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|             |                                                                                                  | Page   |
|------------------|-------------------------------------------------------------------------------------------------------|--------|
|             |                                                                                                  |   |
| ARTICLE      I   | THE      MERGER                                                                                       |   |
|             |                                                                                                  |   |
| 1.01             | The      Merger                                                                                       |   |
| 1.02             | Closing                                                                                               |   |
| 1.03             | Effective      Time of the Merger                                                                     |   |
| 1.04             | Effects      of the Merger                                                                            |   |
| 1.05             | Certificate      of Incorporation; By-Laws; Purposes                                                  |   |
| 1.06             | Directors                                                                                             |   |
| 1.07             | Officers                                                                                              |   |
|             |                                                                                                  |   |
| ARTICLE      II  | EFFECT      OF THE MERGER ON THE CAPITAL STOCK AND MEMBERSHIP UNITS OF THE CONSTITUENT      COMPANIES |   |
|             |                                                                                                  |   |
| 2.01             | Effect      on Capital Stock and Membership Units                                                     |   |
| 2.02             | Exchange      of Certificates                                                                         |   |
| 2.03             | Treatment      of Company Warrants                                                                    |   |
| 2.04             | Company      Notes                                                                                    |   |
| 2.05             | Withholding      Rights                                                                               |   |
|             |                                                                                                  |   |
| ARTICLE      III | REPRESENTATIONS      AND WARRANTIES                                                                   |   |
|             |                                                                                                  |   |
| 3.01             | Representations      and Warranties of the Company                                                    |   |
| 3.02             | Representations      and Warranties of Parent and Merger Sub                                          |   |
|             |                                                                                                  |   |
| ARTICLE      IV  | ADDITIONAL      AGREEMENTS                                                                            |   |
|             |                                                                                                  |   |
| 4.01             | Company      Financial Statements                                                                     |   |
| 4.02             | Access      to Information; Confidentiality                                                           |   |
| 4.03             | Reasonable      Best Efforts                                                                          |   |
| 4.04             | Indemnification      of Company Directors and Officers                                                |   |
| 4.05             | Public      Announcements                                                                             |   |
| 4.06             | Shareholder      Rights Plan                                                                          |   |
| 4.07             | Tax      Free Reorganization Treatment                                                                |   |
|             |                                                                                                  |   |
| ARTICLE      V   | CONDITIONS      PRECEDENT                                                                             |   |
|             |                                                                                                  |
| 5.01             | Conditions      to each Party’s Obligation to Effect the Merger                                 |   |
| 5.02             | Conditions      to Obligations of Parent and Merger Sub                                               |   |
| 5.03             | Conditions      to Obligations of the Company                                                         |   |
|             |                                                                                                  |   |   |

| ARTICLE      VI | TERMINATION,      AMENDMENT, AND WAIVER                        |   |
|-----------------|----------------------------------------------------------------|--------|
|            |                                                           |   |
| 6.01            | Termination                                                    |   |
| 6.02            | Effect      of Termination                                     |   |
| 6.03            | Amendment                                                      |   |
| 6.04            | Extension;      Waiver                                         |   |
| 6.05            | Procedure      for Termination, Amendment, Extension or Waiver |   |

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|             |                                                              |   |
|------------------|-------------------------------------------------------------------|--------|
| ARTICLE      VII | GENERAL      PROVISIONS                                           |   |
|             |                                                              |   |
| 7.01             | Nonsurvival      of Representations and Warranties                |   |
| 7.02             | Notices                                                           |   |
| 7.03             | Definitions                                                       |   |
| 7.04             | Interpretation                                                    |   |
| 7.05             | Counterparts                                                      |   |
| 7.06             | Entire      Agreement; No Third-Party Beneficiaries               |   |
| 7.07             | Governing      Law; Consent to Jurisdiction; Waiver of Jury Trial |   |
| 7.08             | Assignment                                                        |   |
| 7.09             | Remedies                                                          |   |
|             |                                                              |   |   |

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|        1.01 | The      Merger.  Upon the terms and subject to the conditions set      forth in this Agreement, and in accordance with the DGCL, Merger Sub shall      be merged with and into the Company at the Effective Time.  Upon the      Effective Time, the separate existence of Merger Sub shall cease, and the      Company shall continue as the surviving corporation and a wholly-owned      Subsidiary of Parent (the “Surviving      Corporation”). |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |   |
|--------|--------|

|        1.02 | Closing.       Unless this Agreement shall have been terminated and the transactions      herein contemplated shall have been abandoned pursuant to      Section 7.01, and subject to the satisfaction or waiver of the      conditions set forth in Article VI, the closing of the Merger (the      “Closing”) shall      take place at 10:00 a.m. (New York time) on a date to be specified by      the parties hereto, such date to be no later than the second business day      following satisfaction or waiver of all of the conditions set forth in      Article VI capable of satisfaction prior to Closing (the “Closing      Date”), at the offices of Bingham McCutchen, LLP, 399 Park Avenue,      New York, New York 10019, unless another date, time or place is agreed to      in writing by the parties hereto. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        1.03 | Effective      Time.  Upon the Closing, the parties shall file with the      Secretary of State of the State of Delaware a certificate of merger (the      “Certificate      of Merger”) in such form as required by, and executed and      acknowledged in accordance with, the relevant provisions of the DGCL and      shall, in each case, make all other filings or recordings required      thereby.  The Merger shall become effective at such time as the      Certificate of Merger is duly filed with the Secretary of State of the      State of Delaware, or at such other time as is permissible in accordance      with the DGCL and as Merger Sub and the Company shall agree should be      specified in the Certificate of Merger (the time the Merger becomes      effective being the “Effective      Time”). |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        1.04 | Effects of the      Merger.  The Merger shall have the effects set forth in the      applicable provisions of the DGCL.  Without limiting the      generality of the foregoing, and subject thereto, at the Effective Time,      all the properties, rights, privileges, powers and franchises of the      Company and Merger Sub shall vest in the Surviving Corporation, and all      debts, liabilities and duties of the Company and Merger Sub shall become      the debts, liabilities and duties of the Surviving      Corporation. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        1.05 | Certificate of      Incorporation; By-Laws;Purposes. |
|------------------|------------------------------------------------------|

|   |   |
|--------|--------|

|        (a) | At      the Effective Time, and without any further action on the part of the      Company or Merger Sub, the certificate of incorporation of Merger Sub as      in effect at the Effective Time shall be the certificate of incorporation      of the Surviving Corporation until thereafter amended as provided therein      or by applicable law. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (b) | At      the Effective Time, and without any further action on the part of the      Company or Merger Sub, the by-laws of Merger Sub as in effect at the      Effective Time shall be the by-laws of the Surviving Corporation until      thereafter changed or amended as provided therein or by applicable      law. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        1.06 | Directors.       From and after the Effective Time, the directors of the Surviving      Corporation shall be Jeffrey B. Davis and David P. Luci, until the earlier      of their respective resignation or removal or until their successors are      duly elected and qualified, as the case maybe. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        1.07 | Officers.       From and after the Effective Time, the officer of the Surviving      Corporation shall be Jeffrey B. Davis and David Luci, until the earlier of      their resignation or removal or until their respective successors are duly      elected or appointed and qualified, as the case may  be. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

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|        2.01 | Effect on Capital      Stock and Company Notes.  As of the Effective Time, by virtue      of the Merger and without any action on the part of the Company, Merger      Sub or any holder of any shares of Company Common Stock, Company Notes,      Company Warrants, In the Money Company Warrants or any common stock of      Merger Sub: |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| (a) | Common Stock of Merger      Sub.  Each share of common stock of Merger Sub outstanding      immediately prior to the Effective Time shall be converted into one share      of the common stock, par value $0.001 per share, of the Surviving      Corporation. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| (b) | Cancellation of      Treasury Stock and Parent-Owned Company Stock.  Each share of      Company Common Stock that is owned by the Company, and each share of      Company Common Stock that is owned by Parent, Merger Sub or any other      Subsidiary of Parent shall automatically be cancelled and retired and      shall cease to exist, and no cash, Parent Capital Stock or other      consideration shall be delivered or deliverable in exchange      therefor. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| (c) | Conversion of Company      Common Stock and In the Money Company  Warrants. |
|-----|-----------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (i) | Each      issued and outstanding share of Company Common Stock (excluding shares      cancelled pursuant to Section 2.01(b)      and any Dissenting Shares to the extent provided in Section 2.04      but including all shares of Company Common Stock issued upon exercise of      Company Options or Company Warrants occurring after the date of this      Agreement and including all shares issuable upon conversion of any of the      In the Money Company Warrants) shall be converted into the right to      receive a number of shares of Parent Common Stock equal to:  (A)      2,500,000, divided by (B) the sum of (1) the total number of shares of      Company Common Stock outstanding at the Effective Time, and (2) the total      number of shares of Company Common Stock issuable upon conversion of the      In the Money Company Warrants assuming a cashless conversion at the      closing price of Company Common Stock on the date of this Agreement, such      quotient to be carried out to eight decimal points (the “Common      Stock Exchange Ratio”); provided, however, that in no event shall      Parent be required to issue more than an aggregate of 2,500,000 shares of      Parent Common Stock as consideration for the Merger and the transactions      contemplated thereby; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ii) | The      total number of shares of Parent Common Stock issuable in exchange for the      Company Common Stock and shares underlying the In the Money Company      Warrants shall be referred to herein collectively as the “Merger      Consideration.”  In no event shall the aggregate number of      shares of Parent Common Stock to be issued or issuable hereunder in      exchange for Company Common Stock and/or In the Money Company Warrants      exceed, in the aggregate, 2,500,000 (or such lesser number if decreased in      accordance with Section      2.04).  Except as set forth in this Article II, no      other amounts shall be payable with respect to such Company Common Stock      or In the Money Company Warrants. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |   |
|--------|--------|

|        (d) | Cancellation and      Retirement of Company Common Stock.  As of the Effective Time,      all shares of Company Common Stock issued and outstanding immediately      prior to the Effective Time shall no longer be outstanding and shall      automatically be cancelled and retired and shall cease to exist, and each      holder of a certificate representing any such shares of Company Common      Stock (collectively, the “Certificates”)      shall, to the extent such Certificate represents such shares, cease to      have any rights with respect thereto, except the right to receive the      Merger Consideration (and cash in lieu of fractional shares of Parent      Common Stock) to be issued or paid in consideration therefor upon      surrender of such Certificate in accordance with Section 2.02. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Cancellation and      Retirement of In the Money Company Warrants.  As of the      Effective Time, all of the In the Money Company Warrants outstanding      immediately prior to the Effective Time shall no longer be outstanding and      shall be cancelled and retired and shall cease to exist, and each holder      of an In the Money Warrant shall cease to have any rights with respect      thereto, except the right to receive the Merger Consideration (and cash in      lieu of fractional shares of Parent Common Stock) to be issued or paid in      consideration therefor upon surrender of such In the Money Warrant in      accordance with Section      2.02. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (f) | Company Notes.      At the Effective Time, Parent shall assume the due and punctual      performance of all of the terms and conditions of each outstanding Company      Note and each such Company Note shall, unless the conversion rights      thereunder have previously expired, become convertible into the number of      New Securities (as defined in the Company Notes) of Parent and at such      Conversion Price (as defined in the Company Notes) as set forth therein.      The “Company      Notes” shall be the convertible promissory notes made by the      Company listed in Section 2.01(f)      of the Company Disclosure Schedule. The parties acknowledge that certain      of the Company Notes automatically will convert, at the closing price of      Parent Common Stock on the date hereof, to the right to receive Parent      Common Stock at the Effective Time. |
|--------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|        2.02 | Exchange of      Certificates.  |
|------------------|--------------------------------------|

