of this Agreement.

Buyer has the meaning set forth in
the preamble to this Agreement.

Closing has the meaning set forth in
the first sentence of Article III of this Agreement.

Closing Date has the meaning set
forth inArticle IIIof this Agreement.

Competitor means{*}.

Confidential Information has the
meaning set forth inSection
6.1.

Contract means any agreement,
contract and commitment, written or oral, relating to the Business to which
Seller is a party or by which Seller, or any of its properties within the
Acquired Assets or the Business, is bound, excluding confidentiality agreements
to discuss transactions that were alternatives to the transactions contemplated
in this Agreement.

Copyrights means U.S. and foreign
registered and unregistered copyrighted or copyrightable works, pending
applications to register the same, and all rights in or with respect to any of
the foregoing.

Effective Date has the meaning set
forth in the preamble to this Agreement.

Environmental Laws means all laws
relating to hazardous waste, infectious medical and radioactive waste, and other
environmental matters, including, without limitation, the Resource Conservation
and Recovery Act, the Clean Air Act and the Comprehensive Environmental Response
Compensation and Liability Act, and any regulations issued thereunder.

Excluded Assets has the meaning set
forth inSection 1.2hereof.

Excluded Liabilities has the meaning
set forth inSection 1.3hereof.

FDA has the meaning set forth inSection 4.7(b)hereof.

Field shall mean{*}.

Gene
Therapy shall mean the insertion of nucleic
acid comprising the sequence of a gene or genome into a chromosome in an
individuals cells to treat or prevent a disease or the replacement of a
defective mutant allele with a functional one, regardless of whether
accomplished in vivo or ex vivo.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

Governmental Approval and
Governmental Approvals have the meanings set forth inSection 4.3(a)hereof.

Governmental Authority means any
governmental department, commission, board, bureau, agency, court or other
instrumentality of the United States or foreign country, or any county,
jurisdiction, municipality or other political subdivision thereof or any other
supranational organization of sovereign states.

IND shall mean an investigational new
drug application.

Indemnified Party has the meaning set
forth inSection 8.4.

Indemnifying Party has the meaning
set forth inSection 8.4.

Intellectual Property means
Copyrights, Patents and Trademarks, and all rights to sue, counterclaim and to
collect damages and payments for claims of past, present and future
infringement, misappropriation or other violation thereof.

Invention Records means all invention
disclosures shown in the records maintained by Seller in the normal course of
business.

{*}.

Know-How means confidential or
proprietary ideas, trade secrets, technical knowledge or designs, concepts,
methods, processes, proprietary materials, unpatented inventions (whether
patentable or not) other than Invention Records, improvements, know-how,
formulae, reports, data, customer lists, mailing lists, business plans or other
proprietary information that provides the owner with a competitive advantage and
all rights in or with respect to any of the foregoing.

Knowledge means{*}.

Law or Laws means any and all foreign,
federal, state, and local statutes, codes, licensing requirements, ordinances,
laws, rules, regulations, decrees or orders of any foreign, federal, state or
local government and any other Governmental Authority including, without
limitation, all Environmental Laws and any judgment, decision, decree or order
of any court or Governmental Authority.

Letter of Intent means that certain
Non-Binding Letter of Intent between Buyer and Seller dated November 6, 2008.

License or Licenses means any
licenses, permits, consents, approvals, authorizations, registrations,
qualifications, and certifications, in each of the foregoing cases, of any
Governmental Authority.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

---

Lien or Liens means any lien, claim, security
interest, mortgage, pledge, restriction, covenant, charge or encumbrance of any
kind or character, direct or indirect, whether accrued, absolute, contingent or
otherwise.

Loss or Losses means losses, damages,
liabilities, taxes, sanctions, deficiencies, assessments, judgments, costs,
interest, penalties, amounts paid in settlement and expenses (including, without
limitation, reasonable attorneys fees, which shall exclude the costs of
in-house legal counsel and staff).

Materials means all finished goods
inventories of Product and all other inventories of materials for Product
including clinical materials, raw materials, work in process, samples and
supplies, wherever located to the extent of Sellers rights in them as of the
Effective Date.