| (a) | Exchange      Agent.  As of the Effective Time, Parent shall enter into an      agreement with such bank or trust company as may be designated by Parent      (the “Exchange      Agent”) which shall provide that Parent shall deposit with the      Exchange Agent, for the benefit of the holders of Certificates and In the      Money Company Warrants, for exchange in accordance with this Article II,      certificates representing the shares of Parent Common Stock (such shares      of Parent Common Stock, together with any dividends or distributions with      respect thereto with a record date after the Effective Time and any cash      payable in lieu of any fractional shares of Parent Common Stock being      hereinafter referred to as the “Exchange      Fund”) issuable pursuant to Section 2.01 in      exchange for outstanding shares of Company Common Stock and In the Money      Company Warrants. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | Exchange      Procedures.  Promptly after the Effective Time, the Exchange      Agent shall mail to each holder of record of Certificates and In the Money      Company Warrants immediately prior to the Effective Time whose shares of      Company Common Stock and/or In the Money Company Warrants were converted      into shares of Parent Common Stock pursuant to Section 2.01(c)      a letter of transmittal (which shall specify that delivery shall be      effected, and risk of loss and title to the Certificates and/or In the      Money Company Warrants shall pass only upon delivery of the Certificates      and/or In the Money Company Warrants, as applicable, to the Exchange      Agent, and which shall be in such form and have such other provisions as      Parent may reasonably specify) and (ii) instructions for use in effecting      the surrender of the Certificates and/or In the Money Company Warrants in      exchange for certificates representing shares of Parent Common      Stock.  Upon surrender of a Certificate and/or In the Money      Company Warrants for cancellation (or indemnity reasonably satisfactory to      Parent and the Exchange Agent, if any of such Certificates and/or In the      Money Company Warrants are lost, stolen or destroyed) to the Exchange      Agent together with such letter of transmittal, duly executed, the holder      of such Certificate and/or In the Money Company Warrants shall be entitled      to receive in exchange therefor a certificate representing that number of      whole shares of Parent Common Stock which such holder has the right to      receive in respect of all Certificates and/or In the Money Company      Warrants surrendered by such holder pursuant to the provisions of this      Article II (after taking into account all shares of Company Common Stock      than held by such holder either directly or upon conversion of the In the      Money Company Warrants in a cashless conversion), and the Certificates      and/or In the Money Company Warrants, as applicable, so surrendered shall      forthwith be cancelled.  In the event of a transfer of ownership      of shares of Company Common Stock and/or In the Money Company Warrants      which is not registered in the transfer records of the Company, a      certificate representing the proper number of shares of Parent Common      Stock may be issued to a transferee if the Certificate and/or In the Money      Company Warrants, as applicable, is presented to the Exchange Agent,      accompanied by all documents required to evidence and effect such transfer      and by evidence that any applicable stock transfer Taxes have been      paid.  Until surrender as contemplated by this Section      2.02(b), subject to the provisions of Section 6.02(h)      (Dissenters Rights) each Certificate and In the Money Company Warrants, in      each case, shall be deemed at any time after the Effective Time to      represent only the Parent Common Stock into which the shares of Company      Common Stock represented by such Certificate or In the Money Company      Warrants have been converted as provided in this Article II and the right      to receive upon such surrender cash in lieu of any fractional shares of      Parent Common Stock as contemplated by this Section      2.02(b). |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (ii)   | Distributions with      Respect to Unexchanged Shares.  No dividends or other      distributions with respect to Parent Common Stock with a record date after      the Effective Time shall be paid to the holder of any unsurrendered      Certificate with respect to the shares of Parent Common Stock represented      thereby, and no cash payment in lieu of fractional shares shall be paid to      any such holder pursuant to this Section 2.02      until the surrender of such Certificate and/or In the Money Company      Warrants, as applicable, in accordance with this Article      II.  Subject to the effect of applicable laws, following      surrender of any such Certificate and/or In the Money Company Warrants, as      applicable, there shall be paid to the holder of the certificate      representing the whole shares of Parent Common Stock issued in exchange      therefor without interest, (i) at the time of such surrender, the amount      of any cash payable in lieu of any fractional share of Parent Common Stock      to which such holder is entitled pursuant to this Section 2.02      and the amount of any dividends or other distributions with a record date      after the Effective Time and a payment date subsequent to such surrender      payable with respect to such whole shares of Parent Common      Stock. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | No further Ownership      Rights in Company Common Stock.  All shares of Parent      Common Stock issued upon conversion of shares of Company Common Stock and      In the Money Company Warrants in accordance with the terms hereof, and all      cash paid pursuant to this Section 2.02 in      lieu of fractional shares, shall be deemed to have been issued in full      satisfaction of all rights pertaining to such Company Common Stock and/or      In the Money Company Warrants, and there shall be no further registration      of transfers on the stock transfer books of the Surviving Corporation of      the Company Common Stock and In the Money Company Warrants which were      outstanding prior to the Effective Time.  If, after the      Effective Time, Certificates are presented to the Surviving Corporation      for any reason, they shall be cancelled and exchanged as provided in this      Article II. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv)   | No Fractional      Shares.  (i) No certificate or scrip representing      fractional shares of Parent Common Stock shall be issued upon the      surrender for exchange of Certificates and/or In the Money Company      Warrants, and such fractional share interests shall not entitle the owner      thereof to vote or to any rights of a stockholder of Parent.  In      lieu of such issuance of fractional shares, Parent shall pay each holder      of Certificates and In the Money Company Warrants an amount in cash equal      to the product obtained by multiplying (a) the fractional share interest      to which such holder would otherwise be entitled (after taking into      account all shares of Company Common Stock held immediately prior to the      Effective Time by such holder) by (b) the average of the closing sale      prices for a share of Parent Common Stock on the OTC Bulletin Board for      the ten trading days immediately preceding the date of the Effective      Time. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (b)   | As      soon as reasonably practicable after the determination of the amount of      cash, if any, to be paid to holders of Certificates and/or In the Money      Company Warrants, as applicable, with respect to any fractional share      interests, the Exchange Agent shall make available such amounts to such      holders of Certificates and/or In the Money Company Warrants, subject to      and in accordance with the terms of this Section      2.02. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Termination of      Exchange Fund.  Any portion of the Exchange Fund      deposited with the Exchange Agent pursuant to this Section 2.02      which remains undistributed to the holders of the Certificates and/or In      the Money Company Warrants six months after the Effective Time shall be      delivered to Parent, upon demand, and any holders of Certificates and/or      In the Money Company Warrants who have not theretofore complied with this      Article II shall thereafter look only to Parent and only as general      creditors thereof for payment of their claim for Parent Common Stock, cash      in lieu of fractional shares of Parent Common Stock and any dividends or      distributions with respect to Parent Common Stock to which such holders      may be entitled pursuant to this ArticleII. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | No      Liability.  None of Parent, Merger Sub, the Company or      the Exchange Agent shall be liable to any Person in respect of any shares      of Parent Common Stock (or dividends or distributions with respect      thereto) or cash from the Exchange Fund delivered to a public official      pursuant to any applicable abandoned property, escheat or similar      law.  If any Certificates and/or In the Money Company Warrants      shall not have been surrendered prior to three years after the Effective      Time of the Merger, or immediately prior to such earlier date on which any      Merger Consideration, any cash in lieu of fractional shares of Parent      Common Stock or any dividends or distributions with respect to Parent      Common Stock would otherwise escheat to or become the property of any      Governmental Entity, any such Merger Consideration or cash shall, to the      extent permitted by applicable law, become the property of the Surviving      Corporation, free and clear of all claims or interest of any Person      previously entitled thereto. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | Investment of Exchange      Fund.  The Exchange Agent shall invest any cash included      in the Exchange Fund, as directed by Parent on a daily basis. Any interest      and other income resulting from such investments shall be paid to      Parent. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | Adjustment      Provisions.  In the event Parent changes (or establishes      a record date for changing) the number of shares of Parent Common Stock      issued and outstanding prior to the Effective Time as a result of,      including, without limitation, a forward or reverse stock split, stock      dividend, recapitalization or similar transaction with respect to the      outstanding Parent Common Stock and the record date therefor shall be      prior to the Effective Time, the Common Stock Exchange Ratio shall be      proportionately adjusted.  If between the date hereof and the      Effective Time, Parent shall merge, be acquired or consolidated with, by      or into any other corporation (a “Business Combination”) and the terms      thereof shall provide that Parent Common Stock shall be converted into or      exchanged for the shares of any other corporation or entity, then      provision shall be made as part of the terms of such Business Combination      so that security holders of the Company who would be entitled to receive      shares of Parent Common Stock pursuant to this Agreement shall be entitled      to receive, in lieu of each share of Parent Common Stock issuable to such      security holders as provided herein, the same kind and amount of      securities or assets as shall be distributable upon such Business      Combination with respect to one share of Parent Common Stock (provided      that nothing herein shall be construed so as to release the acquiring      entity in any such Business Combination from its obligations under this      Agreement as the successor toParent). |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|        3.01 | Representations and      Warranties of the Company and its Subsidiaries. Except as may be      set forth in a disclosure letter (to the extent each disclosure item      therein is clearly marked to indicate the section, paragraph or      subparagraph of this Agreement to which such disclosure is an exception,      referencing the same section, paragraph and subparagraph as used in this      Agreement, in each case, except to the extent that any such disclosure is      reasonably discernable to apply to more than one section, paragraph or      subparagraph of this Agreement) delivered by the Company to Parent and      Merger Sub at the time of execution of this Agreement (the “Company      Disclosure Letter”), the Company hereby represents and warrants to      Parent and Merger Sub as follows: |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |   |
|--------|--------|

|        (a) | Organization; Standing      and Corporate Power. The Company is duly organized, validly      existing and in good standing under the laws of the State of Delaware and      has the requisite corporate power and authority to carry on its business      as it is now being conducted.  The Company is duly qualified or      licensed to do business and is in good standing in each jurisdiction      (domestic or foreign) in which the nature of its business or the ownership      or leasing of its properties makes such qualification or licensing      necessary, other than in such jurisdictions where the failure to be so      qualified or licensed (individually or in the aggregate) would not have a      Material Adverse Effect with respect to the Company.  The Company has      delivered to Parent complete and correct copies of each of (i) the      certificate of incorporation (including any Certificate of Designations      thereto) (the “Company      Certificate”) and by-laws (the “Company By-laws”)      of the Company, in each case as amended and as currently in effect and      (ii) the minute books of the Company which contain records of all      meetings held of, and other corporate actions taken by, its stockholders,      board of directors and any committees appointed by its board of      directors. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (b) | Subsidiaries.      Except as set forth in Section 3.01(b)      of the Company Disclosure Letter, the Company does not own, directly or      indirectly, any capital stock or other ownership interest in any      Person. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (c) | Capital Structure.  The      authorized capital stock of the Company consists of (x) 100,000,000 shares      of Company Common |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------|

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|        (d) | Authority;      Noncontravention. The Company has the requisite corporate power and      authority to enter into this Agreement and to consummate the transactions      contemplated hereby.  The execution and delivery of this Agreement by      the Company and the consummation by the Company of the transactions      contemplated hereby have been duly authorized by all necessary corporate      action on the part of the Company.  This Agreement has been duly      executed and delivered by the Company and (assuming due authorization,      execution and delivery by Parent and Merger Sub) constitutes a legal,      valid and binding obligation of the Company, enforceable against the      Company in accordance with its terms, subject to the effects of      bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium      and other similar laws affecting creditors’ rights generally and general      equitable principles (whether considered in a proceeding in equity or at      law).  The execution and delivery of this Agreement does not, and the      consummation by the Company of the transactions contemplated by this      Agreement and compliance by the Company with the provisions hereof will      not, conflict with, or result in any breach or violation of, or any      default (with or without notice or lapse of time, or both) under, or give      rise to a right of termination, cancellation or acceleration of, or a      “put” right with respect to any obligation under, or to a loss of a      material benefit under, or result in the creation of any pledge, claim,      lien, charge, encumbrance or security interest of any kind or nature      whatsoever except for a Permitted Lien (collectively, “Liens”) upon      any of the properties or assets of the Company under, (i) the Company      Certificate or Company By-laws, (ii) any agreement, contract,      license, loan or credit agreement, note, note purchase agreement, bond,      mortgage, indenture, lease or other agreement, instrument, permit,      concession, franchise or license applicable to the Company or its      properties or assets or (iii) subject to the governmental filings and      other matters referred to in the last sentence of this      Section 3.01(d), any judgment, order, decree, statute, law,      ordinance, rule, regulation or arbitration award applicable to the Company      or its properties or assets. Each Lien of the Company in excess of $5,000      is set forth in Section 3.01(d) of the Company Disclosure      Letter. No consent, approval, order or authorization of, or registration,      declaration or filing with, or notice to, any federal, state or local      government or any court, administrative agency or commission or other      governmental authority or agency, domestic or foreign (a “Governmental      Entity”) is required by or with respect to the Company in      connection with the execution and delivery of this Agreement by the      Company or the consummation by the Company of any of the transactions      contemplated hereby or the performance by the Company of its obligations      hereunder, except for the filing of the Delaware Certificate of Merger      with the Secretary of State of the State of Delaware and appropriate      documents with the relevant authorities of other states in which the      Company is qualified to dobusiness. |
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|        (e) | Company SEC Documents;      Undisclosed Liabilities.  Since January 1, 2005, the      Company has filed with the SEC all reports, schedules, forms, statements      and other documents required pursuant to the Securities Act and the      Exchange Act (collectively, and in each case including all exhibits and      schedules thereto and documents incorporated by reference therein, the      “Company      SEC Documents”).  As of their respective dates, the Company      SEC Documents complied in all material respects with the requirements of      the Securities Act or the Exchange Act, as the case may be, and the      rules and regulations of the SEC promulgated thereunder applicable to      such Company SEC Documents.  Except to the extent that information      contained in any Company SEC Document has been revised or superseded by a      later filed Company SEC Document, none of the Company SEC Documents      (including any and all Company SEC Financial Statements included therein)      contains any untrue statement of a material fact or omits to state a      material fact required to be stated therein or necessary in order to make      the statements therein, in the light of the circumstances under which they      were made, not misleading.  The financial statements of Company      included in the Company SEC Documents (the “Company      SEC Financial Statements”) comply as to form in all material      respects with applicable published accounting requirements and the      published rules and regulations of the SEC with respect thereto, have      been prepared in accordance with GAAP, applied on a consistent basis      during the periods involved (except as may be indicated in the notes      thereto) and fairly present the financial position of the Company as of      the dates thereof and the results of its operations and cash flows for the      periods then ended (subject, in the case of unaudited quarterly      statements, to normal recurring year-end audit adjustments).  The      Company has no liabilities or obligations of any nature (whether accrued,      absolute, contingent or otherwise) required by GAAP to be recognized or      disclosed on a balance sheet of the Company or in the notes thereto,      except (i) liabilities reflected in the audited balance sheet of the      Company as of March 31, 2008, (ii) liabilities incurred since      March 31, 2008, in the ordinary course of business consistent with      past practice and (iii) liabilities that would not be reasonably      likely to have a Material Adverse Effect with respect to the      Company. |
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|   |   |
|--------|--------|

|        (f) | Disclosure Controls      and Procedures.  The Company maintains disclosure controls and      procedures required by Rule 13a-15 and 15d-15 under the Exchange      Act.  Such disclosure controls and procedures are designed to ensure      that all material information relating to the Company is made known to the      Company’s chief executive officer and chief financial officer by others      within the Company, particularly during the period in which the Company’s      applicable Exchange Act report is being prepared, and effective, in that      they provide reasonable assurance that information required to be      disclosed by the Company in the reports that it files or submits under the      Exchange Act is recorded, processed, summarized and reported within the      time periods specified in the SEC’s rules and forms.  The      Company’s management assessment was that disclosure controls and      procedures were effective as of March 31,  2008. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | Information      Supplied.  None of the information supplied or to be      supplied by the Company in writing for inclusion or incorporation by      reference in (i) the registration statement on Form S-4 to be filed with      the SEC by Parent in connection with the issuance of Parent Common Stock      in the Merger (the “Form      S-4”) shall, at the time the Form S-4 becomes effective under the      Securities Act, contain any untrue statement of a material fact or omit to      state anymaterial fact required to be stated therein or necessary to make      the statements therein not misleading or (ii) the Information Statement      shall, at (A) the date it is first mailed to the Company's stockholders      and/or (B) at the time of the Stockholder Meeting, contain any untrue      statement of a material fact or omit to state any material fact required      to be stated therein or necessary in order to make the statements therein,      in the light of the circumstances under which they are made, not      misleading.  The Information Statement shall comply as to form      in all material respects with the requirements of the Exchange Act and the      rules and regulations promulgated thereunder, except that no      representation is made by the Company with respect to statements made or      incorporated by reference therein based on information supplied in writing      by Parent or Merger Sub specifically for inclusion or incorporation by      reference therein. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (h) | Absence of Certain      Changes or Events.  Since March 31, 2008, there is not and has      not been:  (i) any Material Adverse Change with respect to the      Company; (ii) any condition, event or occurrence which, individually      or in the aggregate, could reasonably be expected to have a Material      Adverse Effect or give rise to a Material Adverse Change with respect to      the Company; (iii) any condition, event or occurrence which,      individually or in the aggregate, could reasonably be expected to prevent      or materially delay the ability of the Company to consummate the      transactions contemplated by this Agreement or perform its obligations      hereunder. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

----

|  | (i)  |            Litigation; Labor      Matters; Compliance withLaws. |
|--|-----------|------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (i) | Except      as set forth in Section 3.01(i)(i) of      the Company Disclosure Letter, there is no suit, action, claim, charge,      arbitration, investigation or proceeding pending before or, to the      knowledge of the Company, threatened by, a Governmental Entity, in each      case with respect to the Company that, individually or in the aggregate,      could reasonably be expected to have a Material Adverse Effect with      respect to the Company or prevent or materially delay the ability of the      Company to consummate the transactions contemplated by this Agreement or      to perform its obligations hereunder. There is no judgment, decree,      citation, injunction, rule or order of any Governmental Entity or      arbitrator outstanding against the Company which, individually or in the      aggregate, could reasonably be expected to have a Material Adverse Effect      with respect to the Company. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ii) | Except      as set forth in Section 3.01(i)(ii) of      the Company Disclosure Letter (1) the Company is not a party to, or      bound by, any collective bargaining agreement, contract or other agreement      or understanding with a labor union or labor organization; (2) the      Company is not the subject of any strike, grievance or other proceeding      asserting that the Company has committed an unfair labor practice or      seeking to compel it to bargain with any labor organization as to wages or      conditions of employment; (3) there is no strike, work      stoppage or other labor dispute involving the Company or, to its      knowledge, threatened; (4) no grievance is pending or, to the      knowledge of the Company, threatened against the Company which,      individually or in the aggregate, could reasonably be expected to have a      Material Adverse Effect with respect to the Company; (5) the Company      is in material compliance with all applicable laws (domestic and foreign),      agreements, contracts and policies relating to employment, employment      practices, wages, hours, immigration matters and terms and conditions of      employment; (6) the Company has paid in full to all employees of the      Company all wages, salaries, commissions, bonuses, benefits and other      compensation due and payable to such employees under any policy, practice,      agreement, plan, program, statute or other law; (7) the Company is      not liable for any severance pay or other payments to any employee or      former employee arising from the termination of employment under any      benefit or severance policy, practice, agreement, plan or program of the      Company, nor will the Company have any liability which exists or arises,      or may be deemed to exist or arise, under any applicable law, contract or      otherwise, as a result of or in connection with the transactions      contemplated hereunder or as a result of the termination by the Company of      any Persons employed by the Company on or prior to the Effective Time; and      (8) the Company is in compliance with its obligations pursuant to the      Worker Adjustment and Retraining Notification Act of 1988 (“WARN”)      and any similar state or local laws, and all other employee notification      and bargaining obligations arising under any statute or      otherwise. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (iii) | The      business of the Company is not being conducted in violation of any law      (domestic or foreign), ordinance or regulation of any Governmental Entity      in any material respect. |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

----

|   | (j)             Employee Benefit      Plans. |
|--------|---------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (i) | Section 3.01(j)(i) of      the Company Disclosure Letter contains a true and complete list of each      “employee benefit plan” (within the meaning of Section 3(3) of      ERISA) (including, without limitation, multiemployer plans within the      meaning of Section 3(37) of ERISA or any of its foreign      equivalents)), stock purchase, stock option, severance, employment,      change-in-control, fringe benefit, collective bargaining, bonus,      incentive, deferred compensation and all other employee benefit plans,      agreements, programs, policies or other arrangements relating to      employment, benefits or entitlements, whether or not subject to ERISA      (including any funding mechanism therefor now in effect or required in the      future as a result of the transactions contemplated by this Agreement or      other activities taken by the Company on or prior to the date of this      Agreement), sponsored by the Company or any other entity such as a      co-employer, whether formal or informal, oral or written, legally binding      or not under which any employee or former employee of the Company has any      present or future right to benefits based on such employee’s employment      with the Company and under which the Company has any present or future      liability.  All such plans, agreements, programs, policies and      arrangements are herein collectively referred to as the “Company      Plans.” |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ii) | With      respect to each Company Plan, the Company has delivered to the Parent a      current, accurate and complete copy (or, to the extent no such copy      exists, an accurate description) thereof and, to the extent applicable,      (A) any related trust agreement, annuity contract or other funding      instrument; (B) the most recent determination letter issued by the      IRS; (C) any summary plan description and other material written      communications (or a description of any material oral communications) by      the Company to its employees concerning the extent of the benefits      provided under a Company Plan; and (D) for the three most recent      years (I) the Form 5500 and attached schedules;      (II) audited financial statements; (III) actuarial valuation      reports; and (IV) attorney’s response to an auditor’s request for      information. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (iii) | (A) Neither      the Company nor any member of its Controlled Group has or shall have, as      of the Effective Time, any obligation to any multiemployer plan (within      the meaning of 4001(a)(3) of ERISA) or any collective bargaining      agreement; (B) neither the Company nor any member of its Controlled      Group has incurred any material withdrawal liability under Title IV of      ERISA; and (C) neither the Company nor any member of its Controlled      Group has engaged in a transaction which could subject it to liability      under ERISA Section 4212(c). |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        (iv) | (A) Each      Company Plan which is intended to meet the requirements for Tax-favored      treatment under Subchapter B of Chapter 1 of Subtitle A of the Code meets      such requirements; and (B) the Company has received a favorable      determination from the IRS with respect to any trust intended to be      qualified within the meaning of Code    Section 501(c)(9). |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (v) | The      Company has complied and currently complies in all material respects with      the applicable continuation requirements for its welfare benefit plans,      including Section 4980B of the Code and Sections 601 through 608,      inclusive, of ERISA and any applicable state statutes maintaining health      insurance continuation coverage for employees and      beneficiaries. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (vi) | Except      as otherwise disclosed in Section 3.01(j)(vi) of      the Company Disclosure Letter, none of the terms of the Company Plans      provides that the consummation of the transactions contemplated by this      Agreement will, either alone or in combination with another event,      (A) entitle any of the Company’s employees or current or former      officers or directors to severance pay, unemployment compensation or any      other payment, except as expressly provided in this Agreement, or      (B) accelerate the time of payment or vesting, or increase the amount      of compensation due any such employee or  officer. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (vii) | Except      as otherwise disclosed in Section 3.01(j)(vii) of      the Company Disclosure Letter, no payment that is owed or may become      due to any director, officer, employee or agent of the Company will be      non-deductible or subject to tax under Section 280G,      Section 4999 or Section 162(m) of the Code; nor will the      Company be required to “gross up” or otherwise compensate any such person      because of the imposition of any excise tax on a payment to such      person. |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (vii) | Each      Company Plan is amendable and terminable at the sole discretion of the      sponsor thereof without notice to any participant or      beneficiary. |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ix) | There      is no suit, action, claim, charge, arbitration, investigation or      proceeding (except with respect to benefits payable in the normal      operation of Company Plans and qualified domestic relations orders)      against or involving any Company Plan or asserting any rights or claims to      benefits under any Company Plan that could give rise to any material      liability. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (x) | Except      as disclosed in Section 3.01(j)(x) of      the Company Disclosure Letter, there are no obligations or potential      liability under any Company Plan for providing welfare benefits after      termination of employment to any employee (or any beneficiary of an      employee), including, but not limited to, retiree health and life      insurance coverage, but excluding continuation of health coverage required      to be continued under Section 4980B of the Code or other applicable      law and insurance conversion privileges under state law. The assets of      each Company Plan which is funded are reported on their fair market value      on the books and records of such CompanyPlan. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        (xi) | No      individuals are currently providing, or have ever provided, services to      the Company pursuant to a leasing arrangement or similar type of      arrangement. The Company has no obligation to provide benefits under any      Company Plan maintained for its employees to or for the benefit of any      individual who has been treated as an independent contractor by the      Company. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (k)             Taxes. |
|--------|-----------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (i) | The      Company has timely filed with the appropriate Governmental Entity all Tax      Returns required to be filed by it, each such Tax Return has been prepared      in compliance with all applicable laws and regulations and all such Tax      Returns are true, accurate and complete in all material respects. The      Company has (A) timely paid in full all Taxes required to have been      paid by it (whether or not such Taxes were shown to be due on such Tax      Returns); and (B) made adequate provision for all accrued Taxes not      yet due.  The Company has made accruals for Taxes on the Company      SEC Financial Statements that are adequate to cover any Tax liability of      the Company determined in accordance with GAAP through the date of the      applicable Company SEC Financial Statements, and any Taxes of the Company      arising after the date of the most recent Company SEC Financial Statements      and at or before the Effective Time have been or will be incurred in the      ordinary course of the Company’sbusiness. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ii) | As      of the date of this Agreement, no federal, state, local or foreign audits,      suits or other administrative proceedings or court proceedings are      presently pending with regard to any Taxes or Tax Returns of Parent, and      the Company has not received a written notice of any material pending or      proposed claims, audits or proceedings with respect to Taxes. The Company      has not granted any outstanding extensions of the time in which any Tax      may be assessed or collected by any Tax authority. There is no      action, suit, proceeding or audit with respect to any Tax or, to the      knowledge of the Company, threatened against or with respect to the      Company.  The Company has not received any notice of deficiency      or assessment from any Governmental Entity for any amount of Tax that has      not been fully settled or satisfied, and to the knowledge of the Company      no such deficiency or assessment isproposed. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (iii) | No      claim has been made in writing by any Governmental Entity in a      jurisdiction where the Company does not file Tax Returns that any such      entity is, or may be, subject to taxation by that      jurisdiction. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        (1) | Properties. The      Company (i) has good and marketable title to all the properties and      assets (A) reflected in the Company Financial Statements as being      owned by the Company (other than any such properties or assets sold or      disposed of since such date in the ordinary course of business consistent      with past practice) or (B) acquired after March 31, 2008 which are      material to the Company’s business, free and clear of all Liens. The      Company has good and valid leasehold interests in all real property      leases, subleases and occupancy agreements to which the Company is a party      (the “Company      Leases”) and is in sole possession of the properties purported to      be leased thereunder.  Section 3.01(l) of      the Company Disclosure Letter lists and describes briefly all Company      Leases. Each Company Lease is in full force and effect and      constitutes a legal, valid and binding obligation of, and is legally      enforceable against, the respective parties thereto. There is no uncured      breach, and no default exists, on the part of landlord under any of      the Company Leases, and the Company has no knowledge of breach or default      or any event, condition or state of facts, which with the giving of notice      or the passage of time, or both, would constitute a breach or default by      the Company under any Company Lease. There is no suit, action, arbitration      or other proceeding with respect to the Company Leases or the premises      leased under the Company Leases. The Company has not received notice and      does not otherwise have knowledge of any pending, threatened or      contemplated condemnation proceeding affecting any premises leased by the      Company or any part thereof or of any sale or other disposition of      any such leased premises or any part thereof in lieu of condemnation.      The real property leased to the Company under the Company Leases      encompasses all real property used by the Company, and the Company does      not own any real property and does not have any options to purchase real      property. The landlord under each of the Company Leases has performed all      initial improvements required to be performed by it under such Company      Lease and all tenant improvements allowances have been paid to the Company      as tenant under such Company Lease. All insurance required to be      maintained by the Company under each of the Company Leases is in full      force and effect. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (m) |  Environmental      Matters. |
|-----------------|-----------------------------------|

|        (i) | The      Company holds and is in compliance in all material respects with all      Environmental Permits and the Company is, and has been, otherwise in      compliance with all Environmental Laws in all material respects and, to      the knowledge of the Company, there are no conditions that might prevent      or interfere with such compliance in thefuture. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ii) | The      Company has not received any Environmental Claim, and to the knowledge of      the Company there is no threatened Environmental  Claim. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (iii) | The      Company has not entered into any consent decree, order or agreement under      any Environmental Law. |
|-------------------|----------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        (iv) | There      are no (A) underground storage tanks, (B) polychlorinated      biphenyls, (C) friable asbestos or asbestos-containing materials,      (D) sumps, (E) surface impoundments, (F) landfills or      (G) sewers or septic systems present at any facility currently      leased, operated or otherwise used by the Company that could reasonably be      expected to give rise to liability of the Company under any Environmental      Laws. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (v) | There      are no past (including, without limitation, with respect to assets or      businesses formerly owned, leased or operated by the Company) or present      actions, activities, events, conditions or circumstances, including,      without limitation, the release, threatened release, emission, discharge,      generation, treatment, storage or disposal of Hazardous Materials, that      could reasonably be expected to give rise to liability of the Company      under any Environmental Laws. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (vi) | No      modification, revocation, reissuance, alteration, transfer or amendment of      the Environmental Permits, or any review by, or approval of, any third      party of the Environmental Permits is required in connection with the      execution or delivery of this Agreement or the consummation of the      transactions contemplated hereby or the continuation of the business of      the Company following suchconsummation. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (vii) | Hazardous      Materials have not been generated, transported, treated, stored, disposed      of, arranged to be disposed of, released or threatened to be released at,      on, from or under any of the properties or facilities currently leased or      otherwise used by the Company, in violation of or so as could result in      liability under, any EnvironmentalLaws. |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (viii) | The      Company has not contractually assumed any liabilities or obligations under      any Environmental Laws. |
|--------------------|------------------------------------------------------------------------------------------------------------------|

|  |            (n)  |       Contracts; Debt      Instruments. |
|--|-----------------------------------------------|-----------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (i) | The      Company is not, and has not received any notice and has no knowledge that      any other party is, in default in any material respect under any contract,      agreement, commitment, arrangement, lease, policy or other instrument to      which it is a party or by which it is bound; and, to the knowledge of the      Company, there has not occurred any event that with the lapse of time or      the giving of notice or both would constitute such a    default. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ii) | The      Company has delivered to Parent and Merger Sub (x) true, complete and      correct copies of all loan or credit agreements, notes, bonds, mortgages,      indentures and other agreements and instruments pursuant to which any      Indebtedness of the Company is outstanding and (y) accurate      information regarding the respective principal amounts currently      outstanding thereunder. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (iii) | The      Company has delivered to Parent and Merger Sub true, complete and correct      copies of all other contracts, agreements, commitments, arrangements,      leases, policies or other instruments that are material to the business of      the Company, including, without limitation, any non-compete agreement or      any other agreement requiring expenditures above  $25,000. |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|        (o) | No      Brokers.  No broker, investment banker, financial advisor or      other Person (including, without limitation, SCO Capital Partners LLC      and/or its affiliates) is entitled to any broker’s finder’s, financial      advisor’s or other similar fee or commission in connection with the      transactions contemplated by this Agreement based upon arrangements made      by or on behalf of the Company. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (p) | Intellectual      Property. |
|-----------------|-----------------------------|