Medical and Regulatory Information
means all in vitro, animal and human pre-clinical and clinical studies and
reports, reports of any assay testing, results of any pharmacokinetic, toxicity
and stability tests, adverse experience reports, all data generated by outside
parties (including investigators) with whom Seller has engaged in the conduct of
the development of the Product and any other correspondence with any
Governmental Authority relating to the Product; all of the foregoing to the
extent of Sellers rights in them.

NASPs has the meaning given in
Recital A.

Patents means U.S. and foreign
patents and patent applications (including provisional applications), including
any continuations, continuations-in-part, re examinations, extensions,
divisions, renewals, reissues, patent term extensions, supplementary protection
certificates and later filed foreign counterparts thereto and all rights in or
with respect to any of the foregoing.

Period means{*}from the Closing Date.

Product means the product being
developed by Seller commonly referred to as AV513, as it is formulated as of
the Closing Date.

Product Registration or
Product Registrations means in each case relating to the Products or the Business,
(a) all new drug applications, supplemental new drug applications, and foreign
drug and product applications and registrations, (b) any amendments,
supplements, or filings or communications with Governmental Authorities in
connection with each of the foregoing categories, (c) Medical and Regulatory
Information, and (d) Regulatory Approvals.

Purchase Price has the meaning set
forth inSection 2.1.

Regulatory Approval or
Regulatory Approvals means the written approval of every Governmental Authority
required for the manufacture, marketing, and sale of the Product in such
Governmental Authoritys country or countries as well as any pricing and
reimbursement approvals required prior to the commencement of commercial sales
of Products in such country or countries.

Retained Contract has the meaning set
forth inSection 4.11.

Seller has the meaning set forth in
the preamble to this Agreement.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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Seller License or Seller Licenses has the
meaning set forth inSection
4.5.

Seller Material Adverse Effect means
any event, circumstance or condition occurring after the Effective Date{*}which directly
(but not solely or exclusively) relates to Seller or any Acquired Asset that
individually or in the aggregate with all other events, circumstances and
conditions occurring after the Effective Date and not announced before such time
is reasonably expected to be materially adverse to: (a) the{*}of the Acquired Assets or
(b) Sellers ability to{*}; provided, however, that Seller Material Adverse Effect
shall not include{*}.Buyer acknowledges and agrees that employee departures from Seller in
view of the already-announced layoff will not be considered a Seller Material
Adverse Effect.

Taxes means all taxes of any type or
nature whatsoever, including without limitation, income, gross receipts, excise,
franchise, property, withholding, value added, import duties, employment,
payroll, sales and use taxes and any additions to tax and any interest or
penalties thereon.

Tech
Transfer Period has the meaning set forth inSection 6.3(a).

Tech
Transfer Process has the meaning set forth
inSection 6.3(a).

Territory means the world.

Third Party means any entity other
than Seller, Buyer, or an Affiliate of either of them.

Third Party Claim means any action,
suit, proceeding, claim or demand by or brought by a Third Party.

Third Party Consent or
Third Party Consents has the meaning set forth inSection 4.3.

Trademarks means U.S., state and
foreign trademarks, service marks, logos, slogans, trade dress, trade names, and
other designations of origin, including all goodwill associated therewith and
symbolized thereby, and any common law rights, registrations and applications to
register the foregoing, and all rights in or with respect to the foregoing.

Transferred Know-How means the
Know-How that is listed on the Transferred Know-How List.

Transferred Know-How Category means
all Know-How owned, controlled, or used by Seller or its Affiliates that has
been primarily used or primarily held for use (a) in the Business or (b) in the
research, development or manufacture of the Product, including:

(1) the manufacturing process for AV513 as currently manufactured (to the extent
proprietary to Seller, and, to avoid doubt, not individual steps in such process
to the extent applied outside of AV513 or NASP manufacture);

(2) the preclinical data that has been generated by or for Avigen before the
Closing Date with respect to NASPs within the scope of the Transferred
Intellectual Property to treat disorders in the Field.

Transferred Know-How List has the
meaning set forth inSection
6.3.

Transferred Intellectual Property has
the meaning set forth inSection
4.13.