|   |   |
|--------|--------|

| (i) | Section 3.01(p)(i) of      the Company Disclosure Letter sets forth all Intellectual Property owned      by the Company, which is registered or filed with, or has been submitted      to, any Governmental Entity, and all Intellectual Property licensed from      third parties by the Company, and the nature of the Company’s rights      therein. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (ii) | The      Company owns or has the right to use all Intellectual Property necessary      for the Company to conduct its business as it is currently conducted and      consistent with past practice. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (iii) | All      of the Intellectual Property used by the Company is subsisting and      unexpired, free of all Liens, has not been abandoned and, to the knowledge      of the Company, does not infringe the intellectual property rights of any      third party. None of the Intellectual Property to the extent used by the      Company is the subject of any license, security interest or other      agreement to which the Company is a party granting rights therein to any      third party. No judgment, decree, injunction, rule or order has been      rendered by any U.S. federal or state or foreign Governmental Entity which      would limit, cancel or question the validity of, or the Company’s rights      in and to any Intellectual Property in any material respect. The Company      has not received notice of any pending or threatened suit, action or      proceeding that seeks to limit, cancel or question the validity of, or the      Company’s rights in and to any Intellectual Property. The Company takes      reasonable steps to protect, maintain and safeguard its Intellectual      Property, including any Intellectual Property for which improper or      unauthorized disclosure would impair its value or validity, and have      executed appropriate agreements and made appropriate filings and      registrations in connection with theforegoing. |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (q) | Government Licenses;      Compliance With FDC Act and Other Regulatory      Requirements. |
|-----------------|-------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (i) | The      Company holds all material authorizations, consents, approvals,      franchises, licenses and permits required under applicable law or      regulation for the operation of the business of the Company as presently      operated (the “Company      Permits”).  All the Company Permits have been duly issued or      obtained and are in full force and effect, and the Company is in material      compliance with the terms of all the Company Permits.  The Company      has not engaged in any activity that would cause revocation or suspension      of any such Company Permits.  Neither the execution, delivery nor      performance of this Agreement shall adversely affect the status of any of      the Company Permits. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|        (ii) | Without limiting the generality      of the representations and warranties made in sub-paragraph      (i) above, the Company represents and warrants that (i) all      Pharmaceutical Products that are subject to the jurisdiction of the United      States Food and Drug Administration (the “FDA”) are being developed, labelled,      stored, tested and distributed directly by the Company in substantial      compliance with all applicable requirements under the Federal Food, Drug      and Cosmetic Act of 1938 (the “FDCA”), the Public Health Service Act      of 1944 (the “PHSA”) and all applicable similar      state and foreign Legal Requirements, including those relating to      investigational use, premarket clearance and applications or abbreviated      applications to market a new Pharmaceutical Product.  “Pharmaceutical      Products” shall mean      all biological and drug candidates, compounds or products being      researched, tested, developed, manufactured or distributed by the Company,      (ii) all preclinical studies and clinical trials conducted by the      Company have been, and are being, conducted in substantial compliance with      the requirements of Good Laboratory Practice and Good Clinical Practice      and all requirements relating to protection of human subjects contained in      Title 21, Parts 50, 54, and 56 of the United States Code of Federal      Regulations (“C.F.R.”), in each case, to the extent      required by applicable law and regulations, (iii) no Pharmaceutical      Product has been recalled, suspended, or discontinued as a result of any      action by the FDA or any other similar foreign Governmental Entity by the      Company, or (iv) since December 31, 2005, neither the Company      nor, to the knowledge of the Company, any of its officers, key employees      or agents has been convicted of any crime or engaged in any conduct that      has resulted, or would reasonably be expected to result, in debarment      under 21 U.S.C. Section 335a or any similar state law or      regulation under 42 U.S.C.Section 1320a-7. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (r) | Insurance. The      Company maintains insurance policies (each, a “Company      Insurance Policy”) with reputable insurance carriers against all      risks of a character and in such amounts as are usually insured against by      similarly situated companies in the same or similar businesses. Each      Company Insurance Policy is in full force and effect and is set forth in      Section 3.01(q) of      the Company Disclosure Letter. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (s) | Disclaimer of Other      Representations and Warranties.  The representations and      warranties contained in this Section 3.01,      and in the Officer’s Certificate and Secretary’s Certificate to be      delivered by the Company under this Agreement, do not contain any untrue      statement of material fact or omit to state any material fact necessary in      order to make the statements and information contained therein not      misleading.  Parent and Merger Sub acknowledge and agree that the      Company has made no representation or warranty in connection with this      Agreement or the transactions contemplated hereby other than as set forth      in this Section 3.01. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        3.02 | Representations and      Warranties of Parent and Merger Sub.  Except as set forth in      the disclosure letter (to the extent each disclosure item therein is      clearly marked to indicate the section, paragraph or subparagraph of this      Agreement to which such disclosure is an exception, referencing the same      section, paragraph and subparagraph as used in this Agreement, in each      case, except to the extent that any such disclosure is reasonably      discernable to apply to more than one section, paragraph or subparagraph      of this Agreement) delivered by Parent and Merger Sub to Holdings and the      Company at the time of execution of this Agreement (the “Parent      Disclosure Letter”) or in the Parent SEC Documents filed on or      after January 1, 2007, Parent and Merger Sub represent and warrant to      Holdings and the Company asfollows: |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Organization, Standing      and Corporate Power.  Each of Parent and Merger Sub is      duly organized, validly existing and in good standing under the laws of      the jurisdiction in which it is organized and has the requisite corporate      power and authority to carry on its business as now being      conducted.  Each of Parent and Merger Sub is duly qualified or      licensed to do business and is in good standing in each jurisdiction      (domestic or foreign) in which the nature of its business or the ownership      or leasing of its properties makes such qualification or licensing      necessary, other than in such jurisdictions where the failure to be so      qualified or licensed (individually or in the aggregate) would not have a      Material Adverse Effect with respect to Parent.  Parent has made      available to the Company complete and correct copies of its certificate of      incorporation and by-laws and the certificate of incorporation and by-laws      of Merger Sub. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Capital      Structure.  As of the date of this Agreement, the      authorized capital stock of Parent consists of (i) 100,000,000,000 shares      of Parent Common Stock and (ii) 2,000,000 shares of Parent Preferred      Stock.  As of the close of business on June 30, 2008, there      were: (i) 5,648,781 shares of Parent Common Stock issued and outstanding,      (ii) 11,666,195 shares of Parent Common Stock issuable upon conversion of      3,227.3617 shares of Parent Preferred Stock, (iii) 163 shares of Parent      Common Stock held in the treasury of Parent; (iv) 52,818 shares of Parent      Common Stock reserved for issuance pursuant to Parent's stock option plans      (collectively, the "Parent      Stock Plans"); (v) 1,293,820 shares of Parent Common Stock issuable      upon exercise of awarded but unexercised stock options; and (vi) warrants      representing the right to purchase 9,461,725 shares of Parent Common      Stock;  Except as set forth above, as of the close of business      on June 30, 2008 there were no shares of capital stock or other equity      securities of Parent issued, reserved for issuance or      outstanding.  All outstanding shares of capital stock of Parent      are, and all shares which may be issued as described above shall be, when      issued, duly authorized, validly issued, fully paid and nonassessable and      not subject to preemptive rights.  The shares of Parent Common      Stock to be issued in connection with the Merger (x) shall, when      issued, be duly authorized, validly issued, fully paid and nonassessable      and not subject to preemptive rights, and (y) shall be issued in      compliance in all material respects with all applicable federal and state      securities laws and applicable rules and regulations promulgated      thereunder.  As of the Effective Time of the Merger, the Board      of Directors of Parent shall have reserved for issuance a number of shares      of Parent Common Stock as is required by the Company Warrants to be      assumed by Parent pursuant to Section      2.03.  Except as set forth above and in the Rights      Agreement, dated as of October 31, 2001, between Parent and the American      Stock Transfer & Trust Company, there are no outstanding securities,      options, warrants, calls, rights, commitments, agreements, arrangements or      undertakings of any kind to which Parent is a party or by which it is      bound obligating Parent to issue, deliver or sell, or cause to be issued,      delivered or sold, additional shares of capital stock or other equity or      voting securities of Parent or obligating Parent to issue, grant, extend,      accelerate the vesting of or enter into any such security, option,      warrant, call, right, commitment, agreement, arrangement or      undertaking.  There are no outstanding contractual obligations,      commitments, understandings or arrangements of Parent to repurchase,      redeem or otherwise acquire or make any payment in respect of any shares      of capital stock of Parent. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (c)   | Authority;      Noncontravention.  Parent and Merger Sub have all      requisite corporate power and authority to enter into this Agreement and      to consummate the transactions contemplated hereby.  The      execution and delivery of this Agreement by Parent and Merger Sub and the      consummation by Parent and Merger Sub of the transactions contemplated      hereby have been duly authorized by all necessary corporate action on the      part of Parent and Merger Sub.  This Agreement has been duly      executed and delivered by each of Parent and Merger Sub, as applicable,      and (assuming due authorization, execution and delivery by the Company)      constitute valid and binding obligations of Parent and Merger Sub, as      applicable, enforceable against them in accordance with their terms,      subject to the effects of bankruptcy, insolvency, fraudulent conveyance,      reorganization, moratorium and other similar laws affecting creditors'      rights generally, general equitable principles (whether considered in a      proceeding in equity or at law) and an implied covenant of good faith and      fair dealing.  The execution and delivery of this Agreement does      not, and the consummation by Parent and Merger Sub of the transactions      contemplated by this Agreement and compliance by Merger Sub with the      provisions of this Agreement shall not, conflict with, or result in any      breach or violation of, or default (with or without notice or lapse of      time, or both) under, or give rise to a right of termination, cancellation      or acceleration of, or a "put" right with respect to any obligation under,      or to a loss of a material benefit under, or result in the creation of any      Lien upon any of the properties or assets of Parent or Merger Sub under      (i) the certificate of incorporation or by-laws of Parent or Merger Sub,      (ii) any loan or credit agreement, note, bond, mortgage, indenture,      lease or other agreement, instrument, permit, concession, franchise or      license applicable to Parent or Merger Sub or any of their respective      properties or assets or (iii) subject to the governmental filings and      other matters referred to in the following sentence, any judgment, order,      decree, statute, law, ordinance, rule, regulation or arbitration award      applicable to Parent or Merger Sub or their respective properties or      assets, other than, in the case of clauses (ii) and (iii), any such      conflicts, breaches, violations, defaults, rights, losses or Liens that      individually or in the aggregate would not have a Material Adverse Effect      with respect to Parent or prevent or materially delay the ability of      Parent and Merger Sub to consummate the transactions contemplated by this      Agreement or perform their respective obligations hereunder.  No      consent, approval, order or authorization of, or registration, declaration      or filing with, or notice to, any Governmental Entity is required by or      with respect to Parent or Merger Sub in connection with the execution and      delivery of this Agreement by Parent and Merger Sub or the consummation by      Parent and Merger Sub of any of the transactions contemplated hereby,      except for (i) such filings, if any, may be required under the HSR Act and      the filing of any required applications, if any, by Parent and Merger Sub      pursuant to antitrust or similar laws in such foreign jurisdictions as      necessary, (ii) the filing with the SEC of (A) the Form S-4 and (B) such      reports under the Exchange Act as may be required in connection with this      Agreement and the transactions contemplated hereby, (iii) the filing of      the Certificate of Merger with the Secretary of State of the State of      Delaware and appropriate documents with the relevant authorities of other      states in which Parent is qualified to do business, (iv) such other      consents, approvals, orders, authorizations, registrations, declarations,      filings or notices as may be required under the "takeover" or "blue sky"      laws of various states and (v) such other consents, approvals, orders,      authorizations, registrations, declarations, filings or notices the      failure of which to make or obtain, individually or in the aggregate,      could not reasonably be expected to (x) prevent or materially delay      consummation of the Merger or the other transactions contemplated hereby      or performance of Parent's and Merger Sub's obligations hereunder or      (y) have a Material Adverse Effect with respect to      Parent. |
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| (d)   | Parent SEC Documents;      Undisclosed Liabilities.  Parent has filed with the SEC      all reports, schedules, forms, statements and other documents required      pursuant to the Securities Act and the Exchange Act since January 1, 2005      (collectively, and in each case including all exhibits and schedules      thereto and documents incorporated by reference therein, the "Parent      SEC Documents").  As of their respective dates, the      Parent SEC Documents (other than the Parent SEC Financial Statements)      complied in all material respects with the requirements of the Securities      Act or the Exchange Act, as the case may be, and the rules and regulations      of the SEC promulgated thereunder applicable to such Parent SEC      Documents.  Except to the extent that information contained in      any Parent SEC Document has been revised or superseded by a later filed      Parent SEC Document, none of the Parent SEC Documents (including any      Parent SEC Financial Statements included therein) contains any untrue      statement of a material fact or omits to state a material fact required to      be stated therein or necessary in order to make the statements therein, in      the light of the circumstances under which they were made, not      misleading.  The consolidated financial statements of Parent      included in all Parent SEC Documents filed since January 1, 2005 (the      "Parent      SEC Financial Statements") comply as to form in all material      respects with applicable published accounting requirements and the      published rules and regulations of the SEC with respect thereto, have been      prepared in accordance with generally accepted accounting principles as      applied in the United States (except, in the case of unaudited      consolidated quarterly statements, as permitted by Form 10-Q of the SEC),      applied on a consistent basis during the periods involved (except as may      be indicated in the notes thereto) and fairly present the consolidated      financial position of Parent and its consolidated subsidiaries as of the      dates thereof and the consolidated results of their operations and cash      flows for the periods then ended (subject, in the case of unaudited      quarterly statements, to normal recurring year-end audit      adjustments).  Neither Parent nor any of its Subsidiaries has      any liabilities or obligations of any nature (whether accrued, absolute,      contingent or otherwise) required by generally accepted accounting      principles as applied in the United States to be recognized or disclosed      on a consolidated balance sheet of Parent and its Subsidiaries or in the      notes thereto, except (i) liabilities reflected in the audited      consolidated balance sheet of Parent as of December 31, 2006 and (ii)      liabilities incurred since December 31, 2006, in the ordinary course of      business consistent with pastpractice. |
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| (e)   | Information      Supplied.  None of the information supplied or to be      supplied by Parent or Merger Sub in writing for inclusion or incorporation      by reference in (i) the Form S-4 shall, at the time the Form S-4 becomes      effective under the Securities Act, contain any untrue statement of a      material fact or omit to state any material fact required to be stated      therein or necessary to make the statements therein not misleading or (ii)      the Information Statement shall, (A) at the date it is first mailed to the      Company's stockholders and/or (B) at the time of the Stockholder Meeting,      contain any untrue statement of a material fact or omit to state any      material fact required to be stated therein or necessary to make the      statements therein, in the light of the circumstances under which they are      made, not misleading.  The Form S-4 shall comply as to form in      all material respects with the requirements of the Securities Act and the      rules and regulations promulgated thereunder, except that no      representation is made by Parent or Merger Sub with respect to statements      made or incorporated by reference therein based on information supplied in      writing by the Company specifically for inclusion or incorporation by      reference therein. |
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| (f)   | Absence of Certain      Changes or Events.  Since March 31, 2008, there is not      and has not been: (i) any Material Adverse Change with respect to Parent;      (ii) any condition, event or occurrence which, individually or in the      aggregate, could reasonably be expected to have a Material Adverse Effect      or give rise to a Material Adverse Change with respect to Parent; (iii)      any condition, event or occurrence which, individually or in the      aggregate, could reasonably be expected to prevent or materially delay the      ability of Parent and Merger Sub to consummate the transactions      contemplated by this Agreement or perform their respective obligations      hereunder. |
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| (g)   | Litigation; Compliance      with Laws. |
|-----------------|----------------------------------------|

| (h)   | Interim Operations of      Merger Sub.  Merger Sub was formed on July 10, 2008      solely for the purpose of engaging in the transactions contemplated      hereby, has engaged in no other business activities and has conducted its      operations only as contemplatedhereby. |
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| (i)   | Required      Vote.  This Agreement has been approved by Parent, as the      sole stockholder of Merger Sub. No other vote of holders of any class or      series of securities of Parent or Merger Sub is necessary to approve this      Agreement, the Merger and the transactions contemplated      hereby. |
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| (j)   | Taxes.  Parent      has timely filed all Tax Returns required to be filed by it, each such Tax      Return has been prepared in compliance with all applicable laws and      regulations, and all such Tax Returns are true, accurate and complete in      all respects.  Parent has paid all Taxes shown to be due on such      Tax Returns.  Parent has made accruals for Taxes on the Parent      SEC Financial Statements that are adequate to cover any Tax liability of      Parent determined in accordance with generally accepted accounting      principles through the date of the applicable Parent SEC Financial      Statements, and any Taxes of Parent arising after the date of the most      recent Parent SEC Financial Statements and at or before the Effective Time      of the Merger have been or will be incurred in the ordinary course of      Parent's business.  Parent has timely withheld and timely paid      all Taxes that are required to have been withheld and paid by it in      connection with amounts paid or owing to any employee, independent      contractor, creditor or other person.  No outstanding deficiency      or adjustment in respect of Taxes has been proposed, asserted or assessed      by any Tax authority against Parent.  Parent has not granted any      outstanding extensions of the time in which any Tax may be assessed or      collected by any Tax authority.  There is no action, suit,      proceeding, or audit with respect to any Tax now in progress, pending or,      to the knowledge of Parent, threatened against or with respect to      Parent.  Neither Parent nor any of its Subsidiaries has ever      been a member of any affiliated group of corporations (as defined in      Section 1504(a) of the Code) other than a group of which Parent was the      common parent.  Neither Parent nor any of its Subsidiaries has      ever filed or been included in a combined, consolidated or unitary Tax      Return other than with respect to a group of which Parent was the common      parent.  Parent is neither a party to nor bound by any Tax      sharing agreement or Tax allocation agreement.  Neither Parent      nor any of its Subsidiaries is presently liable, nor does Parent or any of      its Subsidiaries have any potential liability, for the Taxes of another      person (i) under Treasury Regulations Section 1.1502-6 or comparable      provision of state, local or foreign law, except with respect to a group      of which Parent was the common parent, (ii) as transferee or successor, or      (iii) by contract or indemnity or otherwise (other than pursuant to      contracts entered into with customers, vendors, real property lessors, or      other third parties the principal purpose of which is not to address Tax      matters).  Parent has not participated, within the meaning of      Treasury Regulations Section 1.6011-4(c), in (i) any "reportable      transaction" within the meaning of Section 6011 of the Code and the      Treasury Regulations thereunder, (ii) any "confidential corporate tax      shelter" within the meaning of Section 6111 of the Code and the Treasury      Regulations thereunder, (iii) any "potentially abusive tax shelter" within      the meaning of Section 6112 of the Code and the Treasury Regulations      thereunder, or (iv) any transaction identified as a "transaction of      interest" within the meaning of proposed Treasury Regulations Section      1.6011-4(b)(6).  Parent will not be required, as a result of a      change in method of accounting for any period ending on or before or      including the Effective Time of the Merger, to include any adjustment      under Section 481(c) of the Code (or any similar or corresponding      provision or requirement under any other Tax law) in Taxable income for      any period ending on or after the Effective Time of the      Merger.  Parent will not be required to include any item of      income in Taxable income for any Taxable period (or portion thereof)      ending after the Closing Date as a result of any (i) prepaid amount      received on or prior to the Closing Date, or (ii) "closing agreement"      described in Section 7121 of the Code (or any similar or corresponding      provision of any other Tax law).  Parent has never been either a      "distributing corporation" or a "controlled corporation" in connection      with a distribution of stock qualifying for Tax-free treatment, in whole      or in part, pursuant to Section 355 of the Code.  Parent is not      and has not been a United States real property holding corporation within      the meaning of Code Section 897(c)(2), during the applicable period      specified in Code Section 897(c)(1)(A)(ii).  For purposes of      this Section 3.02(j), references to Parent shall be deemed to include      Parent and all of its Subsidiaries except where the context indicates      otherwise. |
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| (k)   | No      Brokers.  No broker, investment banker, financial advisor      or other Person (including, without limitation, SCO Capital Partners LLC      and its affiliates) is entitled to any broker's finder's, financial      advisor's or other similar fee or commission in connection with the      transactions contemplated by this Agreement based upon arrangements made      by or on behalf of Parent.  Parent hereby indemnifies the      Company and holds the Company harmless from and against any and all      claims, liabilities or obligations with respect to any other fee,      commission or expense asserted by any Person on the basis of any act or      statement alleged to have been made by Parent or its      affiliates. |
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| (l)   | Disclaimer of Other      Representations and Warranties.  The representations and      warranties contained in this Section 3.02,      and in the Officer’s Certificate and Secretary’s Certificate to be      delivered by the Parent under this Agreement, do not contain any untrue      statement of material fact or omit to state any material fact necessary in      order to make the statements and information contained therein not      misleading.  The Company acknowledges and agrees that the Parent and      Merger Sub have made no representation or warranty in connection with this      Agreement or the transactions contemplated hereby other than as set forth      in this Section 3.02. |
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| 4.01   | Conduct of Business by      the Company. |
|------------------|------------------------------------------|

| (a)   | During      the period from the date of this Agreement to the Effective Time (except      as otherwise expressly contemplated by the terms of this Agreement or      agreed to in writing by Parent), the Company shall, and shall cause its      Subsidiaries to, act and carry on their respective businesses in the      ordinary course of business consistent with past practice and use its and      their respective reasonable best efforts to preserve substantially intact      their current business organizations, keep available the services of their      current officers and employees and preserve their relationships with      customers, supplies, licensors, licensees, advertisers, distributors and      others having significant business dealings with them.  Without      limiting the generality of the foregoing, during the period from the date      of this Agreement to the Effective Time, except as otherwise expressly      contemplated by the terms of this Agreement, the Company Disclosure      Schedule or agreed to in writing by Parent, the Company shall not, and      shall not permit any of its Subsidiariesto: |
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|   | (b) | Changes in Employment      Arrangements.  Except as otherwise agreed to in writing      by Parent, neither the Company nor any of its Subsidiaries shall adopt or      amend (except as may be required by law) any bonus, profit sharing,      compensation, stock option, pension, retirement, deferred compensation,      employment or other employment benefit plan, agreement, trust, fund or      other arrangement for the benefit or welfare of any employee, director or      former director or employee or increase the compensation or fringe      benefits of any director, employee or former director or employee or pay      any benefit not required by any existing plan, arrangement or      agreement. |
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|   | (c) | Severance.  Except      as set forth in Section 3.01(i)(ii)      and/or 3.01(j)(vi) or (x) of the Company Disclosure Schedule,      neither the Company nor any of its Subsidiaries shall grant any new or      modified severance or termination arrangement or increase or accelerate      any benefits payable under its severance or termination pay policies in      effect on the date hereof. |
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|   | (d) | WARN.  Neither      the Company nor any of its Subsidiaries shall effectuate a "plant closing"      or "mass layoff," as those terms are defined in WARN, affecting in whole      or in part any site of employment, facility, operating unit or employee of      the Company or any Subsidiary, without notifying Parent in advance and      without complying with the notice requirements and other provisions of      WARN and any similar state or locallaw. |
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|   | (e) | Tax Free      Reorganization Treatment.  The Company and Parent shall      not, and shall not permit any of their respective Subsidiaries to,      intentionally take or cause to be taken any action not otherwise      consistent with the transactions contemplated by this Agreement which      could reasonably be expected to prevent the Merger from qualifying as a      "reorganization" within the meaning of Section 368(a) of the      Code. |
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|   | (f) | Other      Actions.  Neither the Company nor Parent shall, or shall      permit any of its Subsidiaries to, intentionally take any action that      could reasonably be expected to result in any of its representations and      warranties set forth in this Agreement being or becoming untrue in any      material respect, or in any of the conditions to the Merger set forth in      Article VI not being satisfied; provided that the Company and its Board of      Directors shall not be required to take or be prohibited from taking any      action to the extent that such action is not required to be taken or is      permitted, as applicable, pursuant to Section 5.06 of      this Agreement.  The Company and Parent shall promptly advise      the other party orally and in writing of (i) any representation or      warranty becoming untrue, (ii) the failure by such party to comply with      any covenant, condition or agreement hereunder and (iii) any event which      could reasonably be expected to cause the conditions set forth in Article      VI not being satisfied; provided, however, that no such notice shall      affect the representations, warranties, covenants and agreement of the      parties or the conditions to their obligations  hereunder. |
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| 5.01     Preparation of Form      S-4 and Information Statement; Company Financial      Statements. |
|------------------------------------------------------------------------------------------------------------------------------|

| (a)   | As      soon as practicable following the date of this Agreement, Parent and the      Company shall prepare the Information Statement and the Form S-4, and      Parent shall file with the SEC the Form S-4, in which the Information      Statement shall be included. Each party shall notify the other party      promptly upon the receipt of any comments from the SEC or its staff and of      any request by the SEC or its staff or any government officials for      amendments or supplements to the Form S-4 or the Information Statement, or      for any other filing or for additional information and shall supply the      other party with copies of all correspondence between such party or any of      its representatives, on the one hand, and the SEC, or its staff or any      other government officials, on the other hand, with respect to the Form      S-4, the Information Statement, the Merger or any other      filing.  Parent and the Company shall each use its reasonable      best efforts to have the Form S-4 declared effective under the Securities      Act as promptly as practicable after such filing.  The Company      shall use its reasonable best efforts to cause the Information Statement      to be mailed to the Company's stockholders as promptly as practicable      after the Form S-4 is declared effective under the Securities      Act.  Parent shall also take any action (other than qualifying      to do business in any state in which it is not now so qualified or filing      a general consent to service of process) required to be taken under any      applicable state securities laws in connection with the registration and      qualification of the Parent Common Stock to be issued in the Merger, and      the Company shall furnish all information relating to the Company and its      stockholders as may be reasonably requested in connection with any such      action. |
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| (b)   | The      Company’s Board of Directors may withdraw or modify such recommendation if      the Board of Directors of the Company shall have concluded in good faith      on the basis of advice from outside counsel that such action is required      in order to satisfy its fiduciary duties to the stockholders of the      Company under applicable law.  Any such recommendation shall be      included in the InformationStatement. |
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| (c)   | The      Company shall use its reasonable best efforts to promptly (i) prepare      all financial statements of the Company required for the Parent to timely      file with the SEC the financial statements required under Items 2.01 and      9.01 of Form 8-K including, without limitation, the Company Financial      Statements in compliance with Regulation S-X promulgated under the      Securities Act and (ii) obtain the consent of Vitale, Caturano &      Company, Ltd. and any other required consents of accountants to use their      opinion with respect to the Company Financial Statements in any SEC      filings that may be necessary in connection with the transactions      contemplated by this Agreement. |
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|   |   |
|--------|--------|

| 5.02   | Access to Information;      Confidentiality. |
|------------------|----------------------------------------------|

|   |   |
|--------|--------|

|        5.03 | Reasonable Best      Efforts. Upon the terms and subject to the conditions set forth in      this Agreement, each of the parties agrees to use its reasonable best      efforts to take, or cause to be taken, all actions, and to do, or cause to      be done, and to assist and cooperate with the other parties in doing, all      things necessary, proper or advisable under applicable laws and      regulations to consummate and make effective, in the most expeditious      manner practicable, the Merger and the other transactions contemplated by      this Agreement, including (i) obtaining all consents, approvals,      waivers, licenses, permits or authorizations as are required to be      obtained (or, which if not obtained, would result in an event of default,      termination or acceleration of any agreement or any put right under any      agreement) under any applicable law or regulation or from any Governmental      Entities or third parties in connection with the transactions contemplated      by this Agreement, (ii) defending any lawsuits or other proceedings      challenging this Agreement, (iii) accepting and delivering additional      instruments necessary to consummate the transaction contemplated by this      Agreement, and (iv) satisfying the conditions to closing set forth      under Article V hereof. |
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|        5.04 | Indemnification of      Company Directors andOfficers. |
|------------------|--------------------------------------------------------|

|   |   |
|--------|--------|

|        (a) | From      and after the Effective Time, Parent and the Surviving Corporation shall      jointly and severally indemnify, defend and hold harmless each person who      is now, or has been at any time prior to the date hereof or who becomes      prior to the Effective Time eligible for indemnification pursuant to the      Company Certificate and Company By-laws (or comparable organizational      documents) of the Company or any agreement of indemnification with the      Company, in each case as the same existed on the date of this Agreement      (the “Indemnified      Parties”) against (i) all losses, claims, fines, damages,      costs, expenses (including, without limitation, reasonable attorneys’      fees), liabilities or judgments, or amounts that are paid in settlement of      or in connection with any claim, action, suit, proceeding or investigation      (whether civil, criminal or administrative) based in whole or in      part on or arising in whole or in part out of the fact that such      person is or was a director, officer or employee of the Company,      pertaining to any matter existing or occurring at or prior to the      Effective Time, whether asserted or claimed prior to, or at or after, the      Effective Time (“Indemnified      Liabilities”) and (ii) all Indemnified Liabilities based in      whole or in part on, or arising in whole or in part out of, or      pertaining to this Agreement or the transaction contemplated hereby, in      each case to the extent the Company would have been permitted under the      Company Certificate and Company By-laws (or comparable organizational      documents) or any agreement of indemnification with the Company to      indemnify such person, in each case as the same existed on the date of      this Agreement. In the event any such claim, action, suit, proceeding or      investigation is brought against any Indemnified Parties (whether arising      before or after the Effective Time), (i) any counsel retained by the      Indemnified Parties for any period after the Effective Time shall be      reasonably satisfactory to Parent; (ii) after the Effective Time,      Parent or the Surviving Corporation shall pay all reasonable fees and      expenses of such counsel for the Indemnified Parties promptly as      statements therefor are received; and (iii) after the Effective Time,      Parent and the Surviving Corporation shall cooperate in the defense of any      such matter, provided that neither Parent nor the Surviving Corporation      shall be liable for any settlement of any claim effected without its      written consent, which consent shall not be unreasonably withheld. Any      Indemnified Party wishing to claim indemnification under this Section 5.04,      upon learning of any such claim, action, suit, proceeding or      investigation, shall notify Parent and the Surviving Corporation (but the      failure so to notify Parent and the Surviving Corporation shall not      relieve either from any liability which it may have under this Section 5.04      except to the extent such failure prejudices Parent and the Surviving      Corporation). Parent and the Surviving Corporation shall be liable for the      fees and expenses hereunder with respect to only one law firm to represent      the Indemnified Parties as a group with respect to each such matter unless      there is, under applicable standards of professional conduct, a conflict      between the positions of any two or more Indemnified Parties that would      preclude or render inadvisable joint or multiple representation of such      parties. |
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|   |   |
|--------|--------|

|        (b) | If      Parent or the Surviving Corporation or any of their respective successors      or assigns (i) shall consolidate with or merge into any other      corporation or entity and shall not be the continuing or surviving      corporation or entity of such consolidation or merger or (ii) shall      transfer all or substantially all of its properties and assets to any      individual, corporation or other entity, then, and in each such case,      proper provisions shall be made so that the successors and assigns of      Parent or the Surviving Corporation shall assume all of the obligations      set forth in this Section 5.04. |
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|   |   |
|--------|--------|