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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Schedule 1.1

Acquired Assets

Sellers entire right, title and
interest as of the Effective Date in and to each of the following which,
collectively, reflect all assets primarily used in or primarily held for the
benefit of the Business:

| | 1.  |  | each of Sellers
      rights, claims or causes of action accrued or accruing after the Closing
      Date under the Assigned Contracts;                                                                                                                                                              
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    
| | 2.  |  | all Medical and
      Regulatory Information;                                                                                                                                                                                                                                                         
| |    
| | 3.  |  | all Books and
      Records;                                                                                                                                                                                                                                                                          
| |    
| | 4.  |  | all Transferred
      Intellectual Property;                                                                                                                                                                                                                                                          
| |    
| | 5.  |  | the Transferred
      Know-How;                                                                                                                                                                                                                                                                       
| |    
| | 6.  |  | all Materials and all
      rights accruing after the Closing Date under Assigned Contracts against
      manufacturers or suppliers of any of the Materials;                                                                                                                                         
| |    
| | 7.  |  | all Seller
      Licenses;                                                                                                                                                                                                                                                                            
| |    
| | 8.  |  | all goodwill directly
      associated exclusively with the Acquired Assets or the Business, including
      all goodwill associated with the Transferred Intellectual
    Property;                                                                                                                  
| |    
| | 9.  |  | Buyers allocable
      share of any refunds of any Tax of a type and for a period described in
      the final two sentences ofSection
      4.10; with Buyers share of any such
      refund to be determined accordance with the principles in the final two
      sentences ofSection
      4.10.
| |    
| | 10. |  | The IND that Seller
      has compiled but not filed prior to the
Closing.                                                                                                                                                                                                                            

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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Schedule 1.2 Excluded Assets

| | 1.  |  | All real
      property.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    
| | 2.  |  | All equipment
      (including manufacturing equipment), fixtures and furniture.                                                                                                                                                                                                                                                                                                                                                                                           
| |    
| | 3.  |  | All documents other
      than those described inSchedule
      1.1.                                                                                                                                                                                                                                                                                                                                                                                                       
| |    
| | 4.  |  | All cash and cash
      equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    
| | 5.  |  | All causes of action
      for breach of any Contracts occurring prior to the Closing
  Date.                                                                                                                                                                                                                                                                                                                                                                              
| |    
| | 6.  |  | All agreements with
      employees who did prior to the Closing Date operate the
  Business.                                                                                                                                                                                                                                                                                                                                                                              
| |    
| | 7.  |  | All rights that Seller
      may have now or in the future in connection with, under, or as a result of
      its agreement with Genzyme announced in December 2005.                                                                                                                                                                                                                                                                                                       
| |    
| | 8.  |  | All correspondence not
      included in the Books and Records definition.                                                                                                                                                                                                                                                                                                                                                                                               
| |    
| | 9.  |  | Any refund of Taxes
      relating to the ownership or operation of the Acquired Assets or the
      conduct of the Business prior to the Closing, including Sellers allocable
      share of any refunds of any Tax of a type and for a period described in
      the final two sentences ofSection
      4.10; with Sellers share of any such
      refund to be determined in accordance with the principles set out in the
      final two sentences of Section 4.10.
| |    
| | 10. |  | Patent application
      number 60/634,321, filed December 6, 2004, entitled Non-anticoagulant
      Sulfated Polysaccharides (NASPs) for the Treatment of Neuropathic
      Pain.                                                                                                                                                                                                                                                                                       

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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Statement Regarding Omitted
Schedules

Pursuant to Regulation S-K Item
601(b)(2), the following briefly describes all omitted schedules. The Company
agrees to furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.

|Schedule 2.2:    |  | Allocation
      of Purchase Price  description of how purchase price is allocated among
      Acquired Assets                                                                                                            
|---------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Schedule 4.3:    |  | Third Party
      Consents  list of parties from whom consent is required to transfer the
      Acquired Assets                                                                                                           
|Schedule 4.5:    |  | Licenses and
      Permits  list of license and permits required in connection with the
      transfer of the Acquired Assets                                                                                             
|Schedule 4.7(b): |  | Recalls;
      Adverse Events; Governmental Authorities  list of any recalls or adverse
      events related to the Acquired Assets; list of governmental agencies
      exercising any authority over the Acquired Assets
|Schedule 4.11:   |  | Contracts 
      list of all Contracts                                                                                                                                                                                    
|Schedule 4.12:   |  | Financing
      Statements  list of all financing statement under the UCC                                                                                                                                                 
|Schedule 4.13:   |  | Intellectual
      Property  list of all the Transferred Intellectual
  Property                                                                                                                                          

{*} = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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