|        (c) | The      provisions of this Section 5.04      are intended to be for the benefit of, and shall be enforceable by, each      of the Indemnified Parties. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (d) | The      rights of the Indemnified Parties under this Section 5.04      shall be in addition to any rights such Indemnified Parties may have      under the Company Certificate or Company By-laws, or under any applicable      contracts or laws. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (e) | No Circular      Recovery. The obligations of the Parent and the Surviving      Corporation in this Section 5.04      are subject to the condition that each Indemnified Party will not make any      claim for indemnification against the Parent, the Surviving Corporation or      the Company by reason of the fact that such Indemnified Party was a      controlling person, director, employee or representative of the Company or      the Surviving Corporation or was serving as such for another Person at the      request of the Company (whether such claim is for losses of any kind or      otherwise and whether such claim is pursuant to any statute,      organizational document, contractual obligation or otherwise) with respect      to any claim brought by the Parent or its affiliates relating to this      Agreement that is finally and successfully adjudicated against such      Indemnified Party. With respect to any claim brought by the Parent or its      affiliates against any Indemnified Party relating to this Agreement that      is finally and successfully adjudicated against such Indemnified Party,      the obligations of the Parent and the Surviving Corporation in this Section 5.04      are subject to the condition that any right of subrogation, contribution,      advancement, indemnification or other claim against the Company with      respect to any amounts owed by any Indemnified Party shall not be      applicable. |
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|   |   |
|--------|--------|

|        5.05 | Public      Announcements. Neither Parent and Merger Sub, on the one hand, nor      the Company, on the other hand, shall issue any press release or public      statement with respect to the transactions contemplated by this Agreement,      including the Merger, without the other party’s prior consent (such      consent not to be unreasonably withheld or delayed), except as may be      required by applicable law, court process or by obligations pursuant to      any agreement with any securities exchange or quotation system on which      securities of the disclosing party are listed or quoted. In addition to      the foregoing, Parent, Merger Sub and the Company shall consult with each      other before issuing, and provide each other the opportunity to review and      comment upon, any such press release or other public statements with      respect to such transactions. The parties agree that the initial press      release or releases to be issued with respect to the transactions      contemplated by this Agreement shall be mutually agreed upon prior to the      issuance thereof. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 5.06 | No      Solicitation.  The Company shall not (whether directly or      indirectly through advisors, agents or other intermediaries), nor shall      the Company authorize or permit any of its or their officers, directors,      agents, representatives or advisors to, (a) solicit, initiate or take any      action knowingly to facilitate the submission of inquiries, proposals or      offers from any Person (other than Merger Sub or Parent) relating to (i)      any acquisition or purchase of 33.33% or more of the assets of the Company      or of over 33.33% of any class of equity securities of the Company, (ii)      any tender offer (including a self tender offer) or exchange offer that if      consummated would result in any Person beneficially owning 33.33% or more      of any class of equity securities of the Company, (iii) any merger,      consolidation, business combination, sale of substantially all assets,      recapitalization, liquidation, dissolution or similar transaction      involving the Company whose assets, individually or in the aggregate,      constitute more than 33.33% of the consolidated assets of the Company      other than the transactions contemplated by this Agreement, or (iv) any      other transaction the consummation of which would or could reasonably be      expected to impede, interfere with, prevent or materially delay the Merger      (collectively, "Transaction      Proposals"), or agree to or endorse any Transaction Proposal, or      (b) enter into or participate in any discussions or negotiations regarding      any of the forgoing, or furnish to any other Person any information with      respect to its business, properties or assets or any of the foregoing, or      otherwise cooperate in any way with, or knowingly assist or participate      in, facilitate or encourage, any effort or attempt by any other Person      (other than Merger Sub or Parent) to do or seek any of the foregoing;      provided, however, that the foregoing shall not prohibit the Company      (either directly or indirectly through advisors, agents or other      intermediaries) from (i) furnishing information pursuant to an appropriate      confidentiality letter (which letter shall not be less favorable to the      Company in any material respect than the Confidentiality Agreement, a copy      of which shall be provided for informational purposes only to Parent)      concerning the Company and its businesses, properties or assets to a third      party who has made a bona fide Transaction Proposal, (ii) engaging in      discussions or negotiations with such a third party who has made a bona      fide Transaction Proposal, (iii) following receipt of a bona fide      Transaction Proposal, taking and disclosing to its stockholders a position      contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act or      otherwise making disclosure to its stockholders, (iv) following receipt of      a bona fide Transaction Proposal, failing to make or withdrawing or      modifying its recommendation referred to in Section 3.01,      and/or (v) taking any action required to be taken by the Company pursuant      to a non-appealable, final order by any court of competent jurisdiction,      but in each case referred to in the foregoing clauses (i) through (iv)      only to the extent that the Board of Directors of the Company shall have      concluded in good faith on the basis of advice from outside counsel that      such action is required in order to satisfy its fiduciary duties to the      stockholders of the Company under applicable law; provided, further, that      the Board of Directors of the Company shall not take any of the foregoing      actions referred to in clauses (i) through (iv) until after prompt advance      notice to Parent (which notice shall in no event be given less than two      (2) business day prior to furnishing such information or entering into      such discussions) with respect to such action and that such Board of      Directors shall, to the extent consistent with its fiduciary duties,      continue to advise Parent after taking such action and, in addition, if      such Board of Directors receives a Transaction Proposal, then the Company      shall promptly inform Parent of the terms and conditions of such proposal      and the identity of the Person making it. The Company shall immediately      cease and cause its advisors, agents and other intermediaries to cease any      and all existing activities, discussions or negotiations with any parties      conducted heretofore with respect to any of the foregoing, and shall use      its reasonable best efforts to cause any such parties in possession of      confidential information about the Company that was furnished by or on      behalf of the Company to return or destroy all such information in the      possession of any such party or in the possession of any agent or advisor      of any such party. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  5.06 | Shareholder Rights      Plan. The Parent shall take all action necessary to render the      Shareholder Rights Plan inapplicable to the execution, delivery and      performance of this Agreement and the transactions contemplated      hereby. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|  5.07 | Tax Free      Reorganization Treatment. The Company, Parent and Merger Sub shall      not intentionally take or cause to be taken any action not consistent with      the transactions contemplated by this Agreement or which could reasonably      be expected to prevent the Merger from qualifying as a “reorganization”      within the meaning of Section 368(a) of the  Code. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.08 | Termination of Company      Plans.  Effective no later than the day immediately      preceding the Closing Date but contingent upon the Closing, the Company      shall terminate any and all Company Plans intended to include a Code      Section 401(k) arrangement (collectively, the "Terminated      Company Plans").  The Company shall provide Parent with      evidence that such Terminated Company Plan(s) have been terminated      (effective no later than the day immediately preceding the Closing Date)      in accordance with each such Terminated Company Plan’s respective      terms.  The Company also shall take such other actions in      furtherance of terminating such Terminated Company Plan(s) as Parent may      reasonably require. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  6.01 | Conditions to each      Party’s Obligation to Effect the Merger. The respective obligation      of each party to effect the Merger is subject to the satisfaction or      waiver on or prior to the Closing Date of the following      conditions: |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (a) | No Injunctions or      Restraints. No temporary restraining order, preliminary or      permanent injunction or other order issued by any court of competent      jurisdiction or other legal restraint or prohibition preventing the      consummation of the Merger shall be in effect; provided, however, that the      parties hereto shall use their reasonable best efforts to have any such      injunction, order, restraint or prohibition  vacated; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (b) | Governmental      Approvals. Other than the filing of the Delaware Certificate of      Merger, all authorizations, consents, orders or approvals of, or      declarations or filings with, or expirations of waiting periods imposed      by, any Governmental Entity in connection with the Merger and the      consummation of the other transactions contemplated by this Agreement, the      failure of which to file, obtain or occur is reasonably likely to have a      Material Adverse Effect with respect to Parent or a Material Adverse      Effect with respect to the Company, shall have been filed, been obtained      or occurred on terms and conditions which would not reasonably be likely      to have a Material Adverse Effect with respect to Parent or a Material      Adverse Effect with respect to theCompany; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | (c) | Form      S-4.  The Form S-4 shall have become effective under the      Securities Act and shall not be the subject of any stop order or      proceedings seeking a stop order, and any material "blue sky" and other      state securities laws applicable to the registration and qualification of      Parent Common Stock issuable or required to be reserved for issuance      pursuant to this Agreement shall have been complied  with; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Information      Statement.  No stop order suspending the use of the      Information Statement shall have been issued and no proceeding for that      purpose shall have been initiated or threatened in writing by the SEC or      its staff; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | Flow of Funds      Memorandum.  Parent and the Company shall have executed      and delivered a mutually agreeable Flow of Funds Memorandum setting forth      certain payments to be made by Parent concurrently with the Closing (the      “Flow      of Funds Memorandum”); |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | Stockholder      Approval.  The Merger and this Agreement shall have been      approved and adopted by the requisite vote of the holders of shares of      Company Common Stock to the extent required pursuant to the requirements      of the certificate of incorporation and the  DGCL; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  6.02 | Conditions to      Obligations of Parent and Merger Sub. The obligations of Parent and      Merger Sub to effect the Merger are further subject to the following      conditions:  |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (a) | Representations and      Warranties. The representations and warranties of the Company      contained in this Agreement shall be true and correct in all material      respects on and as of the Closing Date, with the same force and effect as      if made on and as of the Closing Date, except for (i) changes      contemplated by this Agreement or in the Company Disclosure Letter,      (ii) representations and warranties that are qualified by materiality      or Material Adverse Effect, in which case such representations and      warranties shall be true and correct in all respects, and      (iii) representations and warranties which address matters only as of      a particular date, in which case such representations and warranties      qualified as to materiality or Material Adverse Effect shall be true and      correct in all respects, and those not so qualified shall be true and      correct in all material respects, on and as of such particular date; and      Parent shall have received a certificate to such effect signed by the      president of the Company. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (b) | Performance of      Obligations of the Company. The Company shall have performed in all      material respects all obligations required to be performed by it under      this Agreement at or prior to the Closing Date. Parent shall have received      a certificate dated as of the Closing Date signed on behalf of the Company      by the president of the Company to the effect set forth in this      paragraph. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (c) | Consents, Etc.       Parent and Merger Sub shall have received evidence, in form and      substance reasonably satisfactory to Parent, that such licenses, permits,      consents, approvals, authorizations, qualifications and orders of      governmental authorities and other third parties as are necessary in      connection with the transactions contemplated hereby have been obtained,      except where the failure to obtain such licenses, permits, consents,      approvals, authorizations, qualifications and orders would not,      individually or in the aggregate with all other failures, have a Material      Adverse Effect with respect to theCompany. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (d) | No Litigation.       There shall not be pending by any Governmental Entity or any other      Person or solely with respect to any Governmental Entity, threatened by      any suit, action or proceeding, (i) challenging or seeking to      restrain or prohibit the consummation of the Merger or any of the other      transactions contemplated by this Agreement or seeking to obtain from any      party hereto or any of their Affiliates any damages that are material in      relation to the Company; (ii) seeking to prohibit or limit the      ownership or operation by the Company of any material portion of the      business or assets of the Company or to dispose of or hold separate any      material portion of the business or assets of the Company, as a result of      the Merger or any of the other transactions contemplated by this      Agreement; (iii) seeking to impose limitations on the ability of      Parent to acquire or hold, or exercise full rights of ownership of, any      shares of the common stock of the Surviving Corporation, including,      without limitation, the right to vote such common stock on all matters      properly presented to the stockholders of the Surviving Corporation; or      seeking to prohibit Parent or any of its Subsidiaries from effectively      controlling in any material respect the business or operations of the      Company. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (e) | Termination of Company Options and      certain Company Warrants.  The Company shall have      complied with the requirements of the 1994 Equity Incentive Plan and the      2001 Incentive Plan (together, the “Company      Option Plans”) in connection with offering holders of the Company      Options and Company Warrants (other than the In the Money Company      Warrants) the opportunity to exercise all such Company Options and Company      Warrants held by such holder prior to the Effective Time.  At      the Effective Time, all outstanding Company Options and Company Warrants      not exercised (other than the In the Money Company Warrants) shall be      terminated and each such holder shall have no further rights thereunder to      purchase shares of Company Common Stock.  At the Effective Time,      the In the Money Company Warrants shall automatically convert into the      right to receive Merger Consideration as provided in Article II      above. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (f) | Directors and      Officers. As of the EffectiveTime: |
|-----------------|-------------------------------------------------------|

|   |    |
|--------|--------------|

|   | (i) | Consulting and      Transition Agreement. Parent and the Company’s President &      Chief Business Officer shall have mutually agreed on terms to discharge      the Company’s obligations and agree upon the terms of that certain      Consulting and Transition Agreement, in the form attached as Exhibit      A hereto; and |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        (g)    | No Material Adverse      Effect. Since the date of this Agreement, there shall not have      occurred any Material Adverse Effect or Material Adverse Change with      respect to the Company. |
|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (h) | Dissenters’      Rights.  Any applicable period during which stockholders      of the Company have the right to exercise appraisal, dissenters' or other      similar rights under Section 262 of the DGCL or other applicable law shall      have expired and stockholders of the Company holding in the aggregate more      than five percent (5%) of the outstanding shares of Company Common Stock      shall not have exercised appraisal, dissenters' or similar rights under      Section 262 of the DGCL or other applicable law with respect to such      shares by virtue of the Merger. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (i)       Resignation of      Directors and Officers.  Except as set forth in Sections 1.06 and      1.07, the directors and officers of the Company, in office      immediately prior to the Effective Time shall have resigned as directors      and officers of the Surviving Corporation effective as of the Effective      Time. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|   |   |
|--------|--------|

|        6.03 | Conditions to      Obligations of the Company.  The obligation of the Company to      effect the Merger is further subject to the following      conditions: |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (a) | Representations and      Warranties.  The representations and warranties of the Parent      and Merger Sub contained in this Agreement shall be true and correct in      all material respects on and as of the Closing Date, with the same force      and effect as if made on and as of the Closing Date, except for      (i) changes contemplated by this Agreement or in the Parent      Disclosure Letter, (ii) representations and warranties that are      qualified by materiality or Material Adverse Effect, in which case such      representations and warranties shall be true and correct in all respects,      and (iii) representations and warranties which address matters only      as of a particular date, in which case such representations and warranties      qualified as to materiality or Material Adverse Effect shall be true and      correct in all respects, and those not so qualified shall be true and      correct in all material respects, on and as of such particular date; and      the Company shall have received a certificate to such effect signed by an      authorized officer of Parent and MergerSub. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (b) | Performance of      Obligations of Parent and Merger Sub.  Parent and Merger Sub      shall have performed in all material respects all obligations required to      be performed by each of them under this Agreement at or prior to the      Closing Date. Holdings and the Company shall have received a certificate      dated as of the Closing Date signed on behalf of Parent and Merger Sub by      an authorized officer of Parent and Merger Sub to the effect set forth in      this paragraph. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (c) | No Litigation.      There shall not be pending by any Governmental Entity or any other Person      or solely with respect to any Governmental Entity, threatened by any suit,      action or proceeding, challenging or seeking to restrain or prohibit the      consummation of the Merger or any of the other transactions contemplated      by this Agreement. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |    |
|--------|--------------|

|        (d) | Parent Consents,      Etc. The Company shall have received evidence, in form and      substance reasonably satisfactory to the Company, that such licenses,      permits, consents, approvals, authorizations, qualifications and orders of      governmental authorities and other third parties as are necessary in      connection with the transactions contemplated hereby have been obtained,      except where the failure to obtain such licenses, permits, consents,      approvals, authorizations, qualifications and orders would not,      individually or in the aggregate with all other failures, have a Material      Adverse Effect with respect to theParent. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 7.01 | Termination.  This      Agreement may be terminated and abandoned at any time prior to the      Effective Time: |
|------|---------------------------------------------------------------------------------------------------------------------------|

|        (e)   | by      Parent, if the Company or its Board of Directors shall have (1) failed to      approve, withdrawn, modified, or amended in any respect adverse to Parent      its approval or recommendation of this Agreement or any of the      transactions contemplated herein; (2) failed as promptly as reasonably      practicable after the Form S-4 is declared effective to mail the      Information Statement to its stockholders or failed to include in such      statement such recommendation; (3) recommended any Transaction Proposal      from a Person other than Parent or any of its affiliates; (4) resolved to      do any of the foregoing; or (5) in response to the commencement of any      tender offer or exchange offer for more than 10% of the outstanding shares      of Company Common Stock, not recommended rejection of such tender offer or      exchange offer at the time of filing of the requisite Schedule 14d-9 with      the SEC; |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | by      the Company, if the Company has received a Superior Proposal, which the      Company’s Board of Directors determines in good faith (after consultation      with its financial advisors) continues to constitute a Superior      Proposal.  For purposes of this Agreement, a “Superior Proposal”      is an Acquisition Proposal for 100% of the Company Common Stock that      involves consideration to the holders of shares of Company Common Stock      that is superior to the consideration offered to such holders pursuant to      the Merger and that otherwise represents a superior transaction to the      Merger in the reasonable discretion of the Company’s Board of      Directors; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (g)   | by      Parent, upon a breach of any representation, warranty, covenant or      agreement on the part of the Company set forth in this Agreement, or if      any representation or warranty of the Company shall have become untrue, in      either case such that the conditions set forth in Section 6.02(a)      or Section      6.02(b) (other than with respect to the delivery of the officers'      certificates required thereunder) would not be satisfied at the time of      such breach or as of the time such representation or warranty shall have      become untrue; provided that if such inaccuracy in the Company's      representations and warranties or breach by the Company is curable by the      Company through the exercise of its commercially reasonable efforts within      ten (10) business days of the time such representation or warranty shall      have become untrue or such breach, Parent may not terminate this Agreement      under this Section 6.01(g)      during such ten-day period, provided Company continues to exercise such      commercially reasonable efforts; or |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | by      the Company, upon a breach of any representation, warranty, covenant or      agreement on the part of Parent or Merger Sub set forth in this Agreement,      or if any representation or warranty of Parent shall have become untrue,      in either case such that the conditions set forth in Section 6.03(a)      or Section      6.03(b) (other than with respect to the delivery of the officers'      certificates required thereunder) would not be satisfied at the time of      such breach or as of the time such representation or warranty shall have      become untrue; provided that if such inaccuracy in Parent's      representations and warranties or breach by Parent is curable by Parent      through the exercise of its commercially reasonable efforts within ten      (10) business days of the time such representation or warranty shall have      become untrue or such breach, the Company may not terminate this Agreement      under this Section 6.01(h)      during such ten-day period provided Parent continues to exercise such      commercially reasonable effort. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.02 | Effect of      Termination.  In the event of termination of this      Agreement by either the Company or Parent as provided in Section 7.01,      this Agreement shall forthwith become void and have no effect, without any      liability or obligation on the part of Parent, Merger Sub, or the Company,      provided that (a) any such termination shall not relieve a party from      liability for any willful breach of this Agreement and (b) the last      sentence of Section      4.02(a), this Section 7.02,      Section      8.07 and the Confidentiality Agreement shall remain in full force      and effect and survive any such termination. Nothing contained in this      paragraph shall relieve any party for any breach of the covenants or      agreements set forth in this Agreement or the Confidentiality      Agreement. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.03 | Amendment.  This      Agreement may be amended by the parties at any time before or after any      required approval of matters presented in connection with the Merger by      the stockholders of the Company; provided, however, that after any such      approval, there shall be made no amendment that by law requires further      approval by such stockholders without the further approval of such      stockholders. This Agreement may not be amended except by an instrument in      writing signed on behalf of each of theparties. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 7.04 | Extension;      Waiver.  At any time prior to the Effective Time, the      parties may (a) extend the time for the performance of any of the      obligations or other acts of the other parties; (b) waive any inaccuracies      in the representations and warranties contained in this Agreement or in      any document delivered pursuant to this Agreement; or (c) subject to the      provisions of Section 7.03,      waive compliance with any of the agreements or conditions contained in      this Agreement. Any agreement on the part of a party to any such extension      or waiver shall be valid only if set forth in an instrument in writing      signed on behalf of such party. The failure of any party to this Agreement      to assert any of its rights under this Agreement or otherwise shall not      constitute a waiver of such rights. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.05 | Procedure for      Termination, Amendment, Extension or Waiver.  A      termination of this Agreement pursuant to Section 7.01,      an amendment of this Agreement pursuant to Section 7.03 or      an extension or waiver pursuant to Section 7.04      shall, in order to be effective, require in the case of any party hereto      an action by its Board of Directors or a duly-authorized designee of its      Board of Directors. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.01 | Nonsurvival of      Representations and Warranties.  None of the      representations and warranties in this Agreement or in any instrument      delivered pursuant to this Agreement shall survive the Effective Time and      all such representations and warranties shall be extinguished on      consummation of the Merger and no party hereto nor any officer, director      or employee or stockholder of any of them shall be under any liability      whatsoever with respect to any such representation or warranty after such      time.  This Section 8.01      shall not limit any covenant or agreement of the parties which by its      terms contemplates performance after Effective  Time. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.02  |  Fees and      Expenses.   |
|------------|-------------------------------------------|

----

| 8.03 | Notices.  All      notices, requests, claims, demands and other communications under      this      Agreement shall be in writing and      shall be deemed given if delivered personally or sent by overnight courier      (providing proof of delivery) to the parties at the following addresses      (or at such other address for a party as shall be specified by like      notice): |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | if      to Parent or Merger Sub, to |
|--------|-----|-------------------------------------|

----

|   | 8.04      Definitions.       For purposes of thisAgreement: |
|--------|------------------------------------------------------------------------------------------------|

|         (a)  |  “Acquisition      Proposal” means any solicitation, initiation, encouragements, discussions,      negotiations and communications regarding a similar transaction with any      third party involving: |
|-----------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         (b)  |  “Affiliate”      of any Person means another Person that directly or indirectly, through      one or more intermediaries, controls, is controlled by, or is under common      control with, such firstPerson; |
|-----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         (c)  |  “Agreement”      has the meaning set forth in thepreamble; |
|-----------------------------------------------------------|------------------------------------------------------------------------------|

|         (d)  |  “Certificates”      shall have the meaning ascribed thereto in Section  2.01(d); |
|-----------------------------------------------------------|----------------------------------------------------------------------------------------------------|

|         (e)  | “Certificate      of Merger” shall have the meaning ascribed thereto in Section      1.03; |
|-----------------------------------------------------------|--------------------------------------------------------------------------------------------------------|

|          (f)  | “C.F.R.”      shall have meaning ascribed thereto in Section 3.01(p)(ii); |
|-----------------------------------------------------------------|--------------------------------------------------------------------------------------------|

|         (g)  |  “Closing”      shall have meaning ascribed thereto in Section 1.02; |
|-----------------------------------------------------------|--------------------------------------------------------------------------------------------|

|         (h) |  “Closing      Date” shall have meaning ascribed thereto in Section 1.02; |
|-----------------------------------------------------|-------------------------------------------------------------------------------------------------|

|          (i) |  “Code”      shall have meaning ascribed thereto in the fourth recital to this      Agreement; |
|-----------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|

|         (j)  | “Common      Stock Exchange Ratio” shall have meaning ascribed thereto in Section 2.01(c)(i); |
|-----------------------------------------------------------|----------------------------------------------------------------------------------------------------------------|

|         (k)  | “Company”      shall have meaning ascribed thereto in the preamble to this      Agreement; |
|-----------------------------------------------------------|--------------------------------------------------------------------------------------------------------|

|         (l)  | “Company      By-laws” shall have the meaning set forth in Section      3.01(a); |
|-----------------------------------------------------------|----------------------------------------------------------------------------------------------|

|         (m) | “Company      Certificate” shall have meaning ascribed thereto inSection 3.01(a); |
|-----------------------------------------------------|----------------------------------------------------------------------------------------------------|

|         (n) | “Company      Common Stock” means the common stock, par value $0.001 per share, of the      Company; |
|-----------------------------------------------------|------------------------------------------------------------------------------------------------------------------|

----

|         (o) | “Company      Disclosure Letter” shall have meaning ascribed thereto inSection 3.01; |
|-----------------------------------------------------|-------------------------------------------------------------------------------------------------------|

|         (p) | “Company      Financial Statements” shall have meaning ascribed thereto inSection 3.01(e); |
|-----------------------------------------------------|-------------------------------------------------------------------------------------------------------------|

|         (q) | “Company      Insurance Policy” shall have meaning ascribed thereto inSection 3.01(q); |
|-----------------------------------------------------|---------------------------------------------------------------------------------------------------------|

|         (r) | “Company      Leases” shall have meaning ascribed thereto in Section 3.01(j); |
|-----------------------------------------------------|------------------------------------------------------------------------------------------------|

|         (s) | “Company      Note” or “Company Notes” shall have the meaning ascribed thereto in Section      2.01(e); |
|-----------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

|         (t) |  “Company      Options” means the options to purchase shares of Company Common Stock      listed inSection 3.01(c)      of the Company Disclosure Letter; |
|-----------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         (u) | “Company      Option Plans” shall have the meaning set forth in Section      6.02(e); |
|-----------------------------------------------------|---------------------------------------------------------------------------------------------------|

|         (v) | “Company      Plans” shall have the meaning set forth in Section      3.01(i)(i); |
|-----------------------------------------------------|-----------------------------------------------------------------------------------------------|

|         (w) | “Company      Permits” shall have meaning ascribed thereto inSection 3.01(p)(i); |
|-----------------------------------------------------|---------------------------------------------------------------------------------------------------|

|         (x) | “Company      SEC Documents” shall have the meaning ascribed thereto in Section      3.01(e); |
|-----------------------------------------------------|-----------------------------------------------------------------------------------------------------------|

|         (y)  | “Company      Warrants” means warrants to purchase shares of Company Common Stock as      listed inSection 3.01(c) of      the Company DisclosureLetter; |
|-----------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (z)  |  “Confidentiality      Agreement” shall have meaning ascribed thereto inSection 4.02(a); |
|-----------------------------------------------------------|----------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (aa)  | “Controlled      Group” shall have meaning ascribed thereto inSection 3.01(h)(iii); |
|------------------------------------------------------------|------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (bb)  | “Delaware      Certificate of Merger” shall have meaning ascribed thereto inSection 1.03;  |
|------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|

|         (cc) | “Dissenting      Shares” shall have the meaning set forth in Section      2.04; |
|------------------------------------------------------|---------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   |   |
|--------|--------|

|         (ee)  | “Effective      Time” shall have meaning ascribed thereto inSection 1.03; |
|------------------------------------------------------------|--------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (ff) | “Environmental      Claim” means any written or oral notice, claims, demand, action, suit,      complaint, proceeding or other communication by any Person alleging      liability or potential liability (including without limitation liability      or potential liability for investigatory costs, cleanup costs,      governmental response costs, natural resource damages, property damage,      personal injury, fines or penalties) arising out of, relating to, based on      or resulting from (A) the presence, discharge, emission, release or      threatened release of any Hazardous Materials at any location, whether or      not owned, leased or operated by the Company or Parent (as applicable) or      (B) circumstances forming the basis of any violation or alleged      violation of any Environmental Law or Environmental Permit or      (C) otherwise relating to obligations or liabilities under any      Environmental Laws; |
|------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|         (gg)  | “Environmental      Permits” means all permits, licenses, registrations and other governmental      authorizations required under Environmental Laws for the Company or Parent      (as applicable) to conduct its operations and business on the date hereof      and consistent with pastpractices; |
|------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (hh)  | “Environmental      Laws” means all applicable federal, state and local statutes, rules,      regulations, ordinances, orders, decrees and common law relating in any      manner to contamination, pollution or protection of the environment,      including, without limitation, the Comprehensive Environmental Response,      Compensation and Liability Act of 1980, the Solid Waste Disposal Act of      1976, the Clean Air Act, the Clean Water Act, the Toxic Substances Control      Act of 1976, the Occupational Safety and Health Act of 1970, the Emergency      Planning and Community-Right-to-Know Act, the Safe Drinking Water Act, all      as amended, and similar statelaws; |
|------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|         (ii) | “ERISA”      shall mean the Employee Retirement Income Security Act of 1974 or any      successor law, and regulations and rules issued pursuant to that Act or      any successor law; |
|------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (jj)  | “Exchange      Act” shall mean the Exchange Act of 1934, as  amended; |
|------------------------------------------------------------|-----------------------------------------------------------------------------------|

|         (kk) | “Exchange      Agent” shall have the meaning set forth in Section      2.02; |
|------------------------------------------------------|------------------------------------------------------------------------------------------|

|         (ll) | “Exchange      Fund” shall have the meaning set forth in Section      2.02; |
|------------------------------------------------------|-----------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (mm) | “FDA”      shall have meaning ascribed thereto in Section 3.01(p)(ii); |
|------------------------------------------------------|-----------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (nn)  |  “FDCA”      shall have meaning ascribed thereto in Section 3.01(q)(ii); |
|------------------------------------------------------------|------------------------------------------------------------------------------------------------|

|         (oo) | “Flow      of Funds” shall have the meaning set forth in Section      6.01(e); |
|------------------------------------------------------|--------------------------------------------------------------------------------------------|

|         (pp) | “Form      S-4” shall have the meaning set forth in Section      3.01(g); |
|------------------------------------------------------|---------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (qq)  | “GAAP”      shall have meaning ascribed thereto in Section 3.01(e); |
|------------------------------------------------------------|--------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (rr) | “Governmental      Entity” shall have meaning ascribed thereto in Section 3.01(d); |
|------------------------------------------------------|-----------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|  | (ss) | “Hazardous      Materials” means all hazardous or toxic substances, wastes, materials or      chemicals, petroleum (including crude oil or any fraction thereof) and      petroleum products, friable asbestos and asbestos-containing materials,      pollutants, contaminants and all other materials, and substances regulated      pursuant to, or that could reasonably be expected to provide the basis of      liability under, any EnvironmentalLaw; |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|  | (tt) | “Indebtedness”      means, with respect to any Person, without duplication, (A) all      obligations of such Person for borrowed money, (B) all obligations of      such Person evidenced by bonds, debentures, notes or similar instruments,      (C) all obligations of such Person under conditional sale or other      title retention agreements relating to property purchased by such Person,      (D) all obligations of such Person issued or assumed as the deferred      purchase price of property or services (excluding obligations of such      Person to creditors for raw materials, inventory, services and supplies      incurred in the ordinary course of such Person’s business), (E) all      capitalized lease obligations of such Person, (F) all obligations of      others secured by any Lien on property or assets owned or acquired by such      Person, whether or not the obligations secured thereby have been assumed,      (G) all obligations of such Person under interest rate or currency      hedging transactions (valued at the termination value thereof),      (H) all letters of credit issued for the account of such Person,      (I) all guarantees and arrangements having the economic effect of a      guarantee of such Person of any Indebtedness of any other Person and      (K) all obligations with respect to compensation or other employee      arrangements which become due or payable as a result of this Agreement or      the transactions contemplatedhereby; |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| (uu      ) |  “Indemnified      Liabilities” shall have meaning ascribed thereto in Section 4.04(a); |
|------------|---------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (vv) | “Indemnified      Parties” shall have meaning ascribed thereto in Section 4.04(a); |
|------------------------------------------------------|-----------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|         (ww)  | “Intellectual      Property” means all rights, privileges and priorities provided under      federal, state, foreign and multinational law relating to intellectual      property, including, without limitation, all (i)(a) inventions,      discoveries, processes, formulae, designs, methods, techniques,      procedures, concepts, developments, research, works, technology, new and      useful improvements thereof and know-how relating thereto, whether or not      patented or eligible for patent protection; (b) copyrights and      copyrightable works, including computer applications, programs, software,      databases and related items (except for off-the-shelf commercial      software); (c) trademarks, service marks, trade names, brand names,      corporate names, logos and trade dress, the goodwill of any business      symbolized thereby and all common-law rights relating thereto; and      (d) trade secrets and other confidential information; and      (ii) all registrations, applications, recordings and licenses or      other similar agreements related to the  foregoing; |
|------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     (xx) | “In      the Money Company Warrants” shall have the meaning set forth in Section      2.03; |
|------------------------------|---------------------------------------------------------------------------------------------------------|

----

|        (yy) | “IRS”      shall mean the U.S. Internal RevenueService; |
|------------------|---------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (zz) | “knowledge      of the Company” means the actual knowledge of any officer of the Company,      including James Pachence as President of the Company, assuming due      inquiry, or those facts which, taking into account the scope and nature of      the responsibilities of the individual in question, should have been known      to such individual; |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (aaa) |  “knowledge      of Parent” means the actual knowledge of any officer of Parent, assuming      due inquiry, or those facts which, taking into account the scope and      nature of the responsibilities of the individual in question, should have      been known to such individual; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (bbb) |  “Licenses”      shall have meaning ascribed thereto in Section 3.01(o)(ii); |
|-------------------|----------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ccc) |  “Lien”      or “Liens” shall have meaning ascribed thereto in Section 3.01(d); |
|-------------------|-------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ddd) | “Material      Adverse Change” or “Material Adverse Effect” means, when used in      connection with the Company or Parent, any change, effect, event or      occurrence that either individually or in the aggregate with all other      such changes, effects, events and occurrences has been or is reasonably      likely to be materially adverse to the business, properties, financial      condition or results of operations of the Company or Parent, as the case      may be, and its Subsidiaries taken as a whole, provided that (i) with      respect to Section 3.01(h)(i) and (ii), shall exclude any      material adverse change in the Company’s results of operations for any      fiscal period prior to the Closing Date that is directly attributable to a      disruption in the conduct of the Company’s business arising from the      transactions contemplated by this Agreement or the public announcement      thereof and (ii) with respect to Section 3.02(f)(i) and      (ii),      shall exclude any material adverse change in Parent’s results of      operations for any fiscal period prior to the Closing Date that is      directly attributable to a disruption in the conduct of Parent’s business      arising from the transactions contemplated by this Agreement or the public      announcement thereof; and provided, further, that Material Adverse Effect      and Material Adverse Change shall not be deemed to include the impact of      (a) any change in laws and regulations or interpretations thereof by      courts or governmental authorities generally applicable to the Company and      Parent, (b) any change in GAAP or regulatory accounting principles      generally applicable to the Company and Parent, (c) any change      arising or resulting from general industry, economic or capital market      conditions or conditions in markets relevant to the Company or Parent, as      applicable, that affects Parent or the Company, as applicable (or the      markets in which Parent or the Company, as applicable, compete) in a      manner not disproportionate to the manner in which such conditions affect      comparable companies in the industries or markets in which Company or      Parent, as applicable, compete, (d) any act or omission of the      Company taken with the prior written consent of Parent or (e) the      expenses reasonably incurred by the Company in entering into this      Agreement and consummating the transactions contemplated by this      Agreement; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        (eee) | “Merger”      shall have meaning ascribed thereto in second recital to this      Agreement; |
|-------------------|---------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (fff) |   “Merger      Consideration” shall have meaning ascribed thereto in Section 2.01(c)(ii); |
|-------------------|----------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ggg) | “Merger      Sub” shall have meaning ascribed thereto in the preamble to this      Agreement; |
|-------------------|-----------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (hhh) |  “Parent”      shall have meaning ascribed thereto in the preamble to this      Agreement; |
|-------------------|-------------------------------------------------------------------------------------------------------------|

|        (iii) |  “Parent      Common Stock” means the common stock, par value $0.01 per share, of      Parent; |
|-------------------|-----------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (jjj) | “Parent      Disclosure Letter” shall have meaning ascribed thereto in Section 3.02; |
|-------------------|-------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| (kkk) | “Parent      Capital Stock” means the Parent Common Stock and the Parent Preferred      Stock; |
|-------|------------------------------------------------------------------------------------------------------------|

|   | (lll) | “Parent      Common Stock” means the common stock, par value $0.01 per share, of      Parent; |
|--------|-------|-----------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (mmm) | “Parent      Preferred Stock” means the preferred stock, par value $0.01 per share, of      Parent; |
|-------------------|-----------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (nnn) | “Parent      SEC Documents” shall have meaning ascribed thereto in Section 3.02(d); |
|-------------------|------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ooo) | “Parent      SEC Financial Statements” shall have meaning ascribed thereto in Section 3.02(d); |
|-------------------|-----------------------------------------------------------------------------------------------------------------|

|   |    |
|--------|--------------|

|        (qqq) | “Permitted      Lien” means statutory Liens securing payments not yet due and such Liens      as do not materially affect the use of the properties or assets subject      thereto or affected thereby or otherwise materially impair business      operations at such properties; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (rrr) | “Person”      means an individual, corporation, partnership, joint venture, association,      trust, unincorporated organization or other  entity; |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (sss) | “Pharmaceutical      Products” shall have meaning ascribed thereto in Section 3.01(p)(ii); |
|-------------------|-------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (ttt) | “PHSA”      shall have meaning ascribed thereto in Section 3.01(p)(ii); |
|-------------------|------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (uuu) | “SEC”      means the United States Securities and Exchange  Commission; |
|-------------------|-------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        (vvv) | “Securities      Act” shall mean the Securities Act of 1933, as  amended; |
|-------------------|---------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (www) |  “Shareholder      Rights Plan” shall have meaning ascribed thereto in Section 3.02(b); |
|-------------------|---------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (xxx) | “Subsidiary”      of any Person means another Person, who holds an amount of the voting      securities, other voting ownership or voting partnership interests which      is sufficient to elect at least a majority of its Board of Directors or      other governing body (or, if there are no such voting interests, 50% or      more of the equity interests of which) or is owned directly or indirectly      by such Person; |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (yyy) | “Superior      Proposal” shall have the meaning ascribed thereto in Section      7.1(f); |
|-------|------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (zzz)  | “Surviving      Corporation” shall have meaning ascribed thereto in Section 1.01; |
|-------------------------|----------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        (aaaa) | “Tax”      or “Taxes” (and with correlative meaning, “Taxable” and “Taxing” and “Tax      Law”) means any United States federal, state or local, or non-United      States, income, gross receipts, franchise, estimated, alternative minimum,      add-on minimum, sales, use, transfer, registration, value added, excise,      natural resources, severance, stamp, withholding, occupation, premium,      windfall profit, environmental, customs, duties, real property, personal      property, capital stock, net worth, intangibles, social security,      unemployment, disability, payroll, license, employee or other tax or      similar levy, of any kind whatsoever, including any interest, penalties or      additions to tax in respect of theforegoing; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   |   |
|--------|--------|

|        (cccc) | “Technology”      means all inventions, works, discoveries, innovations, know-how,      information (including ideas, research and development, know-how,      formulas, compositions, processes and techniques, data, designs, drawings,      specifications, customer and supplier lists, pricing and cost information,      business and marketing plans and proposals, documentation and manuals),      computer software, firmware, computer hardware, integrated circuits and      integrated circuit masks, electronic, electrical and mechanical equipment      and all other forms of technology, including improvements, modifications,      works in process, derivatives or changes, whether tangible or intangible,      embodied in any form, whether or not protectible or protected by patent,      copyright, mask work right, trade secret law or otherwise, and all      documents and other materials recording any of the    foregoing; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        (dddd)  | “WARN”      shall have meaning ascribed thereto in Section 3.01(i)(ii). |
|--------------------------|------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        8.05 | Interpretation.       When reference is made in this Agreement to an Article or a      Section, such reference shall be to an Article or Section of      this Agreement, unless otherwise indicated.  The table of contents,      table of defined terms and headings contained in this Agreement are for      convenience of reference only and shall not affect in any way the meaning      or interpretation of this Agreement.  The language used in this      Agreement shall be deemed to be the language chosen by the parties hereto      to express their mutual intent, and no rule of strict construction      shall be applied against any party.  Whenever the context may      require, any pronouns used in this Agreement shall include the      corresponding masculine, feminine or neuter forms, and the singular form      of nouns and pronouns shall include the plural, and vice versa.  Any      reference to any federal, state, local or foreign statute or law shall be      deemed also to refer to all rules and regulations promulgated      thereunder, unless the context requires otherwise.  Whenever the      words “include,” “includes” or “including” are used in this Agreement,      they shall be deemed to be followed by the words “without      limitation.”  No summary of this Agreement prepared by any party      shall affect the meaning or interpretation of this    Agreement. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        8.06 | Counterparts.       This Agreement may be executed in two or more counterparts, all of      which shall be considered one and the same agreement and shall become      effective when one or more counterparts have been signed by each of the      parties and delivered to the other parties.  The delivery of a      signature page of this Agreement by one party to the other via      facsimile or other electronic transmission shall constitute the execution      and delivery of this Agreement by the transmitting  party. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        8.07 | Entire Agreement; No      Third-Party Beneficiaries.  This Agreement (including the      Company Disclosure Letter and the Parent Disclosure Letter, and the      Schedules and Exhibits attached hereto) and the other agreements and      instruments referred to herein constitute the entire agreement, and      supersede all prior agreements and understandings, both written and oral,      among the parties with respect to the subject matter of this Agreement.       This Agreement, other than Section 5.04 (with respect to which      the Indemnified Parties shall be third-party beneficiaries), is not      intended to confer upon any Person other than the parties any rights or      remedies. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |
|--------|--------|

|        8.08 | Governing Law; Consent      to Jurisdiction; Waiver of Jury Trial.  This Agreement shall      be governed by, and construed in accordance with, the laws of the State of      New York, regardless of the laws that might otherwise govern under      applicable principles of conflicts of laws.  Each of the parties to      this Agreement (a) consents to submit itself to the personal      jurisdiction of any state or federal court sitting in the State of New      York in any action in any action or proceeding arising out of or relating      to this Agreement or any of the transactions contemplated by this      Agreement, (b) agrees that all claims in respect of such action or      proceeding may be heard and determined in any such court, (c) agrees      that it shall not attempt to deny or defeat such personal jurisdiction by      motion or other request for leave from any such court and (d) agrees      not to bring any action or proceeding arising out of or relating to this      Agreement or any of the transaction contemplated by this Agreement in any      other court.  Each of the parties hereto waives any defense of      inconvenient forum to the maintenance of any action or proceeding so      brought and waives any bond, surety or other security that might be      required of any other party with respect thereto.  Any party hereto      may make service on another party by sending or delivering a copy of the      process to the party to be served at the address and in the manner      provided for the giving of notices in Section 7.02.  Nothing in      this Section 7.07, however, shall affect the right of any party to      serve legal process in any other manner permitted by law.  Each party hereto      hereby irrevocably waives all right to trial by jury in any action,      proceeding or counterclaim (whether based on contract, tort or otherwise)      arising out of or relating to this Agreement or the transactions      contemplated hereby or the actions of any party hereto in the negotiation,      administration, performance and enforcement of this      Agreement. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        8.09 | Assignment.       Neither this Agreement nor any of the rights, interests or      obligations under this Agreement shall be assigned, in whole or in part,      by operation of law or otherwise by any of the parties without the prior      written consent of the other parties.  Subject to the preceding      sentence, this Agreement shall be binding upon, inure to the benefit of      and be enforceable by the parties and their respective successors and      assigns. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        8.10 | Remedies.       Except as otherwise provided herein, any and all remedies herein expressly      conferred upon a party shall be deemed cumulative with and not exclusive      of any other remedy conferred hereby, or by law or equity upon such party,      and the exercise by a party of any one remedy shall not preclude the      exercise of any other remedy.  The parties hereto agree that      irreparable damage would occur in the event that any of the provisions of      this Agreement were not performed in accordance with their specific terms      or were otherwise breached.  It is accordingly agreed that the      parties hereto shall be entitled to an injunction or injunctions to      prevent breaches of this Agreement and to enforce specifically the terms      and provisions of this Agreement, this being in addition to any other      remedy to which they are entitled at law or in  equity. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | [REMAINDER      OF PAGE INTENTIONALLY LEFT BLANK] |
|--------|---------------------------------------------------|

----

|                                    |                      |
|-----------------------------------------|---------------------------|
| ACCESS      PHARMACEUTICALS, INC.       |
|                                    |                      |
|                                    |                      |
| By:                                | /s/      Jeffrey B. Davis |   |
|                                    | Name:                     | Jeffrey      B. Davis |
|                                    | Title:                    | Chief      Executive Officer |
|   MACM      ACQUISITION CORP. |
|                                    |                      |
|                                    |                      |
| By:                                | /s/      Jeffrey B. Davis |   |
|                                    | Name:                     |  Jeffrey      B. Davis |
|                                    | Title:                    | President |
|   MACROCHEM      CORPORATION  |
|                                    |                      |
|                                    |                      |
| By:                                | /s/      David P. Luci    |   |
|                                    | Name:                     |  David      P. Luci |
|                                    | Title:                    | President      & Chief Business Officer |

----